Premium Pricing: Why Customers Pay 10x More for YETI’s Coolers
When YETI launched in 2005, brothers Roy and Ryan Seiders had an unfathomable idea: to sell a $300 camping cooler when nearly all the other coolers on the market sold for under $30.
Unlike most entrepreneurs who seek to disrupt an industry by solving industry inefficiencies and then selling their wares at significantly lower prices, the Seiders developed what they believed to be the perfect portable cooler that just happened to cost an order of magnitude more than traditional coolers. According to YETI CEO Matt Reintjes,
We didn’t set out to make a product that cost ten times as much as ordinary coolers. We just wanted something that wouldn’t break. So we set out to build the best cooler we could make, with the best materials, construction, and manufacturing processes, without any compromises.
And it was this commitment to quality that has helped the organization carve out a new market for premium priced coolers. Reintjes adds,
We knew there were other people out there that were sick of their gear breaking and would be willing to pay more for a product that could last and significantly outperform their expectations. It turned out there were a lot more people sick of failing gear than we could imagine.
By 2007, the business had cleared $1 million in sales. In 2009, YETI sold $5 million worth of product. Revenue kept multiplying as the company began partnering with increasingly large brick-and-mortar retailers Ace Hardware, DICK’S Sporting Goods, REI, and even Walmart. YETI’s sales soared to $29 million in 2011, and then $147 million in 2014. Last year, Inc. Magazine reported that YETI’s overall revenues climbed to $468.9 million, about 10% of which YETI sells through its website.
So, how did YETI, over the better part of a decade, manage to grow its business to nearly half a billion dollars in sales with $47 million driven through Ecommerce?
To sell a premium product, calculate its value
Business experts would normally agree that convincing consumers to switch from paying $30 for a cooler to spending $300 is a fool’s errand. In 2005, when YETI was first introduced to the market, this was unprecedented. However, the hard-to-swallow cost of the uber-premium product was easy-to-justify when shoppers calculated its long-term value.
There are a lot of cheap, essentially disposable, products in the world that consumers repurchase every time they have a need. Consumers pay a price each time they have to replace those products, and if you add them all up compared to one YETI product that is built to last, the YETI value equation starts to make a lot of sense.
Today, the company’s most expensive cooler, the Tundra 350, sells for $1299.99. For the biggest outdoors enthusiasts, $1300 on a single piece of equipment can feel like a bargain when used over dozens of outdoor activities each year, every year. And as consumers’ appetites for luxury coolers grew, so did the competition. The Grizzly 40 Quart Ice Chest, the Igloo Yukon 50 Quart Cold Locker, the ORCA 40 Quart Cooler, the Pelican ProGear Elite 35 Quart Cooler, sell between $246-$326 on Amazon.
What’s impressive about the YETI story is in addition to getting consumers to adapt to paying 10x what they were used to for a cooler, YETI has also been able to successfully cross-sell and upsell its loyal customers who spend even more on some of the brand’s premium-priced accessories like the Rambler 20 oz. Tumbler, which costs $29.99, has over 12,000 positive customer reviews and has an average rating of 4.8 out of 5 stars. Though far cheaper alternatives can be found on Amazon for under $10, many shoppers still prefer to support the YETI brand. Reintjes knows,
Once people have bought and used a YETI product for a while, they understand the high level of performance and durability built into everything we make. As we’ve expanded from hard coolers and applied our same product innovation approach to other categories like soft coolers, travel cups, water bottles, insulated can holders, and (soon) jugs, people who have experienced YETI performance in one product are usually the first people to jump on board with our latest and greatest.
For many customers, YETI coolers have even become something of a status symbol, given their luxury price tag and durable features. In fact, last year a report by The Wall Street Journal found that thieves have been targeting YETI products, snatching them from beachgoers, campers, and grocery stores.
Marketing YETI with the help of influencers
To build a brand so highly coveted that its products attract burglars, YETI leveraged the help of influencers. In an article for The American Genius, business writer Connor Wrenn writes,
From the beginning, YETI has marketed the cooler to people like the founders; passionate and respected outdoorsmen whose passions drove them to own the latest and greatest gear. To do this, they hired influential guides and fisherman as brand ambassadors. They also sponsored programming on hunting and fishing TV stations. All of these early efforts earned the trust and recommendation of “influencers” and “prosumers.”
