Lillian Vernon, Sharper Image Crash. Why?
Always have a USP (Unique Selling Proposition)
Lillian Vernon started out with a USP: free personalization. It was her hallmark for 50 years.
When she sold out to the first private equity firm, the nitwits trashed the brand and started charging for personalization. When the company was sold at a distressed price to another private equity firm, new CEO Muoio reinstated the free monogramming policy, but it was too late.
Had the company stayed true to its USP and offered a full line of imprinted and personalized merchandise—women’s clothes, men’s shirts and cuff links, napkins, paper goods, fine and costume jewelry, corporate premiums and gifts, leather diaries, etc.—the business may have lasted beyond 56 years.
Instead, the business was built on tchotchkes, and found itself running with a pack.
The selling proposition was no longer unique.
Richard Thalheimer’s USP was initially exotic, up-market electronics and fascinating gizmos. But he had no sense of the concept of line extensions.
For example, if you offer a CD stereo rig, make sure the buyer becomes dependent on you for CDs to play on it so that you get ongoing revenue rather than a one-shot sale.
If you sell DVD players, offer the greatest selection of DVDs ever assembled—or cut a joint venture with Blockbuster or Netflix—so that you receive continuing income from that initial sale.
All Thalheimer’s sales were single shots. He never gave customers a good reason to buy more and more and more.
“One book is an item,” said Richard Simon, founder of the great publishing firm of Simon & Schuster. “Two is a line.”
Lillian Vernon and Richard Thalheimer never had lines; they sold items. In the beginning they were unique.
They no longer are.
One final thought: Thalheimer was thrown out after running the business for 30 years, and three successors failed to stanch the red ink. When Lillian Vernon decided to bail out after 50 years, her planning was so poor that the business she created and built with such passion wound up in the hands of private equity firms—which wrecked it. Bill Gates has Steve Ballmer. Who did Richard Thalheimer and Lillian Vernon have?