Wooing the super-rich
Saturday, 25th May, 2013Luxury brands are joining forces to maximise their haul from Australia’s small but lucrative pond of high-net-worth customers, via lavish events a world away from the hard sell of the showroom floor.
It’s a concept known as affinity marketing - the selling of complementary products to the same target market - and works on the premise that those in the market for a top-line sports car are the same folk who will drop A$70,000 ($85,700) on a sound system or a cool half-million on a custom-built dining suite for 20.
Once a largely ad hoc affair, matchmaking between brands has turned professional courtesy of The Luxury Network, an upmarket introduction agency for purveyors of prestige products and services.
Established in the UK in 2007, TLN has chapters across Europe, Asia and the Middle East. It set up shop in Australia in July 2011. Two years on, the group has 100 members, selling everything from supercars to artisan chocolates, to a target market of about 150,000 cashed-up Aussies.
Companies pay between A$8000 and A$30,000 a year to join the Network. The fee gives brands an entree to functions where they can showcase their wares and discuss mutual marketing opportunities.
The financial services sector classifies individuals with investable assets of A$1 million - excluding their home - as high-net-worth, while those in the A$20m-and-up category are deemed ultra-high-net-worth.
TLN Australia managing director Lynne Wyatt says while the member companies may also sell products that Joe Average can afford, they need to have a hefty percentage of clients who fit the high-net-worth criteria.
Unlike the hoi polloi, these well-heeled folk rarely decide to buy something because they’ve seen it advertised on TV. Rather, personal recommendation is king, particularly if it’s from someone from the same social milieu.
Working together to host upmarket entertainment, events and experiences enables vendors to tap each other’s databases and reach a larger pool of qualified customers.
“It’s all very subtle” Wyatt says. “It’s about having a presence, not being in your face. I look at The Luxury Network as a giant jugsaw puzzle. Every member is a piece of the puzzle. Who you partner with is how the picture will look.”
Sometimes the picture looks like a cooking class for a clutch of key Deloitte clients at the Gaggenau showroom. When supercar club Ecurie25’s customers are invited to get fitted up for some Titleist golf clubs while they inspect some hot new wheels, it becomes a study in cashed-up, testosterone-fuelled consumerism.
The relationship-based sales approach makes sense to bespoke furniture maker David Boucher, whose handcrafted, one-off timber pieces grace the mansions and boardrooms of billionaires around the world.
Boucher and Company has a workshop in Toowoomba in rural Queensland and a gallery in Sydney’s Castlereagh Street but, swanky shop-front notwithstanding, 99% of custom comes via word-of-mouth, Boucher says.
He says showcasing his work at events staged by TLN members such as Rolls Royce and Cartier opens the door to further high-end sales - say, perhaps, the jewellery buyer who wants a beautiful cabinet to store special occasion pieces.
The “you bring your customers and I’ll bring mine” approach has also found favour with Bang & Olufsen.
Since joining the Network 12 months ago, the premium audio supplier has been an in-demand party partner for the likes of Audi, white goods manufacturer Miele and Ecurie25.
B&O’s general manager for Australia and New Zealand, Julian Kipping, says teaming up with like-minded brands helps the marketing dollar stretch further.
Some customers spend up to $70,000 having sound systems installed in their homes. The sales can take multiple meetings and several months to lock down.
Invitations to attend swanky events can keep customers engaged with the brand for the following five years, until they’re ready to upgrade again.
“Sales is all about trying to provide people with experiences” Kipping says. “Long gone are the days of enticing buyers with a bit of wine and cheese … these people can pick and choose what they go to.”
Naren Sivasailam, a senior analyst at IbisWorld, says eschewing the hard sell is key to maintaining brand cachet and a big part of why affinity marketing’s soft-sell schmooze makes sense for luxury players.
“Their air of exclusivity is extensively guarded” he says. “The idea of spending A$20,000 on a bag - you have to be very crafty with marketing and brand equity for that to work.”
