Is a velvet rope marketing strategy part of your offering?
Wonder if your plans are missing something?
A red velvet rope approach arouses an intangible, emotional customer sense of desire. It translates to “I want to do or have” mindset. So the rational buyer’s cost-benefit analysis goes out of the window.
In New York City, when people see a line, they often get on it before asking why it exists.
In a world where time-scared people look for speed and convenience, a line translates to a reward of high perceived value.
So, why do people indulge in this irrational behavior relative to their scarce time and resources?
Because they seek to:
- Avoid emotional FOMO and disappointment,
- Acquire bragging rights by getting something of intangible importance, and/or
- Attract attention from others who desire elite status.
In a marketplace when your prospects have infinite options, the use of a velvet rope marketing strategy creates real and perceived exclusivity. In turn, this selectivity translates into customer desirability that results in premium prices and increased customer lifetime value (aka: CLTV).
Let’s examine how you can apply a velvet rope marketing strategy to your business plans.
What Is A Velvet Rope Marketing Strategy?
The Velvet Rope Marketing Strategy Definition:
Is a selective and targeted approach to your customer base. In turn, this builds desire for your products and services due to their higher perceived value, limited availability, and reduced purchase friction. This translates to elite standing and luxury.
So you can increase prices by adding special perks that further adds to your offering’s allure. Since it shows your audience has the ability to pay for them.
When you employ a velvet rope marketing strategy, you make a conscious decision to focus on a restricted audience. By its nature your potential customer base is limited in size and defined by a set of guidelines.
So why limit the potential size of your audience?
Because the revenues generated over their customer lifetime is disproportionate to the size of the market segment.
According to 2013 Boston Consulting Group research:
In aggregate, consumers spent over $1.8 trillion worldwide annually on items they defined as luxuries. BCG dubbed this purchase behavior trend as the “urge to splurge.”
For profitable luxury marketing success, consider these 4 key challenges:
- Difficult-to-define new high-spending consumer segments and their buying behaviors;
- Specific location or geography attributes have an impact on retail luxury offering availability and visibility;
- New and innovative business models caused by cultural changes; and
- Impact of evolving digital technologies create disruptions on marketing and selling.
Why Should You Add An Exclusive Customer Experience Strategy?
What can your business gain from adding an elite approach to one or more audience segments and/or product offerings?
Use an exclusive, red velvet rope approach to set your organization and offering apart from competitors and close substitutes.
- Enhance the perceived value of your products and services. Combine high price and high-tough experiential benefits to make people want them more. Include intangible emotional perception to increase the “I must have” desirability.
- Limit the supply, access and/or status of your products and/or services. For example, Lululemon limits product quantities so customers feel they must buy now!
- Develop a high-involvement offering consisting of tangible and intangible elements. So customers get emotional significance based on their personality, status and lifestyle.
In turn, adding this elite approach to your marketing:
- Builds your reputation;
- Increases profitable revenues; and
- Creates demand by limiting availability.
Since this preferential VIP treatment makes others want to belong, it creates an emotional sense of FOMO. As a result, both your customers and your employees feel special by association.
BUT your guidelines for admission must NOT discriminate based on race, religion, country of origin, sexual orientation, and/or other distinctions. Since this causes legal and/or social issues as well as negative public opinion.
How Do You Provide Velvet Rope Marketing?
Deliver top quality products and services and content.
Provide an elite experience that makes your customers feel special. Include discreet VIP quality service 24/7 in the manner and context your customers desire.
Actionable Velvet Rope Marketing Tips:
- Define audience qualifications including average amount of customer spend and frequency of purchase. This helps to target prospects and to determine marketing investment and profitability. It’s also referred to as Recency, Frequency and Monetary (or R/F/M).
- Perform detailed price and fully-loaded cost analysis to ensure adding special services and/or benefits yield higher margins and CLTV. Also, assess the value of additional benefits as well as potential lost revenue opportunities.
Where Did the Power of the Velvet Rope Come From?
