Selling the Life of Luxury

What would you sell your client today if money were no object? Chances are good that the answer is at least part of the key to what experts say is an increasingly crucial move for agencies to boost sales, particularly in the lucrative luxury market that is one of the industry’s fastest-growing segments.

The New York-based Luxury Marketing Council estimates spending on premium and luxury brands, including travel, is growing about 12 percent a year as much as triple the spending growth in the overall retail market and the Boston Consulting Group estimates the global market for new luxury goods will nearly double to $1 trillion in the next four years.

But while selling into the luxury travel marketplace or even up-selling current clients into higher-end travel isn’t rocket science, it’s not necessarily easy either. Amid growing competition there is no one-size-fits-all approach to this diverse segment, and agents need to be well-versed in a broad range of nuances and niches, as well as specific sales and marketing strategies, to master the market.

“Selling to the affluent is not for the faint of heart. The rewards are rich, but you will be tested time and again,” said Ignacio Maza, executive vice president of Signature Travel Network. “A key is enhancing your selling skills. You need a different approach to sell to the affluent. You must project confidence, knowledge and be able to deliver exceptional customer service. The affluent client will be won over and kept by those who deliver extraordinary service.”

The American Affluence Research Center quantifies the U.S. luxury market as the wealthiest 10 percent of households, with net worth and an average annual income of $270,000 or more. These 11 million households control 70 percent of the wealth of all American families and make up 40 percent of all income earned by American households.

Experts say savvy agents can expand their luxury sales 40 percent or more with a strong business plan, a concerted effort and commitment. But they also note the challenges including the variety of ways to quantify the market and that the definition of “luxury” can mean many things to many people even among the most affluent in the market.

“It’s a diverse market. These are people who are more sophisticated shoppers and tend to have much more travel experience. They look for new and different things. They like value but also like comfort and convenience. That’s part of the value proposition. Agents really need to put themselves into this mind-set,” said Ron Kurtz, president of the Miami-based American Affluence Research Center.

In its 2006 survey of the affluent market, the center found plenty of potential, with 19 percent of respondents saying they plan to buy a cruise in the next 12 months, near the highest percentage since the survey began four years ago. More respondents also said they plan to spend more on domestic and international travel in the year ahead.

But even among the most affluent, it’s a misconception to think that money truly is no object.

“Just because they might be rich ... they’re not going to pay more than they have to,” said Bruce Tepper, vice president of travel consulting firm Joselyn, Tepper & Associates Inc. “And that’s perfectly reasonable; it’s a sophisticated audience. They don’t mind paying but for experience and for quality goods.”

Tepper generally breaks the market into three categories: “traditional luxury,” with either inherited or earned money; “trade-ups,” in which as affluence grows and the population ages, new categories of luxury are created as consumers buy less but buy better; and “special occasion,” in which almost every traveler is a candidate for up-selling.

“It’s important to understand the different kinds of clients who purchase luxury products. There are those who aspire to luxury and purchase high-end products only on special occasions; another group who always wants ‘the best of the best’ on every vacation regardless of cost; another group that wants quality but will not always buy the most expensive product; and those who have a very personal view of what luxury is,” said Signature’s Maza. “Every one of these customer segments has to be approached differently.”

Tepper advises agents become armed with knowledge and specialization.

“There is no such thing as a ‘luxury travel specialist’ the market is too broad. You have to have a pretty narrow specialty in order to truly sell your knowledge,” he said.

Tepper says once an agent identifies a specialty there are a variety of ways to market and effectively mine for new or up-sell clients.

“Within Ireland, for example, you could do something special like a golf tour, a historical or cultural tour or another package that’s a bit more unique. You could partner with local businesses in that specialty, like museums or golf courses, to market jointly with them, or advertise in specialty publications,” he said.

There also are opportunities to target special-occasion travelers, which often can boost more traditional customers into higher-end sales, he said.

“Agents can even do it one on one with clients, ‘I know it’s your anniversary and I know you love cruising, now might be the time to try this special cruise.’ It applies to almost everybody and you move people up. Sometimes the difference in price is minimal, but you build a more loyal customer & That’s the real value,” Tepper said.

Kurtz advises agents to be more proactive.

“Don’t be afraid to sell up. You have to get into the mind-set and not be hesitant. Traditionally, agents used to perceive their role as saving the client money. [But increasingly] it’s not about saving money but about how to offer service and quality and add value,” Kurtz said.

And Tepper says it’s a relatively common difficulty agents face: Selling from their own pocketbook.

“It’s basically selling down,” she said. “For example, if they get a call from a client interested in a [high-end] cruise, but the agent sees the price and thinks, ‘I can get you a cruise for half that price’ & They assume they are doing a favor by suggesting the client spend half that. That’s a major issue. If, in fact, the person listens to that advice, they often are disappointed with the results. & You’re not doing them a favor.”

Selling Up

Maza suggests agents ensure they have a strong portfolio of upscale products and services, as well as spend more time on the best clients, while letting go of the marginal customers or loss-makers.

