Ira Friedman is the CEO of Bay Audio, a
manufacturer of custom speaker solutions.He holds an MBA from the Harvard Business School. Ultra High Net Individuals (UHNI), a classification of households with over $30M in disposable income, represents your best potential clients. How many households fit this description? As of 2012, there were about 500,000 in the United States and another 300,000 scattered across the world. By 2020, economists predict a doubling of the number of UHNI households worldwide. You’ll find them primarily in California, metro New York, Florida, and Texas.
Here’s the interesting thing about UHNI households: They have several homes, and they tend to buy and renovate on a regular basis. And those UHNI’s living in Germany, Japan, Russia, and China like to buy a little place in New York, LA, or Miami, increasing your number of potential clients. Most importantly, UHNI households can afford the services you provide.
The Shrinking Market?
Look back to your glory years before the housing bubble burst. Chances are you were marketing to anyone building a nice home. You sold indiscriminately to clients with $1M in assets, $5M in assets, or $30M in assets. The only difference was the size of the project.
A client with $1M in assets has very different needs than a UHNI client. The $1M client is looking for a great system, to be sure, but the UHNI client is looking for the highest level of support, service, and aftersale care. Back in your heyday you offered the same level of service to the $30M client as you did to the $1M client. That’s gotta change.
The ultra high net individual (UHNI) client is looking for the highest level of support, service, and after-sale care. Today, the $1M client has all but vanished, and if you haven’t realigned your business to attract and service the $30M client, you’re probably not doing so well. During the last 10 years, the number of $30M clients increased in the U.S. The UHNI household weathered the housing crisis, the financial crisis…virtually any crisis thrown at them. And while $30M households did suffer losses tied to equities and real estate, the losses were regained in the past two years. Put another way, during the worst days of the financial crisis, the average $30M household suffered so badly that they “only” had $25M in assets.
How Do You Target the UHNI Market?
There’s something nice about small, discrete markets: reputations matter and good reputations matter most. A small group of architects caters to the UHNI market. A small group of custom builders work with these architects. And a small group of interior designers furnish these homes. Unlike the mass market, where reputation is distilled and hard to trade on, the UHNI market is focused, clubby, protective, and serviced by “their own.”
You see this with fancy designers who seem to be associated with all the best homes in an area. When a custom builder’s name pops up on lawn signs in the best neighborhoods, every integrator in town is pining to have a relationship with that one preeminent architect. Breaking into the market is not easy, especially if you have a competitor who has been successfully servicing this peer group. But there is a weak link in the chain: the builder.
Builders are likely to have a bad experience with an integrator, because they personally feel the pain of disorganized installations, poor system performance, operability troubles, and client complaints. Builders focus on the manufacturability of the home, not the performance. Woe to the unlucky integrator who adversely impacts the manufacturability of the home.
Lucky for you, finding a disgruntled builder is straightforward. It just takes a persistent sales effort.
Proving Your Teamworthiness
Think of your first few jobs in this world as a market development project. Don’t discount. Instead, overdo it on the service side. Provide architectlevel documentation. Run your crews like a precision military force. Accept responsibility for all glitches, failures, and hiccups—even those caused by other trades. And most importantly, deliver an A-class system on time and on budget.
I’m sure that you believe you do this every day, but you don’t. Because if the idea of targeting your business to the UHNI market is intriguing, that means you’re not doing it yet. And the reason you aren’t doing it is because you haven’t consistently impressed the high-end architects, builders, and designers you’ve had an occasion to work with over the years.
Look back at your projects. Perhaps you had that golden opportunity to shine. Perhaps you were given a project with an A-Class architect, builder, or designer involved. If that project didn’t immediately lead to more projects with that same peer group, then you failed. But all is not lost. Think about what went wrong on that project, analyze the failings, and re-orient your organization to provide top-notch service.