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Art buyers respond to the luxury experience: in today’s economic climate, catering to high-end customers makes good business sense

Art buyers respond to the luxury experience: in today’s economic climate, catering to high-end customers makes good business sense

Maja Tarateta

Last November, Coral Gables International Art Center held a private showing at the Wexford Plantation, an exclusive housing community in Hilton Head, S.C., in advance of the gallery’s entrance into the marketplace. “All the people there were high-end clients,” said Fred Castro, executive director of the Art Center. The gallery brought the art to them, sold a few pieces and hoped to leave a strong impression on these very important customers.

Castro and other gallery owners, like retailers in other categories, have come to realize that capturing the attention of high-end consumers by offering the luxury experience is increasingly critical in the current economy. Whereas mass merchants such as Wal-Mart, The Gap, Toys ‘R’ Us and Kohl’s reported lackluster profits or sales over the winter holiday selling season, retailers who primarily cater to wealthy consumers, such as Tiffany & Co., Neiman Marcus and Saks Fifth Avenue, reported stronger-than-expected sales.

Gregory Furman, executive director of the Luxury Marketing Council in New York, said that the most successful luxury marketers concentrate their attention on the best customers, particularly those in the top fifth. These winning retailers recognize the importance of customer service and reward their top customers for information on themselves and referrals. They also obsessively add value for the customer and customize relationships to meet the customer’s needs, among other initiatives.

“Forty to 60 percent of revenue will come from the best customers. The real meat comes from the top 10 to 15 percent of your customers. You might as well start with the ones you know and love,” Furman said. In doing so, “you will create a buzz among a community of influence.”

Additionally, a recent survey by Accenture, a global management consulting company based in New York, found that 87 percent of Americans earning more than $150,000 a year would be willing to spend more if they could find “better” products and services. Another Accenture research report indicated that consumers were looking for innovations in customer interaction. A majority of the 3,500 respondents in the United States and Europe said they believe companies don’t care about them after they purchase a product, leaving an opportunity for retailers to enhance relationships with customers and provide better post-sale attention. These two areas, experts agree, are especially important when dealing with high-end customers.

Customizing Customers

When it comes to finding and keeping high-end art buyers, gallery owners need to both target them and understand them, according to Pam Danziger, president and founder of Unity Marketing in Stevens, Pa. “They may not want to shop regular hours. They may want you to bring the items to them. They may need extra services. This will be the key to capturing them.

“When customers buy luxury,” Danziger continued, “it’s all about the experience. What does that experience entail? For each customer, it may be something very different.”

What’s the one thing all luxury consumers are looking for? “You must provide the best customers with information and opportunities that surprise and delight them,” said Furman.

Spending time and money on education and services for high-end customers is an investment gallery owners said pays off. Jean-Pierre Desbiens, proprietor of A & C Fine Art Gallery and Sculpture Garden in East Greenwich, R.I., said his staff does research and follows up on just about anything a customer mentions. The 11,000-square-foot facility features 300 works on display by 45 painters and sculptors from across the continent, and caters to high-end customers, with an average sale of about $5,000 and works for sale up to $42,000.

Desbiens recently shipped a piece of art to a client in Texas and included information and a book on the artist in the package. “Not because the customer requested it, but to educate so they can appreciate what they just bought,” he said.

He also organizes sessions with artists and his best customers before or after shows, either in small groups or one-on-one. “People want to be able to talk about the art they purchase in terms of a body of work and the artist’s vision of life,” he said. He also keeps a customer-relation database in which he registers and records client preferences in files that can be called up whenever needed.

Matthew Abramowitz, who owns Storyopolis, a children’s art gallery and bookstore in Los Angeles, said he spends entire days on the phone talking to his gallery’s best customers. “We contact them when new artists come in. We give them previews. We send [digital] files of artists that they are interested in,” he said. “As much information as I can provide, I will. I will hunt down pieces they are looking for.”

Sometimes, the education/information aspect of customer service can be simply maintained. At Hang Art in San Francisco, “anyone can ask for immediate notice when a new work by a particular artist comes into the gallery through automated e-mails for those who register on the Web site, said Leah Edwards, director of marketing. “That said, when we’ve worked with a client on numerous occasions and have learned about their interests and tastes, we are also likely to call the client to talk about a new work we feel he or she will be interested in,” she continued. “Or, we might call to give them a few month’s notice that one of their favorite artists will be having a solo show, which can be important if the collector does not live in the San Francisco Bay area and would like to attend the opening.”

Regardless of how it’s done, luxury retailers are spending more money on educating the best customer, said Furman, adding that consumers respond well to education because connoisseurship is at an all-time high. “The better educators will have better businesses, and that will deepen the relationships they have with customers,” he said.

As Desbiens mentioned, offering access to special events and services can also help deepen relationships with a gallery’s best customers. At Coral Gables International Art Center, Castro said he often holds private, after-hours appointments for customers with busy schedules, often meeting them at the gallery as late as 11 p.m. Hang Art will also stay open late for customers who can’t make it to the gallery during regular hours.

