Don't Miss a Thing
Free Updates by Email

Enter your email address

preview  |  powered by FeedBlitz

RSS Feeds

Share |

Facebook: Seth's Facebook
Twitter: @thisissethsblog





Seth Godin has written 18 bestsellers that have been translated into 35 languages

The complete list of online retailers

Bonus stuff!

or click on a title below to see the list


All Marketers Tell Stories

Seth's most important book about the art of marketing




Free Prize Inside

The practical sequel to Purple Cow





An instant bestseller, the book that brings all of Seth's ideas together.




Meatball Sundae

Why the internet works (and doesn't) for your business. And vice versa.



Permission Marketing

The classic Named "Best Business Book" by Fortune.



Poke The Box

The latest book, Poke The Box is a call to action about the initiative you're taking - in your job or in your life, and Seth once again breaks the traditional publishing model by releasing it through The Domino Project.




Purple Cow

The worldwide bestseller. Essential reading about remarkable products and services.



Small is the New Big

A long book filled with short pieces from Fast Company and the blog. Guaranteed to make you think.



Survival is Not Enough

Seth's worst seller and personal favorite. Change. How it works (and doesn't).




The Big Moo

All for charity. Includes original work from Malcolm Gladwell, Tom Peters and Promise Phelon.



The Big Red Fez

Top 5 Amazon ebestseller for a year. All about web sites that work.




The Dip

A short book about quitting and being the best in the world. It's about life, not just marketing.




The Icarus Deception

Seth's most personal book, a look at the end of the industrial economy and what happens next.





"Book of the year," a perennial bestseller about leading, connecting and creating movements.




Unleashing the Ideavirus

More than 3,000,000 copies downloaded, perhaps the most important book to read about creating ideas that spread.



V Is For Vulnerable

A short, illustrated, kids-like book that takes the last chapter of Icarus and turns it into something worth sharing.




We Are All Weird

The end of mass and how you can succeed by delighting a niche.



Whatcha Gonna Do With That Duck?

The sequel to Small is the New Big. More than 600 pages of the best of Seth's blog.



THE DIP BLOG by Seth Godin

All Marketers Are Liars Blog

Blog powered by TypePad
Member since 08/2003

« September 2013 | Main | November 2013 »

Understanding luxury goods

A luxury good gets its value from its lack of utility and value. A typical consumer would look at what it costs and what it does and say, "that's ridiculous."

When a good like this (and it might be a service as well) comes to market, it sometimes transcends the value equation and enters a new realm, one of scarcity and social proof. The value, ironically, comes from its lack of value.

The owner of a $12,000 Birkin bag might tell you that it's worth every penny. Obviously, one can carry a wallet and a few other essentials in bag that costs less than 1% of what this bag costs, and we can even imagine making something just like a Birkin for a fraction of the price. But that would be a copy, not the real thing, and so the story, the narrative, the specialness and most of all, the social element would go out the window. A Birkin bag is at its most valuable when your friends admire you for owning it, not when they admire its ability to carry your stuff.

The ring in the blue Tiffany box or the speaker cables that cost more than a car--these are purchased as (perhaps perverse) testaments to the (take your pick) power/taste/wealth of the person buying or owning it.

Discount luxury goods, then, are an oxymoron. The factory outlet or the job lot seller or the yoga studio that's selling the "same thing but cheaper," isn't selling the same thing at all. They don't offer scarcity, social proof or the self-narrative of a splurge. What they sell is, "you're smarter than other people, but you know, you're also a little bit of a fraud because this isn't actually a luxury good, because it's a better value." Circular, but true.

It takes guts to invent a brand new luxury good from scratch. Shinola watches don't tell time any better than a $16 Timex, but they do tell a better story. Their creation is part of that story, but so is the identity of the stores that sell them and the fact that they sell out regularly.

Jean-Baptiste Colbert, who invented the industry (yes, one person invented luxury goods as a category) understood something that flies in the face of the non-scarcity of the internet: social proof among the wealthy is based on beauty plus scarcity plus expense. The fact that others believe a good is overpriced is precisely why a certain segment of the market chooses to purchase it.

This even works in b2b situations. McKinsey certainly offers a luxury good (only the biggest, wealthiest corporations can afford them) as do furniture makers like Herman Miller.

We're also seeing luxury goods being purchased by people not ordinarily thought of as wealthy. A teenager with a rare pair of new sneakers qualifies as luxury in her tribe.

