|Posted on June 5, 2013 at 12:30 AM|
Perusing the June 2013 issue of Residential Systems – the digital issue no less; you can read it here – I came across a column by Ira Friedman entitled “Targeting the Mega Rich: Why Ultra High Net Individuals are the Best Custom Integration Clients.”
Ira had some interesting points in his piece. For one, he defined Ultra High Net Individuals (UHNI) as households with over $30M in disposable income” saying they “represent your best potential clients.”
Ira also claimed, “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.”
As someone who’s company has been around since 1995 and doesn’t “attract and service the $30M client,” I took some exception to some of the things that Ira had to say. While I’m sure that UNHI are the perfect clientele for some companies, I’m not at all convinced that they are “the best custom integration clients” for everyone.
So, I figured I would offer a different take on this and assure those of you with companies like mine that you can continue and even thrive without targeting the UHNI clients. Here are seven reasons why you should think long and hard as to whether or not UNHI clients are right for your firm.
According to Ira, these mega-rich live primarily in California, metro New York, Florida and Texas. (Interestingly, coinciding almost exactly with what Prima Cinema told me where the majority of its systems are located.) So, if you live in one of those four areas, congratulations! You might have a shot at these big money clients. For the rest of us, we might stumble across one once a year if they decide to build a second (third, fourth...) home in the geographic area we cover. (And even then I can’t tell you how often I hear, “Well, I have a lot of this stuff in my main home. This is just a vacation house and when I come here I just want to relax and don’t care about any A/V or automation. Just a flat screen in the family room with a small surround system...")
Ira’s company – Bay Audio – sells speakers to custom installers all over the country, so it is much easier to have a reach that extends hundreds/thousands of miles beyond your base. For the remaining 99% of us, we realistically remain within a 100-mile radius of our home base.
One large difference between a typical homeowner and a UHNI is the depth of their pockets. And if something goes wrong – even through no fault of your own – these are the people that can literally sue you out of business. A legal team with nothing better to do than to tie you up in court while you pay your own legal representation $100s/hour will not only be out-of-pocket expense, but a huge drag on the focus of your company. Oh, and you also will have all of the outstanding money on the project until it comes to a resolution. I have personally seen a client tell another contractor – the pool installer – “I have a lot of money and time. I will take out a full page ad in the newspaper telling everyone how bad you are and then make it my goal to put you out of business!” Think it could never happen to you? Think again. I know of another high-profile southern California custom firm that was embroiled in a lengthy – and costly – legal battle when a customer claimed the speakers they installed used toxic materials that were making him sick. The UNHI often have eccentric, volatile Type-A personalities that might not always respond, um, rationally.
And no matter how great you might hit it off with the UNHI, the likelihood is that you will frequently find yourself in the position of not dealing with Mr. or Mrs. UHNI, but rather one of their assistants or staff. And I’ve been told that these intermediaries “are more than willing to have you fall on the sword if it means they don’t have to.”