How Crocs 3x'd Revenue in 5 Years

+ How iPhone Overtook Android

In 2017, Crocs faced declining revenues and a fading brand. In the past 5 years, it more than 3x’d revenue.

US$ Billions, Image my Own

5 lessons from Crocs turnaround:

1. Reduce marketing
2. Streamline products
3. Increase personalization
4. Collaborate
5. Focus

Let's break them down.

After taking off in the early 2000s, revenues at Crocs declined for years. Competition in the space for work shoes and cheap knockoffs had decimated the business. 2017 was a nadir.

But the company took dramatic steps to turn around. It’s a fascinating case for students of product growth.

1. Reduce Marketing Expenses

Crocs closed 30% of its retail locations. Like the way of the mall, physical retail was going out of style. Crocs took the bold step of closing its permanent “billboards.”

Instead, Crocs doubled-down on e-commerce. This business proved to not only be much larger, but also more lucrative. Crocs went from 5 focus countries to 80+. It also increased its margins. This shift to online helped it to return to profitability.

2. Streamline Product Portfolio

Crocs reduced 30-40% of its product selection. It had an inventory problem. People didn’t care about many of the new styles it had invented. Management took the hit & got rid of them. This improved consumer perception of what WAS available.

3. Focus on Personalization

Where Crocs did take the remaining products was customization. Jibbitz, or Charms, became the focus of Crocs. These add-ons help make your Crocs “you.” They helped grow the market, and also increase LTV of existing customers through upsells.

4. Collaborations as Marketing

How do you still make a mark as a brand without marketing spend?

· Post Malone
· Justin Bieber
· Balenciaga

Crocs made new products designed by stars. The stars marketed them. It was a textbook example of product reinvention.

Crocs’ Balenciaga collaboration was a particularly landmark collab. Crocs’ were selling for $700. This helped Crocs break into a more affluent clientele, and further monetize them. It opened the door for a stream of other fashion collabs, like Vera Bradley.

5. Focus on One User Persona

What did all these efforts have in common? They targeted millennials. Millennials shop online, love personalization, and are represented by figures like Post Malone. Crocs understood focus would help them stand out.

It all started with deep insight. Crocs observed millennials’ nostalgia for the brand, from its early-2000s success. So, they bet on increasing brand relevancy with the already aware, instead of generating new awareness. The focus helped them succeed, despite smaller budgets.

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How iPhone Overtook Android

As recently as 2019, 65 out of 100 smartphones in the US were Android. Google had dominant market share. Quietly over the past 3 years, iPhone has taken over. It’s worth examining how:

1. iMessage

Apple has built iMessage as a closed ecosystem. It brands Android users. Add one to a groupchat & they’re green. No one wants to be the green bubble in a sea of blue. Functionally, the quality of videos & pics is lower, messages don’t send over wi-fi, & more.

This has been Apple’s deliberate strategy. In 2016, Tim Cook forwarded an email to head of iPhone. It said they shouldn’t “move iMessage to Android.” It detailed how not having iMessage was a “dealbreaker” for Android users. Especially because GSuite worked so well on iOS.

2. The privacy play

October 24th, 2018. Tim Cook gave a landmark speech. He called out the “data industrial complex” fueling the ad industry. Google execs didn’t know it at the time, but it was a turning point in the smartphone market. Since then, iPhone has gained share.

This was because Apple made a big change in its marketing strategy. Giant privacy focused building takeovers started popping up around the country. Not billboards. These were giant art installations remaking cityscapes.

The Google Train is leaving the station. Source: Business Insider

3. Ecosystem control

Tight integration has allowed Apple to maintain control over the user experience. iOS engineers can tune the OS for very specific hardware. This has allowed iOS’s experience to be more seamless and less buggy than Android.

It’s Apple’s old playbook. Same as Mac. But unlike desktop where Windows still reigns supreme, Apple was able to win with a closed ecosystem due to the app store. It has a rich ecosystem of third party apps. Indeed, many iOS apps out-function their Android peers.

4. Incredible Retention

iPhone users stay iPhone users. Apple has built a rich set of software lock-in, from iCloud to Siri.

It’s impossible to grow market share if you have a leaky bucket, with users regularly churning. The iPhone doesn’t. It has incredibly low churn.

5. Moving to lower price points

In 2019, the cheapest “latest model” iPhone was $699. That completely changed with the release the iPhone SE in 2020. Suddenly, the cheapest new iPhone was $399. Apple made a concerted effort to move downmarket.

This coincided with the recent network buildout of 5G in America. As customers looked to upgrade to 5G capable phones, they found a competitively priced Apple device.

6. Maintaining cultural relevance

As the chart shows, in 2021, iPhone share growth slowed. Then, iPhone 13 launched. Share gains re-commenced.

Each year, Apple manages to put on a huge show for new iPhones. Big Android brands, Samsung & Lenovo, have been unable to.

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Bonus: Deep & Shallow Product Management

We need to reframe how product managers talk about project management. Too often, the discussion is a simplistic denigration of project work.

But, the lives of great PMs involve tons of project management. I think we should reframe it as Deep Product Management.

Let’s define Deep Product Management. This is when the PM is actively adding to the executional success of the project: removing blockers, helping make decisions that come up, being the EM's & engineers' best friend. They can speak to what's happening on a daily level.

This is in contrast to Shallow Product Management. This is when the PM is hands off on the executional details: rely on the EM, trust the designer to make decisions, focus more on why & what then when & how. They don't know on a day-to-day basis how things are going.

What does life look like when you excel at the art of Deep Product Management?

· Read and comment on the tech specs
· Attend stand ups to get daily updates on progress
· Volunteer to help unblock issues
· Think through all the flows and corner cases with design
· Run a great UAT

As a result, a conversation with leadership might go like this:

Leadership: “Where are we at with X big new feature?”
PM: “We’re at risk. I am working to try to unblock Z issue with Y team.
Or:
PM: “We’re on track. X & Y engineers are tracking to timeline as of this morning.”

On the other hand, in shallow product management, the conversation goes something like:

Leadership: “Where are we at with X big new feature?”
PM: “I think we’re okay. Let me check with the EM.”
Or:
PM: “I’m not sure… Let me find out.”

As you can guess from the conversations, the Deep PM’s features have less risk. In Shallow Product Management, features often have bugs, get delayed, or miss some analytics. Deep PMs’ features rarely do.

Of course, what is appropriate depends on your environment and the time.

Environment:
· What does eng want?
· What is the product culture?
· How many engineers are you supporting?

Time:
· How much do you have?
· Are you good at managing it?
· Do you need to focus on strategy?

But in most organizations, front-line PMs should strive to Deep Product Management. There may be heavy planning cycles. Or a high eng:PM ratio. Then they’re shallow. Otherwise, the best IC PM’s go Deep. They become glue between engineering and a quick, metric-moving release.

This all comes back to how product managers talk about project management. In all the talk of “product thinking” and “Facebook PMs don’t write PRDs,” the art of execution has gotten lost. I would argue the pendulum has swung too far.

I have found Deep Product Managers are better strategists for their detailed execution. They don’t make it about strategy OR execution. With good prioritization, they do strategy AND execution. Their deep project management drives deep strategic insight.