2012-12-06

Co.Exist

How Patagonia Makes More Money By Trying To Make Less

The company’s proposition--that you not buy its clothes--is resulting in some of its best sales ever.

It’s holiday season and retailers are gearing up with every technique possible to maximize revenue for the next few weeks. Some retailers will earn more during the holiday shopping season than in the previous months combined, and already this year’s Black Friday online sales set a record by topping $1 billion for the first time, according to comScore. Sales for Cyber Monday were expected to exceed $1.5 billion, another record.

But in the midst of this shopping mania, one prominent retailer took a different approach.

Instead of blasting sales prices and urging consumers to load up their virtual shopping carts, Patagonia encourages consumers to buy less by promoting its Common Threads Initiative on its home page, advocating sustainability. The company says: “We design and sell things made to last and be useful. But we ask our customers not to buy from us what you don’t need or can’t really use. Everything we make--everything anyone makes--costs the planet more than it gives back.”

This holiday campaign follows last year’s groundbreaking advertising strategy featuring an ad in the New York Times on Black Friday saying “Don’t Buy This Jacket.” That’s right--an ad discouraging sales on the biggest shopping day of the year.

But like any great campaign, their message the past two years is tied to the brand’s promise. Environmentalism is at the core of Patagonia, but to specifically discourage sales is an unusual maneuver since Patagonia is not a non-profit organization. It’s an exceptionally profitable manufacturer and retailer generating $400 million in revenue each year. Patagonia makes some of the best, and most expensive outdoor gear in the world, but the company’s mission is bigger than simply maximizing profit. The mission is: “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.”

Here’s a clip from Rosenblum’s movie, The Naked Brand, discussing Patagonia’s marketing strategy.

That would be an easy pursuit if Patagonia didn’t care about running a great business.  But therein lies the lesson. Patagonia has found a way to marry good business with its brand promise. According to Patagonia’s Director of Environmental Strategy, Jill Dumain, “If I wanted to make the most money possible, I would invest in environmentally responsible supply chains … these are the best years in our company’s history.”

The company is making money by living its brand promise. They actively invest in reducing their carbon footprint and exposing associated challenges online through The Footprint Chronicles. This feature allows customers to track the environmental impact of any Patagonia item. They even explained why you shouldn’t buy the jacket: “To make it required 135 liters of water, enough to meet the daily needs (three glasses a day) of 45 people. Its journey from its origin as 60% recycled polyester to our Reno warehouse generated nearly 20 pounds of carbon dioxide, 24 times the weight of the finished product. This jacket left behind, on its way to Reno, two-thirds its weight in waste.”

Thus, Patagonia’s audience trusts the brand, admires its values, and aspires to live by the same principles. Very few brands can compete on quality and price alone. Your brand doesn’t necessarily need to invest in the environment or take such risky maneuvers. However, it can’t be built exclusively through great products and great advertisements. That model is antiquated. Consumers have too much information and too few dollars. They want to invest in brands that have similar values to their own. Perhaps that simply means your product has more advanced engineering, is more user-friendly, or has better customer service. Those are all viable brand elements that create a powerfully rational connection with consumers. Ideally, your brand would also embody behaviors that elicit an emotional connection, such as investing in social, educational, or environmental responsibility.

Building a brand platform like Patagonia’s is difficult, expensive, and somewhat risky. But, when brands reduce the amount they spend on paid media, they can invest in building a brand which will help their paid media work significantly better, and more importantly, create brand evangelists.

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3 Comments

  • Diane LaRaja

    My husband and I are big Patagonia fans.  We purchase most of our outdoor clothing and gear from them. Their products wear amazingly well and they stand by their products like no company I have ever dealt with!

    Their sales staff is "outdoorsy" and knowledgeable. I consider them "outdoor geeks" if there is such a thing. Because of this I think their customers do the advertising for them.  

    Diane LaRaja

  • SLeveen

    Excellent piece Jeff. I particularly like your inclusion of educational responsibility--a most welcome combination of words. And they resonate with our brand. All best, Steve