Published On: March 7, 2011

AV Retailers Aggressively Push For The Upsell Despite The Down Economy

Published On: March 7, 2011

AV Retailers Aggressively Push For The Upsell Despite The Down Economy

HomeTheaterReview.com publisher/editor Jerry Del Colliano weighs in on the various methods audio/video retailers are employing to move product, even in an economy where most consumers are feeling the pinch and are consequently reluctant to spend money.

Bryn_mawr_stereo_store.gifIn 1990 I worked for a mid-level retail chain called Bryn Mawr Stereo that had about 18 locations in the Philadelphia, South Jersey and Delaware area. Long after I left for music school in Los Angeles, the chain got acquired by Tweeter and then went out of business. However, during the few years I worked there the chain was a local force. Our General Manager, Richard Glikes, who today is the founder of the HTSA audio-video buying group used by many AV dealers, demanded chain-wide that his sales people try to upsell their leads when they walked in the door.

Additional Resources
• Find more original stories like this in our Feature News section.
• Read about similar problems with AV manufacturers in the article, Whale Hunting in the Desert.

Asking a customer’s budget was not only fair game – it was a key element of technically strong selling – and everyone did it. If a nicely dressed client came into the store looking for entry level Polk speakers and a Yamaha receiver and I saw him drive up in an E-Class Mercedes, I would be remiss not to show him NAD, KEF and Celestion as higher end solutions in the same basic product category. The rule of thumb was to see if you could inspire a customer to spend roughly 20 percent more than their initial budget without blowing the sale during that recessionary economy. While it wasn’t always easy to upsell the client, the last thing we wanted Richard to find out about was how we were irresponsibly walking our customers down the street to Hi-Fi House or Circuit City. If they walked in and wanted to buy – you were expected to close them. Plain and simple.

Today, I am hearing more and more stories of brick and mortar dealers all over the country pushing the upsell to levels that would be out of bounds in a good economy and downright foolish in these trying economic times. One HomeTheaterReview.com reader from Vienna, Austria called me on Skype to discuss his system. He is an IT executive for a major cellular carrier and has built one of the most sophisticated networked media systems I have heard to date. He has his Euro-satellite-DVR recording to a Raid 5 configuration bank of hard drives where he also keeps his uncompressed music, photos, home videos and other media. He streams all this both wirelessly and via CAT-6 throughout his house while backing up his media on the cloud. Networks are what he knows and he could teach most AV dealers a thing or two about how to manage media in a home.

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What he needed to augment his networked media system was either a top of the line soundbar like the Yamaha YSP-4000 or a modest 7.1 receiver with a pair of speaker so that he could grow his system. Two of his friends recommended a retailer in Vienna and he went to see them with a 1000 Euro budget (around $1,400), which is perfectly reasonable for his system needs. The guy needed a fix as he loves AV but this budget wasn’t the end of the game – it was just what he could spend today. When he get gets to the retailer – which by the way, isn’t a pure audiophile salon – they start him off with products that cost 8,000 Euros and go up from there. Perhaps he was dressed too well, wore the wrong watch or the salesperson loves walking lay-down sales out the door, but that’s not the Richard Glikes 20 percent upsell. This type of move is like taking a car buyer who walked onto the lot looking for a VW GTI and putting him in a Maserati Granturismo for his first test drive. How the hell do you bring a customer back from that test drive to buy the car he can afford?

Obviously, the salesman lost a sale that was ready to happen that day, otherwise I wouldn’t have been on Skype trying to help this guy build a plan for his system. He went for the gusto the same way many high end AV companies price their products comparably to a Marquis Jet Card or a used Ferrari when value oriented products like Wyred 4 Sound, Oppo, Orb, Aperion, Paradigm, Legacy Audio, Noble Fidelity, Emotiva, Benchmark and many other smartly-priced products are selling like hotcakes despite the horrible economy. Ultimate performance appeals to clients but value always sells. Always.

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People don’t like being taken advantage of in any economy but they do like being sold to by a professional who knows his or her trade but also knows their customers’ limits. For example, there is an Italian restaurant here in West Los Angeles who is famous for pushing black truffles when they are in season. For those who don’t know, black truffles are about as expensive of a food product as you can buy and these subtlety flavored fungi pretty much make any other food taste better. Le Cirque in Manhattan is famous for their scrambled eggs with black truffles. But black truffles cost a fortune (white truffles are even more money and taste better) and this restaurant doesn’t disclose the price. They simply come by your table and ask you if you want a shaving of black truffles on top of your pasta course. Much like a free refill on your iced tea or some grated Parmesan – the implication is that this is free. What people find out is that an $18 pasta plate now cost $54 with black truffles on top. The well-heeled patrons of this establishment tend to get fooled once with this and pay the bill out of embarrassment but on more than one occasion have I talked with multi-millionaire local foodies who, when referencing this restaurant, go into a fit of rage at how abused they were with the truffles. For me – I simply will not go back to the joint and I am not alone. Abusing your customers’ budgets – even if they “have the money” is far outside the bounds of an upsell.

