Restoration Hardware just killed it’s sale program, and profited in the meantime!
February 27, 2017
Last week , Gary Friedman of Restoration Hardware, one of this century’s most successful furniture brands, sent out an email to his customer database advising them of a big change. They were killing off their regular sale events. And by regular, I mean at least once a month.
To delve in further, let’s take a look at Restoration Hardware and how they market to their customers.
RH is a high end furniture retailer. They have grown phenomenally over the past decade and at last count ranked in sales of around $2billion. Their products speak for themselves, a mix of classic and modern pieces that can make any room look amazing. They use internet marketing to push the majority of their products, and whilst they have a high end clientele, they are still a target for the middle class buyer who might take a few months before deciding on whether to purchase that $5,000 sofa! Retargeting is a tactic used frequently for the retailer, mainly for the fact above. While the prices can be justified as ‘just for the rich’ (to decorate a room can cost upwards of $20k) the brand is still achievable. They put measures into place to ensure that you can get on the RH train, offering a store credit card to help you jump on board.
Email marketing is probably the biggest tool this retailer used in it’s arsenal. But did it wear thin?
Im a fan of RH and I actually use their email marketing tactics in consultations to my clients on what NOT to do, it seems that the top shelf at RH were also thinking the same thing. TheSumofUs.org is another offender, a charity that goes after the uglies of the world and asks you to sign and donate at the same time. The emails are frequent and the subject titles irritating, albeit they get their message across otherwise I wouldn’t be writing about them. However, I eventually had to remove them from my list. I would receive emails in my box with subject lines such as:
Re; How Could You?
Re; Can You Believe What He Did?
All were to push a message but I’d be interested in seeing their opt out stats. It would be a regular occurrence for me to think a client was pissed and sending me an angry email. Thus I severed the connection. Sorry SumofUs, I still read your site 🙂
The problem with any form of offer, or anything really is when you use it too much – nobody wants it. Or when you cheapen your brand through too many discounts and offers. I was taught this around 15 years ago by my mentor and Mark Burl, of Global Radio. Don’t cheapen your brand by offering discounts straight away. RH was synonymous with offers a plenty. I’m guessing it actually brought down their sales, because most might not buy anything until an offer was released, which in turn would have generated slumps. They also offer a nifty little surprise – buy something, and if we change the price within 30 days, you can have the difference. So it was almost expected that a sale would be coming soon. Thus, cheapening what is meant to be a high end brand.
Alas, Mr Friedman introduced a membership card (The Grey Card) and scrapped the regular sale. As referenced in his email ‘No one wants their inbox flooded with sales messages, and quite frankly, we don’t like sending them.’ It was a true testament to honesty and a way of connecting with his audience.
Now you can sign up and become a part of the RH family. For a very modest $100 per year you can enjoy year round savings of 25%. Literally every day. 25% is the key number as this was the most you would ever come to expect saving at the group. The deal is quite frankly genius and depending on how many people RH has in it’s data bank could be a very lucrative push for them indeed.
It of course means, that sales will now permanently be down by 25% – but, will more sales be done, more often? That $5,000 sofa you wanted is now $3,750, so the $5,000 you had budgeted can also buy something else, perhaps an end table for that piece.
The buying cycle of purchasing a piece of furniture will now be shortened dramatically, and while an immediate slump might be seen, the long term value will be very good indeed.
If RH taught us anything in this switch up, it’s to engage with your customers carefully and to ensure you don’t connect too often annoying folk. Don’t over communicate making people opt out, nor cheapen your brand by constantly sending out offer emails. While your audience might be loyal, they will come to rely on you offer a discount sooner or later and not rush to buy the product.
As Einstein so eloquently put it, ‘Out of clutter, find simplicity.’
And as Friedman so eloquently put it….