Editor’s note: Jeff Winsper is the founder of Winsper, a firm launched in 2002 that focuses on advertising and marketing to high-net-worth consumers. Along with J.D. Norman, the agency’s executive vice president and managing director, Winsper sat down with Inman’s "Real Estate Rookie," Alison Rogers, to talk about luxury marketing in these tough times.
ROOKIE: I’ve been taking a look at high-end real estate markets around the country, and my impression is that in many of them volume has stalled but prices haven’t dropped much, if any. How are affluent consumers changing their spending habits due to the downturn?
WINSPER (JW): We have a client who sells $2-million-plus boats. (That client is) doing fine. We did some consulting with a client who sells private planes. (That client has) still got a two-year backlog.
The ultra-high-net-worth consumer may have less in terms of percentage of their net worth than they did a few months ago, but they still have plenty of money in relative terms.
The lower-end affluent, or those that "traded up" during this "gilded age" over the past 10 years, now they are "trading off." For example, they’re still going to Italy, though not necessarily Italy and then Vail. And they may not use their jet membership card; they will go charter instead.
ROOKIE: But volume is off in the high-end home markets.
JW: What happened during the boom was that buyers became much more sophisticated about real estate investments. And now in a down economy, they’re becoming far more particular and discerning. Say you list a house in a "McMansion" neighborhood for values between $3 million and $5 million.
If you say, "I have a five-bedroom," the competition says, "me too."
If you say, "I have 5,000 square feet." "Me too."
If you say, "I have a media room." "Me too."
So there are a lot of people questing out there right now, and what they’re wondering is, "Are they going to find that perfect match?"
NORMAN (JDN): Plus, people might not be walking into a real estate transaction with as much cash in hand from the previous transaction — I don’t have $150,000 for a kitchen redo to make your place look exactly like my (old) place.
ROOKIE: So it sounds like we move back to selling an "emotional fit" rather than "features."
JW: The length of time that people used to stay in homes had been steadily decreasing; now we’ll see it stretch out again. As people start thinking of their houses less as investment vehicles, they’ll focus on marrying the market’s "delighters" to their personal delighters.
JDN: It’s going to be less about stuff and more about substance. How is living in this home going to better my quality of life?
ROOKIE: I love that word — "delighter" — but I don’t know it.
JW: It’s a distinguishing innovative offering that is different in the category, that is first to market, that supersedes what used to be standard.
JDN: A perfect example of a delighter is the start button that used to be in very high-end sports cars. You used to see it in Ferraris and Porsches, now you see it in Nissan Altimas.
ROOKIE: So delighters become commonplace?
JW: Exactly. Heated garages were a delighter 25 years ago, but they’re not anymore. Media rooms were a delighter five years ago — they’re not anymore.
ROOKIE: So maybe those aren’t the things to focus on, as much as location or view.
JW: And the quality of communication. We don’t purport to be luxury real estate marketers … but we were approached by the seller of a $30 million piece of property in Greenwich (Connecticut). The owner said, "I don’t want to use traditional ways to sell my home." He was saying, "I want a marketer who understands the affluent consumer."
Realtors are using old models for a new-age economy. You need to deliver the quality of marketing communications and experience that these people are accustomed to at that price point. If you buy a private plane, you get a coffee table book about the plane. If you buy a 270-foot ship, you don’t get a color printout that’s bound in plastic sheeting.
JDN: Realtors would do that! Maybe they’d try to move it upscale with a script font. (He laughs.)
ROOKIE: Sounds like you’re half-kidding, but I know what you mean. What did you end up doing?
JW: We branded the property and tried to create a story around it. At that high-end price point, warm cookies and milk and a couple of arrangements of flowers aren’t going to cut it.
ROOKIE: But if you’re selling luxury, do you address the down economy?
JW: People in America have typically earned their way up — they’re goal setters, they’re achievers, they’re very comfortable with money, and they’re comfortable with talking about money. They say, "This business climate stinks. This is what I’m going to have to do to get through it." They attack the problem head on. Very straight talk.
ROOKIE: So maybe talking about money forthrightly is a key. What about going online? Can you use social media to find high-end customers?
JDN: Marketers think of the Internet as a media channel, but it’s not. It’s a medium, like the telephone is a medium. So if you go onto a chat board to meet people, you have to think, "What are those people coming to do?" They’re coming to be educated, talk, share, participate and join in. And you have to add value to that.
Brands need to be "kind of humble." Anything that you do that asks for the exchange of money is going to get flamed.
JW: For example, if you’re at a cocktail party and four of you are talking about the New York Giants, and someone jumps in and starts talking about something else, they get the shaft because the content is not relevant in context. Please don’t step into the middle of the circle and just start talking about something else.
ROOKIE: If transactions are slow, what should luxury Realtors be doing to build their brands?
JW: I would start to build up your Web and digital presence, social media, search-engine optimization (SEO), by understanding the ongoing behavior of the consumer. During the crisis, keep a keen eye out for trends — behavioral shifts — to determine sentiment and attitudes. Then apply those analytics to your Web presence. Provide content and counsel, thought leadership, guidance to those who are on the bottom of the price point. Have your brand remain confident and worthy to those on the high end. It isn’t rocket science.
By doing that, you have a far greater chance of finding more profitable customers, and customers finding you.
ROOKIE: I’m just at the point in my business where I’m going to have enough money to start advertising. Do I design my ads for the Web differently?
JDN: Think through a persona, an archetype of who your consumer might be. That helps you figure out how to engage with them. If I’m really wealthy and I’m considering a move to a new city, my first worry might not be about movers. It might be about nannies — so finding out where someone would educate themselves about nannies might be a creative place to meet the decision-maker.
Also, the model used to be banners that people clicked on, which took them to a new place. Now the idea is that you want the customer to be able to accomplish whatever you want to do within that particular banner without leaving the site. Don’t force people to engage with you if they don’t want to. Just give them the flexibility to do so. They are in control.
ROOKIE: I’m very Web-friendly — I met my husband on the Internet — but now I’m increasingly seeing the Web being used to "gang up" against a brand. Right now in New York there’s a thread of buyers who are all deciding to walk away from their contracts in one particular new building. How does a marketer fight that?
JW: Well, don’t build a bad building in the first place! Joking aside, a lot of brands think denying people the place to have a forum denies them the ability to have a forum. That’s not true. Your best hope, if there’s a bad story coming, is to get out in front of the story. Be honest and forthright.
JD: The building might say something like, "We hold people to their contracts; we stick to our word. That helps you when we don’t change the prices in good times. If you like brands that stick to their word, we’re probably the right brand for you, if you like brands that are a little more nebulous, we’re probably not the right brand for you." Remember people want to do business with like-minded people.
JW: One more story: Comcast is a very commodity-based utility, which is difficult to brand, and they can be difficult if you want to turn on your service. So there’s a lot of consumer reaction against them on the Web, with sites like comcastmustdie.com.
So against corporate directive, this one Comcast employee, Frank Eliason, decided to reach out to a person on a social-networking site. He sent a three-word message: "Can I help?" Now he’s a hero. Google him.
JW: Don’t forget the power of those three simple words: "Can I help?"
Alison Rogers is a licensed salesperson and author of "Diary of a Real Estate Rookie."
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