Understanding Why People Wear Expensive Jewelry Will Get You More Sales For Any Business.

It helped me get more paying students at the multiple EdTech Businesses. And I stopped asking myself — Product Features or Star Teachers? :)

During price discovery, early on my start up days, I realized that a few competitors were charging a heavy premium for their products. My silver jewelry store offered modestly priced office jewelry — light weight, simple and elegant, targeting female office goers.

I mentioned this price disparity to a well established jeweler friend. I asked — “Who would buy an expensive silver article when a similar better priced one also does the same job?”

This wealthy friend told me:

Whoever buys everyday silver earrings for 75 dollars a piece, has a serious need for something else, much more than a jewelry. I would never pay so much just for a finger ring.

It amused me that this phrase came from the mouth of a millionaire. But the point was right.

Lesson learned 1-

At the core, people don’t spend their hard earned money only for quality, durability, design, or customer service! The reason is much deeper.

Discovering the reasons people buy pricey products helped me understand my customers at multiple other businesses that I started or joined later in the EdTech industry.

It will also help you in optimizing your marketing efforts. But how do we develop this understanding? The challenge is that customers do not tell the real problem they want a product for. They usually convey their problems in solution terms.

Henry Ford said — “If I had asked people what they wanted, they would have said faster horses”.

So if you cannot always rely on the client’s answers, how to know their desires? You need to get deeper into our customers’ psyche. Guess Apple does this best.

In one of my professional engagements (an EdTech company), our offerings were initially coaching on individual subjects. Such tutoring was offered to help students prepare for their ‘weak subjects’. Eventually, after numerous interaction with students and studying multiple cohorts, we realized that students were concerned about spending time and money on individual subjects since our courses didn’t help them prepare for the overall exam per se.

So we moved to an offering which was more meaningful to our students. Instead of offering courses with subjects on which we had inhouse expertise readily available, we enhanced our internal knowledge pool and offered a course with all subjects. We did this for one exam and then another exam and so on. We were eventually a one stop tutoring partner and our students loved it.

Our consumers never wanted a tutor, they wanted a partner in their learning journey, and that is what we offered later. This not only turned our offer more attractive but allowed us to raise our price as well.

This change was a turning point for our business.

My wealthy friend also said that “Not a lot of jewelers would do bespoke and exclusive office jewelry. But those who do, can demand a decent premium”.

Lesson learned 2-

Scarcity brings about an element of luxury and who doesn’t love that feeling of affluence.

A piece of jewelry is an item that brings out the beauty and grace to those who wear it. For e.g. earrings have been worn for all sorts of reasons including celebration, status symbol or purely for aesthetic reasons. A good quality mass produced jewelry could fulfil this role as well. But a bride on her wedding day, a diplomat going to a high profile meeting or an entrepreneur prospecting a high value customer prefer to invest in expensive & exclusive jewelry.

Why do they spend 10X or more, essentially for a similar product? Here is the reason — Certain professionals need validation, so expensive accessories contribute to an image of success.

Students aspiring to crack a tough exam need this feeling of confidence and success the most. They don’t like butterflies in their stomach. So we offered batches with limited seats.

One of the most attractive — and denied — reason people buy expensive things is because it is scarce. Scarcity creates two consumer hooks simultaneously:

1st — The sensation of emergency. Since the inventory for sale is limited, the consumers have little time to reflect on the purchase decision. We skip basic questions we must do before spending money or resources. This rush stimulates purchase by impulse emotion.

2nd — The sensation of exclusivity, best explained by the economic concept called Veblen Good. It is something for which demand rises as the price increases, because of the exclusive character.

To appeal to customers, however, scarcity needs to have a reason.

Jewelry that are handmade, and therefore not produced by millions in automated factories. Doctors, lawyers, or specialists that have a limited number of hours in a day. They are hence well placed to charge high for their services.

If you have a limited supply or limited hours of time, make it clear for your customers. It will work for your (and their) advantage. For our EdTech company, every batch had some exclusivity — a star teacher or a special course on tips to memorize concepts (say the many historic dates). These are motivations for students aspiring to book a seat in an exclusive batch! This will be their advantage over others in the competitive exam.

Clarifying that your product is scarce will have a positive impact on your marketing efforts and help clients to understand availability.

Understanding the purchasing reasons for expensive things is not only helpful if you are selling expensive stuff, in fact, it is a game-changer for any marketing effort. It was for my businesses — The jewelry store and the EdTech firms.

The last few words my friend spoke before we moved to another topic of discussion made perfect sense to me. He said “Someone found their niche that made sense to office going jewelry shoppers”.

Lesson learned 3 -

Create not compete.

Don’t just identify desires of your customers — Surface their core desires. Do not ask what products they want, but the results from what they buy. Nokia lost the battle to their new age competitors — They continued with what they perceived good.

Identifying Product-Market-Fit is an important exercise at the start of any business. Run multiple surveys, conduct focus groups and install various other strategies to understand the small un-addressed pains that customers are experiencing.

People love services specific to their needs and are willing to pay more to the service provider who identifies their need before anyone else.

History tells that the company which identifies a niche and successfully offers meaningful products or services, ends up setting a new industry. Motorola, Mercedes, Goodyear are good examples of products that created value for customers and hence gave formal faces to mature industries of today. Other companies which join the same industry became competitors. Not that the competing companies didn’t provide value but they would take considerable time in reaching till the top.

You know why? The innovations at a competing company is to race the industry leader or their immediate competitor, while the innovations at a creator company is to race itself. While the competing company is motivated to succeed, the creator company is usually inspired to bring about a positive change.

Remember, people are more comfortable paying to someone who connects best with their needs. Also, the creator organizations do not worry as much about the market size since they are creating the market. Yes they will have to start small.

Meritnation identified their niche and digitized content which students found meaningful (they probably initiated the Indian EdTech industry over a decade ago). Byjus identified a niche and produced the content in an engaging audio-video format. Unacademy identified their niche and offered live tutoring. Doubnut identified their niche and helped students with their doubts.

All above mentioned EdTech firms provided which no other player offered to students before they did and so they very well deserve the success status they enjoy today.

Try answering the questions below when you are setting up a marketing or a pricing strategy -

What’s the benefit that my customers have from the product I sell that no one else provides today?

How can I convey that the value I offer is truly meaningful and is available for a selected few only?

What problems are my prospects unable to articulate in absence of a solution that doesn’t exist till now?

What outrageous offer (near guarantee) can I make to my customers?

After answering them, create a problem statement for yourself using the 3W1H principle — What is the problem, when does the problem occur, where does the problem occur most, how big is the problem. Use these answers collectively to craft a product that fulfills your customers’ implicit desires with excellence, and often you will be able to increase your prices.