The over-the-top 450 room Waldorf Hotel opened just prior to the Panic of 1893, a major depression caused by railroad over expansion and a run on the gold supply.Built on the site of William Waldorf Astor’s Fifth Avenue home, the hotel cost $400 million.
Unlike other hotels at the time, its owners intended for The Waldorf to become more than a temporary residence for travelers. Instead they created a place where young New Yorkers with money went to be entertained and seen in public. By design it allowed its rich patrons to indulge in social climbing as a spectator sport.
According to George C. Boldt, the general manager:
“We must make this into a haven for the well-to-do. Pad it with luxury and ease of living. There are always enough people willing to pay for these privileges. Just give them the chance.”
Waldorf Hotel employees had to follow Boldt’s 5 Rules of Customer Service:
- Always have enough supplies (aka: hot water) for all 450 hotel rooms at the same time;
- Never speak abruptly to a woman nor be indifferent to her complaints. Because women expect a hotel to have things done for her without troubling herself and can leave with 5 minutes notice;
- The customer is always right. Be as courteous to the lowest paying customer as the highest;
- Execute every customer request with military discipline; and
- Know the name of every visitor and remember it when they return the next time.
Actionable Velvet Rope Marketing Tip:
- Provide quality customer service beyond expectations. Where possible anticipate the needs of your customers and their guests.
How a Swiss Immigrant Became the Public Face of The Waldorf Hotel
Here’s how Oscar Tschirky became the public face of the Waldorf Hotel and head of its restaurant.
While head of the private dining room at Delmonico’s, New York City’s top restaurant, Tschirky learned of the new Waldorf Hotel’s restaurant. To get this job, Tschirky asked a patron to introduce him to the hiring manager. Also, he asked other patrons to sign a letter to recommend him. So, he arrived at his job interview with 10 pages of recommendations.
After securing the prestigious Waldorf position, Tschirky did his homework to help him to provide exceptional personal service in his new job by:
- Working at a restaurant downtown in the financial district until hotel construction was completed. So he could learn the language of business and build relationships with the up and coming railroad men and bankers.
- Learning the names of New York’s 1,368 millionaires.
In an increasingly populous and anonymous city, Oscar understood that everyone wanted to be known. In the process became the hotel’s most valuable asset.
Actionable Velvet Rope Marketing Tip:
- Build and develop your network before you need it to get information and introductions. Like Oscar of the Waldorf, Andy Crestodina of Orbit Media believes in building your network, one person at a time.
“The true power of social media is to build your tribe!” – Andy CrestodinaClick To Tweet
How Did the Waldorf Hotel Attract the 400 Top Families to Its Opening?
To attract the Who’s Who of New York society to the Waldorf Hotel’s opening, George C. Boldt, the general manager, planned a major charity event. It honored Mrs. William Kissam Vanderbilt’s pet charity, Saint Mary’s Free Hospital for Children.
Tickets to the opening cost the princely sum of $5. All of the money went to charity since The Waldorf provided:
- Rooms for the event,
- Music by the Damrosch orchestra, and
- Champagne supper.
Despite a rainy downpour, 1,500+ of the 400 top families arrived at The Waldorf on March 14, 1893. In addition, people lined up outside the hotel to see the attendees as they entered the venue according to Oscar of the Waldorf by Karl Schriftgiesser.
Actionable Velvet Rope Marketing Tip:
- Get people to want your product or event by attracting the people who your target market cares about. Take a page from Boldt’s playbook. He used influencer marketing before it existed!
How Studio 54 Increased Velvet Rope Desirability
When they opened Studio 54, the New York City nightclub, in 1977, Steve Rubell and Ian Schrager added a twist to velvet carpet marketing strategy. After studying the Oscars, they made unpredictability part of getting into the club.
Because everyone had to wait in line to gain entry to Studio 54 including A-listers.
AND, getting in, depended on how the bouncers felt about you on that specific night. You couldn’t buy or charm your way in, even if you had gotten in the night before.
