When thinking about change and getting others on board with the change, one of the best ways to achieve that is by establishing a digital growth purpose.
A purpose-driven growth model can give you a huge strategic advantage in a commoditized market.
That's precisely the approach the founder of TOMS Shoes adopts.
The Story of TOMS Shoes
The founder of TOMS shoes got an idea for a business model when traveling through Argentina in 2006. He noticed a need that got him thinking. What Blake sees is many children growing up without shoes to wear.
They were barefoot.
Not long after the trip, Blake started a company out of his apartment, which eventually became what we all know today as TOMS Shoes.
This organization was born from a purpose.
TOMS sets out not only to sell another commoditized shoe, but in their own words:
The premise behind this business model is that with every pair of shoes they sell, they will donate a pair to a needy child. They are the founders of what they call the One For One approach, which TOMS eventually trademarks.
What begins as a simple idea evolves into a robust growth model, and the numbers speak for themselves.
As of today, donations by TOMS since 2006 amount to over 88 million pairs of shoes for children.
When you think about this from an economic standpoint, with an average price of $54 for their shoes, the average cost of goods that sell per pair is just $9.
The purpose-driven business model creates almost a triple threat of value for consumers, kids in need, and the entity itself.
The purpose is what gives TOMS a huge strategic, competitive advantage in an otherwise commoditized shoe market.
However, it isn't smooth sailing for long.
TOMS Loses Sight of Their Purpose
Around 2011, 2012, the story takes a different turn. TOMS begins focusing on chasing growth and revenue and loses sight of its purpose.
To support their expansion efforts, TOMS began to roll out new product lines.
In doing so, they began to drift further away from the reason behind their success, which is the purpose, the One For One philosophy.
Soon, the company fell back on conventional marketing campaigns, and strategies requiring expensive media ad buys and lifestyle shoots.
At this point, TOMS was no longer on purpose.
The focus was not on what defines the One for One brand.
As the company struggled, CEO Blake decided to take a sabbatical. Over that period, he reflected on the past, present, and the next move to transform TOMS to get them to the next level.
He realized that the enterprise was focusing much more on the process and promoting commoditized products rather than their purpose.
The concentration was on increasing revenue, which contradicted their purpose, to improve lives.
Those two simple words, "Improve lives," and the determination behind it is what gave TOMS their competitive advantage.
For those shopping for the shoes and those working at TOMS, improving lives is what makes them feel part of something bigger than themselves.
Years later, while reflecting on some failures and missteps, TOMS CEO Blake discovers that they began operating just like every other footwear company did.
They had become a commodity.
In 2015, Blake stepped away as the CEO, but continued to help drive TOMS's purpose.
He acknowledged that there was a close relationship between the story of TOMS and their purpose. He shared, "I realized the importance of having a story today is what really separates a company. People just don't wear our shoes. People tell our story."
Jim Alling, from Starbucks and T-Mobile, stepped in as the new CEO. He embarked on the next steps of TOMS, getting them back on track and moving away from promoting and pushing products.
This is a crucial lesson for all financial brand marketing, sales and leadership teams because in December 2019, TOMS's challenges escalate. They had to bring in new private equity and investors, hoping that the new owners had faith in the brand and were willing to double down on TOMS's purpose.
TOMS continues to evolve and change its strategy while returning to the core purpose.
If you consider TOMS story and what makes it successful in the first place, that purpose, two words, improving lives, and how the company loses its way, you cannot deny that it can be difficult for brands to make the kind of changes TOMS continues to make to find its way back to its purpose.
What Your Financial Institution Can Learn From the TOMS Shoes Journey
Now, think about your financial brand, how you position yourself, how you market, and how you communicate.
Are you promoting the same great rates, fantastic service, and commoditized laundry list of lookalike features?
Are you doing R&D?
(That is not research and development)
It's ripping off and duplicating what other financial brands are doing.
Or are you doubling down and committing to a unique purpose, your financial brand, and the people in the communities that serve you?
Are individuals just banking with you? Is a checking account, a loan, or a mortgage the only thing they have with you?
Are people believing in your purpose and telling your story to their friends and family?
Profitability Through Purpose
For TOMS, it's their boldness and courage that helped keep them moving forward and create value in a world beyond selling commoditized products.
That's our hope for you.
That is our hope for your financial brand: that you can have the same boldness and courage to start banking on purpose and not look back.
In doing so, you will position your financial brand beyond the commoditized promotion of lookalike products and services.
Commit to putting the transformation of people and the communities you serve ahead of the traditional transaction of dollars and cents.
This article was originally published on December 16, 2020. All content © 2021 by Digital Growth Institute and may not be reproduced by any means without permission.