By concentrating on attitude and follow-up, one company turns browsers into repeat customers
It's possible to wander into one of Scott Hanson's galleries and not buy anything. Lots of people do. What's less likely is that after buying one thing, a customer never buys anything else. That's because Hanson has created an extraordinary retailing organization, one that beats industry productivity averages by focusing its marketing and sales efforts on its best and most promising customers: those it's already got.
A new idea? Not at all. Most sellers give it a nod, but few exploit it as well and as profitably as Hanson. Maybe it gets so little attention from companies because it doesn't require buying fancy new technology, making a big capital investment, spending lots of media bucks, betting the company in a market repositioning move, or hiring a $1,000-a-day consultant. It's a bold strategy, but not brash. To apply it as well as Hanson does is to appreciate the subtle difference between selling a customer and servicing a client.
The advantages of servicing clients, or selling to people that you've already sold to once, are legion. For one, you know who they are and, if you've kept decent records, how and where to find them. You know what they like and what they don't like and, if you've really been paying attention, you know why. If you can sell to customers you already have, think of all the money you don't have to spend advertising to people who might not want your product or service even if you were giving it away. Imagine how much more focused your marketing strategy can be.
Maybe the best argument for selling to your old customers, your clients, is that those are the easiest sales you can make. All the groundwork has been laid. The client is already inclined to buy whatever it is that you're selling. All you've got to do in order to get the second and subsequent sales is create a desire in the customer for more. "I've never received a follow-up call from any store I've been in," says Hanson salesperson Lynne Janzen, who finds this incredible, given her own success with the follow-up phone call, letter, and postcard. "Just think of what they could sell."
Hanson Galleries sells artwork, about $3 million worth a year, on average, in each of eight storefront galleries. It retails limited-edition graphics by such popular artists as Marc Chagall, Peter Max, Thomas McKnight, and Erte to middle-class collectors who will most likely hang them over their couches and mantelpieces.
Yes, middle-class art collectors. That's really the key to Hanson's application of this age-old sales strategy. Customers buy once; collectors buy multiple works and keep on buying. The average Hanson collector makes seven purchases within the first three years. And we're not talking about two-for-$25 Elvises on black velvet. Invoices at Hanson's average close to $4,200.
To convert customers into collectors (or repeat buyers), Hanson Galleries concentrates on two things -- attitude and follow-up. Salespeople create an attitude in the customer that makes him or her amenable to collecting. Then they follow up relentlessly, both to reinforce the attitude and to get those subsequent sales.
Because of their locations, the Hanson Galleries don't naturally attract collectors. They're situated in tourist spots -- Sausalito, Calif., New Orleans, and San Francisco, for instance -- which would seem to make the salesperson's job harder, not easier. A vacationing couple from Michigan might wander into the Beverly Hills store on Rodeo Drive once, but they're not likely to be in the neighborhood regularly. If the salesperson is going to develop a continuing relationship with the client, the development has to begin on the first visit. If it doesn't, there probably won't be a second.
So, the first attitude that has to be adjusted is that of the sales help. Hanson has persuaded his salespeople -- they're called art consultants -- not to look at a walk-in and see a one-shot opportunity, but rather a potential revenue stream. The distinction, well implanted now 15 years after Hanson founded the business, evokes significantly different behavior.
First, it gets the consultants to ask questions. The more they know about people, the easier it is to sell them something. Hanson's art consultants spend lots of time finding out things about the people who come through the door, whether they buy anything or not. Consequently, Rebecca Speight, director of the Sausalito gallery, can call a vacationer's home or office a week after he stopped by the store and take up where their conversation left off. "Gosh," she might say, "so how was the Sonoma Valley Inn?"
But what the art consultants spend most of their energy on is adjusting the customer's attitude, in this case toward art. In place of art you could read fashionable clothes, sports cars, home electronics, or just about any other big-ticket item for which the decision whether to own the product at all must precede the question of which kind or brand to buy. If potential customers are going to turn into collectors, they have to have an attitude that holds three things to be true.
