Welcome to this week’s edition of my marketing-focused blog series, the clean Tusk!
There is nothing remotely traditional about Hermès’ customer loyalty program, no global program portal, no loyalty tier system and not even free gifts. Forget about discounts! Many argue that there is no loyalty program at the French brand who is synonymous for its handmade luxury goods. While most brands rely on explicit rewards programs, Hermès opts for a more subliminal strategy. A strategy where the customer has to prove their loyalty to the brand, by purchasing multiple non-quota products before being offered the brand’s ultra expensive hero products, like the Birkin or Kelly bags. With more and more people sharing their “Hermès Journey” online, one wonders, how does the brand manage to keep its customers coming back for more, despite the lofty price tags?
Cultural Influences
Hermès, being a French brand, carries a cultural cachet associated with European elegance and sophistication. The brand has a strong association to aristocracy, equestrian sports, royal clientele and even Grace Kelly! Paris, headquarters of the brand, has been the global center of elegant style and fashion for over five centuries.
The allure of European luxury often plays a role in the consumer’s decision-making process. Buying a Hermès product is akin to buying into a particular cultural narrative—one that establishes the image of an elevated taste for excellence and an appreciation for heritage. Customers perceive this French connection to be superior and it is representative of their own appetite to belong to a culture with highly refined standards for everyday goods.
Social Influences
Ownership of an Hermès item often signifies a certain social status and is celebrated by fellow loyal customers. The brand is frequently seen on celebrities and the ultra-wealthy, thereby serving as a social marker. Hero products from the brand are now recognized as family heirlooms and are seen being passed down to the next generation.
People are often influenced by their social circles, role models and family. Owning an Hermès item becomes a statement about one’s social standing, which can be a significant motivator for subsequent purchases as it provides the consumer with a sense of social belonging. With the items appearing in the will’s of the wealthy, it can’t be ignored that their perceived value is also passed down to the following generation.
Personal Factors
Hermès provides every customer with a direct line of service and communication, a personal sales associate with whom you are expected to establish a relationship. This sales associate is often there to communicate the brands’ history, design story and high quality. This exercise allows the customer to align their personal choices, beliefs and be educated about the new connection they are making. The sales associate then offers a wide range of personalized services, from monogramming to customized designs and recurates the catalog of over 17000 colors to match the customer’s lifestyle and preferences.
Personal factors such as age, lifestyle, and occupation play into the consumer’s decision to invest in a personalized, luxury item. The higher the personal connection, the greater the likelihood of brand loyalty. With access to an entire human being available to make your Hèrmes dreams come true and guide the pre-spend journey, the brand is almost guaranteed customer.
The Role of Price and Perceived Value
Hermès items are notoriously expensive, and the brand rarely, if ever, offers discounts. The pricing strategy at Hermès also aims to build perceived value. There are no sales or discounts, which protects the brand’s image and the perceived value of the goods. The brand’s high price point also serves as a form of social proof. The assumption is that if so many are willing to pay this much for a product, it must be exceptional. The increase in value of the hero items over the last decade has even outperformed the returns from the S&P 500!
The high price point contributes to the brand’s aura of exclusivity. For Hermès customers, the steep price is not a deterrent but rather a reinforcement of the item’s desirability and quality. This pricing strategy appeals to consumers who equate high cost with high quality. Today the brand’s hero products are even considered investments due to their ever increasing holding value. This goes beyond the products merely providing social endorsement, subtly influencing new and existing customers to make a purchase.
Returning for more!
Hermès has created a unique blend of cultural, social, personal, and psychological factors to keep its customers fiercely loyal. Price, rather than being a barrier, serves as a complex tool that adds layers of desirability, profitability and social validation for the brand’s loyalists. Through its nuanced understanding of consumer behavior, Hermès has managed to build an invisible fortress of loyalty around itself. It’s not just the high-quality products but a finely-tuned symphony of consumer behaviors that make Hermès a brand people don’t just like but love—and love to come back to despite exorbitant prices.
Topics: Customer Loyalty, Customer Behavior
