Back to PodcastThis Doesn’t Make Sense It was the most pain in the butt buying experience and yet, I’ve come away a raving fan. In this episode I’ll share 3 counterintuitive lessons from a thriving company in Canada. Download as an MP3 by right clicking here and choosing “save as.” RSS feed for Marketing Your Business Big Ideas The Shopping Experience [00:57] My wife was looking for a long winter jacket, and there was one particular brand that she had been eyeing up for quite some time, but this brand can be found only in a very limited number of stores. And even if you do find a store that is selling them, the jackets are always out-of-stock. What’s more, they also limit the number of people allowed in the store. So it’s a real pain in the butt shopping experience. On the surface, this sounds crazy. How is a company going to be successful if their merchandise is not readily available? And yet this particular business is thriving. You probably know about the company I’m talking about, Canada Goose. When we arrived to the brand’s actual store in Toronto, there was a lineup outside the store. And when you get in the store, there is more staff than there are customers. Finally, Amy decides on this one particular jacket, and when we get in line to pay for it, one of the salespeople comes up and says that we don’t need to stand in line with the jacket. They take it over and go through this whole packaging process that looks like they’re saying goodbye to it, putting it into a suit covering and walking us through a lifetime guarantee they have on these jackets. We left that store after spending thousands of dollars, and it got me thinking. There was limited availability, and the prices were really high, and yet they had a lineup outside the door with people who couldn’t wait to get in to buy their merchandise. And in those 40 minutes that we were in the store, they must have sold around 30 jackets, making about $30,000 in less than an hour. There are three reasons why this particular brand is thriving. Limited Availability Increases Demand [6:38] Number one, they have limited availability. We often think that selling more of our products is the way to get it in front of more people, to make it more available. The more people who have the chance to buy the better, but not in this case. Because of the limited availability, the jackets would fly off the shelves really quickly. Plus, they would limit the number of stores and people that were allowed in the store. There was this feeling of exclusivity, because you had finally gotten to the place where you could maybe find a jacket and make a purchase. Limited availability in the membership world is a way to drive new members. The membership sites who are open all the time will almost never compare in terms of the number of new members added over a year versus those membership sites who are only open one to three times a year. Limiting your availability, your quantity, or the access to you actually increases demand. High Prices Lead To Big Profit Margins [9:38] The next lesson that I took from this is the high prices – their prices are three to four times the price of every other jacket that you would consider buying. It gives them way more profit margin to be able to make those kinds of decisions where they don’t have to be in every single store, therefore requiring less infrastructure and management. We think bigger is better, but it’s not always true. Bigger oftentimes means more complicated, more complex, more stress. There are very rare circumstances where competing for the lowest price is ever going to create a good situation for you. We want to create a situation where we have higher premium prices with a much bigger profit margin because it affords us the ability to make different types of decisions. Invest Back Into Your Product [10:50] Third lesson, because they charge high prices, they’re able to create a high-quality product, and so they can invest more back into the product. Everyone who purchased a Canada Goose jacket would rave about how warm it is, how long it lasts, and more often than not they’ve gone back to buy something else from that company. When you create a high-quality product, you get a lot of return or repeat customers. Word of mouth is strong, and so are repeat sales. With our TRIBE program, we’re entering into our fourth year, and this year we reinvested hundreds of thousands of dollars back into refilling the whole program to ensure that our audience has the latest and greatest research, ideas and insights. We’re reinvesting back in to raise the quality of the product, and we see it as a strategic advantage. And I want you to see it as a strategic advantage too. Think about the products you’re offering, about the way in which you’re offering them. Is there a way to incorporate any one of these three lessons? Memorable Quote “To create word of mouth, we have to create high quality products. To have the money to create high quality products, we have to raise our prices. And when we limit our availability, we drive more demand.” – Stu McLaren Rate & Review the Podcast Reviews for the podcast on iTunes and greatly appreciated! They help us build awareness for the show, which in turn allows us to bring value to more listeners like you. Not only that, but they help us better understand what matters the most to you so that we can constantly improve. If you received value from this episode, it would mean the world if you could take a moment and leave your honest rating and review. 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