Roundtable: How to Sell Luxury Goods in a Down Economy
Recently, CustomRetailer had the opportunity to speak with several leading executives, covering a wide range of custom electronics categories, on the not-so-simple topic of selling high-end custom electronics in today’s market.
The following comments and suggestions on up-selling in a tough economy are from Pete Baker, Vice President of Sales and Marketing, Remote Technologies, Inc.; Mike “Sparky” Detmer, Vice President of Sales and Marketing, Niles Audio; Bill Johannesen, Director of Sales and Marketing, CodexNovus; and Manfred Freiberger, Senior Account Executive, dnp USA.
CR: With potential customers seemingly reluctant to make investments in luxury goods, what would you consider to be the single most important technique for selling higher-end products in today’s market?
Detmer: First, you must understand what luxury goods are and what customers value most. Luxury goods are defined by Master Card as those goods and services that make up the top 1percent in prices. That being said, it is important to understand that when selling custom-installed audio video equipment one must segment the market and take a share from other luxury items, such as jewelry, travel, new cars, etc. You do this by framing a salient value proposition that resonates with these homeowners. It could be something like this: “As opposed to other luxury items, a custom-installed A/V system gives you something to relax with at home; something to enjoy when you entertain; and something the kids would rather use than going out.” But the ultimate way is through third-party referrals. The power of a customer recommendation should never be doubted.
Johannesen: Micro-targeting and personalization. Business is down, it’s not gone. Customers for your products are out there, they are just in smaller numbers and harder to find. The “Get-out-the-vote” activity from the recent presidential election has driven the science of targeting customers by both demographic and behavioral data to a new usable reality. This allows sniper-like targeting of pre-qualified prospects with extremely relevant, personalized e-mail and direct-mail marketing messages; driving them to your web site for engaging, benefit-oriented messaging with an invitation toward competent, authorized local dealers.
Baker: With the housing market taking a direct hit as a result of the downed economy, consumers are looking to cocoon and enhance their current homes, in lieu of moving. Much of the enhancements being made, include incorporating or upgrading the technology in their home. Given the amount of new and exciting home entertainment and automation products on the market, one of the most important features to focus on selling (higher end) technology is user interface and the experience. Today’s homeowner wants quick and, more importantly, easy access to television, music, movies (entertainment) and home automation.
Freiberger: To push harder, and explain the value for money factor. It’s important not to compromise now because customers might regret a compromised solution later. Demo the product, show differences between the different levels of quality. In our business, seeing is believing. People see differences and remember them. They won’t settle for second or third best. Continue to combine excellent quality with excellent service.
CR: Conversely, what would you consider an incorrect approach?
Johannesen: Item and price. This is a method for commodity products and has no place with luxury goods. Service, solutions, convenience and a superior experience of purchase, ownership and use are what will drive their investment.
Baker: Discounting goods or services. Instead market the value-added aspects of working with (or buying from) a specialist: access to specialty or professionally grade products, the benefit of working with professional, knowledgeable staff and higher levels of service and support—pre- and post-sale. All of which are afforded to the consumer when working with a specialist. One major mistake would be turning to mass market products, which are often discounted in stores and online. Utilizing professional-grade products and services offers additional value to your business that big-box retailers can’t provide customers.
Freiberger: A common mistake is to reduce pricing! Don’t’ go cheap in any aspect of your business. It’s important not to compromise the value of your service and products.
Detmer: Some approaches unlikely to succeed include weak value statements, focusing on features and not customer benefits, and discounting.
CR: Do you think the potential luxury customer’s expectations regarding quality and performance have changed?
Baker: I think all customers expectations have changed. More than ever before, today’s customer has an interest in enjoying the exciting products and technologies which are now available. The bar has also been raised with these new technologies: flat panels, HD satellite, Blu-ray. The consumer appreciates the higher quality of content which is being delivered today. They are anxious to incorporate this new technology into their home and lifestyle. The consumer also now places a higher value in the user interface to access the technology and make the experience more enjoyable. In the past, the homeowner may have settled with the hassles of dealing with 2-3 remotes in a home entertainment system. This kluge type of control is no longer acceptable or on par with the quality of the rest of the experience.
Detmer: Customers always expect high quality and performance! Let’s face it; have you seen any really bad TVs lately? To sell luxury A/V gear you must focus on the user experience and the control interfaces. Specify more speakers, as opposed to less, for greater and smoother sound coverage at uniform volumes. Configure the in-wall touchscreens or wireless hand-held remotes with favorites to deliver “one-touch” to music or movies. Remember, customizing the system to match the customer’s needs is always more powerful than just chanting 1080p.
Johannesen: Absolutely! They are tired and frustrated with poor quality and service in their financial matters, travel, big-box shopping, government, etc. Consumers at all levels are seeking a trusting relationship with their providers—someone who does what they say they will do! They’re done with unfulfilled promises in service and functionality. They desire integrity and authenticity from a single source, a general contractor if you will, for their home technology needs. It’s about ease-of-use, reliability, workmanship and integration with their environment. You want to earn their garage door opener! It shows you’ve gained their trust, respect and the ability to come right inside the house when they are in need.
CR: What role does customer service and technical support play when selling high-end products in the current market?
Freiberger: Customer service is extremely important, if not the most important aspect of your business! Quality and service go hand-in-hand.
Johannesen: The best time to secure a customer for life is when your customer has a problem; this is the make or break point with their loyalty to your brand. With a rapid response, heartfelt empathy and a smooth resolution exceeding their expectations, you’re on the way to building long-term customer advocacy.
Detmer: Customer service plays a huge role in custom-installed A/V systems. Dealers that provide their customers with a hot line and system check-ups always prevail and get more referrals.
Baker: Customer service and technical support are absolutely critical in the luxury market. High-end goods and top-level customer support are synonymous. The level of personal attention and service you provide luxury customers should go hand-in-hand with the level of luxury products you offer.
CR: Finally, what is something your dealers have done to successfully up-sale their clients?
Baker: Our dealers have been successful by providing specialty, professional-grade products, which are only available through professional systems integrators. This adds an inherent value to their business by affirming the value in working with a professional CE provider. By refusing to compromise on the quality of products, services and support they provide, they have brought value of their business.
Detmer: Niles dealers have a built-in, up-selling tool when they specify our ceiling mount loudspeakers with Directed Soundfield technology. These loudspeakers feature a twist-and-lock mounting mechanism that facilitates instant speaker change-out or replacement. Our dealers frequently take the next model up in the line to their customers’ home to demonstrate the difference on site with little or no extra effort. Typically, this results in an up-sale—and higher customer satisfaction in the process.
Johannesen: Providing superior demonstrations that focus on the products’ benefits to their lifestyle. It’s not about the gear; it’s about access and enjoyment of their movies, music and photos. Our product is merely the vehicle to facilitate the customers’ lifestyle enhancement. That needs to be first and foremost in the presentation, installation and ease-of-use long after our dealer hands over the remote control.
Freiberger: The key to their success has been refusing compromise on quality and service even in tough times. CR