Buy Less: How Some Companies Profit By Asking You To Spend Less

This week on Under The Influence, we look at the companies that actually profit by asking you to BUY LESS.

We'll explore a burger company that actually asks its customers to eat less beef, why Xerox is helping their customers print less, why Gillette has suddenly started encouraging men to change blades less often, and why a clothing company insists that you buy less of their apparel.

It's a completely counter-intuitive marketing strategy, but each of these companies is doing more business than ever.

Find out why, this week.

Since the dawn of modern marketing, advertisers have wanted us to buy more.

The more products and services we buy, the more profit and market share those companies enjoy.

With the stock market on everyone's radar now, investors demand quarter-after-quarter profit.

More is the goal.

So it's always fascinating to stumble across companies who ask us to buy less.

Back in 1968, a fast food restaurant opened in northern Sweden called Max Burger.

Source: MaxBurgers

Their burgers became so popular, they opened up several more restaurants within two years. Today, Max Burger has 86 stores, with 3,000 employees and revenues of over $200 million.

They are more profitable than McDonald's or Burger King in Sweden, and while that may be impressive for a family-owned company, there is another reason why this is remarkable:

Max Burger asks its customers to eat less beef.

It all started a few years ago when the CEO of Max Burger looked at their menu, and realized their prime menu item - hamburgers - generated 70% of their carbon footprint.

So that prompted Max Burger to make sweeping changes to their menu. First, they offered fewer beef items on their menu. And they recommended more chicken, fish or veggie sandwiches to their customers - all of which have reduced fat, sugar and salt.

The mix of non-beef items is now 30% higher than it used to be.

Then they chose the extremely counter-intuitive strategy of trying to influence their customers to buy less beef by actually posting the carbon emission stats for each product on their menu:

Source: Max Burgers

It's a courageous strategy to ask people to eat less beef - especially when the name of your restaurant is Max Burger.

But 'eat less beef' has translated into profit.

Max Burger stores enjoy 11-15% profit margins, versus 2-5% for their bigger competitors.

Clearly, customers are attracted to the company's philosophy, and the "eat less beef" strategy has been a unique factor that has distinguished Max Burgers from their big, multi-national competitors.

It has also attracted attention from all over the world.

Even vegetarian crusader Sir Paul McCartney referenced Max Burger while speaking before the European Parliament (at the 2:40 mark below):

Source: TEDxTalks/YouTube

It is the fastest-growing chain of restaurants in Sweden, expanding 20% per year, and they have enjoyed an increase in customer loyalty of over 27%.

It's a growth strategy born of asking people to buy less.

For decades, Xerox has been one of the most successful technology companies in the world.

Founded in 1906, it began by manufacturing photographic paper and equipment. It invented the first plain paper photocopier in 1959, and the laser printer ten years later, which became a multi-billion dollar business for Xerox.

Today, it has over 140,000 employees in 160 countries, and enjoys revenues of over $22 billion a year.

And lately, it has been implementing a new strategy to help their customers print less.

That's a big shift in business-as-usual, considering Xerox exists to sell devices, paper and machine servicing based on printing - so the more its products are used, the better.

But Xerox can't afford to ignore the desire of their customers to create less waste.

So it helps them reduce the number of printers sitting in individual offices by the thousands, and has shifted instead to more centrally located networked devices that combine printers, copiers and fax machines.

It's an interesting strategy coming from one of the world's biggest printing companies - because they are essentially cannibalizing their own products. But as the CEO of Xerox put it, it's better that Xerox do the cannibalizing than another company.

While Xerox has been helping customers print less, it has also developed a large management business that allows companies to outsource their document needs to Xerox. Here's a recent Xerox commercial featuring two concierges from a Marriott hotel having a conversation:

Source: XeroxCorp/YouTube

A printing company that helps customers print less is a radical idea. But times are changing, and Xerox realizes that by helping customers manage their documents - even if it means less printing - it will help Xerox develop deeper relationships with them. And deeper relationships mean customer loyalty.

For Xerox in the 21st century, selling less printing means more market share.

For many years, Gillette has enjoyed a dominant 80% market share in the disposable blade category.

But recently, Gillette put out a TV commercial that got everyone's attention:

Source: Gilette/YouTube

The reason it got so much attention was because it said something Gillette had never said before.

Because for the first time ever, Gillette talked about how long a blade could last.

Shaving blade companies have been notoriously tight-lipped about how long their blades last.

