How to Switch from a “direct response” led company to a “brand" led company.

One of the reasons Chubbies got acquired was the economic impact (profit generation) associated with the switch from a “direct response” led company to a “brand" led company.

However, operationalizing this shift across the company was hard. Really hard.

Here's what I learned about the challenges and what you can do to increase the probability of a successful operational transition.

*First, let's define terms*

Direct response led company:

— Definition of success: Maximizing revenue from dollars spent, measured by purchases driven by ad clicks within the last 7 days.

— Resource Allocation: Effectively all (95%?) marketing resources allocated to buying purchases in the short term. Lacks confidence in allocating resources to ‘brand’ building because it does not perform well based on the agreed upon definition of success.


Brand led company:

— Definition of Success: Yes, the definition of success used by the direct response led company is one component, but it is in service of the parent metric, which is the growing the percentage of new customer acquisition revenue coming through owned and organic channels. Figures out how to measure brand strength and its connection to financial results.

— Resource Allocation: Still allocating resources to direct response, but confidently investing in brand building. Transitioning to an even split betw direct response and brand building. Comfortable seeing a lower short term revenue return on ad spend because you are also measurably increasing brand strength.


*What I learned*

— Employees may be scared — team members may fear for their jobs if what they’ve been doing all along is ‘wrong’.

— There is a HUGE context discrepancy -- You have already gone through your own ‘journey of enlightenment’ on this topic. Conversely, your team has been laser focused executing the plan to hit this month’s number.

— Changing incentive structures is takes time — sure, incentives drive behaviors, but changing how people are compensated (e.g., what determines bonus amt) takes time.


*what you can do to increase the probability of a successful operational transition*

— Take ownership -- As the leader, you define success. This is on you, and no one on your team is 'wrong'.

— Over-Communicate the WHY and the HOW - Ultimately, the purpose of this transition is to generate more profits. We can all support that. However, the math explaining how this transition can help improve long term profit generation may not be clear. Walk through your P&L in depth. Walk through examples. Show, for instance, how increasing ROAS (return on ad spend) can actually result in fewer profit dollars if paid channels becoming a larger % of new customer $$.

— Update incentives to get people PSYCHED for this next chapter
—
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, 

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

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