Read more about the problems with the overly aggressive upsell on Page 2.
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Soon after I left Philadelphia for Los Angeles, I made my living
while in school working at the legendary Christopher Hansen Ltd.
high-end audio salon in Beverly Hills. This place was a true residence
of high end audio. It was the exclusive dealer for Mark Levinson, THIEL, Wilson Audio, Goldmund and Transparent Audio
on the West Side of Los Angeles and the demo rooms were gorgeous (some
say too pretty for real audiophiles but that’s a debate for another
time and place). We had Wilson WATT Puppies
and one of three pairs of Wilson Grand SLAMMs set up in the big audio
room, all powered by Mark Levinson electronics and Transparent
Reference cables. The room was an audiophile Mecca. People wanted to
see it. They wanted to demo it and I was more than willing to show it
to them. That is – after I qualified them for five or ten minutes.

If they were in the market for a smaller system or product, we did
that business first before I blew them away. My rule was that I wanted
to get their credit card to go through and the invoice written before
they got the demo of what was then a $150,000 audio system. Otherwise I
was going to ruin them while also ruining my sale. I also made sure to
give people a test drive of the big systems as I could put together a
Wilson WATT Puppy v.3 system including more entry-level electronics for
about $16,500. I sold a lot of those systems to clients who upgraded
and to others who referred me clients. I was able to show them their
budget, but I told them how much the truffle cost before I shaved it on
top. There’s a huge difference if you want to retain and satisfy the
client long term.

Circuit_City_logo.png

Today’s consumer electronics world is sadly littered with bad
salespeople and companies who either don’t train them for excellence or
appreciate levels of excellence when they see it. Circuit City had a
group of good salespeople in many of their stores but one day their
“suits,” while flying on one of their two corporate jets, decided that
they could spike their quarterly earnings by forcing their top
producers to give up their commissions and take salaried positions. Two
quarters later these bean-counting morons at Circuit had started a
process that quickly would take the company into Chapter 7 bankruptcy
and cost the American economy a sum total of 33,000 jobs. Brilliant. Best Buy isn’t much better as their “Blue Shirts” are unfortunately not trained to be excellent at anything. Walk into a Magnolia located inside of a Best Buy
and see if you get qualified. See if they ask you about your system and
try to get you to spend 20 percent more (they need Richard as a
consultant). You are lucky if they even speak with you at all, as their
lives don’t change if they sell you a $20,000 home theater like they
would if they were on commissions. The suits at Best Buy worry about
selling against Costco and Wal-mart
and Target. But it’s online that they should be worried about, as
Amazon will sell somebody a Blu-ray disc for 30 to 50 percent less.
They will match or beat the prices at Best Buy all day long, as they
don’t have the overhead. Online retailers also don’t charge tax for
out-of-state sales, which in California can be nearly a 10 percent
savings to start. Much like many AV retailers coming out of this bad
economy – Best Buy is in big trouble. And if I was getting back into
specialty retail – I would open a store right across the street from
the biggest Best Buy in town and have someone dressed in a gorilla suit
twirling a sign that said “Experience a $250,000 home theater before
you buy anything;” then I would qualify them first, treat the customer
like gold and get that 20 percent premium. 

Even if the client walked next door, they would remember who offered
them a Diet Coke to drink or showed them some real value and customer
support. They know who shows “people-centered interest” as Dale
Carnegie wrote about back in the day. This level of sales never goes
out of style in any economy.

In the end, the customer is always right and today they are
demanding real value. That’s not to say you can’t sell them on
something special. 373,000 people (source: Google Analytics Jan. 2011)
read this publication every month looking for the best of the best in
terms of performance and value. People like to be sold to when it’s
done right. When it’s not done right they have the power in their hands
with an iPhone,
Android or Blackberry to simply walk out of a store and buy on price.
The standard for selling professionally is higher today than every
before. The consumer is low on cash. Banks don’t lend out home equity
like they did just a few years ago and the consumer is empowered with
low-cost, out-of-state or online options that they didn’t have just a
few years ago.

If they want to truly earn the sale, retailers need to deliver the
value at a price the consumer can afford. They need to exceed the
expectations of the consumer and earn the right for the 20 percent
upsell. In the end the truffles taste good on top of that pizza when
you know what they cost, they are priced right – and you are ready to
buy.

Additional Resources
• Find more original stories like this in our Feature News section.
• Read about similar problems with AV manufacturers in the article, Whale Hunting in the Desert.

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