The most Gillette has said in the past, according to a recent article in Fortune Magazine, was that the average man takes 150 strokes per shave, that men's faces have 10 to 15,000 hair follicles, and that 10% of men replace their blades according to the calendar, and the rest of us go by feel.

As Fortune says, Gillette never mentioned blade life because it was better if the customer didn't know. By not knowing, a customer might replace the blade more often than necessary.

By telling the public their blades last at least 5 weeks, Gillette is saying you don't need to buy their product as often.

So why does Gillette want us to buy less blades?

Well, one possible answer is that Gillette's famous market share has been losing some ground. Since 2010, some reports state they have lost three share points, due to the economy and some pricing pressure from competitors.

While three share points may not sound like much, each share point is worth millions, and smart marketers watch dropping share points closely to see if it's the sign of a trend.

Rival Schick is priced lower than Gillette, and recently, upstart Dollar Shave Club posted this very amusing video - poking a stick at Gillette's celebrity spokesman, Roger Federer:

Souce: DollarShaveClub/YouTube

One of the main marketing strategies of market leaders is to protect market share. It's doubtful that Gillette could expand beyond its 80% share, but that also means they are constantly in defense mode.

So Gillette made a statement they have never made before: They promoted a five-week blade lifespan.

Imagine their market share is a castle. The five-week claim is their new moat.

In other words, they hope the value in having to buy fewer 5-week blades will stop competitors from breaching their market share.

Buy less.

Sometimes, that strategy can even fortify market share.

The Patagonia company has always played by its own rules.

Founded in 1972, the outdoor clothing company has always had a sustainability strategy at the core of its DNA. But recently, Patagonia has begun to actively encourage its customers to do something few retailers would ever do.

To buy less.

And this strategy is actually leading to increased profits.

Here's how it works.

Patagonia has created a program called "The Common Threads Initiative."

On their website, they ask people to take a pledge to reduce excessive consumption to save the planet we all share.

That pledge has four elements:

1. That you'll promise to reduce what you buy.

Patagonia says it will help you with that promise by only making clothing that will last. So you don't have to keep re-purchasing their apparel.

In essence, Patagonia is asking you to buy less.

2. Promise to repair any clothing article that breaks down, instead of replacing it.

Patagonia says it will help you do that by repairing items at a fair cost.

3. Reuse clothing. To achieve this, Patagonia has entered into a partnership with eBay, creating a unique site where customers can sell their used Patagonia clothing instead of sending it to the landfill.

4. The final component of the pledge is to recycle. When your Patagonia clothing finally does wear out, and can no longer be reused, Patagonia will take it back and recycle the materials to make new clothing.

The basic underpinning for this strategy is Patagonia's belief that the greenest clothing is the clothing that already exists.

As long as they can keep it out of the landfill - through repair, reuse and recycle - the planet will be better off.

But the most extraordinary aspect of this, to me, is the first part of the pledge - that you promise NOT buy what you don't need.

In other words, they are asking people to buy less new clothing from their company. In an essay titled, "Don't buy this shirt unless you need it," Patagonia's founder articulates the company's philosophy of making products that last so you can consume less. Here's an ad they ran with the same theme:

Source: Patagonia

Traditionally, once a piece of clothing is paid for, that is the end of a company's relationship with it. But Patagonia wants to stay connected.

And where most fashions only last a season, and are designed to look outdated within a year, Patagonia maintains they design for the long run.

The strategy has led to increased business, because the Common Threads initiative is an ideal that draws in more and more customers who care about sustainability.

As I've said many times before, a company's core philosophy - its fundamental belief system - is what brings customers to the door.

In Patagonia's case, they do the seemingly impossible... they create customer loyalty by asking them to buy less.

In a buy-more world, a company that asks us to buy less is like a cowbell in a symphony orchestra.

It is a plan that goes against the grain of most marketing strategies.

But as marketer Jim Stengel says in his book titled, "Grow" - the only way a business can truly grow in the 21st century is if businesses and customers share the same agenda.

That's a big "if" - because it means a company must lock its business model onto the motives of its customers. Not the stock market.

There is an interesting subtext to each of the examples you heard here today - in Patagonia's case, buy-less actually promotes the high quality of their apparel. They're really saying you won't have to buy more because their clothing is so good.

In Max Burgers' example, they're really saying the rest of their menu must be incredibly fresh and delicious in order to convince you to buy less beef.

In Gillette's case, a 5-week blade really means leading edge technology. And printing less really means Xerox is a company that listens to its customers.

The buy-less strategy didn't draw customers to the product, it drew them to the company.

And that is the difference in the new world of 21st century marketing...

...when you're under the influence.

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