NOT ALL SALES ARE GOOD SALES

I'm sure you've heard the phrase “not all sales are good” before.

Yes, we’d like to increase our revenue and build successful businesses but hold on a minute - not every single one of them is going be great isn't it? Sounds counterintuitive I know so let me explain why this is the case...

In 1856, Thomas Burberry founded his company. In 1879, he invented a fabric called gabardine.?He did this by waterproofing the thread before it was woven. This meant the fabric could breathe but still remain waterproof.?

It was so effective that Roald Amundsen wore it when he became the first man to reach the South Pole in 1911. Ernest Shackleton wore it for his expedition across the Antarctic in 1914. In 1924, George Mallory wore it when he became, many people believe, the first man to conquer Everest.?

But Thomas Burberry’s real claim to fame came in 1914. He invented the trench coat. Something to keep British officers warm and dry in the trenches of the First World War.?

After the war, his trench coat was so popular that every civilian wanted one. To make sure everyone knew which was the original, Burberry lined their trench coats with an unusual check pattern. A sort of brown tartan. Over the years, the Burberry check became iconic.

So much so, that by the 1970s, people had begun wearing it on the outside of their clothes. This lining became a coveted design in itself. No longer anything to do with waterproof garments. And this is where Burberry made their big mistake.?

They assumed that all sales were good sales. Burberry began selling licences to everyone who wanted one. The ‘Burberry check’, and consequently the brand, began appearing everywhere. Indiscriminately.?

From scarves, to shirts, to trousers, to casual jackets, to hats. So much so that it began to get out of hand. ‘Burberry check’ began appearing as a joke on inappropriate items of clothing.?

On baseball caps, on dog collars, on baby clothes. And that isn’t the image you want for a premium brand. Pretty soon, the ‘Burberry check’ became the emblem of the ‘chav’. Which meant no one with any taste or style would be caught dead wearing it.?

Burberry had lost its image, its sales, its way. So, in 2006, Burberry hired a new CEO. Angela Ahrendts is American. She flew into London on a cold, grey, damp day to meet the senior executives of Burberry. Despite the weather, not one of them was wearing any Burberry.

If they didn’t want to be seen in their own brand, what chance was there that the public would? Ahrendts had to set about undoing the damage the previous management had done.?

She spent millions of pounds buying back all the licences that had been sold. Twenty-three different licences, in fact, from companies all over the world.?

What seemed like a fast way to make money had all but destroyed the brand. Before she could get people to reappraise the brand, she had to stop the rot. And gradually it began to work.?

The new designs began to be judged on their own merits. And they began to sell. And gradually Burberry turned around. After she took over, sales more than doubled to ￡1.9 billion per year and the share price doubled to ￡13.70.?

What Ahrendts knew was that if you have a premium brand, people have to be willing to pay a premium for it. But they won’t do that if everyone in the world has it.?

Part of the value of a premium brand is perceived exclusivity. If everyone has it, it isn’t exclusive. So you can’t charge a premium.?

Burberry learned the hard way. Chasing sales isn’t always the right thing to do.