ART NOUS

Sheepskin coats and trilby hats may not be among the first images that spring to mind when Sotheby’s auction house is mentioned but there’s a distinct similarity between secondhand car dealers and those flogging art. Each needs to attract buyers as well as sellers and each, naturally, tends to concentrate on the variety of products for sale as well as taking a good slice of the profits.

But it is Sotheby’s which can lay claim to using the more sophisticated marketing techniques. Car dealers are justly proud of their direct marketing initiatives to individual consumers, with the emphasis on building “relationships”, but Sotheby’s was there long before them.

Founded in 1744, the company has kept a careful record of transactions and details on its customers. As a result it now puts into practice the sort of relationship marketing techniques which companies such as Heinz, Tesco and Vauxhall are only just discovering.

“We can see what customers have been buying and when they have been buying. And we can get a pretty good clue as to what they are buying as collectors,” says Tim Robson, Sotheby’s director of marketing Europe.

Four years ago the marketing department set up its own database and has now incorporated it into its in-house list of customers and transactions. It includes “anyone who has ever had any contact with us” as well as information about export transactions from Sotheby’s branches around the world.

Like other loyalty programmes the department also sends out cards asking customers about areas which interest them. Prospective buyers are invited to lectures and, when a sale is due, the database is trawled for likely customers and invitations are sent out.

What’s under the hammer is arguably intrinsically more attractive to consumers than other “everyday” goods for sale – Robson describes the objects themselves as performing a sort of “subliminal marketing” role.

One thing the database does prove is that the 80:20 rule beloved of so many businesses – where 20 per cent of the consumers supply 80 per cent of the custom – applies to Sotheby’s too, though some observers suspect the figure is more like 95:5. This is why keeping tabs on known consumers is so important.

“There has always been a core group of people who are building collections. Through the generations Sotheby’s – and other established houses like Christie’s – have records of these people going back almost to the years we were founded. We’ve followed customers and collections down the centuries – that’s real generational marketing,” says Robson.

“Both companies know to a large degree, especially in the UK, where the best properties are and in what state they’re in,” he adds.

Though Sotheby’s won’t discuss it, the main auction houses keep extraordinarily detailed records on prospective clients, with information gathered by people whose sole task is to wine and dine them. Their aim is to find out who in vastly wealthy families is likely to inherit, where the tensions lie, who is likely to contest the will and how a collection is likely to be disposed of.

Clearly the information gathered is sensitive; in fact it is probably illegal for companies to hold under the UK’s Data Protection Act which is why it is often stored abroad. Banks are not the only businesses attracted by Switzerland’s secrecy laws.

When the distressing time comes to sort out the will of a loved one, Sotheby’s is there to help. It has its own department to help sort out tricky legal problems, including the issues involved in valuations. So complex and costly can these problems be that in the US most collections tend to be in the hands of lawyers rather than the families themselves.

Clearly Sotheby’s can make a strong case to probable inheritors. Allowing the firm to take on some of the burden means only lawyers are likely to lose out and who but a lawyer could possibly object to that?

Bridging the gap between the consumer and the business is the basis for every loyalty scheme – the aim is to make the consumer feel good towards the brand. Sotheby’s does this by employing people who share similar interests with its consumers. For every collection and collector there is an expert at Sotheby’s, many of whom are collectors themselves.

Robson is a collector and expert in the arcane field of financial documents and has a keen understanding of what motivates consumers.

The atmosphere of the auction room plays a key role. Compared with other ways of buying, Robson describes it as the difference bet-ween watching TV and going to the theatre.

“It’s a competitive environment at a business level. It appears relaxed but the atmosphere is charged; and when people first go they are unsure of the procedure. Gradually they get into it and once they’ve stuck their hands up to bid for something they get a real sense of achievement,” he says.

There are a variety of reasons why people become sellers. The main factor, it seems, is not because they are short of money but because they are bored.

“People reach the point of their collecting career where they can go no further so the collection may lose its appeal. Completing a collection is a fever and when it’s finished it’s no fun anymore,” he says. Some buyers do so to alleviate boredom. Robson points to a group of affluent women in France who meet for regular trips to Sotheby’s Geneva auction house to buy jewellery.

Another reason for purchase is straightforward enough: attraction to the objects on sale. However, says Robson, there are also groups of high net worth individuals who have gone through the whole gamut of cars, yachts and prints and are looking for a new interest.

“They are seeking other ways to reflect their status. They buy into the experience of coming and purchasing what they want here, or at other auction houses,” says Robson. “They are also seeking something else to engage with.”

Death is another important factor, since inheritance often prompts a visit to the sale rooms, both to buy and to sell. Robson says the ageing population in Europe, including the UK, means the wealth accrued over a long period is falling to the middle-aged, an increasingly lucrative sector for auction houses.

Sotheby’s New Bond Street auction house may not look like home to cutting-edge marketing techniques but a fundamental reason for the success of this multinational business over the past 250 years is its mastery of techniques touted by today’s marketing “gurus” as revolutionary.

Despite its carefully nurtured image of old-established English gentility – nurtured in part by a French ad agency called Lorin Lilti – there’s nothing old-fashioned about Sotheby’s marketing.