The $2,500 and Under Room - How To Sell Audiophile Gear To a New Generation of 200,000,000 Music Lov

[chrisy]

The $2,500 and Under Room - How To Sell Audiophile Gear To a New Generation of 200,000,000 Music Lovers

By: Jerry Del Colliano

Boy did I ever grab the attention of the dealers in America during these hot summer months. I have received dozens of emails from AV retailers around the country objecting to calling (in general terms) dealers "lazy" and "entitled" while calling most reps mere "order-takers". Some manufacturers were even peeved with me for talking about margins (specifically rep margins); however these numbers are realistically no secret to the audiophile, as no hobbyist group does more research and or tries harder to get the most audio performance from their beloved music playback system. For that, you have to love the traditional audiophile even if they are a spending less and less as they age.

A lot of people think that as the American economy starts its long road to recovery, that things will rebound right back to normal. Many of the print magazines that HomeTheaterReview.com fights over ad budgets with, truly believe the days of getting $6,000, $8,000 and $10,000-plus per page for an ad with no statistical accountability, that reaches an increasingly older audience will be returning. They are wrong. Dead wrong. Audio dealers who think a "killer app," like the somewhat profit-rich, flat HDTV, will drive dozens of new customers through their front doors are also misled. HDTVs today are now mostly a commodity and consumers looking to spend a little extra money above the big box retailers and especially the warehouse stores demand that they get more and more for their incremental spends. If it makes the retailers feel any better - the ad agencies demand the same from online publications. If you are spending for premium goods in any market these days - you can ask for the world and you might just get it. That's just how things are right now in this economy.

I believe the solution for specialty AV dealers' sales and/or profitability woes is to return to what made the "stereo store" truly great. I am proposing that dealers get back to selling audio. That's right - I said it's time to get back to selling high performance audio gear. It is true that consumers believe what they see much more than what they hear; thus the "order taking" comments in recent weeks. All salespeople want the easy "lay down" sale but that isn't really the foundation of a great working relationship. With over 200,000,000 Apple iPods walking around in the hands of the next generation of potential audio enthusiast fans' hands, and traditional audiophiles headed quickly towards Social Security, I am proposing a different way to sell audio. I am proposing selling audio for the new economy and for a New Generation. The consumer demand is there as Apple has proven to us. The question is: are dealers too set in their ways to get away from selling bloated, overly-esoteric audiophile products to older clients or can they get back to audiophilia's roots when younger Baby Boomers in the 1980s bought up the likes of Adcom, Aragon, Magnepan, Luxman, NAD and other value oriented products that led to a generation-long audio gear love affair?

The Under $2,500 Room
I am challenging - especially the dealers who emailed me in the past few weeks - to consider investing (YES - this means you have to spend some of your money) in one new room in a traditional brick and mortar store. Call it the "Under $2,500 Room" because nothing in the room should be much above that price point, as the next generation of consumers can't yet pop for high end Meridian, Wilson and Mark Levinson - but someday will. It just takes time, interest and money.

Construction:
First off, gut the room with the help of a contractor. Ditch the drywall and replace it with Quiet Rock which is easily three times the cost of traditional drywall but with its "goop" you can create a very quiet environment to listen in, even for affordable gear. Fill the walls with acoustical material made from recycled blue jeans or other "green" sound deadening materials. Replace any windows with new, multi-pane windows which are more energy efficient and quiet. Ultimately install absorptive treatments for the windows to reduce unwanted reflections. Rip out the carpet and perhaps replace it with dark hardwood floors (think Apple Store) or even polished cement. Add a thick carpet to soften the acoustics. Place a thick carpet in the middle of the room where the main seating will be, to help with absorption and to create a luxurious yet modern look.

Before finishing the drywall, wire the walls with HDMI cables for one or two video displays but not many. Run conduit in the walls for multiple runs of speaker cables and audio cables too. This costs nearly nothing when the walls are opened and its allows you to keep the cable clutter to a minimum, which is how Apple does it - but not how most traditional stereo stores show affordable audio gear.

