Recently, I had a long chat with one of our more enthusiastic forum users at HomeTheaterEquipment.com. He was looking to make a pretty significant upgrade to his system, which already packs top-of-the-line Krell, Revel and Transparent products. It’s an awesome system, but his subwoofer is ten years old and not really kicking the kind of ass that he wants. We talked about the idea of getting two subwoofers and what brands I recommend. One of the brands that I suggested was our client SVS, which is run by the former head of a top regional retailer, but the company sells its value-oriented speaker products direct via the Internet. My forum buddy bought two subwoofers from SVS and just fell in love with the customer service. SVS’s tech support worked with him on settings, placement and levels to get the best performance at no extra cost. The company stresses its “customer bill of rights,” which among other things offers a no-hassle, 45-day return policy with free shipping. To quote that ugly-ass guy from the Vonage commercials, that’s “crazy generous.”
Despite the success my buddy had buying a new product online, growth of the specialty AV business also needs traditional, regional retailers to succeed in order to promote the business. Unfortunately, things have been a little rocky on that front. National chains like Tweeter, Ultimate Electronics, and Circuit City are gone, with few companies outside of Costco and Wal-Mart filling the void. Specialty AV is based around an added-value experience that often includes a demonstration, educated salespeople, and much more. Online retailers woo customers with killer value and equally killer customer service, while many brick-and-mortar stores struggle to compete with competitors ranging from warehouse stores to online players like Amazon to big-box stores like Best Buy and Magnolia. Is brick-and-mortar AV doomed at this point? Some think so, but I am not among them. However, I do think that changes are needed to woo back customers. Here are some suggestions on how traditional AV stores can get consumers back through the doors for years to come.
1. Invest in the Best New AV Gear
Too many high-end dealers are severely risk-adverse today. I don’t care if XYZ Audio is owned by a Baby Boomer who doesn’t want to invest his “retirement” in the hottest new gear. That’s the type of behavior that gets consumers to buy their gear elsewhere. Show Ultra HD. Bring in a Red Ray player/server (when they finally ship). Get the Sony UHD server on the showroom floor the day it comes out. Have a THX or ISF calibrator get each and every HDTV on your “floor” calibrated so that you can show people the difference. How about showing, say, a calibrated and non-calibrated Panasonic 60-inch ST Series plasma side by side? Run the same material from a dual-output AV preamp or receiver and show customers what they get when they tweak their sets to perform at their best. Internet retailers might be able to win on price, but they can’t do these types of in-store demos.
Wanna know why audiophile gear is so expensive? In part, it’s because dealers demand high margins, but companies also “floor” their products – meaning Joe Blow Audio Labs not only has to build a pair of $10,000 speakers, but has to ship them to XYZ Audio and wait until XYZ sells a few pairs before Joe Blow gets paid. Internet-direct resellers don’t have this overhead and can often offer better margins. XYZ Audio should buy products at the best possible prices and offer competitive values from actual blue-chip A-list brands right on the showroom floor. They should invest in acoustically-treated rooms that look like their clients’ homes – rooms that don’t make women want to run away. Partner with an interior designer to help make the retail showroom look fantastic, while tastefully integrating equipment into the décor. Gone are the messy equipment racks and walls of speakers. People with money don’t get compelled to spend by messy displays. Remember, you don’t have to show every speaker in the line in order to sell the line well. Perhaps keep the other speakers and products in a staging area that can be a little messier for specific demonstrations, while keeping the showroom neat.
2. Build Actual Community with Your Customers
When I was a teenager who was learning about high-end audio, a buddy’s dad took us to dealers like the legendary SoundEx in Abington, Pennsylvania. On Saturday mornings, there were a dozen or so serious buyers in the store, talking audio, buying magazines, sifting through audiophile CDs and interacting with the sales staff. New gear was being auditioned. Systems were being tweaked, and fun was being had. This was long before social networking, but it was definitely social. Customers helped other customers with gear decisions. It was very organic, even if the doughnuts that the sales guys brought in were bad for you.
How about getting a trendy food truck to come and cater for a dealer’s best clients on a weekend day? How about throwing a Sunday football party to watch the local NFL game scaled from 1080i to UHD on an 80-plus-inch Sony, LG or Samsung set? How about booking a wine tasting with a local restaurant and co-marketing to its mailing list? How about moving your UHD set into the men’s locker room of the top country club in town for the final round of a major like the Masters, U.S. Open, or British Open? What rule says your showroom floor is the only place you can do a demo? Why not pack up audiophile components and go on the road to do demos in your Top Ten clients’ audiophile systems? Even if they don’t buy, you get some good face time with them and show them that you care about their business.
