There’s so much talk and pressure these days to have a premium offer.
You hear about so much, it’s beginning to sound like the ONLY reason why you got into business.
So, because I love money and want you to have more of it – whether you make your millions going high-brow or low-brow – I thought I’d crack open the code behind creating a high-end product or service …
… by looking at one high-end product that failed on a grand scale so big that they lost HUNDREDS OF MILLIONS of dollars in ONE month.
NOTE: This 2400+ word article is extensive and detailed, but worth the read. You’ll hear ideas that NOBODY talks about, and get a brand new perspective about premium pricing – cuz the truth is, premium pricing doesn’t necessarily mean more cash in your pocket.
Enter Mulberry – the iconic English leather goods brand.
First – a little history.
Founded in 1970 – completely handcrafted in Britain – the original Mulberry design was based on a Royal Air Force document case, debuted in the legendary Biba boutique, and was an instant hit.
Not just with the It-Girls and the hip crowd of the moment.
It was a bag that captured the quintessential British spirit without being dowdy OR over the top.
Penelope Tree and Twiggy had theirs – and so did plenty of the small town Miss Marple types.
That stylish yet practical bag became the mainstay of the Mulberry brand. A version of the original exists in EVERY season designed by Mulberry for the last 40 years.
Who doesn’t love that turn-lock hardware. Kinky!
Up until 2002, Mulberry was considered a ‘mid-range’ or ‘entry-level’ leather goods company – which meant prices ranged from really affordable (around $120 – $300) and topped out at $700.
In 2002, Mulberry added a line of ‘accessible luxury’ bags, introducing a price point that topped out at close to $1200.
They kept their original line.
Because you could still get a nifty Mulberry turnlock purse for $120 – while the new bags, named after models of the minute like Alexa Chung and Lana Del Rey, were the deluxe, candy-colored-yet-infinitely-practical superstars.
This combination of mid-range & high-end was so successful that Mulberry increased in value by more than 500%. Each year. For ten years.
In 2012 Mulberry was worth – in net profits – more than 2.2 BILLION dollars.
2.5 years later Mulberry is currently worth 609 million dollars.
Okay, so how does a company lose more than 1.5 billion in value in TWO YEARS?
They tried to enter the super-luxury market. Where Hermes hangs out.
On the surface, it seems like a no-brainer. Mulberry was already making a $1200 bag of incredible quality, why not a $2200 bag?
It should have been a no-brainer. What happened instead was a titanic disaster.
Here’s how it went down.
Mulberry hired a new CEO, Bruno Guillon, straight from Hermes. So he gets luxury. He gets leather. He gets quality. Sounds good.
: He opened up a second factory in Britain, in a town with a 60% unemployment rate. Sounds GREAT for the local economy.
: He produced a line of bags with a base price of $2900 and ranging up to $6000.
: He created a fancy ad campaign filled with pretty models and soft colors.
Check and check.
And he discontinued every bag with a price point below $2500.
That’s right. He shut down the popular and profitable entry level and ‘accessible luxury’ lines that had scored the company billions of dollars in revenue.
No ‘bridge’ line. No more Alexa, no more Del Rey. You couldn’t even get a keychain for less than $200.
Hard to say, but it looks like Guillon was operating from what I call ‘The Field of Dreams’ platform.
If you build it, they will come.
Guillon appears to have assumed that, if he made a super-luxury bag, the super-luxury people would buy it. Just because.
That standpoint may work for Kevin Costner and a bunch of baseball playing ghosts, but that mentality is almost non-functional from a business standpoint.
: He didn’t test the market.
: He didn’t spend the necessary time retooling the image of Mulberry from a well made, practical brand you could buy in the Selfridges department store into an exclusive object of desire.
: He didn’t cultivate his target audience for the move into the high-end luxury market.
Now get this: It IS possible to move from mid-range to high-end – and to be SUPER successful doing it.
Look at Burberry – a clothing line founded in 1856 – it was designed to cater to the ‘sporting’ English gentry, and famous for its trench coats right through this century.
In 2001, Burberry slowly but surely started expanding its scope, adding womens ready to wear, the hip Brit brand, and their upscale, fashion forward, Burberry Prorsum label.
