Tobacco use has been declining for decades (and many would say that's a good thing). But Sykes Wilford was convinced there was a business opportunity in selling artisanal tobacco pipes, some of which can go for up to $15,000. So he started Smokingpipes.com. "People told me I was crazy," he says. Not so crazy, it turns out. Smokingpipes.com's parent company, Laudisi Enterprises (which Wilford set up to run a small storefront location, a pipe distribution business, and a tobacco factory), had $13.2 million in sales in 2014, 70 percent of which came from Smokingpipes.com. Wilford shares his strategy for growth in a shrinking industry.
1. Own the high end
Wilford didn't want to build a business competing in the commoditized, low-cost pipe market--the margins just weren't there. So he streamlined his inventory, emphasizing sales of limited-edition artisanal and estate pipes that generate higher profits. While the sourcing of these rare pipes is a challenge, he says it's worth it. The message to customers is: "If you want it, you have to buy it now, because there won't be another one next week," says Wilford. To appeal to the connoisseur, Wilford uses the language of art criticism, design, and history when describing his wares on the website. "This is a hobby with a rich history," he says. "We want to be the highly expert retailer for it."
2. Make marketing personal
The market for smokers isn't getting any bigger, so Wilford targets loyal pipe smokers and designs marketing programs to convert them to aficionados. He attracts lower-end buyers (those who spend less than $500) using automated emails and educational web content (such as videos of pipe makers at work). To move them to the company's more expensive artisanal and rare pipes, his customer service agents review their buying habits, and then contact individuals directly with recommendations for high-end pipes. "If you were spending $4,000 on something, would you want to buy on the basis of an automated email, or would you buy on the basis of a personal recommendation?" Wilford asks.
3. Create expert employees
When Wilford hires new employees, no matter what their jobs are, he teaches them the pipe and pipe-tobacco trade. For instance, customer service agents often get instruction from the marketing department on writing product descriptions, and they are encouraged to attend trade shows and office lectures on pipe aesthetics. That's why Wilford gives Smokingpipes.com's customer service agents leeway when they're handling customer issues. He also prefers to hire full-time employees instead of part-timers, despite the added costs. "If you're doing something 10 hours a week, you're never as good as if you do it full time," Wilford says. "I want to ensure that our service is exceptional."