It's interesting to note that first class travel isn't the luxury good it once was. The airlines stumbled, started playing with both service and scarcity, and unravelled the myth. Hence the need for a private jet as a luxury good, even when there's a perfectly fine commercial jet going to that very destination.

One place where the luxury goods idea has been underutilized is philanthropy. The rich guy who gives $20 million to a university isn't doing it because the school is likely to spend his money in the most efficient way. He's doing it because they will name a building after him. The building is a scarce good, overpriced for what it appears to deliver, which is precisely why it's a form of luxury.

One opportunity for non-profits is to use their true needs as only part of the conversation about giving. The dreaded gala, for example, is best seen as a luxury good. All the time and coordination and busywork are actually providing utility... not to the charity, but to those attending.

Sorry to drone on... wrapping up then, when luxury intersects with the web, conflicts ensue. First, because the net makes pricing transparent, which inevitably makes some people feel stupid for paying full price (and stupidity doesn't work with the other pillars of luxury). And second, because the new sorts of social proof have to do with how connected and respected you are, not how much you paid for that handbag.

Is Google jumping the shark?

Ron Howard explained that while they were shooting the notorious episode where Fonzie jumped the shark, he knew the show had turned a corner. In the case of Happy Days, the corner was the chasing of ratings at the cost of integrity. In the case of corporations, the corner is usually the chasing of profit at the expense of the original mission.

These places don't run out of creativity. You don't jump the shark because you're empty, you do it because there's pressure to be greedy.

Google has been found to have hacked and stolen user data, circumventing privacy settings. They've recently announced that without asking first or sharing the upside, they may be selling the names and faces of people who use Google + to advertisers, to be included in endorsement ads. People expressing themselves online might soon find themselves starring in ads as unpaid, unwilling endorsers.

How does this happen? Public companies almost inevitably seek to grow profits faster than expected, which means beyond the organic growth that comes from doing what made them great in the first place. In order to gain that profit, it's typical to hire people and reward them for measuring and increasing profits, even at the expense of what the company originally set out to do.

Every company at a certain stage ends up with two sorts of employees... some that work hard to improve the experience and value for the original customers, and some that tear down that experience and value in order to please shareholders in the short run.

It's not surprising, but it's sad.

The irony here is that in the long run, what the advertisers are telling companies like Google they want isn't what is going to build it into an even better company (or even help the advertisers) in the long run.

Advertisers often seem to want pitchmen spraying perfume at every person who walks into the store, inserts stuffed into every periodical, pop up ads, complete data on every individual they target and the ability to spam at will. Great media companies fight back on all of these intrusions, because they know that what actually works is genuine connection built around remarkable products and services.

Innumeracy and the power of choice

This video about income distribution in the USA is extraordinary. First, because it's so well produced, well researched and calm. Second, because it does a beautiful job of making statistics come to life. There's a story behind the numbers, and the producers bring the story to life.

There are two lessons to be learned about communicating about (as opposed to with) numbers here:

  1. As the data from the Harvard study shows, people are incredibly, almost willfully, bad at visualizing and understanding anything beyond really simple distributions.
  2. Giving people the appearance of choice, "if you could organize this, how would you," is a significantly better question than, "what's fair?" By reminding people that they actually do have a voice, you open the discussion wider.

If you agree or disagree with the 92% of the sample that is quoted in the video, my point is still the same: presenting information in this way, in a way that allows people to hear and see and think, is one of the most powerful tools available to people who'd like to make change. It's far more powerful than yelling.

Thank you, Jay

My friend and occasional co-author Jay Levinson just passed away. He was eighty.

Jay helped invent the idea of the modern marketing book, pioneered Guerrilla Marketing (which has nothing to do with gorillas and everything to do with thinking independently and bravely) and influenced several generations of leaders.

But most of all, I want to thank Jay for living a generous life. He never kept a secret, never hesitated to teach, to point something out, to lift someone up.

Jay was at his best when, with a mischievous smile, he'd answer a question, turning a newbie into an expert with one of his many lists or with a clever story. The point of his many, many books wasn't that there was a formula to follow, but that there was an attitude, an attitude that could help just about anyone make a difference.

The core of that attitude was the lighthearted application of generosity, for no other reason than it was the right thing to do.

We'll miss you, Jay.

