When Your Goal is Selling Premium Products, Offer a “Marketing Line” As Well

What a $150K+ sound system can look like. Includes delivery, home installation, and tuning, of course.

A marketing line isn’t a phrase, it’s a product line that you need to create to draw customers in.

This past weekend I attended The Home Entertainment (T.H.E.) Show in Costa Mesa, CA. The name is a bit misleading because what is primarily showcased there is Hi-Fi audio equipment. Unlike more consumer-oriented shows, like the Consumer Electronics Show in Vegas, almost all the audio products at T.H.E. Show are extremely expensive. By expensive, I mean, this gear is not what you’ll find at Best Buy or Costco.

No, this isn’t your grandfather’s record player…

At the top end, there were vendors showing speakers that cost more than a luxury car, music steamers that cost more than college tuition payment, and a turntable (yes, that’s a record player) that costs more than a kitchen remodel. Then there’s all the bling that goes with it: cryogenically treated garden-hose-sized cables, mystery boxes that isolate unwanted noise, and lots of lighted things that shimmer in the dark. It all does matter to the experience, because everything sounded amazing, to my ears. The only thing was the prices…

For most of the dealers and vendors, THE show was just an OK show. However, a few businesses completely sold out, to the point that they didn’t even need to pack anything up. Invariably, those were the ones selling more affordable products. Now, it’s quite possible that the vendor who sold a single high-cost amplifier may still have come out ahead profit-wise, but there is a downside to that windfall as well. This isn’t just about the profits, it’s also about the customer base.

The high-cost premium product seller now has one new customer, who may not have much money left over for another purchase later. The value sellers on the other hand, reached far more customers who believed they got a great deal, information that they will pass on to others. So how does a premium product seller do what the value seller did without compromising their product line?

This isn’t the kind of Mac you buy at the Apple Store, but at just $15,000 this 350W McIntosh amp is considered a bargain in hi-fi, and it has the brand-name recognition to back it up.

The Root of the Problem

What premium product vendors expect is that the brands that they offer include a lower-cost, value line. They hope that the premium vendor’s low-cost products will bring in customers who don’t have deep pockets, who may then progress to more expensive higher-end products later. That is the hope.

The problem with this approach is that the vendors expect the brand name to sell the product, rather than doing the work themselves. They will continue to focus on the high-cost product customers because that is where the big margins are. This doesn’t always work, and here’s why.

This cute little number is from Steinway Lyngdorf (yes, the world-famous piano people). It had unbelievable sound for its size, but that magic comes at a steep price of $21K+ for a pair.

Customers aren’t just buying the brand. They also want to believe that this product is special, even if it is a brand name. They’ve done their online research, and they know that this is the entry-level; they know that a C-class Mercedes is not an S-class. They also know that they can typically find a similar value-product online on their own.

However, what they can’t find online is the buying experience. They need to be assured that this purchase is still a good value, a good investment, and that they can depend on the product over time. That buying experience has little to do with the brand, and much more to do with the relationship that the vendor creates with their customer.

More often than not, premium product vendors only take the time to build that experience with customers who buy premium products. They don’t spend the time cultivating customers who buy value products. It’s not that these vendors are bad people. Rather, it’s that selling premium products is a very different process. At lower price points there are more customers, there is more competition, and the ROI just doesn’t seem to be there, so vendors don’t specialize there if they can avoid it.

If the brand doesn’t sell itself, then the vendor has no choice but to continue doing what they have always done. They will continue to do what they know well: focusing on just high-cost items and the customers who can afford them. It pays the bills and it’s familiar.

Unfortunately, that is also why they often have just an OK show.

A Different Line of Products and Services

What if, instead of relying on a value line from the brands that they carry, vendors were to create their own lower-cost option? What if they could do this using even the higher-cost items that they prefer to sell? What if this could all be achieved at low-to-zero cost to their bottom line?

To understand how to do that, we need to take a closer look back at what the value-product sellers did differently at the show. There were several things that stood out to me, as well.

1. Their products were showcased as bundles, but priced individually.
   So, for example, a whole system might be expensive when assembled, but the visitors did not see that price. They only saw the lower, per-item price.

2. They were showcased in two rooms.
   One room was louder, with more fanfare, and typically had a line of people waiting to sit and be amazed. The second room was similar with almost identical products, but the mood was just a little more subdued. Not a lot, but a little bit.

3. They greeted everyone equally.
   They were friendly and helpful at all times, they remained energetic, and this remained so at the end of the day, and the end of the show. They typically had more people on hand to do this, even family members, so this felt more like a group effort which appeared more down-to-earth.