“Interview your best clients to understand their dreams, aspirations, their deepest desires and build a business plan around that information,” he said. “Do more public relations within your community to get the word out on your capabilities, talents, experience and recent accomplishments. Do consumer events with a mix of existing and new clients to be always poised to grow your client base.”

Signature is revamping its database to simplify the process for its members and ensure marketing is being correctly targeted. The consortia also is expanding its marketing to include “Luxury Redefined” direct mail, targeted e-marketing campaigns and a hotel and resort directory that can be mailed to agents’ clients.

Mark Belles, Virtuoso’s executive vice president for sales and service, said that consortia is moving to help agents with its own training department and classes that focus on everything from sales training to prospecting for new affluent clientele.

The network also gives preferred suppliers an opportunity to train members through live meetings and runs a series of worldwide educational trips to give agents firsthand experience of products and destinations.

“The first rule of selling: promote the benefits, not the features. & That said, even a well-heeled traveler wants value for their money. In an age where the consumer can access available inventory online, and often find discounted rates, the onus is on the agent to advise their clients on the pitfalls of buying based on price alone,” said Belles.

Virtuoso’s advice: Always start at the top.

“Never assume a client can’t afford a certain product or type of accommodation. Reading the client correctly, even when they’re not sure what they really want, and engaging them in a consultative way, will lead to a more successful sale,” Belles said.

Experts also noted that agents need to have a collection of hotels and resorts worldwide that will cater to VIP clients and provide them with exclusive amenities, a network of ground operators overseas who can deliver exceptional experiences, a wide range of luxury cruises, tours, FIT providers, safari companies and others to tackle inquiries.

“I don’t want to sound passe, but you really do need to make contact with regional sales directors” to help leverage supplier resources and knowledge, said Marilyn Conroy, vice president of sales for Silversea Cruises. “That’s their job & what might work in one market might not work in another. These directors are experts in their markets.”

Conroy said the No. 1 way in which Silversea has grown is through increased direct, face-to-face selling such as agency cruise nights.

“It’s one of the things that has worked so well for us, with a return on investment of about 70-1,” she said.

But she also cautioned that in dealing with luxury clients, agents have to walk the walk and talk the talk.

“For agents making the transition from a premium line to a luxury line they mustn’t sell on price. That’s not the way to sell to a luxury client. The client doesn’t mind the price, they want the value proposition. It’s important to stress, on a luxury product, what the price includes,” Conroy said.

Upscale tour operator Abercrombie & Kent works to boost agents’ knowledge of its products, offering electronic marketing material, destination training and agent fam trips.

“What you have to keep in mind is that what you really are selling is an authentic experience. You have to have a clear understanding of what a client is hoping to get out of the trip and match it. We usually find price is not a factor if you’ve really done your homework on what they’re looking for,” said Pamela Lassers, director of media relations for A&K.

“But what is really critical is that our clients are very sophisticated and often have done a lot of Internet research themselves & I think what happens is, clients expect the travel agent to be more knowledgeable than they are. And if it’s not part of a world you’re familiar with it’s important to know you have a resource that is,” Lassers said, noting that A&K offers three-way conference calls with agents and their clients to answer any detailed questions immediately.

Lavish Amenities

While Peninsula Hotels has a relatively small number of properties seven worldwide it also has established an international brand name and reputation through quality and commitment to service excellence.

Peninsula keeps agents informed about the latest updates and new programs and Jean Forrest, general manager of marketing for Peninsula, says the value proposition the hotels offer upscale clients is the key focus.

“Although staying at a Peninsula may be slightly higher than some of our competitors & there is always so much added value that you don’t always quantify as a feature but is delivered as a service. For example & special amenities that are unique to each hotel and staff,” Forrest said.

Such high-end services are what Beverly Hills, Calif.,-based Mansour Travel Co. has capitalized on for more than two decades, catering to the entertainment and business world specializing in celebrity, film and TV production arrangements.

Gary Mansour says he built the now $25 million-a-year business by word of mouth as clients told others about the quality of his services.

“I proved I could do the homework and do the work & I found a way to figure out what they need. I’m honest. I didn’t try to snow them when I didn’t know. But I told them I would find out,” he said.

Mansour now has leveraged that reputation to launch Avion Private Jet Club, a commissionable service offering per-seat pricing on Los Angeles-New York-Los Angeles flights. The service includes door-to-door transportation, private airports, Italian cashmere blankets, preferred hotel and spa rates and complimentary cuisine by chefs, including Wolfgang Puck Catering. Members pay a one-time fee of $14,500, as well as annual dues. And that’s on top of the per-flight cost of $6,000 one way. Avion, which had its first flight in March 2005, now has 60 members.

“I want [clients] to be as invested in me as I am in them,” Mansour said. “I offer quality work and my staff is good. & Agents don’t want to turn down clients, but they shouldn’t be afraid to do that. We have to charge for what we do. & You’re worth it.”

Tepper advises agents looking to sell up to focus on quality, service and specialization.

“It’s not going to happen overnight. It takes a lot of patience to build that trust,” said Tepper. “If you’re moving into that world, you’re more than a travel agent you’re a consultant or advisor. And that’s a process of building trust, comfort and commitment. You have to earn the respect.”