How does watch allocation work?

Podcast of this post

A week ago @nycwatchguy started blogging too – which is good news for the watchfam. In his most recent post he discusses “The rules of engagement” for brands in the watch world… and I thought I would share some frameworks to help folks understand with a little more detail how brands think about the process of allocating a watch to a client. I still agree with him, that it would be nice if brands were more transparent, however, I think we should not hold our breath.

How does it work?

So I made these really rudimentary tables to try and explain the underlying frameworks which brands might follow. None of the numbers are applicable to any brand, but simply there as an illustration so you can visualise the situation, and then figure out where you might place yourself in the context of a brand – and how the watch you want to buy, might be viewed by the brand. This will probably help you assess your own chances of ever getting a watch. Remember, nothing is set in stone (due to the lack of transparency) and if “you know a guy” or you happen to be best friends with some boutique manager, then this clearly doesn’t apply.

Example of customer segmentation

So first, this concept is probably not news to you, but most businesses have some sort of segmentation for their customer relationship management (CRM) process – the above table is merely an illustration – this might vary based on the affluence of the average customer in that location, or by the location itself (e.g. airports) – and the exact numbers will vary by brand too. Paul Thorpe recently posted a video about this after a Rolex AD in the U.K. revealed some of this information (with specific numbers) so you can watch that if you’re keen to see more.

Example of product segmentation

This table is perhaps more interesting, and I think this is where brands are having to shuffle the segmentation to accomodate the impact of secondary market prices. First, let me explain it. The ‘category’ number refers to the overall ranking of the watch from the brand’s perspective – so Category 1 “hot” is where you would find watches like Rainbow Daytona, Lange Triple Split etc… and Category 1 “not” is perhaps where you might find a Leopard Daytona or a Journe Vertical Tourbillon. The Patek 5524G might sit in Category 2 “not” for example. Honestly, I have no idea how the brands classify their watches precisely because of the impact of the secondary market. Historically, you would have expected a Chronometre Bleu to be in Category 3 or 4, but today, it is THE most desired watch from the brand, so perhaps it would sit in Category 1 now. I’d imagine that limited edition pieces would be placed in Category 1 or 2 as well, but hopefully you get the idea.

So the way it would work is along these lines – If you’re a VVIP, you can access Category 1 “hot” and everything else. If you’re a new customer with no history, and unknown to the brand, you might be limited to Category 3 or 4, “not”. As you spend more, you will begin progressing up the ranks to “promising customer” or beyond – and this will unlock category 3 and 4 “hot” pieces; even potentially Category 2 “not” pieces – as the sales staff are trying to move you into the VIP territory, they might need to let you buy something more valuable. Brands encourage staff to say things like “build a relationship with the boutique” and NOT to say things like “package deal” etc – this speaks to my previous article about how poorly Vacheron’s boutique handled the possible sale of an Everest watch.

Now, here’s the problem – the Vacheron Overseas in steel was likely a Category 3 or 4 piece, only about 9 months ago. I know this because I bought one at a discount, and they were quite readily available to anyone. Today, there is a waitlist of multiple years – so would you blame the brand for moving it into category 1 or 2? Same goes for the Odysseus in steel – strictly speaking, it shouldn’t really be anywhere near Category 1, but more than likely, it is. So as the market sentiment shifts, the categorisation of the watch shifts too – making it harder to pin down a table like this for any one brand, because demand changes the way they want to ‘reward’ VIP customers for their loyalty.

Now as @nycwatchguy says… it would be nice if brands just published their own version of these tables and people can decide how they want to spend their money, with which brand, and maybe even create a multi-year budget to work towards their grail Category 1 “hot’ watch. You may have noticed… Built-in to this, is the number of watches customers own – so the whole problem with flipping also goes away because people will need to keep their watches to retain VIP and VVIP status… selling a watch even after 3 years etc, may result in not being in the right CRM segment to access the watch you want. Brands might even request to see proof you still own the watches you bought, to ensure that you meet the criteria.

So why do I think brands will never go down the transparency route?

The problem with full transparency, is how it handcuffs the brand from doing what they want, however, and whenever they want. The very same framework which they would publicise, is the one which the public will use to chastise them later on. In fact, take @nycwatchguy’s latest purchase as an example, the new Vacheron Everest Dual Time… I consider him a friend, and I am exceedingly happy he received it. I also think that he is one of the most deserving owners, simply because he was ready to pay serious money for the original prototype and simply didn’t win it at the auction (he was the underbidder). So of course, he is the right sort of client and ambassador for this watch. Problem is, to my knowledge anyway, he only owns one other Vacheron, so he would not qualify as a VVIP or even a VIP. So how would it look if they published the above CRM information, and then sold him this watch – people would go ape sh*t, right? He would have to keep it a secret, which is not a reasonable request – so he simply wouldn’t get it.

That being said, brands DO want to be able to make exceptions, and they DO like the flexibility that comes with this process not being transparent. The other problem is of course the dual sales channels i.e. authorised dealers, and brand boutiques. Places like Watches of Switzerland (WoS) will have these CRM tables, but across multiple brands – this is even more complicated, since they have multiple ‘carrots to dangle’ in front of big spending VVIPs – whether it is a 5711 or an Overseas, they don’t really care. They just want to shift watches. So how can Vacheron publish their version of these tables, and then reconcile with WoS who have clients buying multiple brands? Let’s say the published it anyway… this would lead to people NEVER buying Vacheron watches from WoS, because they want to get their grail Vacheron and need to become a VIP at a boutique! WoS would surely not take well to the brand doing this, right?

As mentioned already, the final reason is the market constantly changing. Imagine if this stuff was public, and then the Overseas hype started – they might have to allocate this ‘hot’ watch to people with little to no spend – and their own public rule book would hold them to account. This sounds like a massive headache; Why would they give the customers a stick to beat them with?

Conclusion

In short, this game isn’t transparent, and I don’t see a future where it will ever be. People who know how to play the game, using the above framework, will realise that there are ways of increasing your own odds – buying strategically, building relationships, and maintaining awareness of the watch market as prices fluctuate. If you had a watch in mind as your grail, and you see it rising in popularity, sell some stuff and buy it ASAP before the hype train leaves the station! If you can’t move fast enough to do that, it will simply move into Category 1, and you’ll never get it – that’s on you.

Hopefully this helps someone, and congrats again to @nycwatchguy on landing a grail – it took a few years, but I am sure it was worth the wait! This topic is super interesting of course, perhaps we should start a podcast?! 🙂

-F

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