4. They offered products almost at-cost.
   Some offered show-special prices and they also offered bundle discounts. Prices were clearly marked on the items which avoided unnecessary apprehension

5. Surprisingly, they did not ask for contact info.
   Some had sign-up sheets, but the emphasis was on them handing out clear, simple fliers and marketing materials. They never ran out of those, and never let on that they might. The emphasis was on making the visitors feel welcome in a low sales-pressure environment. They let the product demo do most of the talking and did not spend too much time in long demo talk.

6. They followed up in a friendly way.
   Some of the vendors with whom I left contact info, reached out the next day. They did so, not with a sales pitch, but with a genuine thank-you-for-visiting type of message. I should emphasize that the only vendors who did reach out were the value product vendors.

7. Looks mattered.
   The rooms were well-lit, not too bright, and lights were focused on the gear, but it wasn’t overdone. The rooms were not Zen or too pale, instead opting for a bit of mystery – black/dark colors were the most common for the gear. Rooms were clean, but not so that they looked deserted or boring. The gear was simpler, brands/styles matched, and the cables were neat. Nothing seemed extravagant, ostentatious, or appearing out of reach – sources/amps matched speakers in price, look, and performance. It just felt approachable.

SVS, a manufacturer of more affordable gear, took a simpler approach, playing a movie that even kids will enjoy - this setup could be a typical living room in your home… and that’s the message.

These are my observations and I’m sure others will have different views. I also realize that shows are a different scenario than doing 9-5 business in a storefront. However, there are some important lessons above. Perhaps the most important one is that making the visitors, all visitors, feel comfortable and valued is very important.

What if premium vendors would do the same thing in their 9-5 business? Give customers the low-pressure high-wow treatment, no matter who they are. While they are there, also offer one product or bundle at cost. Don’t just offer it on Xmas or Black Friday, either; offer it all the time - make it a regular option.

Now many vendors might think that offering products at-cost is too expensive. If so, then only offer a few of these per month, if you must. Before you do that, though, consider if it’s even necessary. Try it out and see what happens. While selling at-cost is an expense, consider it a marketing expense. Write the difference off on your taxes, if your accountant can document it properly (P.S. I’m no tax accountant).

Premium tube gear can be displayed in a way that draws customers in, like these simple but beautiful AGD Productions amplifiers, even if it is more expensive because it’s more about the experience than the price.

The important thing is that this at-cost product or service becomes a regular marketing tool. It should become something that defines your business, something people remember you with, and something that sets you apart from the competition. The goal is not so much about generating revenue, but to draw in new customers. It is to build up that customer base, and hopefully, those customers will share their positive experiences with others. As a matter of fact, instead of calling it a value-line, it should be called a Marketing Line.

Stop relying on your suppliers to do this for you, even if they are a recognized brand. Suppliers and manufacturers don’t have the insight that you have about your customers – they have much more general or large-market perspectives. They don’t know what you know about your specific customers, where they live, what their specific needs are. They don’t have that personal connection that you have with each and every one of them.

This is the unique value that you bring to the products and services that you sell.

This isn’t just about Hi-Fi

It may seem that this is only going to work for Hi-Fi, but it is a much broader point. Most businesses want to sell premium products. It is where the larger margins are. It’s what we read in Entrepreneur Magazine, and it’s all that the sharks on Shark Tank want to hear. It’s a mantra in business school, and it’s considered a measure of success.

This goal is the same for hi-fi manufacturers, as it is for personal coaches, graphic designers, candle vendors, artists, financial advisors, public speakers, chefs, and every other business. Everyone wants to get to sell premium products and services. The question is how to get there.

If you only rely on your products to sell themselves, or you put this on the back of the manufacturers to figure out with value-line products, then you are missing the point entirely. You can do this better than them. You need to create value in the products and services that you sell, no matter what business or industry you are in, so create your own Marketing Line.

It comes down to the customer experience, something you are most uniquely qualified to design, create, and make available to them. Take a look at the products that you sell, even the premium ones. Is there one, or a bundle that you can create, that you are willing to sell at-cost?

If so, use that as the foundation for developing your customer/client base. Build the customer experience around it. Those customers who buy in, will come back when it’s time to upgrade to something better. They will see you as the one who provides a good value even with premium products. When they do, they won’t mind spending a bit more on a premium product because customer trust has already been established – the hard work is done.

One more picture… The techno music playing on these Børresen C3 speakers from Denmark was like being in the club, and it was all coming from that little streamer with the red lights in the middle. Of course, at $38K+ a pair for the speakers, and something comparable for that streamer, you should expect nothing less.