In the past few weeks I have been talking with some pretty serious audiophile customers, mainly heavy users from Audiogon.com, about the state of the specialty audio business. There is no question that many value-based buyers look to Audiogon.com for deep bargains on used gear but that's no different than an exotic car buyer looking to eBay.com for that perfectly priced Ferrari in an out-of-market dealer. The world of luxury goods isn't as regional today as it is national or in some cases international.

Additional Resources
• Read more of our original content in out Feature News section.
• See more AV dealer news from HomeTheaterReview.com.
• Learn about how you can build a theater on a budget from Andrew Robinson.

What shocked me was the anger that both consumers and dealers have towards each other, especially on the high end segment of the market. Retailers ask why they should spend the money to show expensive audiophile and videophile products when the in-the-know buyers in their area simply go out of state to save tax or buy products used on Audiogon. When asked why the buyers are on Audiogon.com instead of at their local dealers, consumers cite a litany of complaints including: snobby dealers, lack of demo equipment, lousy trade-in programs, high sales tax and poor overall value in the gear that they buy today versus just a few years ago. They feel fully justified in traveling out of state to buy product that is very expensive, to save on tax. They feel no obligation whatsoever to support their local dealer as they think the dealers don't really offer a very fair value in return.

This is what a shrink would call a toxic relationship.

The specialty audio-video business has always been about relationships and personalities. Warehouse stores and uncommissioned salespeople in blue shirts know nothing about this. Circuit City literally blew their entire business by dumping their commissioned salespeople, as it was those few producers who closed when others stood around like clerks. Today, clerks are all you get at all but the best AV stores, which makes for a tough buying experience.

What Can Dealers Do To Lure Back The Real Enthusiast Buyers?

1. Buy back higher end products from local consumers when they are loyal to you.
For example: if you have spent $10,000 or more, lifetime in ABC Audio-Video, then you get the premium trade up program. That offers market level trade-ins without the hassle of selling product on Internet sites. Let the dealer blow gear out but ideally they should be selling to their best, most high end clients locally. If the product is tired like an old CRT big-screen TV - recycle and remove it like the mattress company does. Make life easy on the consumers when they reward you with new business.

2. Price products fairly.
Don't support manufacturers who jack up retail prices to make up for their inability to keep up with technology. Promote high value, high performance products just like consumers want to see. The Internet-direct brands sell on value and performance; thus so should the specialty dealers who also have the chance to do an in-store demo.

3. Extend warranties for consumers.
If somebody buys an entire system or meets a certain lifetime spend level with a store - offer to cover the repair costs if a product goes bad beyond the manufacturer's warranty. If an amp has a 3-year warranty - extend it to 5-years. Offer free pick-up and return service on top of that in the event of a repair. Internet dealers and retailers are giving "white glove installation." This is taking that idea one step further and sticking it to those who think selling extended warranties is a good long term strategy. Get a higher sale price, keep the sale local, sell quality product and the dealer will be just fine while the consumer is very happy.

4. Sell service over commodities.
For HDTVs bought via a specialty retailer - give an ISF calibration for free if they buy the TV from you. For audio - hire one of the top audio gurus (Bob Hodas, Keith Yates, Tony Grimani) to come to town two or three times per year to work with your clients. Bring room treatments, EQs, cables and new gear to the top clients' homes so that they can get better performance. They will spend big time to support you if you deliver high value in return.

5. Ask consumers for their business.
Be honest with a consumer asking for a 30 percent discount that you literally cannot keep the lights on if you give such deep discounts. Explain to them what it costs to "floor" high end products and that without their local support it simply isn't possible to support the high end buyer.

Learn what audiophiles and videophiles can do on Page 2.