Today luxury and innovation are two terms that rarely go together.  The challenge, as identified in the State of Luxury 2017:  The Insider View study, is finding the balance between innovation and tradition, a subject that Mickey Alam Kahn, Luxury Daily’s editor in chief and I pondered in a recent blog.

That blog resulted in call from a colleague active in innovation, Jerry McColgin who heads up an Indianapolis-based firm, Collidea, a strategic innovation company that helps brands identify unmet customer needs that create opportunities to innovate.  He does that by becoming immersed in the customers’ experience to understand the emotions that drive behavior.  As Jerry says, “People shop rationally, but buy emotionally.  Understanding those emotions, then, is the key to innovation.”

Jerry has an engineering background, with his name on 24 patents, and we worked together in a project for a home plumbing and fixtures company.  But his work extends far beyond engineered products, to ‘engineering’ customer experiences, like work he did recently with the Indianapolis Zoo.  With the zoo’s overwhelming success with its Dolphin in Water Adventure, Collidea was brought in to study opportunities to develop other exclusive animal engagement experiences.  “We helped them think differently about the types of experiences visitors would pay extra for,” Jerry explains.  A first result has been new orangutan encounters, giving guests a chance to get up close and personal with these highly-intelligent primates.

Or a project for a door lock company that resulted in innovation in the retail environment where potential customers come into contact with the product first.  “We found the problem wasn’t in the product, but in the retail environment where people got overwhelmed.  That resulted in them either leaving without a purchase or trying to figure out how to make what they already have work,” Jerry explains.  “The customers’ frustrations uncovered in a shop-along project resulted in a new merchandising strategy that makes product selection a simplified 1-2-3 process.”

Knowing that we would have a wide-ranging discussion, I turned my recorder on so I could share the highlights with you.  Interestingly enough, despite Jerry’s extensive work in product innovation, he sees the real frontier for luxury brands to innovate in the experiences realm.

Luxury brands’ innovation opportunity can be found in experiences

I recently consulted with an entrepreneur about the launch of a new luxury leather handbag line.  The product itself ticked off all the key selling features in the category with attractive designs and priced well below its competitive set.  But I sadly couldn’t give her much encouragement, as I told her women today don’t have a handbag problem.  Rather, if other women are like me, their handbag problem is that they already have too many of them in their closet.  The problem is how to repurpose and recycle those old handbags, not buy another new one.

I advised this budding entrepreneur to do more research to identify an unmet women’s handbag need and create a solution to that problem.  More research and due diligence is where her breakthrough resides.  That’s the kind of research that Jerry McColgin and Collidea provide.

“Collidea works with companies to figure out what new types of offerings they can bring to market to meet the unmet needs of their users,” Jerry says.  “We do that by going in-context with the users.”  Jerry has refined an approach that goes to where the customers are engaged with the product or service, whether it be the home, the office, at the computer, or in the store, and studies where the customer has frustrations, challenges or problems at the moment and in-context.  For Collidea’s clients the innovation solution is discovered at the source, i.e. the consumer perspective.  The real contribution Collidea makes isn’t necessarily developing solutions, so much as it is “helping them recognize and understand the real problem.”

A case in point was a recent study Unity Marketing did among luxury cruise customers.  We conducted a series of in-depth-interviews with recent cruisers to research the opportunity for a new more luxurious cruise experience that overcomes some of the problems that dissatisfy a luxury clientele.  What we discovered is that there was no pent-up demand for a new cruise experience that overcomes traditional luxury cruisers’ problems.  When reminded about the obvious shortfalls, the cruisers remembered, but these issues were not top of mind.  The problems with traditional luxury cruises are simply accepted by cruisers as the way it is, all part of the cruise experience that they love despite these dissatisfactions.

Jerry explained why our research approach of IDIs or focus groups are not as effective in uncovering unmet needs as in-context research that studies the customer experience while it is happening, not after the fact.  “As humans we are incredibly adaptive,” Jerry says.  “Talk to people about a product they have used for a while, and they typically say, ‘It’s great, it’s fine,’ because the problems which drive them crazy at first, they learn to get around.  We call those compensatory behaviors, so people learn how to get around design problems and make it work for them, so they no longer see the problems.”

For the cruise client, Jerry suggests taking the research onto the cruise ship itself.  “Take that challenge and go on a cruise to spend the week researching and talking with people as the experience is happening.  You could listen to their complaints, engage them at the point of their frustrations, and get immersed in the whole experience.  Imagine the unmet needs that would be discovered and the innovation service opportunities that would result?” Jerry suggests.

More and more, Jerry is discovering that businesses can make huge strides innovating the customer experience, rather than just designing new products.  “We work to get inside people’s lives to find out what the emotions are that drive their behavior,” Jerry notes.  “Because people shop logically, but they purchase emotionally, luxury brands need to understand those emotional drivers for purchase.  What intrigues me is that people aren’t interested in the status of owning a luxury brand.  It’s the status of having done something that is important today.  That is the essence of the experiential economy.”

Jerry recalls the experience of going into luxury consumers’ homes to talk with them about one aspect or another of their lives.  What startles him is that often these people talk about and show him some modest memento that they collected in their travels, as opposed to the expensive Viking stove or Subzero refrigerator in the kitchen.  “Inevitably what these elite homeowners brag about isn’t some expensive thing, but something that reminds them of an experience.  That is what is memorable and important to them.”  Jerry muses about the opportunity for a luxury goods company to partner with an experience provider to offer an exclusive memento for customers to take away that will remind them of the experience and that is only available to those people who have done that experience.

Innovation made luxury brands great and can keep them great

When it comes to innovation for luxury brands, Jerry says many companies at the top of the brand hierarchy are missing opportunities, as mid-tier brands are out-maneuvering them on the innovation front.  “Too many luxury brands are convinced their customers don’t want innovation, so they believe they have to keep the product where it is.  Instead they put all their efforts toward building the name and brand image,” he comments.

“When I think of so many industries, like automotive or home appliances, the real breakthrough innovation is coming from the mid-tier brands like Whirlpool, Electrolux, KitchenAid, not the Vikings or Subzeros.  Or in automotive, you see all kinds of new features introduced in Toyotas that they don’t put in the Lexus.  It’s like their luxury customers don’t want these features.  True, they don’t want gimmicks or fads.  But they absolutely want innovative features.  This is where luxury brands can find new margins and put themselves back in the lead,” Jerry suggests.

This unwillingness to innovate is ironic since all great luxury brands reached the pinnacle of the consumer market as a result of innovation. “Viking became well known because it was first to launch professional-quality stoves into the home, but then they stopped.  So now all the emphasis is to try and hold on to image and not innovate deliverables,”  Jerry comments.  “Rather luxury brands need to continue the practice of innovation that got them there in the first place.”

Whether it is innovating in product features and design or innovating in the service of shopping or for service industries like travel, hospitality or interior design, Jerry says companies need to see their world like the customers do.  They need to immerse themselves in the customers’ experience and do that without being limited by the company’s own conventional wisdom or internal point of view.   “That’s why we always bring that experience into our research,”  Jerry explains.  “The customer’s experience and their emotions always go hand in hand and that is what will always drive or kill a product or a brand.”