Your Smart-Ass Friends in Digital Business

The latest "victim" of the velvet rope and what marketers can learn from the example (whether they serve a premium brand or not).

a Lesson in Velvet Rope Marketing

Ferrari has standards to maintain—not just with their cars, but with their customers as well.

Everyone knows that Ferraris are expensive, but not everyone knows that Ferrari ownership includes a code of conduct. Basically, if you act a fool and make the Ferrari brand look bad, Ferrari can refuse to sell you any more cars (or at least the special and exclusive models).

There are two main ways a Ferrari owner could make the brand look bad:

1️⃣ Associating Ferrari with bad behavior. Basically, if you create controversy that makes Ferrari look worse for having you as a customer. Imagine an ugly paparazzi situation with your Ferrari clearly visible in the foreground.

2️⃣ Tampering with Ferrari branding on a vehicle. Ferrari's brand, like any other brand, derives some of its power from its consistent presentation. If you tamper with that branding, especially in ways that are likely to make press, you're diluting the ethos attached to that brand.

Justin Bieber is guilty of both—and so, as of last month, he's officially lost some of his buying privileges. The original story published in il Giornale, an Italian newspaper (it's perfectly readable if you let Chrome translate it to English).

So what did he do wrong?

Well, it started in 2014, when he was arrested for street-racing in Miami. He was driving a Lamborghini at the time, but still. Not off to a good start.

Then, at some point in 2015, he took his 2011 Ferrari 458 Italia to West Coast Customs in L.A., where they swapped out the alloy wheels and painted everything electric blue—not just the body, but also the classic red branding on the steering wheel.

Then, one night in 2016, he went partying in West Hollywood and got so wasted he forgot where he'd parked his car. It took an assistant three weeks to find the car (and the valet parking for that period cost $966).

Last but not least, he auctioned the car in 2017. It's hard to quickly explain why that's a no-no to folks like Ferrari, but it's basically adding insult to injury. (The closest analog I have is purebred dog breeders, who will sometimes stipulate in their adoption contracts that, in the event of surrender, you have to give the dog back to them. Love aside, it's basically a quality-control and breed-protection thing.)

It's unclear exactly where Bieber crossed Ferrari's line—and it's unclear why they're only banning him now, five years later—but either way, it's official. At least Biebs has company; he joins Nicolas Cage, 50 Cent, and Kim Kardashian on the list of Mega-Rich Celebrities Banned from Ferrari Privileges.

Well, first of all, it's a reminder that you can fire customers. Healthy brands, like healthy people, have boundaries—and they enforce them.

In the case of an ultra-premium brand like Ferrari, that set of boundaries is often called a velvet rope. You have to be special to cross the velvet rope; you have to belong to some upper echelon, some exclusive group above the rest (and you have to look the part). It's a clear marker of status, which is valuable to us social animals.

Velvet rope marketing uses this phenomenon to business advantage. By creating a velvet rope, you create two groups of customers—the many who aspire to prestige, and the few who take pride in belonging to it—and you create two sets of marketing opportunities, one on either side of the rope. You tell the many that there's a VIP section, you tell the few that they're VIPs, and then you create offers accordingly.

Velvet rope marketing has three essential practices:

1️⃣ Defining the velvet rope. There has to be a clear line between Prestige and Plebeian, and the former group has to be truly exclusive. If people can't see the dividing line, it might as well not exist.

2️⃣ Enforcing the velvet rope. If you don't have a bouncer standing guard, the velvet rope loses its meaning (and therefore its value). If the velvet rope is a gate, you need a gatekeeper—and that gatekeeper has to do their job.

3️⃣ Giving the VIPs special treatment. We all like to pretend that there's no such thing as "special treatment" for certain customers, but... c'mon. It's a reality in every business: some customers are more important than others, and (if we have any sense) we treat them that way because it's better for the bottom line.

Don't get me wrong, you should do right by ALL of your customers, but... this is one of those 80/20 things where it's smartest to keep the big spenders spending.

Ferrari ownership is a sort of velvet rope by itself, just because the cars are so expensive. But the thing about Ferrari money is that, if you can buy one at all, there's a good chance you can buy several—and the thing about Ferrari ownership is that, if you're enthusiastic about the cars and you can afford them, you'll be interested in any special privileges they offer.

This is where Ferrari's code of conduct enters the picture. At some point, they realized that many of the same people who could afford their cars could also afford to make big, stupid, embarrassing mistakes with those cars in full view of the public. They needed a second velvet rope, something that wasn't about money but, instead, about pride and prestige.

As this CBC article points out, Ferrari's ban of Bieber is a big marketing win for the rest of their customers. By enforcing their velvet rope, Ferrari proves that the brand still holds high standards—and more importantly, they validate everyone who still meets those standards. Every Ferrari owner who hears this news is thinking "Justin Bieber got kicked out of this club, but I get to stay."

It's an obvious move when you consider that (A) they're probably only losing one or two sales from Biebs, (B) they send a wave of gratification through the rest of their customers, and (C) they benefit from this press in terms of public perception, whether or not they sell any more cars as a direct result.

BEAR IN MIND You don't have to be a premium brand to make good use of a velvet rope. Really, all you need is a clearly-defined group for your best customers—the ones who are likeliest to spend the most money while giving you the fewest headaches (per dollar spent).

You'd be amazed how often your best customers don't know they're your best customers... and you might be amazed at how much more they're willing to spend when they know they're officially special.

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