Successful Business Strategy: Selling Hope

While reading newspapers on a plane, I discovered a winning business strategy: Selling Hope. The products you sell don’t have to work as advertised. They may or may not. That’s not the point. All you have to do is selling the hope that they will work.

There are plenty of examples for this strategy. Airborne is a popular vitamin and herb pack that allegedly helps people avoid common cold. Does it really work? I don’t know. Some say it does. Some seriously doubt it. The uncertainty didn’t prevent from it becoming popular though. It sells for about $1 per tablet while the regular multivitamin sells for 2-3 pennies per pill. Airborne does a good job selling the hope it will work.

Another example. Anti-wrinkle creams are much more expensive than regular moisturizers. Do they really work? I doubt it. But when you put it in a nice small container with an anti-wrinkle label, it starts selling at a much higher price. Nobody wants wrinkles, right?

Now we come to finance and investing. There are “systems” that claim to produce great results. The “systems” take many different shapes and forms. Some have you look at charts, for example Investools. Some have you screen financial ratios, for example, Magic Formula Investing. Do these really work? I don’t know. All I see is that people hope they work. All they have to sell is hope.

You think you were visionary because you got into Google’s IPO? Or are you kicking yourself for missing out on it? Stop, and look at this chart:

NutriSystem (NTRI), the blue line, makes Google, the red line, look pathetic. In less than 3 years since Google’s IPO, Google quadrupled. NutriSystem rose more than 3,500% in the same period. That’s right, 3,500% in less than 3 years. What does NutriSystem do? It sells diet meals. According to the Wall Street Journal, NutriSystem’s typical customer shells out ~$300 per month for diet meals for 10-11 weeks. They lose 1.5-2 pounds per week while on the program. I think we all know how going on a diet works. You start a program, lose some weight, hoping you’d lose them permanently, but eventually you regain some, then you start the program again. NutriSystem uses the selling hope strategy very well.

Hope springs eternal.