Selling Lifestyles

To use Jim Collins’ phrase, I believe that these days the difference between “good and great” companies is how they manage to sell the idea of a lifestyle. I’ll explain why I think this using two companies in two different industries.

Firstly, Abercrombie & Fitch. They died as a company two times before becoming the phenomenon that they are now. They’ve always been known to sell incredibly high-quality products made from good materials. But that didn’t stop them from filing for bankruptcy once and then being bought out. Abercrombie then brought in a new CEO, Mike Jeffries, who created the new concept for A&F. He wanted this new concept to allow people to think that they’re in a movie. He also wanted the brand to “sizzle with sex”. Abercrombie sells the lifestyle of sexy college students.

Look at the difference in approach. When the brand failed, it focussed on product first and foremost. It made a great product, but with no image or lifestyle, people didn’t buy it. After Jeffries came in, A&F put their lifestyle image first, backed up by a super high quality product. And now they’re smiling all the way to the bank (they’re a multi-billion dollar company).

Look at Apple, too. Apple has always made high-quality products. But it almost failed years ago, because it didn’t have a lifestyle with which people could buy into. Then Jobs came back, and created the “think different” lifestyle that creative people could buy their products to become a part of. I don’t need to explain their success since then.

The point is, you can’t be a great company with just a great product. There are thousands of companies with high-quality, functional products, that are on the verge of failing because no one will buy the product. To be a great company, you need to have a lifestyle that people want to buy into by buying your product. The more compelling the lifestyle that you sell, the more you can charge for your product and the more people will want it. Abercrombie raises its prices every single year, and yet demand for their products rises faster every single year – the Abercrombie lifestyle is so strong that it even makes the law of demand invalid (in economics, it’s called a Veblen Good). This is the situation you want to be in as a company. Think about it – you raise your prices and even more people want to buy your products!

I don’t think that selling a lifestyle is something that only physical-good companies can do. I believe that web apps can do it as well, and indeed many should think about it more seriously. One app that I believe should really focus on creating a lifestyle to sell is Path. The new version of their app is fantastic, and they’re seeing huge numbers of people begin to use it. But Path, to me, is about sharing my life with the people who are close to me. Path’s job, then, is to make me want to share more of my life. And I think the best way for them to do that is to create a broad lifestyle image for people to want to buy into. They should create an image that means when someone sees me using Path, it says something about me and my lifestyle – “I’m tech savvy, value my close friends and family, and want to share my life with them as well as see their lives”.

Every web app can sell a lifestyle of some sort. It might not be as elaborate as Abercrombie’s, as you don’t have a physical store for people to walk around in, but you can create it through your app and website.

I’ll repeat the key point I’m trying to make in this post – that it’s not enough to make a fantastic product. To make your company great, I believe you need to sell a lifestyle through a high-quality product.