When the Quiet Rock is up and the room is painted, build a relatively thin fabric wall (Whisper Walls are good) on two sides of the room as well as in the ceiling. Install easily 50 low voltage lights with very specific tasks of lighting up reading areas for the listener, showcasing gear on display. No one light is designed to light the entire room. Control the lights with a Lutron Grafix Eye or some other good lighting control that costs under $1,000, and create lighting scenes.

There should be a good amount of equipment in the room. However there should only be one (maybe two) seats, preferably ones that swivel and that have foot rests like an Eames chair. The majority of the equipment should be resting on custom made (but not too pricey) maple veneer shelves positioned from waist level to a little bit higher. Avoid the urge to put gear on the floor like a stereotypical stereo store. Create a focus on the gear currently working by placing it on stands than match the shelves made by your cabinet maker. They can be rectangular and perhaps different heights to create visual interest. These stands will be cheap to make as they will be made from plywood and covered in exotic wood veneers. Keep the systems simple and elegant with cable clutter at a minimum.

For the rest of the equipment in the room (and there should be a good amount to create an art gallery effect) showcase the equipment on the shelves. Hide the power cables by cutting holes in the shelves and use polished aluminum grommets to organize the cables. Realistically, most of the gear in the room won't be actively demo'ed but could easily be moved from the shelves and into service if needed. Equipment should have plastic tags with printed information about the product like you would see in an art museum. "XYZ's USB stereo preamp, made in Belgium, $1,995." Let people learn on their own what things cost without having to pitch it to them constantly. This room is designed to be very approachable for the new school customer.

The Equipment:
One of the things that made the audiophile business grow in the past was the willingness of traditional dealers to take on new brands. Ask most sales reps and AV manufacturers and they will tell you that the risk taking on a new line has nearly all but evaporated with traditional AV stores. The good news is that there are a whole host of new and more off-beat brands that can and should be added, that aren't in every store's product lineup. The exact mix of products is up to the dealer to decide but having exciting new products in the store is one of the things that brought audiophiles into stores month after month in the heyday of the business. People traded-in gear, upgraded and listened to new, exciting products. Today's retailers sometimes tend to be a little too conservative with their demos.

To be clear, this room isn't for receivers and home theater demos. That's for another and equally important part of the store. While video displays are needed for on-screen control - there is no need for in-wall, on-wall and or surround sound speakers. In fact, there shouldn't be too many speakers in the room at all. While my personal preference would be to have visually striking products like entry level MartinLogans, good floorstanding speakers from brands like Revel, Bowers and Wilkins, PSB, Paradigm and others are good. More audiophile speakers could also make the cut, especially speakers from the U.K., Europe and around the world. Exotic is good but there should be a balance. One or two self-correcting subwoofers should be used in the room for audiophile demos as the next generation of consumers want to feel their music as much as they hear it.

For source components, there are a whole host of very good and affordable iPod docs from the likes of WADIA, Peachtree Audio, Krell and others. Apple TV is a must. For $300 you can have Kalidescape-like control of your music, movies, photos and more. A main computer hosting lossless AAC files for music could be in the room or in another room. Despite the fact that Oppo's $499 Blu-ray player is sold factory direct - make sure one is in this room. It's a statement piece for value audio, it plays SACDs and DVD-Audio discs and this kind of consumer will know about it. You will earn cred with the consumer if you have the guts to put it in your shop even if you don't sell it. Install an affordable yet USB-enabled turntable. Kids actually love vinyl for its kitsch-factor. Show older customers how you can take Sgt. Peppers and rip it from a record and record it on a hard drive. While many have heard that this is possible - actually having them do opens a whole other level of understanding.

