The Velvet Rope Principle
In the late 70’s the Manhattan nightclub Studio 54, became famous for celebrity attendees, wild nights with massive drug use, and lines to get in that stretched around the block.
The club became notorious for its exclusivity and people stood in line for hours hoping to get in.
Studio 54 Co-owner Steve Rubell had a motto: “The key to a good party is filling a room with guests more interesting than you.” And he would stand outside by the velvet rope and determine who he thought was cool enough to get in.
Why put up barriers to entry?
When you understand that your services aren’t right for everyone, you need to reinforce that understanding with an “only the good ones get in” policy. That’s what the Velvet Rope Principle is. It’s an understanding that to work on projects you love, you need to ONLY work with clients you love—clients, who are “cool enough to get in.” So the next step to take is to filter out the ones that aren’t right for you.
Becoming selective with who you work with means you are going to say, “NO” to most people. To make up for the loss in quantity of clients, you’ll need to make sure that you are only working with quality clients that can pay the higher fees for working with you.
Start this filtering process by first figuring out your Minimum Engagement Amount (MEA). Your MEA is the lowest amount possible for taking on a new client.
Since it takes time and effort to get a new project up and running, you’ll want to make sure it’s worth talking to them in the first place.
The first step is to ask yourself this question, “What is the minimum size project I will work on?”
The number you land on will immediately eliminate any clients that come to you with a project budget below that amount. Your (MEA) will disqualify those prospects before you ever get into a conversation with them. This is a good thing because it will allow you to concentrate your time on the ones that are worthwhile.
You’ll be tempted to keep that MEA number low. Try to avoid that. Instead, keep this in mind: it takes roughly the same amount of time and effort to work with a client paying you $10,000 as it does with one who is paying you $1,000 for the same or similar service. So you may as well cater to better-paying clients.
Another point to keep in mind is this: Your MEA demonstrates exclusivity. When you say that you only take on projects starting at $10,000 (or $50,000 or $100,000), it shows a level of exclusivity and attracts more of the type of client you are looking for while repelling the clients that are a bad fit budget-wise.
The right prospect—the kind you want to work with—associates higher price with higher value. When you present your high MEA to that type of prospect, instead of saying you are too expensive, what you are signaling is that you are a freelancer that delivers high value.
After you’ve figured out your MEA, you are ready to start using the Client Email Screener in this guide. As soon as you get an inquiry, send them the screener.
What you are doing with the screener is putting up roadblocks (or barriers) into place and getting a prospect to jump over them. (Figuratively speaking of course.)
When you make clients jump over hurdles, and they follow through on it, that’s a sign of trust.
And clients that trust you will pay you more for your services.
How barriers create more perceived value
When you put obstacles in place and make something difficult to obtain, it becomes more desirable.
Think about trying to get into that nightclub. It’s made hard to get into on purpose. The use of that little velvet rope is intentional. We want to get on the other side of that rope because we want to feel worthy and want to satisfy our curiosity of knowing what all the fuss inside is all about.
When you create barriers—and there is demand for your services—what you are doing is leveraging the “Scarcity Principle” to keep the price of your services high.
It’s a matter of context more than anything else. You’ve changed the context from a service that is available to anyone, to a service that is available to the few prospects who are qualified.
This context is illustrated really well in the story of Joshua Bell. Bell, is a world-class violinist and composer who sells out Carnegie Hall for hundreds of dollars per ticket.
When he decided to give a free concert in the DC subway, nobody paid much attention to him. They just walked on by. But when he puts up that barrier to entry—a venue with a high ticket price to get in—the value of his service (even though it’s the same service) goes up.
When you put up your barriers to entry, you are framing it in a context that calls attention to you and your service. You are saying, “Hey, this is valuable. Crossing this velvet rope means something.”
What happens after you let them in?
Once your clients get in, not only will they value the experience more, but because you are charging a higher price, you can focus on providing a better service to each of them.
Having fewer total clients dividing your attention and resources allows you to focus and take the time needed to do great work.
Jon Lax used this idea as the value proposition for his former agency Teehan and Lax. Stated simply, “Fewer projects allow us to focus on doing better work.”
What type of client wouldn’t want to hear that you are focused almost exclusively on their project?
Andy Warhol famously said:
“The key of the success of Studio 54 is that it’s a dictatorship at the door and a democracy on the dance floor.”
That’s how you want to treat your clients once they are in. You can treat them equally because you’ve got a client roster full of A+ clients that allow you the time and space to deliver to them the exceptional value (and great work) they are seeking.