An old lesson from a popular Virgin…


We all know this face – it belongs to one of the world’s most successful marketers and exponents of publicity, Sir Richard Branson.

His Virgin brand is now a global challenger and leading brand in a wide variety of categories including airlines, credit cards, trains, health clubs, holidays and all sorts of others in between.

But the category that made him his first billion is no longer dominated by the Virgin brand.

Do you know what his first business was?

It was a mail-order record company. You know records. They’re vinyl discs that produce music when you play them on a turntable – ask your father, if you’re not sure.


But why did this business nearly go broke?

The answer is this: Royal Mail went on strike for about 6 weeks. So Virgin couldn’t deliver orders or receive payments.

What did the wily entrepreneur do as a result?

He opened a retail store. Oh and then he built it into a global brand.

virgin megastore

He sold it to Sony for his first $1 Billion.

Why did this brand go broke though?

Most people think it’s because of the interweb, or iTunes and other digital download services.

The real reason it went broke is simple:

The company limited its marketing to a single channel – retails stores. It didn’t keep an active database of all those millions of customers buying in-store every day. It didn’t have a mail order business, the original backbone of the brand.

If the Virgin Megastores had built databases of their customers and communicated with them regularly, selling them more music products, they could easily have sold them digital downloads from a Virgin service, when the new technology arrived. And it’s not like it was difficult to capture customer details at the checkout. Retailers capture customer data all the time while processing the sale.

And if they had a database, they would have not needed to close their stores, rather they could have created a whole new music retail experience, both online and in-store.

They are certainly not the only brand to fail because they limited their communication channels and ignored history. But sadly many are ignoring the simple lessons of the Virgin Megastore brand and following digital fashion.

An enormous number of companies are putting their businesses at risk by migrating them online and ignoring the channels that have always worked for them. If you restrict your marketing to one channel, particularly one digital channel, you are taking a very big risk – and could go the way of the Virgin Megastores – species extinction.

I think I’d rather stay in business than follow fashion, wouldn’t you?

Time to relax now – I’m going to put some vinyl on the turntable and kick back with a good book:)


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