Better than free

How do you compete with free? How does a wedding photographer or a travel agent—someone who used to make a good living performing a task that was hard to do without them—compete against ubiquitous free alternatives?

There's only one way: Sell something better than free.

Make a product or provide a service that's worth paying for.

You don't need a better way to talk about what you do, or a better gimmick, or a better social media strategy. In fact, you need to reinvent and rebuild what you make for a new reality, a reality where paying for something is an intentional act of buying something way better than the free alternative.

I'm sorry if this seems obvious. It's apparently not obvious to all the frustrated people I encounter who are still trying to sell the old thing in a new market.

Buying is selling

If you're negotiating to buy something--a house, a company, even as the purchasing agent for a big company--you're also selling.

That's because it isn't a faceless transaction involving a list price and a credit card. The purchase involves faith and trust and risk and someone caring enough about the other person to do more than seek the highest possible/lowest possible price.

If you hope to buy for less than the clearing price, or get better work than average, in fact, you are selling when you're buying.

A friend was selling his house, and every time he showed one particular prospective buyer a new feature, the buyer discounted it, demeaning its value. This is a common strategy--denigrate the thing you are hoping to buy, question the judgment of the seller, make them feel desperate. After all, the thinking goes, a desperate person will sell for less.

Perhaps. But more often, a person being made to feel desperate will take her valuable goods somewhere else, to someone who cares more.

Why not say, "that's fabulous! It makes the house worth even more, well done." Recognizing the good work of those you hope to buy from puts you on precisely the same side of the table as the seller.

The brutal purchasing manager who uses RFPs like a club and nickels and dimes (not to mention dollars) suppliers--do you think he's actually getting their best work? When we're talking about emotional labor, it's not often about the money, it's about how the transaction makes the seller feel.

Or consider the used car dealer. His business is only as good as his inventory, of course. So where to get the cars that get sold? One strategy is to only buy cars from desperate folks, folks with no options. (Or to make the people you meet with feel desperate). What sort of inventory does that leave you with? Last resort cars from people with no options. When the dealer who sold me a car recently tried this tactic with the car I hope to sell, I walked away.

The good stuff is more likely to be sold to people who care. The things you'd like to buy are probably going to be sold by people who have other options now.

Your hall of fame

Baseball, sure, but also roller derby and other worthy endeavors have a Hall of Fame.

It says a lot about an industry when it cares enough about its work (and the people doing it) to go to the trouble of organizing this story. The music industry is particularly good at this--not only do they have a hall of fame, but they have gold records, Grammy awards and multiple ways to highlight and honor people doing the work.

Why doesn't your company have one? A wall honoring the driver who broke a stupid company policy and got the shipment there on time... A diorama highlighting a particularly generous middle manager who always managed to find the resources to make something happen... A little glass box holding the purchase order that an heroic salesperson brought back from her long trip...

I got a note a few weeks ago, letting me know I was being inducted into the Direct Marketing Hall of Fame. 101 people --Eddie Bauer, Lillian Vernon and of course, LL Bean--are there (real people, all of them). And also my friend Lester Wunderman, who pioneered the very idea of Direct Marketing and helped launch the American Express card. Three of us are joining this year--Don Peppers and Martha Rogers are the real highlights (if you haven't read their books, you should). Their first book (1996) completely upended my view of the world.

The thing about direct marketing is that it's always been a bootstrapped industry. Lillian famously started at her kitchen table, a few blocks from where I was born (she took her last name from "Mt. Vernon"). Buy some stamps, do some tests, repeat. That approach, the leverage that comes from having big-time media for low-budget money, is here for all of us. We are all direct marketers now.

That means you don't need a permit or permission to start your Hall or your walk of fame. The web makes it easier than ever to have a virtual institution, one that exists solely to find and highlight people that might be worth highlighting. You should start one.

Even better, in a world where we can chart our own course, you could figure out a path that gets you in to the Hall you care about. Not tomorrow perhaps, but, drip by drip, over a career.

The easiest way to disagree with someone to assume that they are uninformed, and that once they know what you know, they will change their mind. (A marketing problem!)

The second easiest way to disagree is to assume that the other person is a dolt, a loon, a misguided zealot who refuses to see the truth. Their selfish desire to win interferes with their understanding of reality. (A political problem!)

The third easiest way to disagree with someone is to not actually hear what they are saying. (A filtering problem!)

