Crocs' Billion Dollar Strategy: Stay Ugly

Crocs’ billion dollar strategy: Stay ugly
The colorful foam clogs appeared in 2002, just as the economy was recovering
from a recession. Brash and bright, they were a cheap investment (about $30) that felt
good and promised to last forever. Former president George W. Bush wore them.
Aerosmith lead singer Steven Tyler wore them. Your grandma wore them. They roared
along with the economy, mocked by the fashion world but selling 100 million pairs in
seven years.
Crocs is a world leader in innovative casual shoes for men, women and children,
offering more than 300 footwear styles. All Crocs™ shoes feature Croslite™, a
proprietary, revolutionary material that gives each pair of shoes soft, comfortable,
lightweight and odor-resistant qualities. Since its inception in 2002, Crocs experienced
incredible growth worldwide, selling shoes in more than 90 countries, and reaching $1
billion in revenue in 2011. Customers and transaction data grew at breakneck pace, as
well as the breadth and complexity of Crocs’ marketing activities.
But it 2011, an overall negative perception of the brand resulted in declining
demand and an increase in inventory, which ultimately forced the company to cut jobs
and close production plants. Who needs a second pair of Crocs in a recession,
particularly when the first pair is holding up ok?
A big shift in company marketing strategy was to shift 100% of marketing spends
to digital. This was much easier to scale on a global basis, and it also allowed to target
existing customer base and potential customers in an efficient way, as consumers
continued to shift their purchasing behavior to digital channels.
In 2012, the Crocs marketing team was given the mandate to transform Crocs’
online business by becoming less reliant on promotions and discounts. The team was
excited by the opportunity to improve Crocs’ profitability. At the same time, the marketing
team knew plenty other companies that reduced or eliminated promotions and were faced
with customer dissatisfaction, increased churn, and shrinking revenue. The Crocs team
decided to take an analytical, test-based approach to promotion optimization. Early on,
they realized that customer segmentation might hold the key to success, and set off to
answer the question: How can Crocs reduce the reliance on promotions by reaching out
to the right customer, with the right message, at the right time? The team decided to start
by testing and optimizing promotions aimed at customers who were showing signs of
churn. The goal was to test and find price sensitive (and insensitive) customer segments
within the customer database, and communicate with them accordingly. Crocs tested
several messages across four different churning customer segments: From customers
just showing initial signs of “fading away,” to deeply attrited, or “lost” customers. Some
“win back” messages included promotions, while others did not. The first round of testing
discovered huge swaths of customers who were responsive to a relationship-based win-
back messaging that did not include any promotional discount. These customers
exhibited a lift of 2X in revenue per user compared to a control group that did not receive
any email.
A common struggle for marketers is having a single source of truth in data.
Different teams, each responsible for different parts of the customer journey, have distinct
ways of capturing and interpreting customer signals; the variability is a hinderance to
efficient decision-making. Crocs took this to heart when building the foundation of their
customer experience strategy. They understood the intricacies of how users engaged the
brand, with people coming to owned properties (Crocs.com) but also a wide network of
reseller sites. At the same time, people are engaged via different marketing channels
across social, email, advertising and more. Their data foundation was architecture with
this in mind. Not only were all customer signals fed into one central decisioning-engine, it
was paired with second- and third-party data sources to further refine the picture of how
users were engaging across digital and physical channels. User-generated content was
decided a good way to get to know a customer and drive engagement with the brand.
Using technology to drive engagement and forge emotional connections with your
consumer can be a differentiating factor, too.
Thrilled by the results, the team decided to implement the next phase in its quest to
find the perfect data-driven strategy. In the interview to the leading business magazines
Crocs CMO said: “Crocs is a democratic brand and appeals to a wide variety of
customers around the globe. We have great product and marketing teams that stay close
to our consumer and trends in the market. They use social listening to quickly influence
our product and marketing strategies and amplify messages or products that are working.
Footwear brands are particularly savvy at cultivating loyal and dedicated followings—
cementing their cultural relevance at breakneck speed. With so many options on the table
for consumers, the brand experience has now become just as important as the shoe
itself. Consumers are embracing different ways to shop, from growing “click and collect”
adoption and more mobile buying, to evolved showrooming. Brands now have to create a
common thread across all these different areas and deliver an experience that feels
consistent and relevant. It makes data strategy more critical than ever before, as teams
now have to stitch together a view of the customer and marry that with personalized
content.”
Task:
You are the representative of the leading consulting agency, which combines unique
expertise both in strategy research and implementation. Prepare the proposal for
marketing analytics framework, which will help company to gain the insight on customer
behaviour. Which metrics you offer and how do you see the results?
It will be important to consider following:

- segmentation approach, segmentation practice, dimensions and procedures
- objectives for the research and research methods needed to uncover consumer
behaviour aspects
- managerial implications for the research and changes agenda and action plan
- expected results
- presuppositions on company capabilities (without references) are acceptable
References
1. https://www.forbes.com/sites/jeffthomson/2019/02/05/digital-drives-crocs-
comeback/#7428ef6733c0
2. https://www.washingtonpost.com/news/business/wp/2017/09/19/crocs-billion-
dollar-strategy-stay-ugly/
3. https://theblog.adobe.com/crocs-takes-on-competitive-footwear-market/

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