The psychological secrets of luxury consumers

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Hi there - Jen here :)

When it comes to using the power of Scarcity to drive demand, luxury brands are in a league of their own.

Take Hermès for example.

A French design house that makes some of the most expensive handbags on Earth, Hermès is notoriously selective in who it sells to.

And yet it’s worth an incredible $218B.

Like many other ultra-luxury brands, Hermès use Scarcity on steroids to make their products incredibly desirable to a group of people who don’t often hear the word, “No.”

🧠 Today we’re diving into the world of the luxury consumer to learn more about how Exclusivity, Scarcity, and other psychology principles, can drive wild demand.

But don’t worry if your brand doesn’t sell directly to high net-worth individuals because anyone can adopt these psychological principles to sell.

Today you’ll learn:

• The Process of Getting a Birkin: Waitlists, Spending Requirements, and Moving Goal Posts

• To Use Scarcity on Steroids, You Need To Pair It With These Two Principles

• How to Use Scarcity Like Ultra Luxury Brands

👉 Before we get started, a quick reminder I’m offering a FREE WORKSHOP TOMORROW called, “Intro to Psychological Buying Triggers: Emotion.”

I will send replay videos out to everyone who registers for the workshop, so if you can’t make this day/time you can still watch (as long as you sign up).

Learn more & sign up for free (seats are limited so grab yours now)

👉 And don’t forget, you can snag a 50% discount on one of my most popular video course workshops, “The Psychology of High-Converting Landing Pages.” Get yours for only $75 - sale ends Friday night.

The Process of Getting a Birkin: Waitlists, Spending Requirements, and Moving Goal Posts

To understand how Hermès can get away with treating customers like they do, you need to know a bit of background.

Hermès’ two most sought after handbags are called the Birkin and the Kelly.

And brand new they cost between $10k and $12k.

Now that might sound like a lot, but on the resale market these bags can be sold for up to $100k with some going for as much as $500k+.

But don’t run down to your local Hermès shop just yet, because it’s NOT easy to get your hands on one.

You have to get on an exclusive waitlist.

To be selected, you’ll need to jump through a series of wild, ever changing, and expensive hoops to get added to a list that doesn’t even guarantee that you’ll ever get the privilege buying this bag.

Customers have reported that they have to shop at a single store, sometimes with a single sales person, and buy $1000s worth of a variety of “lesser” products like belts, key rings, scarves - sometimes totalling $10k and beyond.

And if the Hermès you’re shopping at doesn’t register your sales to your customer account - or you shop in Paris and not Dubai - it doesn’t count as toward your “spend history” toward the bag of your dreams.

To Use Scarcity on Steroids, You Need To Pair It With These Two Principles

Hermès aren’t the only brand that use Scarcity and Exclusivity to drive demand for a ridiculously expensive product.

Luxury automakers Ferrari are notorious for declining to sell to customers who are not sufficiently “enthusiastic” about the brand.

It doesn’t matter if you rock into the dealership with $2M in cash, if they don’t like the cut of your jib they simply ask you to leave.

So how do these brands get away with treating their high net worth clientele so badly?

Because they don’t just make their products exclusive, they also pair their brand with the authenticity of craftsmanship and visible consumption.

Craftsmanship

Hermès leverages its 6-generation long history as French harness makers in its entire brand - from the carriage in its logo to the harness-like hardware on its bags.

To emphasize its dedication to craftsmanship and quality, reportedly every single item that leaves the workshop has to be inspected and personally approved by Hermès creative director Pierre-Alexis Dumas.

Visible Consumption

Ultra-luxury brands know that their famous customers are their best ads.

After all, we all want want the “beautiful people” have whether its cosmetics, fashion, or expensive handbags.

That’s why these brands are so picky about who they “allow” to purchase and represent them - this combination of Exclusivity and aspiration can be an incredibly potent mix for any brand.

The Birkin itself is actually named after French film star Jane Birkin and the Kelly is named for Hollywood (and literal) royalty Grace Kelly.

Its this combination of Scarcity, Exclusivity, Craftsmanship, and Visible Consumption that has built brands like Hermès, Porsche, Ferrari, and Rolex into what they are today - highly desirable multi-billion dollar brands.

How to Use Scarcity Like Ultra Luxury Brands

Here are a few tips to using these principles like Hermès, even if you’re not selling to the rich and famous.

As with any psychology principle applied to marketing, context and customer matter a lot.

I recommend testing how they’ll work in the real world with your specific brand before rolling them out to your entire customer base (or hiring me to do it for you).

• Scarcity: Creating a limited number of a products can not only drive demand, it also has operational and production benefits. Limited product runs can make your costs and income more predictable.

• Exclusivity: Making your products available through a waitlist or invitation-only can make them more desirable. But beware, this works with some types of customers but not others. If you have high-demand customers or easily substitutable products, this usually isn’t a good fit for a model like this.

• Craftsmanship: Higher quality products can demand a higher price from buyers (but beware, because price and demand can have a inverse relationship past a certain point… depending on your product).  

• Visible Consumption: Can you get an influencer or celebrity to use your product and talk about it? Amazing. If not, consider building Behavioral Residue into your product.

Read, Watch, Listen

• How Confirmation Bias Can Sabotage Your Decision-Making [Read]

• Email Psychology Breakdown | Bose Black Friday Campaign [Watch]

• Listen to the latest episode of the Choice Hacking podcast [Listen]

Until next time,
Jen