The Top 1 Reason Your Brand's Revenue Is Declining
(Author's Note: I once heard that articles with 'lists' are more likely to be read than those without them. So excuse my list of 1.)
Why did they ask me? In addition to my charming personality, I had just been bought out of a company (The Tie Bar) that my wife and I founded from the basement of our home just a few years back. By the time we were acquired, The Tie Bar had become the #1 selling online brand for men's accessories.
So I began my consulting work for this brand and here's what I found.
For the first eight years, this brand soared. In fact, in year 8, the brand had just enjoyed its second-straight year of 100 percent year-over-year growth. But now in year 10, the brand's growth had actually started to decline.
Why? Even though I already knew what the answer had to be, I still did my due diligence and asked about every facet of the business.
Here's what I learned:
When I ran The Tie Bar, my strengths were in marketing and branding. So I felt comfortable knowing that if this group was wrong about their marketing and branding strength, I'd be able to figure it out immediately.
But they were right -- their marketing and branding were just fine.
So this basically left that one final possible reason to cause their revenue to flatten. And I knew what it was all along because this is a fashion brand. And like the tech industry, the ongoing success of a fashion brand rests on one thing.
If a brand's sales are flat, the reason why always starts with the products.
How do I know? Well…I dare you to name a single fashion brand that either tanked or flat-out went out of business for any reason other than the fact that their product was no longer "right." Established and fast-growing brands do not decline in revenue because of poor customer service. Established and fast-growing brands do not decline in revenue because they did not advertise enough.
Established brands start to decelerate and decline in revenue because their products are no longer at the taste or quality level expected by its customers. It really is that simple.
Don't get me wrong – marketing, branding, customer service, operations. They are all necessary pieces for success. But if your company once experienced success, then those are systems which don't need the same ongoing evolution and updating that designing and product development does. (Yes, there are exceptions to these rules. Please don't sprinkle the comment section below with them. It's a column – allow me to generalize.)
Anyway, to confirm my theory, I took a look at this brand's products: their quality, their design and their assortment. I compared them with what I am seeing in that industry. I looked to see if the quality was right. I looked to see how varied the assortment was. I looked to see if their products had evolved since their last spike in sales a couple years back.
And my findings revealed exactly what I suspected. This brand's sales had declined because its products simply weren't right anymore.
Related: Do Brands Need to 'Speak American'?
So when I told the CEO what I found, he immediately got defensive. He explained that he has analyzed his sales data. He told me that he knows exactly what kind of products sell well and so he continues to make similar products. And that his design staff (of one!) was on top of the trends. Therefore, as he told me, "it cannot possibly be the products."
And therein lies the problem.
You're in fashion. Your industry constantly evolves. And so should your product. In fact, it is your obligation to your customers not to keep things the status quo. That's the whole point of fashion. If you're selling #2 pencils, then fine. Use the same amount of graphite. Color them the same yellow. And keep those erasers smooth.
But if you're not selling #2 pencils and you're selling men's shirts (for example) then damnit, make sure you're not just selling white button down shirts year after year simply because they sell well. Or worse off, make sure you're not making 40 different versions of a white dress shirt.
Or, just because your awesome navy gingham shirt sold well in 2012, doesn't now mean you should make 14 different navy ginghams in only slightly different scale and sell them in 2015. Instead, be happy that you made some money off gingham, and now go try something else.
When I ran The Tie Bar, I was also in charge of design. And it freaked me out. I never stopped worrying about whether we were keeping up with the latest trends or, better yet, creating new ones. I knew that, as a fashion brand, certain marketing techniques and infrastructure might stand the test of time – but not design. Design was a constant work in progress. And I never took for granted that we were designing the right products. I am proud to say it was a big reason for our success.
So no matter how many great ads you run, no matter how gorgeous your website and no matter how flawless your customer service is, it all means nothing if you're selling a product that people don't want to buy.
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