Gallery Relations

At A & C Fine Art Gallery, going the extra mile for high-end customers can literally entail traveling–to their homes. They install purchased artwork at no charge in about half of their customers’ homes. They will also bring works to a client’s home so that a decision can be made while seeing the pieces in the space. “Last week, we [had] a customer who ended up buying three different pieces from three different artists,” said Desbiens, although the client had only requested to see one piece in the home.

Follow-up is also important in the current economy. “The main thing is to establish chemistry between these clients and yourself. It becomes a friendship,” said Castro, who calls his best clients and sends a personal note if they do not return the phone call. “The perception is that these types of customers are unapproachable. But the reverse holds true. They are amenable and approachable.”

At Hang Art, the staff hand-writes thank-you notes to every customer. “On occasion, we have bought an art book or something small for a client because it seemed like the right thing to do in the moment,” explained Edwards. “That type of gesture just evolves naturally by getting to know someone and seeing something you know they are interested in.”

Although calling the gallery “egalitarian,” Edwards admitted that “high-end customers do get something different from Hang Art, but that’s because high-end almost always means multiple purchases and more contact,” she said, “leading to a deeper relationship.”

Building these relationships are the primary way retailers add value for their best customers. “Customizing the relationship means talking to them, understanding their needs and providing services that surpass their expectations,” said Furman. Retailers who do all that, who create the luxury experience, should find success with high-end customers.

5 Ways to Reward Top Customers

1 INFORMATION Keep them apprised of openings and send them articles on artists of interest.

2 SPECIAL SERVICES Offer complimentary installation or in-home viewing of artwork. Stay open late one night to accommodate them.

3 PRIVATE RECEPTIONS Invite them to meet artists before an opening

in small groups or one-on-one.

4 BUILD STRONG RELATIONSHIPS Get to know clients. Follow up with them by phone and mail. Provide services that make them feel special.

5 CREATE AN EXPERIENCE Understand their needs and surpass their expectations in every way possible.

RELATED ARTICLE: Are you listening?

Too often, businesses spend time, money and energy on in-and-out customers. It’s these customers who often eat up your time, complain, spend little money and never come back. It makes better business sense to allocate more resources to the customers who are easy to sell to, spend more money, provide great feedback and spread the word to others.

And yet, industry research indicates that more than half of these loyal customers will leave your business over a five-year period, mainly because their changing needs go un-met. Each loyal customer who leaves costs five times more to replace than the cost of keeping him satisfied. Most businesses can’t afford that sort of revolving door operation.

So, what can business owners do to determine customer needs and keep them loyal? One of the best ways is by conducting surveys. The act of surveying alone enhances the emotional connection a customer feels with a business, while the results of the survey provide decision-making tools for long-term financial success.

Asking the right questions is critical. Instead of asking questions about how satisfied customers are, ask questions that show how to move a customer from “satisfied” to “loyal.” (e.g., “What is it about our gallery that would have you return in the future and tell your friends?”)

Instead of just asking straight-forward questions, such as, “What do you like about our gallery?” ask trickier questions, such as, “If our gallery were a novel, what type of story would it be?” Questions like these will make customers think more deeply about your gallery and give you a better idea of their own personal impressions of it.

It does little good to know how certain programs were received in the past–it’s better to figure out where customers’ needs and preferences might be a year or two from now. Specific tools need to be in place before customers demand them. before they find the service they’re looking for somewhere else and become a statistic. Instead of looking where customers are today, question that reveal where they are going to bee in the future. (e.g., “How do you expect your art buying to change over the next five years?” You can prompt them with price, size, style or collecting question, or just leave it open-ended. These are good questions to cross-tabulate with an age-related question.

Cross tabulation–dividing responses to one question by responses to another–is a powerful tool. It’s not terribly interesting to discover that only 20 percent of your customer frequent your Web site. However, if you ask a gender question, you may find more useful details. You may find that, of the men surveyed, 70 percent frequent your Web site. Now you have Some great information for your Web site design.

Even if you take all the surveys you want and stock pile the results into fantastic data displays, they are a waste of time if you don’t use the results to modify your programs. Questions about service, price, selection and after-sale service should be looked at carefully, and the results should change how you run your business.

A gallery on the central coast of California began a “listening program” three years back. It started with an after-purchase survey and an employee survey. Later, the company added complaint follow-up surveys, automated online surveys and an annual mailed survey aimed at its high-end customers. As a result, the gallery’s number of loyal customers increased by five percent each year, leading to a 20-percent gain in revenue.

On average, a five-percent increase in loyal customers leads to a 35-percent gain in revenue. Doesn’t this sound much better than churning through passive customers year after year and barely keeping pace with three-percent growth?

Your gallery can be on the high side of these numbers if you choose to listen.

–Kevin Smith

COPYRIGHT 2004 Advanstar Communications, Inc.

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