Burberry is another quintessentially British brand. The QUEEN wears Burberry. And Emma Watson is the current brand ambassador.
Since Burberry allowed their luxury brand to grow over the course of 10 years, they were able to market test EVERY aspect of their plan.
By having 3 distinct labels (young and hip, British stalwart, and luxury maven) they broadened their appeal, brought in new customers without alienating the loyal trench coat crowd, and significantly raised prices for the upscale market.
Burberry took a slow, smart approach.
One that doesn’t appear to have occurred to Mulberry. Or one they chose to ignore.
(I’m all about risk taking, but that doesn’t mean being reckless with your risk taking. If you recall from Think Like A Stripper: Big Girls Take Baby Steps.)
In fact, Creative Director Emma Hill – the genius behind the accessible luxury line and its years of resounding success – left Mulberry when they brought Guillon on board.
Her official resignation statement cited “creative and operational strategy differences” as the reason for her departure.
And it looks like the ‘operational strategy’ was to drop a luxury bomb on the upscale market – then stand back and watch the feeding frenzy.
Except there was no frenzy. The rich weren’t buying.
Mulberry was still making a fantastic handmade product, but they hadn’t put in any marketing legwork.
There was no fanfare, no seduction.
Just an incredibly pricy bag made in Britain.
By not seducing his target audience – Guillon made it look like he was simply making a grab into the pockets of the ultra-rich. And no one is more sensitive – or disdainful – of being chased for their money than the ultra-rich.
Plus, by removing any product that was affordable to ordinary mortals who were saving for something special, Guillon also alienated Mulberry’s intensely loyal middle-market. Women who year-after-year had bought and cherished their Mulberry bags.
(Even Hermes has keychains under $1000.)
Somehow those billions of dollars those women had invested in Mulberry products for 40 years weren’t as good as the money the super wealthy might spend?
Yeah, I wouldn’t shop there anymore either.
In a single season, Mulberry tanked.
In one month, they lost $213 million. One month.
And in less than a year, they lost over half the value of their company.
They didn’t even design a Spring 2013 line. They actually shut down production in order to reevaluate and restructure.
Even though they re-introduced their tried and true ‘entry level’ and ‘accessible luxury’ lines, their previously loyal middle market has not returned. At least not in droves.
Guillon is gone. Mulberry bottomed out at $600 million, and is holding steady.
So what does this story have to do with YOUR premium pricing?
Well, it’s what English teachers might call a cautionary tale.
It’s asking you where you think your money is coming from – and how you think you have to earn it.
What most people do – and why they fail – to create a high-end offering that sells …
… is they quickly whip up a product or service, do minimal testing on it, grab some testimonials from their loyal customers, and then stick a hefty price tag on it because they’ve been told things like …
: You should price higher. You deserve it.
: When you price higher, you’re showing the world your worth.
: If you DON’T have a high-end offering, you’re some kind of entrepreneurial stooge who will never break 6-figures. Or 5-figures.
And then because just like Mulberry, they haven’t done the work to be high-end, their high-end offering tanks, and then they wonder what’s wrong with them.
NOTHING IS WRONG WITH YOU.
And having a high-end offering doesn’t make you a better or more valuable person. Or even a better business person.
Neither our commercial real-estate company or my business coaching/consulting company have high-end offerings. And while I do have Champagne tastes, I’m built for mid-range.
Just like Tory Burch. Just like Zappos. Just like SPANX. All billion-dollar companies built on low to mid-range offerings.
What’s in your bank account is NOT a reflection of your worth. I am the same awesome Erika whether I’m driving a BMW or taking the bus.
Check out what Oprah has to say about worth.
“Who I am is grounded specifically in my sense of spiritual worth and value to myself, to the planet, to the universe, to God.” – Oprah
Are you CLEAR that YOU are NOT your MONEY?
If you said YES! and you still want that high-end offering because you’re FREAKISHLY EXCITED about creating it and FREAKISHLY EXCITED about doing the legwork to make it a screaming success …
… then keep reading for 5 Tips To Scale Up No Matter What Your Price Point.
#1 CREATE A QUALITY OFFERING
The easiest way to know where you stand, is to test it against other products or services in the same price range.
