The secret to Apple stores: they sell benefits, not products

Fortune magazine has a great article on Why Apple is the best retailer in America. They cite a figure I've referenced before: the fact that Apple pulls in about $4,000 per square foot in its stores, compared with $2,600 for Tiffany & Co. and a measly $930 for Best Buy. But I thought the most telling part of the story was about an experience Jobs had when they were designing them back in 2000:

"One of the best pieces of advice Mickey ever gave us was to go rent a warehouse and build a prototype of a store, and not, you know, just design it, go build 20 of them, then discover it didn't work," says Jobs. In other words, design it as you would a product. Apple Store Version 0.0 took shape in a warehouse near the Apple campus. "Ron and I had a store all designed," says Jobs, when they were stopped by an insight: The computer was evolving from a simple productivity tool to a "hub" for video, photography, music, information, and so forth. The sale, then, was less about the machine than what you could do with it. But looking at their store, they winced. The hardware was laid out by product category - in other words, by how the company was organized internally, not by how a customer might actually want to buy things. "We were like, 'Oh, God, we're screwed!'" says Jobs.

But they weren't screwed; they were in a mockup. "So we redesigned it," he says. "And it cost us, I don't know, six, nine months. But it was the right decision by a million miles." When the first store finally opened, in Tysons Corner, Va., only a quarter of it was about product. The rest was arranged around interests: along the right wall, photos, videos, kids; on the left, problems. A third area - the Genius Bar in the back - was Johnson's brainstorm.

"When we launched retail, I got this group together, people from a variety of walks of life," says Johnson. "As an icebreaker, we said, 'Tell us about the best service experience you've ever had.'" Of the 18 people, 16 said it was in a hotel. This was unexpected. But of course: The concierge desk at a hotel isn't selling anything; it's there to help. "We said, 'Well, how do we create a store that has the friendliness of a Four Seasons Hotel?'" The answer: "Let's put a bar in our stores. But instead of dispensing alcohol, we dispense advice."

In 2000 when Dell was king of PCs and low prices were the mantra of PC retailing, this insight was complete heresy. But it also held the key to Apple's retail success: sell Apple benefits and experiences, not Apple products.

There are some other retailers that have figured this out. Davis Freeberg writes over at SeekingAlpha.com that he's particularly pleased with Staples' approach to marketing on TV. Why? Because unlike competitor Office Depot, Staples is now spending more of its marketing money on product placement in TV shows like The Office instead of buying 30-second commercial spots. Staples realized that integrating their products with a TV show produced more customer benefit than interrupting their favorite TV show with a commercial. In short, it left them smiling rather than frowning at the marketing experience.

So here are two questions for all business owners and marketers out there:

1. Are you selling benefits or products?


2. Are you delivering an experience that makes customers happy to spend as much money as they can afford with you, or one that leaves them wanting to spend the least they can?

Answer the questions carefully; the answers to these questions are the difference between the best and the worst of US retailers.

Technorati Tags: Apple, Apple Store, Marketing, Retail, Steve Jobs, Tiffany