Ira Friedman is the CEO of Bay Audio, a manufacturer of custom speaker solutions. He holds an MBA from the Harvard Business School. I’ve visited dozens of dealerships that had installed a theater and vignettes in years past, and for the most part, their demo facilities were either hobbled, in disarray, or sheepishly converted into temporary storage rooms. As a rule, most of these demo facilities had failed.
In the past, the stated goal of a demo facility was to “show several possibilities.” But with the rapid pace of product improvement, most demo facilities were rendered obsolete in several years. High upgrading costs precluded a demo refresh, and the rooms were left to languish.
Today I am finding a handful of dealers reconsidering the need of a demo facility seeing the showroom as a marketing tool addressing three needs: proof of viability, experiential selling, and most importantly, control of venue.
Proof of Viability The tumultuous economy has weeded out weaker competitors. So some dealers point to their facility and demo experience as proof of viability and commitment to the business. In this case, the showroom need only be simple, elegant, and clean. Wary customers are not looking for an overthe- top presentation, but rather, a levelheaded, focused office space that speaks of permanence. A conference room showing automation choices and a small mixed-media room satisfies this goal.
Experiential Selling In established markets with a healthy economy, an aspirational demo facility helps sell high-performance gear. Sure, great salespeople can sell $500,000 theaters without ever playing a demo. But these are theaters sold to the very wealthy. Reaching that next tier of buyers (the simply wealthy) requires a bit more effort. It’s hard to explain the visceral experience of a great home theater without a demo. I’m still impressed and excited when I discern the subtlety and performance of a great system–and I’ll even admit to “forgetting” how good a great theater can be. It’s one thing to describe a meal at The French Laundry. But it’s another thing to actually dine there.
Simply showing “what can be done” in a demo facility is not good enough. The goal should be to show “how great it can be done.”
The perfect demo facility is focused, elegant, and aspirational. Control Of Venue This is my number-one rationale for building an impressive demo facility: getting the client out of his or her home or office and into yours. A change of venue works wonders in the selling process, as it introduces novelty, and puts the prospective client into a “buying” frame of mind.
Presenting a large system in a client’s home or office is fine. But suggesting a follow-up meeting in your showplace propels the conversation to what-ifs and possibilities. And as we know, clients are happiest when they dream about their system–not just fret about costs and time schedules.
Having an appointment in your office makes sense only if you have something of value in your offices to offer. Otherwise, the client sees no benefit in accommodating your schedule and venue choice. But offering an opportunity to see, touch, and experience magic is compelling, and helps cement that ever-important follow-up visit.
Budgeting As a rule of thumb, budget about 25 percent of the value of a prototypical “nice” project in your demo facility. If you’re aiming to satisfy a typical $500,000 client, expect to use about $125,000 in tenant improvements and product purchases. With help from landlords and vendors, your out-of- pocket costs should be closer to half–around $60,000.
On a three-year bank loan, that $60,000 will cost less than $2,000 a month. That’s a small investment to grow your business.
What Not To Do The perfect demo facility is focused, elegant, and aspirational. Don’t show more than one of any category–that means one theater (and make it expensive); one high-end automation system controlling a range of subsystems; one over-the-top landscape system. The demo space isn’t a retail experience with good-better-best choices. It’s a “possibility” center with only the best option presented.
And although you might be nervous not showing lower-priced options, remember you don’t need a showroom to sell mid-priced gear. You can do that without a demo facility at all.