As a result, Studio 54 cracked the code to being irresistible. Their velvet rope marketing strategy created FOMO on steroids. Either you belonged inside the exclusive club or you longed to be inside.
Since velvet rope brands, products and/or experiences are beyond your audience’s control, they want them more. So they show up to wait on the line in hopes of being chosen to enter.
What 3 Tactics Will Make People Lust To Be On Your List?
To take advantage of line-forming selectivity, add these 3 tactics to your elite marketing.
Since they make your offering so emotionally desirable, people lust to have them because they’re difficult to obtain.
As a result, people willingly invest time and/or money to get them. In the process this adds allure to your offering since people visually show their desire for it by waiting in line and/or paying a premium to get it.
1. Gain Early Access Cache
This velvet rope marketing tactic is achieved by being the first to do or buy something. For example, people wait in line to buy the latest Apple product.
How can you apply this approach to your products and services?
Brainstorm how you can make your customers feel special about getting early access to your product. Think in terms of events around your product.
Actionable Velvet Rope Marketing Tips:
- Create sneak previews for products and live events with limited availability. Offer them to your best customers. Alternatively, charge a premium for additional perks. For example, offer a product preview.
- Offer ways to create user-generated content to share on social media or for additional purchase. For example, before entering the elevator to go to the top of Taipei 101 Tower, they take photographs and sell them at the top of the building as souvenirs.
2. Make the Walk of Fame
Inspired by the red carpet entry to Hollywood events like the Oscars, strutting from your vehicle into a high profile event provides its own form of reward. It gives people a level of celebrity by association with someone or something high profile.
For example, luxury manufacturers, designers and retailers, offer to dress and/or lend high profile jewelry to gain visibility. Even better, these outfits may get a second life in the popular gossip media like People Magazine.
Alternatively, contributing to the goodie bags for attendees and/or winners for major events is big business. since space is limited and products are vetted. While events like the Oscars and Grammys have a process for vetting products and related fees.
Why should you participate in this process?
To get your products and services used by influencers.
Actionable Velvet Rope Marketing Tips:
- Create an opportunity for people to be seen at an event with limited access. Apply this tactic to the rock stars of your niche. For example at top marketing conferences, such as Content Marketing World (#cmworld) and Social Media Marketing World (#smmw), my colleague, Jay Baer, hosts “The Warm-Up”, a tradition he started in 2014. Only open to the event’s speakers, these special gatherings allow the who’s who of the conference to mingle.
- Create backdrops for personal and social media photographs. For example, the Marriott Marquis in Times Square has a selfie station on its 8th floor opposite its concierge. Also apply this approach to conferences and live events.
3. Create Limited Edition Product or Service
The limited supply of a one-time item that won’t be available after it sells out adds to its allure. As a result, ownership is special.
For example, while at Bertelsmann, I created a series of leather-bound collectibles of science fiction classics. Priced at 150% over the average book we sold, these special editions yielded 50+% profit.
So how can you extend your offering to create special edition items customers line up to buy?
- Know your audience very well. Pay careful attention to the factors that influence their purchase decisions. For example, based on past sales and related tests, I knew that Bertelsmann’s science fiction buyers would pay a premium price for products they perceived had collectible value.
- Understand the price and cost dynamics of each product or service. To minimize risks and costs, I published these expensive leather bound science fiction books after customers submitted their orders. As a result, I avoided expensive excess inventory or overruns.
How Can Velvet Rope Marketing Work For You? [Case Study]
Having worked on projects targeted at high net worth individuals (aka:HNWI) at Citibank’s Private Bank, I appreciate that every detail of customer service and interaction matters. A team was dedicated to serving the needs of the clients who visited our offices in the iconic Citigroup Center. Like Boldt and Oscar of the Waldorf, their manager, John Knowles, taught them to go the extra mile when serving a client since no detail was too small.
Velvet Rope Marketing Case Study: Project Voice 100
To understand how to implement an offering using the velvet rope marketing strategy, let’s examine what Bradley Metrock did to create Project Voice 100.
