LOS ANGELES, CA - What's the best way to key into the luxury market and begin acquiring clients who can afford top-of-the-line products and one-of-a-kind designs?
According to Leonard V. Casey, MBA, who spoke at the recent Luxury Kitchen and Bath Collection event in Los Angeles, implementing a "Preferred Client Business Strategy" can help designers and dealers build a client base of more upscale clients. This strategy revolves around by targeting the right clients, engaging in effective business strategies and maximizing referrals from the types of clients most likely to bring highly profitable jobs to your business, he noted.
Casey, who spoke on a panel addressing business strategies that draw the most affluent clients, suggested that the key to success is zeroing in on Baby Boomers, the generation that possesses the largest disposable income in history. Couple this with the fact that aging Boomers have fewer and fewer obligations as their children grow up and leave home and the growing desire for secondary homes, and it becomes clear that Baby Boomers comprise an economy-proof center for a designer's business, Casey believes.
He pointed out that where younger generations can easily postpone remodeling when an unfavorable economic climate or financial concerns intrude, 55-year-old empty nesters can't it's their moment, and they have to go for it.
So, even if there is a decrease in the low to middle segments of the kitchen markets, the high end will continue to stay strong. And in today's low-mortgage-fueled remodeling boom, the upper end of the market is growing more quickly than the mainstream.
The other factor in Casey's recommendation to kitchen dealers to focus on older high-end customers is the fact that the lower the budget, the more the customer wants control of selecting the products and establishing price point. Busy upscale consumers, on the other hand, are more comfortable with letting a designer shepherd a project for them which means less time spent hand-holding and educating a client about real costs versus their imagined ideas about what they think a kitchen should cost.
Casey's strategy for successfully building a base of upscale clients centers on increasing the size of an average sale, as well as on improving the closing rate by asking effective qualifying questions. He cited statistics which show that people who entertain frequently are the most likely purchasers of kitchen products and remodeling. And, unlike more intrusive questions about income and home value, "How often do you entertain?" is a casual question that can appropriately be asked early in one's communication with a potential client.
To get top clients, Casey also recommended presenting an excellent business operation that stays on top of technical stills, avoiding installation mistakes that cut into profit, participating in one's community, learning to communicate product capabilities, and staying in contact with the current client base to obtain a "branching" effect of referrals.
"When a market expands, all segments of the market tend to grow in a similar manner," said Casey. For referrals, this means, great customers will refer other great customers, whereas difficult clients will usually refer their equally difficult friends. "Don't forget, you have a right to be selective," he added.
Other suggestions he offered for dealers and designers looking to build a preferred client list included the following:
- Review your current client base, and focus on your best sales, including largest overall sales and sales that produced the highest gross margin.
- Likewise, focus on your best work, aesthetically, and the jobs which inspired the warmest client relationships.
- Take a close look at the clients who you believe do the most entertaining, as these can be great referral candidates.
- Make a list of the clients for all of the above jobs, and put
them on special VIP list. These will be your preferred customers
who should be privy to special events and the like, as they are
most likely to bring in the kind of business that will be most
valuable to you.
Casey concluded : "Remember, when you're not selling your preferred client, someone else is."