Customers have to believe, first, that buying art (or expensive clothing, and so on) is OK, that it's not somehow frivolous. Sales consultants frequently have to disabuse prospects of their belief that collecting art is "not for the likes of me." Customers also have to believe that they are capable of buying artwork intelligently -- that is, without being cheated. And, of course, they have to believe that Hanson Galleries is the right place to buy art.
"Education," Hanson says, "is critical to our sales." The methods his consultants employ -- videotapes, catalogs, private viewing rooms, and conversational teaching techniques -- aren't extraordinary, but their execution is. Show interest in a hanging work or sculpture at a Hanson gallery, and 30 minutes later you may not own it, but you'll know the artist's biography, his other work, his techniques, and where he stands in relation to his peers. "You buy a work," Hanson says, "and then everything that happens with that artist, you're notified. You now become knowledgeable about that artist and his work. You can talk about him with people at cocktail parties."
All the while, customers are giving up information about themselves. "Our salespeople are not just selling a product," says Joy Ortner, director of the La Jolla, Calif., gallery, "they're finding out who you are, what you do, where you live, how big your home is, what color your walls are. . . . That's the key to multiple acquisition."
It's one of the keys, anyway. The information goes onto customer cards, because the art consultants' most productive selling doesn't happen on the sales floor, but over the phone and through the mail. In fact, Hanson Galleries requires that its art consultants spend roughly half their time on the phone, the other half on the floor. If they don't work the floor, their customer lists aren't being replenished. If they don't work the phones, they're not getting the relatively easier subsequent sales.
But another key is how they work the phones.
Give people a good reason to do something, the Hanson philosophy goes, and at least some of them will do it. Some people will take up art collecting for the same reasons that others take up running, yoga, or gourmet cooking: they want to be part of something. Hanson Galleries makes sure there's something for people to be part of. They make art exciting and create a tension that engages their collectors. New works are released on Wednesdays, and most are presold, sight unseen, to buyers of the artist's earlier work. "I can try to get it for you at the prerelease price," a consultant will confide to a client. Hanson Galleries has the usual openings, shows, newsletters, postcards, and thank-you notes after a sale. But always, there's the telephone. Clients get called before mailings go out, then again afterward. "Lots of our clients are doctors, businessmen. We get right through to them," says marketing and sales director Jennifer Walker. " 'It's your art consultant,' the secretary will say."
Hanson Galleries' best consultants will sell nearly $1 million each this year. Its average consultant will turn in about half that. The company's sales rose from $17 million in 1987 to more than $25 million in 1988. If it were just a storefront retailer selling art to customers, Hanson Galleries might make half those sales. But it does what it does by doing the other half of its business with clients -- customers who hardly need to be sold at all.
A SELLER'S GUIDE
Musts for turning one-sale customers into repeat-business clients
Clients are made, not born. To create a client by the Hanson Galleries method, a seller needs to provide the following.
* Education. As a rule, the more potential customers know about whatever it is you're selling, the more of it they are likely to buy. Clients have to be educated, and education is part of the seller's job.
* Protection. Any purchase, but especially of big-ticket items, represents a risk to the buyer -- the risk of trading money for something that's not worth the price. A smart seller reduces not only the risk, but the buyer's perception of risk. That's where such things as guaranteed buy-backs come in. They give buyers the chance to practice what they've been taught without paying for learner's mistakes.
* Expectation. People tend to accept established norms -- buying patterns, for instance, in which consumers purchase works of art one at a time. If one car is all they expect to buy when they visit the showroom, you'll have to change their expectations before they'll buy two.
* Satisfaction. You've educated your customers, hedged their risk, and changed their expectations. But to what end, if your merchandising doesn't follow through with product (or service) packages that appeal to and satisfy the needs and capabilities you've created?