For electronics there are all sorts of fun lines to look at. Benchmark Media's USB preamps are ultra-cool and are physically small like Apple TV and other portable products. NuForce's digital amps and very quiet stereo preamps remind me of what Aragon's 4004 amp or Adcom's GFA-555 power amp was to the audiophile business in the late 1980s. Look at NAIM's NAIT tiny integrated amp for some out-there flair. Cary Audio's Xciter series has a cool USB DAC that one of our readers won last month. They have a tube integrated amp that is even more sexy to look at. Krell's KID and PAPA DOC are the perfect way to get consumers into a classic, high end audiophile line. By no means is this the end of the list; it's a good start to highlight the concept.

Audiophile cables should be used but not crazy expensive ones. Cables shouldn't ever look messy. Bluetooth connectivity could blow a consumer away. Imagine slinking into an Eames chair, dimming the lights and having the consumer play his or her music from their iPod touch without wires? You will have their attention technically and when you tell them that the system is under $5,000 - you might just get their money or perhaps more as you show them more and more new-school audio goodies.

Dealers will likely need to cherry pick some of these audiophile lines and if they invest as described above - they have every right to do so. This room needs to be vibrant and have diversity. It needs to have the modern look that GenX and GenY flock to and spend money on. Manufacturers who don't understand will learn sooner or later, especially as you are selling audio like its 1988 all over again.

Marketing and PR
If you are going to use an Apple or any computer system to manage audio files and other media for demo - make sure that for every demo you do that you get the prospect's email address. You earned the right by creating and performing the demo. This new type of client wants to be communicated with via email, Twitter or Facebook and this can help you promote repeat traffic as the room adds new goodies.

Invite the local newspapers over to go through your demo. Show them how an audiophile store has moved to selling to a younger demographic. Show them how you have bridged the gap between audiophila to the iPod generation. Do the USB turntable demo. Show them how they can control an iPod Touch via Bluetooth on your system. Blow them away and expect the ink to roll in.

Advertise. Yes, I said advertise. Even a $200 a month campaign on Google using geo-specific ad words can help drive traffic from the source where these new buyers are. Consider other venues like personalized terrestrial radio spots and cost per acquisition ads in print, newspapers and beyond. Many specialty AV websites offer geo-targeted banner ads too which can affordably earn new clients specifically in your region.

Throw a party for your consumers to open the room. Give away one system to somebody but make all of your consumers sign up for your email list because sending snail mail to them is only OK the first time. Snail mail doesn't work very well, it's expensive and it isn't very green. Make sure the catering is good. Partner with the local high end wine store and see if they will do a wine tasting and hit up their list. Do the same with an art gallery that sells modern 20th century art. Perhaps even install a system on spec in both other stores. Can you say "new leads?"

Take professional photos and post it on the front page of your website. This ties into the Google cost per click campaign nicely. Amateur photos are an insult to how cool this concept is. It's worth spending the last $1,000 on.

Invite college music classes in during the week. Repeat with engineering students. Baby Boomers fell in love with audio gear when they got transistor radios and it just grew from there. In college along with a muscle car - what defined a Boomer man more than the size of his speakers? Actually, don't answer that question - but you see where I am going with this.

Conclusion
The audio enthusiast is a great client and there are hundred of millions of them out there ready to recruit into new-school audiophiles right now. Will the custom AV market return? Absolutely - just as soon as the housing market rebounds. People will want all sorts of custom goodies in their homes but the specialty audio market is an add-on and or an additional market to that business that allows for repeat business and good profit margins for the dealer. The consumer gets the best in affordable, sexy and high tech goodies as well as a golden path down the hallway where the big audiophile room is. How long do you think it will take a young college grad who buys a $5,000 iPod based audiophile system to start sniffing around the 802d's or the Wilson Sasha WPs? Not long. Not long indeed. And these new clients will see the true expertise that specialty dealers have to offer that the big box dealers and warehouse stores simply cannot compete with. Hell, if the customer wants a TV from Costco - go buy it for them just as long as they get the good stuff from you.

Source: HomeTheaterReview.com

[Ted White]

Hi Chrissy,

Very nice write up and concept. And I would agree. Enticing someone to come in with a lower cost room option is a fine idea.