The hardest way to disagree with someone is to come to understand that they see the world differently than we do, to acknowledge that they have a different worldview, something baked in long before they ever encountered this situation. (Another marketing problem, the biggest one).

There actually are countless uninformed people. There are certainly craven zealots. And yes, in fact, we usually hear what we want to hear, or hear what the TV tells us, or hear what we expect, instead of hearing what was said, and the intent behind it. Odds are, though, that we will make the change we seek by embracing the hard work of telling stories that resonate, as opposed to dismissing the other who appears not to get it.

The Show Me State (of the art)

I could ask you to bear with me through this urgent and important post, but I'm not optimistic that many people will.

The punchline matters more than it ever has before.

"Show me what this is about before I commit to it."

And the follow up: "Now that I know what it's about, I don't need to commit."

It started with the coming attractions for upcoming movies. By packing more and more of the punchline into the TV commercial or the theater preview, producers felt like they were satisfying the needs of the audience to know what they were going to see before they bought their ticket. Instead, they trained us to be satisfied by merely watching the attractions. No need to see the movie, you've already seen the best part.

SportsCenter piled on by showing fans a supercut of every great or heroic play of the weekend--a sports fix without investing the time or living through the drama of the game itself.

Record albums used to require not only listening to the entire side (no fast forward on an LP) but actually getting up and flipping it over. The radio wasn't going to play anything but the A side of the single, so if you liked an artist, you surrendered yourself to 45 minutes of her journey, the way she had it in mind.

A performance artist was on the local public radio station the other day. He didn't want to talk about the specifics of his show, because giving away the tactics was clearly going to lessen the impact of his work. No matter. The host revealed one surprise after another, outlining the entire show, because, after all, that's his job--to tell us what we're going to see so we don't have to see it ourselves.

We don't want to organize the course or go to the lecture or read the book until we know precisely what it's going to be about.

College wasn't like this. You committed to four years, you moved somewhere, and then you saw the curriculum. That's part of why it works. A huge part.

We hesitate to surrender our commitment so easily today. It's easier to read the 140 character summary or see the highlights or read the live blog, so we can check the box and then move on.

But move on to where?

To another box to be checked? We become like the tester in the ice cream factory, surrounded by thousands of flavors, but savoring none of them.

We each have a fixed amount of time. One thing you can do is invest it in knowing the summary of what 23 people said. The other thing you can do is to commit to living and breathing and learning from one of those people. Perhaps you will get more by being exposed more deeply to fewer.

One reason an audiobook can change your life is that you can't skip ahead. And the other reason is that you might listen to it five or six times, at the pace of the reader, not at your pace.

My full-day live seminars have impact on people partly because I don't announce the specific agenda or the talking points in advance. It's live and it's alive. I have no certainty what's about to happen, and neither do the others in the room. A morphing, changing commitment by all involved, one that grows over time.

Yes, I get that there's never again going to be a need to buy an album or to listen to all the songs in order, that you can get the quick summary of any book you're expected to have read, that your time is so valuable that perhaps the only economic choice is to live a Cliffs Notes version of your life.

[Oh, that's right, Cliffs Notes' sales are way down because they're too long.]

In fact, you could do that, but when you do, you've surrendered to efficiency and lost some life, some surprise and a lot of growth.

Looking a gift card in the mouth

"You qualified."

I'd just purchased $102 worth of stuff at the sporting goods store, and the clerk happily handed me my ten dollar gift card. What a nice surprise. I turned around to the stuff next to the checkout, searching for a $6 item I could now purchase, for free.

"Oh, sorry, you can't use it today. It becomes valid tomorrow."

Not only that, but I noted that it expires in four months.

Not so much of a gift. A manipulation. I better hurry back, the thinking goes, or that thing of value in my wallet will disappear.

Just as insightful is the recent promotion that they did at Staples. Pay $15 to buy the ability to save 10% on most things in the store (not online) for the next sixty days. It turns out that most people spend about $50 on a visit, which means that part of the card pays for itself in that first visit. But, and it's a big but, you've now purchased something that feels like a debt, one that you can only profit from if you head back, and soon.

These, of course, are not gift cards at all. They are motivational cards. And they work.

People are not machines, and purchasing just about anything is as much about emotion and the story we tell ourselves as it is about economic calculation. Charging you for the chance to save money one day is one more step in a dance about feelings.

« September 2013 | Main | November 2013 »