By no means am I writing an article that makes a convicted felon and a noted crook like Bernard Lawrence Madoff out to be some sort of a hero but all of the news of his assets being auctioned off has got me thinking about all of the things that Madoff did right in building a business, even if it was a scam. While Madoff knew full well that he wasn't buying real assets for his clients/victims, he did know that in order to keep paying way-above-market returns, he would have to have far more demand for his services than supply. With an impressive resume and loyal customers selling their friends for him, Madoff build up a hot nightclub-like demand. He had a waiting list. He had a mystique and he had (so-called) performance, assuming you were smart/lucky enough to get your money out in time. There are very few legit companies that create this level of exclusivity over a prolonged period of time. Ferrari's limited production comes to mind, especially back in the 3000-car-a-year days of the late 1990s where a 360 Modena would sell used with 700 miles on the car for twice its retail price. Patek Philippe has worldwide demand and high prices for their Swiss timepieces through controlling supply and creating a tremendous demand. A top watch salesperson can rightfully suggest that if you don't buy a Patek that you like today, it might cost 20 percent more even as a used watch. There's just that kind of demand for the brand.

To be clear Madoff was a shyster of the first order but the fundamentals of his business were based in time-tested techniques that could actually be teaching points, as the specialty AV business looks for direction in the new economy. Right now in the AV mainstream business there are a host of problems ranging from 10 percent plus unemployment, a truly deflated real estate market and a young generation of clients who think that high end electronics cost less than $500. The most important thing AV manufacturers and specialty retailers can do is to create consumer demand. Literally driving people into dealers is key to both the short term and long term success of the AV business; yet too many high end companies either go dark with their advertising in difficult times or they only will spend on research and design when what they need are new, young clients looking to buy their products.

Dealers also get complacent as in recent history: the housing boom paired with the mainstream demand for flat HDTV sets made closing big ticket home theater sales quite easy. Installers had general contractors and interior designers literally finding them during good times. Now you are lucky if you can find a contractor or designer who was booming in 2006 still in business today.

DirecTV has a commercial on TV right now that shows a family turning their friend's heads into $100 bills as they promote their referral program that sends both the new client $100 as well as the existing client the same amount. Madoff's best salespeople were his reps and client-victims who enthusiastically built the demand for investing in the fund. Third party recommendations are a powerful sales tool. If your best friend tells you that they get 14 percent annual returns on a fund and have done so for the past 15 years - that speaks very loudly. Considering the fact that home theater and home automation systems offer real world value (unlike Madoff's bogus fund) what if a specialty AV dealer or installer teamed up with a local restaurant to offer every new full home theater client a fully catered meal for 10 to 12 of your best friends? Pizzas, pasta, salads, a few bottles of modest wine and the other associated goodies couldn't cost $300 yet a good home theater might start in price from $5,000. Have the salesperson from the dealer play a new blockbuster movie in 1080p from Blu-ray. Have them demo the music server. Cue up the big game. Teach the wives how to use the remote and make new friends while handing out business cards and inviting people to do business with you. Make the experience more personally and more educating than a trip to a big-box store.

And don't be surprised to find out that when consumers are calling you for their audio-video needs that you might have a waiting list for consumers who want to have you install their theaters because as much as the big-box guys want AV to be plug-and-play, cheapie experiences - the best systems are more personal, more high performance and more luxurious. That's why consumers go to specialty retailers and or look for more up-market brands but in today's tough economy, AV manufacturers and specialty dealers have to work harder for smaller, less profitable sales. But those sales grow into bigger and bigger sales over time as the viral nature of good business and fantastic customer support works in an up economy just as well as it does in a bitter recession.