13 March 2008

The Emperors Club: Lessons in Marketing

By now, everyone has heard of terms like Kristen, Ashley Alexandra Dupré, and the Emperors Club; all in connection with the fall of New York's governor. I won't write today about moral failings, the mentality of power, the impact of seemingly small decisions, addictions. Man is fallible, and the public (or at least America) loves to watch when man falls. No, I'd like to chat just a bit about the lessons we can learn about marketing.

Let's look at this story not from the point of view of Spitzer or even Alexandra Dupr
é; no, let's look at the escort service, the Emperors Club. Prostitution is the oldest profession for several reasons: high customer demand, very low barriers to entry to start a business, low SG&A costs (particularly marketing). With the advent of internet, reaching new customers has become easier and easier.

The most poignant lesson of the Emperors Club is in customer segmentation.
Different customers buy these services based on different needs important to them. Pricing for prostitution and escort services in the United States varies widely, from a host of services under $100 to the +$10,000 providers. There is a large customer group who buy these services on price. Others buy on availability and convenience. Attractiveness of the service provider clearly impacts price. At the highest price levels, attractiveness seems not to be the primary driver of price.

The services of individuals and companies providing escort and high-end courtesan services are selling to a group of customers who really are buying on a different set of priorities:
  • Paying more is better There may not be anything as American as this, the simple fact that a niche group of customers view how much they pay as directly related to the quality of the product or service they purchase. Why does Lasik surgery vary so much in price? Why are there more service providers who charge >$3,500/eye (4.6%) than those charging <$1,000 (1.9%)? Because a significant group of customers in the US want to spare no expense when it comes to their eyes. Walk into a high-end Lasik Surgery operation, and you'll find it to look more like a spa than a medical facility. Patients are moved from room to room, to further enhance the experience. The Emperors Club targeted these customers, those who can and would spend more on escort services.
  • Customers want more than the product In a fascinating article for London's Daily Mail, Vanity Fair's Vicky Ward provides a glimpse into what these customers want.

    Other users of agencies are said to include major CEOs, Arab princes, scientists, even the terminally ill. One prostitute, a stunning blonde who worked as "Gloria" - none gave her real name - a legal secretary by day but an "escort" by night, told me that often she got treated far better by the men on her nightly excursions than the misogynists at her prestigious law firm, who thought nothing of patting her behind and asking if she wanted to accompany them on dirty weekends when their wives were out of town.

    By contrast her "clients" were gentlemen. "Often these were just lonely men who wanted to discuss TV programmes, or have a friendly face to talk to. Some did not even want sex," she says.

    These customers wanted more than sex, a list of needs including counseling, discretion, emotional connection, escape from loneliness, sexual exploration, peace of mind, quiet, stress release, and joy among many others you could name.
  • Customer retention is the key to profit growth The press reports imply that other escorts had experienced a less than pleasant interaction with Spitzer than Alexandra Dupré did, yet he kept returning and the Emperors Club kept listening and providing different options. Finding a new customer is much more expensive than keeping one, and the Emperors Club understood this very well.
  • Customer perception is often much more important than product reality It seems that the services of the Emperors Club weren't dramatically better than other service providers seem to be. Alexandra Dupré seems to be a lovely lady, but there are many more who are more attractive, more erotic, more enticing. These non-product features of what they marketed and provided got them both a premium price and a clientèle willing to return again and again.
I worked hard a couple years ago trying to make an interview happen with an interesting person who I'd stumbled upon when analyzing my site statistics. Her name was Elle Butterfield, and she gave me a glimpse into this world. She was an avid poker player who occasionally played East Coast tourneys, but her profession was that of the high-end escort. She charged $5k an hour up to $75k for a weekend away. Julia Roberts told us in "Pretty Woman" that prostitutes don't kiss their john on the lips, yet Elle guaranteed emotional intimacy and connection for her small list of clients. She eventually closed up shop before my interview was completed, possibly sticking with one of her customers who she'd fully connected with.

94/366 A Quickie

Hope everyone is doing well out there. I've been very, very busy and have neglected posting here. I have to confess I haven't minded an unannounced break. Busy is good, I keep telling myself that. Drop me a line when you can, either through comments or csquard@gmail.com.


Blogger Gene said...

One marketing aspect of prostitution (at least high-end prostitution) that's always interested me is buyer's remorse. Let's say you arrange a tryst, the lady exceeds your expectations, you do the deed...and then it's over. You're done. The money (and soon the lady) are gone. How often is the buyer going to think, "Was that really worth it?" Unless the woman was diabolically skilled in the French arts (forget where I heard that line...Sideshow Mel?).

He's not going to think that before. Or, almost certainly, during. But afterwards, it's gotta run through your mind that this wasn't the best use of your money.

Of course, the buyer's mind might change in a few hours. After he's had a nap. Or a pizza. Still, the next time he picks up the phone, you'd think that thought's gotta run through his head. "Is it really worth THIS much?"

Of course the young lady Gov. Spitzer dallied with must've been extraordinary. It cost him $5000 an hour. Plus his job. His career. His reputation. Maybe his marriage. Maybe his freedom.

12:54 PM  
Blogger The Wife said...

Great picture of you, friend.

Hope all is well and hope things will slow down for you now.

2:03 PM  
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