: How does your $350 handbag compare to COACH – one of the BEST made handbags ever?
They’ll be out of style before they’ll ever fall apart.
: How does your $5 ebook compare to ALEXANDRA FRANZEN – world-class writer known for her simple & elegantly designed books?
While Alexandra hasn’t been in business as long as COACH, she’s worked diligently for years to be the best in her field – and continues to refine her craft.
How does your offering measure up? How can you create better quality?
#2 CREATE THE HIGHEST QUALITY EXPERIENCE YOU CAN
The easiest way to start doing this is to think about how you like to be treated when you shop.
: Tieks sends out handwritten notes EVERY time you purchase. And these aren’t generic notes, they are specific to your purchase.
Handwritten notes are a simple and an inexpensive way to start creating that 5-star shopping experience.
: Katie a.k.a. Wellness Mama – blogs in EXQUISITE detail about everything from bone broth to how to make your own mascara.
Her info is so spot on, that whenever I need a remedy, I google “wellness mama upset stomach” or whatever else my problem is – and she always has an idea for me.
And even though I’m all about the extra fancy, I love Katie’s down-to-earth approach – because that’s who she is!
What tiny things can you start doing to treat your potential customers & current customers like rockstars?
#3 BE CONSISTENT WITH YOUR MARKETING
Remember Stripper Tip #26 Always Be Seducing?
If you want to scale up, then you MUST have a consistent marketing plan that is so super delicious people can’t stop talking about it.
Seduce. Seduce. Seduce – like 50 Shades of Business Seduction.
Get on the email lists of companies you adore to see their consistent ‘seduction’ plan in action. Here’s some good ones.
: Tory Burch
She’s the QUEEN of killer marketing. And her website is one of the easiest & most glamorous places to shop online.
While you can buy a pen for under $10, Poppin markets consistently and with style and makes me want to reorganize my desk every time I open up their emails.
: Marc Jacobs’ Makeup
Their email campaigns fascinate me because they have a tough task at hand: how to make marketing a small, slick line of makeup interesting & HOT! They make me want to re-buy the products I already own.
: Tom Ford
His site has a POP-UP! on it. Yes. Those annoying pop-ups work. If Tom Ford does it, you should do it.
Pay attention to what they’re doing on Twitter & Instagram.
They almost exclusively post videos or images with their tweets. As a CHANEL geek, I don’t care about what they have to say, I want to see what they have to show me.
: Simple Green Smoothies
They post professional photos on Instagram with AMAZING graphics overlaid on top – and then give you an ENTIRE recipe for a ‘simple green smoothie’ in the photo description.
I know for a fact, how hard the founders of Simple Green Smoothies worked to get their brand to where it is today – 333k followers on Instagram! No skimping on quality for these ladies.
# 4 CONSISTENTLY CREATE BUZZ
People don’t buy on price, they buy on perceived value – which is why Louis Vuitton can charge such outrageous prices for coated canvas handbags. Yes. I’m one of those LV carrying suckers.
While CHANEL, Gucci, and even Mulberry don’t need to show that they’ve been in VOGUE, BAZAAR or ELLE – you do.
While you’re building your upscale brand, PR is hugely important and having an image on your website that says you – or your offering – has been in Allure, InStyle, Fast Company, Entrepreneur, etc. goes along way to creating that perceived value – so get that PR.
#5 BRING YOUR SUPERFANS WITH YOU
As you scale up, always have an offering that anyone can afford.
Sure Tom Ford’s lipsticks start at $46, but a SUPERfan will save her pennies to be a part of the Tom Ford experience.
When you enter the high-end offering arena, expectations change.
Your high-end audience is a demanding one.
: They want luxury.
: They want to be wooed and won over.
: They want hand-holding, 24/7 availability, and spectacular results. Wouldn’t you?
A high-end audience’s expectations are through the roof. So you better prepare to deliver and REALLY cultivate them.
Have you laid the groundwork for success at the high-end?
Have you grown an email list?
Provided top notch products & services in the past?
Worked your PR?
Grown your reputation?
EVERY successful business take years to build and lots of careful planning to grow…
There’s no magical premium product you toss up on your site, then sit back and plan your trip to Tahiti – not even for a world-class brand like Mulberry.