What do you do when the economy tanks and your business relies on selling high end automobiles, the ones that cost hundreds of thousands of dollars?
If you’re Stuart Hayim, you figure out a new way to sell and just keep moving forward.
Selling expensive luxury items during a recession
Hayim is the owner of Experience Auto Group which sells Ferraris and Maseratis out of three boutique luxury showrooms: Maserati of Manhattan, Ferrari Maserati of Long Island and Ferrari Maserati of Ft. Lauderdale.
“In the world of selling expensive products, everything is relative,” says Hayim. “If you get a Ferrari with everything handcrafted, it’s a piece of art with mechanical engineering that’s probably two decades ahead of the rest of the world.”
“We shouldn’t be surprised that there’s a wait list for the product, even if it costs $250,000 or $300,000.”
Buying luxury based on value, not price
Hayim says high net worth buyers are usually inclined to make buying decisions based on value, not price tags. “Does $250,000 bring the buyer $251,000 of value and pure pleasure?” he asks. “If so, the economy is not an issue. If it brings $249,000 of value and pleasure then the economy really was a factor.”
Still, Hayim found when the world changed during the 2008 Lehman Brothers period, not only did the economy go South, but even affluent people were showing an emotional reluctance to purchase despite their financial ability to do so.
“During that time, more people than I would like to remember would come in, negotiate a price and then say, ‘You know, I can afford it, but I just don’t want to buy it. Where can I drive it?’” Hayim says.
“I’d say, ‘What do you mean, where can you drive it? You can drive it anywhere.” “’Well,’ they’d say, ‘I can’t drive it to work because I don’t want the other guys to see I’m driving such an expensive car.’”
Conspicuous consumption was becoming dirty, Hayim notes. Instead of being something to aspire to, it was something to hide. That was one of the reasons Hayim turned down the Rolls Royce franchise when it was offered to him in 2008. “People would tell me that other drivers clearly disapproved when they were driving a Rolls and stopped at a red light,” Hayim says. “I realized there’s a cultural problem more than a financial problem.”
Marketing techniques to sell luxury during a recession
Hayim’s solution to this problem was to design a new marketing strategy, one that would make prospective buyers feel good instead of guilty about spending some of their big bucks again. That strategy was so successful at increasing business that, in 2011, Hayim’s three luxury car dealerships were ranked #1, #2 and #3 in sales in all of North America.
Hayim began throwing parties for charity, high-end events held inside his showrooms, all of which are lined with Maseratis and/or Ferraris. Invitees were and continue to be delighted to attend because doing something positive for the needy fosters a sense of worth.
Hayim directed his salesmen to simply be available to answer questions instead of trying to get them to come and see a car. In other words, Hayim invited donors to the charity function and the sales part became purely passive.
It’s a great example of thinking outside of the box to prosper during the Great Recession.
The charity connection for Hayim started for when he was 32 years old and in the hospital with cancer. “I had a CAT scan, and I remember wondering who had paid for this machine…probably some old guy over 50,” he says. “Now I’m over 50, and it’s my generation’s turn to pay to make the world a better place.”
Buying and selling in a win-win atmosphere
Hayim says his business training began when he sold some rugs to Wal-Mart in 1991. “I know it’s the far end of the from Ferrari and Maserati, but that’s where I learned that, properly structured, one and one can add up to three to make the world a better place.”
Doug Wolf, Hayim’s Wal-Mart contact, was involved in a transaction involving rugs that cost $3 each. “He bought a million of them, and as I was writing up an order, he asked me if I thought I could see my way clear to giving a 25¢ discount,” Hayim remembers. “He told me that if I could give a 25¢ discount, instead of putting the rugs in Wal-Mart stores for $5.97 he’d sell them for $4.97, in which case he thought he could buy one million, two hundred and fifty thousand of them.”
“I asked what he could do if I gave him a 50¢ discount,” says Hayim. “He said if I could give 50¢, he would give me the order for a million two fifty and another order for the following month because he was so sure the rugs would sell out.”
“So, now I’ve sold 2.5 million rugs but I’m out 50¢ on each one.”
As Hayim was leaving, Wolf asked him if he knew where to go next. “I said, I guess to the bar and have a drink,” says Hayim. “Wolf said, no. Go to India where the rugs are made, show them your purchase order and see if you can negotiate the 50¢ from the manufacturer.”
Hayim did exactly that, and got a 55¢ discount. When I got back, he realized the experience had taught him how to structure a deal in which everybody wins.
“Poor people got wages for making these rugs, the manufacturer got rich, I got a 2.5 million order and protected my margin, Wal-Mart sold 2.5 million rugs and protected its margin and 2.5 million U.S. consumers bought the rugs at $1 less than they would otherwise have done,” Hayim says.
Hayim has tried to structure every deal that way ever since. “You can do make a wonderful donation to charity and get recognition that can benefit your business,” he says. “It doesn’t mean that the charity got any less money.”
The charities that benefit from Hayim’s events get what they want, his business gets what he wants, the clients get to be donors and receive tax deductions, and they get to meet a lot of famous people into the bargain.
Hayim also gives a small donation to a local hospital for every car he sells. The hospital then sends an email to the buyer notifying him or her of the donation Hayim’s agency made on their behalf.
“If you structure a deal properly, my win is not your loss,” says Hayim. “There are winners on both sides of the table. It’s all good.”
Written By Julie Crawshaw