“Those commercials didn’t reach millions of people, but the people that they did reach were the most serious hunters and fisherman,” [YETI vice president of marketing Corey] Maynard said. “So it would reach 100,000 or so hardcore hunters and fishermen who would be the person within their circle of friends who their buddies would ask about the latest gear.”
Indeed, with endorsements from big-game hunter Jeff Simpson, big-wave surfer Shane Dorian and two-time world champion bull rider JB Mauney, YETI easily appeals to the avid adventurer.
Of course, building influencer relationships and earning their brand support took time. The strategy that YETI has employed to create and scale its influencer program, according to CEO Reintjes is a process more than the spontaneous thought-followed-by-action of “we like him/her let’s go sign them.” The ambassadors YETI engages are “people we identify that we think would be a good, authentic brand fit.” Fledgling Ecommerce companies should keep this in mind too. That is because plenty of people have an audience, but misalignment between brand and endorser values can backfire.
Many overly eager businesses have been the subject of ridicule when they’ve partnered with the wrong celebrity. For instance, when Pittsburgh Steeler Rashard Mendenhall unleashed a series of controversial tweets after Osama bin Laden’s death, one of Mendenhall’s sponsors Champion Sportswear sought to distance itself from him. Also, consider Bootea’s regretful partnership with Scott Disick when the reality star copied-and-pasted instructions for his paid endorsement into the caption of his Instagram post. For a company to sustainably grow, influencer relationships need to make sense for both the brand and the endorser’s audience.
- 4 Successful Influencer Campaigns You Can Model (Social Media Examiner)
- Best Influencer and Celebrity Campaign in Social Media (8th Annual Shorty Awards)
- The 7 Best Influencer Marketing Campaigns We’ve Ever Seen (TINT)
Reintjes says one of the best ways YETI sources new brand ambassadors is through referrals from existing ambassadors. He notes, “Usually there’s a ‘getting to know each other’ period, and once we both feel good about a true authentic alignment, [a formal endorsement] offer will follow.” Reintjes also cautions,
The success of influencer marketing is more complex than just deciding how many partners to have. The brand first needs to understand their need for influencer marketing. Is it an awareness play, or is it an authenticity play? If it’s gaining awareness, then you need to look at the outlets that the individual brings to the table, the geography on where you want to build that awareness and then build a plan around basic impressions. If it’s an authenticity play, then it needs to be a natural a brand fit. The quantity isn’t nearly as important as the quality and once you have an individual that you’ve partnered with, you can start to understand the outlets to your consumer base and their follower base and build a strategy and tactics to introduce the partnership. I believe the biggest mistake smaller companies make when entering the “endorsement marketing” playing field is they look for people that have big social networks or can get them quick hits. This is a long term play. We sign our Ambassadors for their expertise and authenticity in their specific pursuit. A couple of our ambassadors don’t even have social networks.
Authenticity is not only important when developing influencer partnerships, it’s also something important brands need to demonstrate to their customers too, through their own social messaging, product packaging, customer service interactions, and advertising campaigns.
Organically, too, interesting brands can attract A-list endorsements. Reintjes believes the best way you can get an influencer to promote your business (and not a competitor’s) is by manufacturing a product worth buying.
I think it starts with the product. You have to have a product that fits into a gap that the individual needs to fill. If you have that product, it makes the alignment real. We’re lucky that YETI fills a need in many different ways in these individuals’ worlds.
A highly cited study by Nielsen suggests peer recommendations are the most credible form of advertising. So, endorsements from YETI’s ambassadors to consumers as well as the clear value a durable and high-tech cooler offers compared to the more “replaceable” alternatives made what some believed to be an impossible challenge look easy.
Ecommerce brands often mistakenly believe their marketing needs to be opportunistic, in that wherever they can attract an audience they should. However, marketers should focus on campaigns and channels that actually convert customers instead of inbounding tirekickers. Furthermore, rather than lower prices to compel shoppers to complete a purchase, many stores should proudly display their products’ advanced features to help buyers justify their premium price tag.
Selling a high-priced product online can be challenging to start, but once you explain your value proposition to customers and garner the support of category influencers, you too may be able to create a cult-like following for your brand and products.
If you are struggling to sell premium-priced items in your Ecommerce store, email us at [email protected] with your issues and goals. We, at CM Commerce (formerly Receiptful), will do our best to offer guidance to help you grow your business. We regularly interview experts and produce deep dive articles on the subjects that will provide you (and our other readers) step-by-step instructions on how to overcome those obstacles to your success. So let us know if there’s a specific subject that would be beneficial to you.