Crocs – The W Report

The Crocs executive team managed its playbook through the pandemic crisis about as good as any company could. Simplicity helps. The classic clog shoes are easy to make with only three components, and two of them are made on-site, according to their CEO. That implies a core competency in rapid manufacturing. But product availability was not the reason for the company’s success. As seen in their Competitive Profile, their true source is in their company culture.

Leveraging company culture

Crocs found ways to leverage word-of-mouth from their employees and collaborated with celebrities to pump up interest. This well-defined strategy allowed them to fine-tune how they connect with customers.

They also stabilized their relationships with a variety of stakeholders beyond just customers, focusing on multiple environmental achievements. In 2020, Crocs sold 85% of its products without shoeboxes. They donate unsold shoes to people in need.

The results? Consumers were lining up out the doors in NYC for a chance to buy the brand at times in 2021.

Setting and meeting customer expectations

So how did Crocs win over more customers and grow their revenue between 2020 and 2022? In a word, focus.

Match Profiles compare any two customer profiles over time, with the lighter colored markers “fading into the background” since they are from an earlier time period. In the Crocs profile, the lighter green bars and blue X’s represent Crocs customers in 2020-Q1. The darker markers represent customers two years later in 2022-Q1.

When analyzing the data, Crocs did an excellent job managing customer expectations. In 2020, Pricing was the third most important need. By 2022, Pricing was the last in importance. No doubt pandemic shortages played into this, but Crocs set customer expectations appropriately. The ability to set and meet expectations is the difference between a market dominator and a market follower.

The key contributor to Crocs’ growth was how they connected with their customers. Improving their company culture provided new ways to generate activity with influencers, celebrities, and other stakeholders. And even though Crocs closed their connection gap with customers, more remains possible.

Measuring up to Apple

Success leaves clues. For over a decade now, Apple has continued to innovate not just in product lines but in its business framework. The result has been market dominance in both financial and consumer terms.

With its unique product niche, Crocs has a familiar feel and history of how the Apple brand started. And today’s Crocs is building a pathway to strong revenue growth similar to Apple as well.

As innovative footwear, consumers are loving what Crocs is doing as they far exceed the performance of other apparel brands such as Lululemon across most functional needs and all emotional needs.

Compared to how Apple customers feel about that brand, Crocs measures up favorably on all but a few functional needs (Availability, Value, and Innovation) and exceeds Apple with their ability to build personal relationships and powerful company culture.

Apple still connects better with its customers than Crocs does, although that’s an excellent opportunity area to capture Crocs’ pricing power.

By Gary A. Williams
Founder & CEO, wRatings
Co-Managing Partner, G2 Equity Partners

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