The Most Successful Brand CEO's Biggest Mistake? Chasing a Revenue Number

Dave Powers is CEO of an $18B company. They own HOKA and UGG - both highly desirable brands each doing hundreds of millions of profit annually, while growing 60% and 30% respectively.

Those are crazy numbers.

It’s a rarity to have people like this share their mistakes.

But when they do, we should listen, because the intel is gold.

Here is his biggest mistake, the 2 ways the problem manifested, and the 3 lessons you can apply to your business today as you think about how to invest in Brand and Direct Response in 2024.


** His biggest mistake?  

Chasing a revenue growth number.



The 2 ways the problem manifested?  

Price and Perception

1) Price

Powers says, “I’ve learned from my mistakes here...

“You start chasing a number versus healthy, sustainable growth.

“And so we actually went through a period early on where we had a lot of markdown inventory in the channel.

“We were selling off price to people

“and it was because we were trying to chase a growth number.

“So fortunately, we recognized that early on and we pulled back inventory, we closed accounts that we didn't want to be in,

“and we had to reset it. “


2) Perception

“You want to grow faster, you want to use word of mouth, you want to use distribution.

“But if you overdo it too soon...it becomes this brand that 'used to be' versus a brand that 'could be.'”




the 3 lessons you can apply to your business today **

1) Revenue growth is not the thing to focus on.

It is an output.

His lesson is that focusing on it as the direct goal is what led to problems historically.

2) Powers teaches us is that what we want more than revenue growth is price insensitivity and a perception that the brand's best days are in front of it.

Sometimes, this is in opposition to revenue growth. Sometimes it is not.

In the times where strengthening price and perception are in conflict with revenue growth, his lesson is to choose price strength and perception because the revenue growth will come.

Choosing revenue growth when in conflict with price strength and perception necessarily means reduced revenue growth in the future.

So the choice becomes
a) the potential for revenue growth
b) 100% certainty for reduced revenue growth in the near future

a) becomes the obvious choice


3) As we navigate 2024 marketing investments in "Brand" and "Direct Response", we can use his guidance here.

The objective of our direct response investments is to hit a short term revenue growth number.

The objective of our 'brand' investments is to strengthen price insensitivity and perception that we are the brand that 'could be'.

If you are a brand investing the vast majority of your marketing resources into direct response, given the above, it becomes resoundingly clear that continuing to invest dollars to with short term revenue growth as the primary goal is the strategically incorrect move




...wish i would have seen this video 12 years ago

would have been verrrrrrry helpful
—
Thanks for reading. If this post was helpful, here are 4 things you can do right now to 

• Get more strategic + tactical nuggets on brand building, 

• Tactics on connecting brand building to financial impact, 

• And specific things you can do to build strong emotional connections with your audience: 

1) Subscribe to the Brand Builders podcast on YouTube or Spotify, and Apple Podcasts. 
2) Apply to join our brand builders slack community (suuuuper small group exclusively for brand founders and operators), 
3) Follow Tom and Preston on Linkedin for regular posts on this stuff
4) And heck, share this with someone