I'm curious, though, why you recommend some of the most expensive sound isolation materials that exist? Seems to run counter to your theme, and using other (more effective) materials would save even more.

Just a thought.

Thanks,

[Kal Rubinson]

Ted White wrote:

Hi Chrissy,

Very nice write up and concept. And I would agree. Enticing someone to come in with a lower cost room option is a fine idea.

I'm curious, though, why you recommend some of the most expensive sound isolation materials that exist? Seems to run counter to your theme, and using other (more effective) materials would save even more.

Just a thought.

Thanks,

Good point and, to go even further, I wonder if giving so much attention to acoustical construction isn't giving the typical $2500 purchaser unreasonable expectations. How many of them will have any acoustical considerations in their roooms?

[JerryDelColliano]

Kal,

You have to look at the big picture.

If you want to go cheap - put spun glass in the fabric wall and use Home Depot peg board and drill random holes into it with a 1.5 inch drill bit.

If you want to become a MILLIONAIRE selling AV gear - spend the money on the RPGs and get the real deal. Not that the clients will spend on this but the room will ROCK and you will sell $2,500 AV components on the hour EVERY HOUR.

[Kal Rubinson]

JerryDelColliano wrote:

Kal,

You have to look at the big picture.

If you want to go cheap - put spun glass in the fabric wall and use Home Depot peg board and drill random holes into it with a 1.5 inch drill bit.

If you want to become a MILLIONAIRE selling AV gear - spend the money on the RPGs and get the real deal. Not that the clients will spend on this but the room will ROCK and you will sell $2,500 AV components on the hour EVERY HOUR.

I do get your point and doing it would undoubtedly be successful. My speculation is whether or not many clients might experience post-purchase blues.

Yeah, I know, now you can sell them the acoustical treatments they should have bought in the first place.

[JerryDelColliano]

I am not sure that the roll off from a nicely done RPG room to a lesser room is THAT much but its something.

From a high end sales perspective (I worked for Chris Hansen and Mark at Cello WAY back in the day so this stuff is in my blood) you have paved the road for a future sale.

My most successful system ever when I was a 19 year old in music school selling in the aerospace recession here in LA was: Wilson WATT Puppy 3.2 speakers, entry level Transparent cable, an Acurus int-amp and a Rotel CD player. The total system out the door was about $16,000 at the time and it CRUSHED other systems at the price. I could have done Levinson and THIEL but the profit wasn't as high and the system wasn't as good in many ways. THEN about 3 or 4 months later, I would show up at the client's house with a No. 38s, a No. 333 and a No. 39 all from Levinson and some mid-level Transparent cables. After I cracked open a nice bottle of wine and unloaded the old VW GTI - I blew the client away with what the system with Levinson and better cables could do. Bang - another $16,000 sale. We could plug and play the CD player and they could hear the VAST difference and they WANTED IT. This is EXACTLY why God created credit cards and the clients used them.

I think that when selling ANYTHING - the ultimate measure of success is CPA "cost per acquisition of client". For high end gear (or private jets or watches etc...) its very high. I am proposing we lower the standard to more affordable gear and earn more new, young clients and then sell to them from here on out. Audiophile magazines and high end audio salons tend to be snobatoriums where the gear doubles in price for no meaningful reason other than the snobbery or mismanagment of the company or the dealer. At Cello - Mark raised the price ALL the time so that we could absorb the trade-ins (pre-audiogon days). There comes a point when things are TOO MUCH MONEY and that point in high end audio is now in my eyes. New lines like Peachtree Audio, NuForce, Benchmark, Oppo, Cary Audio and even some products from the likes of Krell, Transparent and WADIA are very forward thinking. With 200,000,000 people rocking their iPods and iPhones - I am betting that if a dealer got 1/10 one percent of their share in their market - that there would be people to sell systems to today and for years to come. THIS would be a HUGE lift for an industry that is still trying to sell Boomers gear as Boomers are aging past their big buying days.

[Mika75]

Jerry, thank you for a very timely and interesting article.