There are lots of people with the means to buy high-end audio and video that never venture into a stereo store. How about bringing them a unique experience, as well as inviting them into your community?
3. Verbalize the Quid Pro Quo
XYZ Audio should ask potential clients what needs to be done to earn their business. It’s not an unfair request. Customers know that it costs money to hire people, keep the lights on, and floor products. What can the dealer – as opposed to the Internet, Costco and/or Best Buy – do to earn the customers’ business?
What if XYZ Audio created a very simple rewards program? Nothing too fancy. What if, for every $10,000 of referred business, a loyal client gets X dollars to spend on new gear or money donated to a local charity or something cool like that? Local charities also have a lot of good will and can likely cross-market, thus bringing more people to the dealer while making the local community stronger.
4. Ban Audiophile Music While Embracing Music in HD
We discussed the importance of demonstrating video in Ultra HD (or scaled UHD) earlier, but how about a store-wide ban on crappy audiophile music? No Tubular Bells or Jazz at the Pawnshop (unless the customer really insists). Play music that is artful and soulful in a way that creates an experience you can’t get from an online shopping cart. Try out hot, new sources from HDTracks.com or Blu-ray. Playing high-resolution music from artists ranging from Miles Davis to Metallica to Madonna, you can actually use the power of platinum records to get customers excited about audio when they come in the door.
XYZ Audio would be well served by being able to show consumers how they can manage their media easily, using servers ranging from iPads to Roku boxes to Kaleidescape servers. Not only do customers want the ease of use, but they also are likely to hire the dealer to help them with labor-intensive and profitable projects, like ripping CD collections or getting Blu-ray movies distributed to every room of the house.
5. Offer Aggressive Trade-in and Recycling Programs
One of the things that sucks about audio is that – unlike watches, fine wine, exotic cars, and even women’s shoes – this is an “or business,” as opposed to an “and business.” If you are a watch collector, do you sell your Franck Muller watch to get a Patek Philippe? Likely not. Does your wife trade in her Manolo Blahniks for her next pair of Jimmy Choo‘s? Not a chance, sir. On the other hand, if you own a 200-watt Mark Levinson amp, do you sell it to get a 300-watt Krell? Most do when it comes time to upgrade.
Years ago, at Cello Music and Film Los Angeles, we had a program that allowed clients to upgrade from our pretty expensive “entry-level” gear to our really expensive reference products. The deal worked like this: you had one year to get every penny of what you paid for your entry-level product toward reference-level stuff. It was one hell of a motivator, in that the guy with the Cello Duet 350 power amp might want the Cello Performance II class-A monoblock amps as the next upgrade. If the first investment yielded 100 ROI toward the upgrade, then the customer looks smart.
I am not suggesting that it makes sense to offer a dollar-for-dollar trade-up program for everybody or every deal, but how about for a new customer? Earning new high-end audio business is a good thing, and Audiogon.com can’t compete with that type of trade up, even if XYZ Audio is going to sell the new client’s gear on Audiogon.com later to finish the transaction. What if clients who have spent $50,000 or $100,000 (the dealer can pick the number) and who make one purchase per year above $1,000 get the ability to trade up in a year? This client has proven that he or she is worth the support, even if a deal isn’t as fat as a dealer might like. United Airlines would rather sell you an $11,000 business-class ticket from LAX to Heathrow, but they will let you use miles to keep you loyal while making money from your United Chase Visa card and keeping you loyally booking your domestic travel on their airline. “Your flight crew and in-air staff know you had a choice in buying your audio and video components today, and we’d like to thank you for flying XYZ Audio …”
Now Have Your Say …
Where do you stand on brick-and-mortar AV dealers? Should they all go out of business, or could they earn your business back? What do your local dealers do well, and what do they not do for you? It’s okay to name names for both good and bad in the comments section below.
How have your experiences been with buying Internet-direct, as opposed to via big-box stores like Best Buy, versus specialty AV stores? What method do you like best for each product type?
Feel free to comment below, as many AV dealers read these articles. It’s important that we open a dialogue.
By Jerry Del Colliano, HomeTheaterReview