Metrock got the top voice and conversational AI business executives to attend an in-person conference in Chattanooga, Tennessee in April 2021 while COVID still presented travel challenges in the US.
Watch this short video created by Voice Spark Live’s Nicholas Sawka and AJ Wool. They recorded a set of micro-interviews with the Project Voice 100 attendees.
Velvet Rope Marketing Problem: WHY Attend Project Voice 100?
To help emerging voice and conversational businesses meet peers, partners and resources to help them to do business deals with bottom line impact.
While traveling around the US to meet with members of the voice-enabled industry in early 2021, Metrock discovered that senior executives, entrepreneurs and investors remained willing to travel and overcome the necessary hurdles despite existing COVID challenges.
In addition, Metrock’s team acted as matchmakers to ensure attendees made better contacts. This helped to ensure positive results for attendees.
Velvet Rope Marketing Action: How Did Project Voice Get People To Attend?
Metrock used velvet rope marketing to get people to attend Project Voice 100. To increase the allure of attendance and FOMO, he made the event invitation-only.
- Limited the event to 100 top level attendees. Further, attendees had to be approved to ensure that they had the right fit and qualifications.
- Increased ticket price. Project Voice 100 cost more due to the small number of attendees.
- Had to be willing to overcome late-COVID travel hurdles to meet face-to-face. Even before COVID vaccines started being administered, Metrock chose to hold the event in the Chattanooga Conference Center. This venue was safe for attendees since it had special air filtering technology.
Velvet Rope Marketing Result: What Did Attendees Get Out of Project Voice 100?
- Made business-critical connections to help grow their voice-enabled businesses. Metrock and his team carefully curated one-on-one executive meetings. Further, they hand-selected and matched attending executives to facilitate networking to build relationships and businesses to support the growth of the voice community.
How Can You Improve Your Exclusivity Marketing?
You can apply a Velvet Rope Marketing Strategy to your entire offering like Studio 54 or to just one segment or product like Project Voice.
Use these 3 Actionable Velvet Rope Marketing Tactics:
- Share information about your organization and/or products to create a sense of selectivity and to arouse FOMO. This psychology drives a lot of social media use and sharing. So ask: “Do influencers and fans want to associate with your organization publicly, regardless of whether they purchase anything?”
- Allow qualified members of your audience to integrate your brand and/or content to create user-generated content (aka: UGC). This applies to a wide range of content formats and platforms. To find the people to target with special velvet rope treatment, use an AI-powered social tracking tool like Talkwalker.
- Transform your products and/or services into elite items. So your potential customers feel FOMO and willingly pay a premium to purchase them. Sports events have perfected this approach with premium priced boxes.
Velvet Rope Marketing Strategy Conclusion
Select the products and/or services that a tiny segment of your customers want so they can feel special and pampered.
Because, by removing the purchase and other friction from their experience, you create desirability for your offering.
As a result, your customers will pay a premium and generate higher profitable sales over time.
So adapt your brand and offering to attract these elite customers since they will pay a premium for this special treatment.
To use this velvet rope marketing strategy well:
Ask if your brand and/or product line-worthy?
If so, determine what will make it special and, if not, assess what you do to make your best customers feel elite.
Get Heidi Cohen’s Actionable Marketing Guide by email:
Want to check it out before you subscribe? Visit the AMG Newsletter Archive.
A Revolutionary Approach to Content Marketing, and Today's Digital Consumer, 2nd Edition, by Marcus Sheridan.
I've written often about Marcus Sheridan's approach to marketing. His book is one of the must-have guides for every marketer.
Now, for a limited time, you can get the updated edition as an ebook absolutely free!
Read the AMG Interview with Marcus Sheridan on the first edition of They Ask You Answer.
Photo Credit: …
Note: This article was originally written and published on September 2, 2010 under the title, “Is a Digital Line Forming To Your Product?” It was significantly expanded and updated on April 6, 2021.