One of the tasks on my ‘To Do’ list this month is completing a questionnaire for a brand design brief in readiness for a meeting with an agency later in the month. They’ve asked me to list my three favourite brands, and I didn’t have to think hard! On that list is TOMS. I love their ‘One for One’ business model, their story and the elegant simplicity of their branding.
The Origins Of TOMS
Back in 2006, serial entrepreneur, Blake Mycoskie took a trip to Argentina with the primary aim of immersing himself in the culture. Learning the tango, playing polo, and drinking the national wine, Malbec. He wore the alpargata, a soft, casual, canvas shoe worn by almost everyone in the country. This got him wondering whether the alpargata could have market appeal in the United States. But as the focus of his trip was on having fun, not work, he shelved the idea; albeit not for long.
Towards the end of his trip, Blake met an American woman who was volunteering on a shoe drive. She explained that despite living in a relatively well-developed country, many Argentinian children lacked shoes. This not only exposed them to disease, but also made everyday activities like attending school and getting water from the local well difficult. Her organisation collected shoes from donors and gave them to kids in need. But it couldn’t meet the demand.
These two observations led Blake to come up with what at the time was a groundbreaking model for social entrepreneurship.
Returning home to Los Angeles with duffel bags of modified alpargatas, Blake had to figure out what to do with them. As he knew very little about fashion, retail or the footwear business, he asked some of his best female friends to dinner and told them the story of his trip to Argentina, the shoe drive and his idea for TOMS.
Get Feedback From Potential Customers
Thankfully for Blake, his friends loved the story, the shoes and the whole concept of TOMS. They gave him a list of stores they thought might be interested in selling his shoes. And they left his apartment as his first brand ambassadors, wearing pairs they’d insisted on buying.
This is a great lesson. Talk to potential customers, who may be friends and acquaintances, about your idea and elicit their feedback. They will almost certainly be able to help your market research by telling you where your current customers shop and hang out.
Don’t Hide Behind A Computer, Show Up In Person
Initially Blake thought he could get his business off the ground by sending emails and making phone calls in his spare time. But he quickly realised that this approach was getting him nowhere fast. Whilst it was easy to reach out to people remotely, this was no substitute for showing up in person.
One Saturday, Blake went to American Rag, one of the top stores on the list his friends had compiled, and asked for the shoe buyer. Despite seeing a vast array of shoes every month, the buyer recognised there was something unique about TOMS. She loved both the story and the shoes themselves, and knew she could sell both of them.
TOMS now had its very first retail customer!
The Power Of PR
TOMS got another big break shortly afterwards. Booth Moore, fashion writer for the Los Angeles Times, heard about the TOMS and published their story in an article. On the day of publication, TOMS received 2,200 orders on the website.
This was great news. But unfortunately Blake only had 160 pairs of shoes sitting in his apartment! On the website, he had promised everyone four-day delivery. He responded quickly by hiring three interns who called and emailed everybody who had ordered shoes to let them know their orders weren’t coming anytime soon because they didn’t have the inventory. In fact, they might have to wait up to eight weeks before new stock arrived.
Remarkably only one person out of those 2,200 orders cancelled, which goes to show how far a rapid, honest response goes when dealing with customer service issues.
That first article in the LA Times sparked further coverage. Vogue magazine decided to do a feature on TOMS, which led to articles in other magazines, such as Time, People, Elle and Teen Vogue. The company at that point consisted of just Blake and his three interns, and was run surreptitiously out of his apartment.
By the end of his first summer, using his Venice Beach apartment as his headquarters, Blake had sold 10,000 pairs of shoes online, and was retailing through stores in Los Angeles. Soon, celebrities like Keira Knightley, Scarlett Johansson, and Tobey Maguire were spotted wearing TOMS. And its customer base expanded to include major retailers like Nordstrom and Urban Outfitters.
In 2014, private equity firm Bain Capital purchased a 50% stake in the company, reportedly valuing it at $625 million. With half of his payout of $200 million, Mycoskie launched a social entrepreneurship fund to support the next generation of companies like TOMS. To date, it has made 15 investments in companies with social goals.
Fast forward to today, and TOMS, which has annual sales in excess of $500 million and more than 500 employees. It has donated 70 million pairs of shoes to children in developing countries. And more recently has branched out, using its ‘One For One’ business model, to sell other products, including eyewear, coffee, and bags.
Blake himself stepped down as CEO in 2015. Explain this decision, Blake said:
“I never wanted to step up to being CEO in the first place. I was forced to because someone had to do it, but it was never my skill set. So the day I hired Jim (Alling) was one of the best days in TOMS’ history. I knew we had a day to day leader who could learn the business and run it, and allow me focus on the all the stuff I’m good at. For many entrepreneurs it is a big decision, and they regret it, and they want to come back to it. It was always my vision to find a great CEO. Now instead of running the business day to day, I am focusing more on the marketing and the giving, which are the areas I have the most expertise and passion for.”
The Key To TOMS Success As A Brand
This can be summarised in one word – simplicity. The simplicity of the shoe and the simplicity of the message, ‘One For One.’
The shoe itself was simple. Just a couple pieces of canvas draped over a sole. It had no laces and no technical factors, It’s this simplicity that can create beauty in design (think Apple) and is what allowed the shoe to become iconic so quickly. No other shoe looked like it, making it easily distinguishable from across the street.
Customers also loved the ‘One For One’ story and were proud that they’d helped someone in need. They passed the story to their family and friends who went online and bought a pair themselves, and so news of the brand spread by word of mouth.
The reason the ‘One For One’ message struck such a chord was because it tapped into a growing trend to buy from socially responsible companies. Increasingly customers would rather do good with their purchases than give to charity. A recent survey found that 30% of US consumers plan to increase their purchases towards socially responsible companies. Whilst another study discovered that 55% of global consumers are willing to pay more for products from companies that are committed to positive social and/ or environmental impact.
Millennials – TOMS target demographic – particularly want their purchases to have purpose. According to the 2013 Cone Communications CSR Study, 72% of millennials believe they can make a positive social and environmental impact through their purchases and 51% check the packaging to ensure social and environmental impact.
Conventional business thinking says that profit and purpose are at odds with each other. That ‘doing good’ will cost a company money, rather than make it money. But the success of TOMS is proof that purpose drives profit. Despite its least expensive shoe retailing for $54, the company has generated over a billion dollars worth of sales, while giving away 20 million shoes.
To read more about the story behind TOMS, check out this article in Fast Company, and read Blake’s book, Start Something That Matters. To understand the relationship between purpose and profit in business, start with Jim Collins’ Good To Great.
Join The Conversation.
Question: Which brand do you love, and why? I love reading your feedback so please do write your comments in the box below.
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I’m Denyse Whillier, a London based business coach and consultant. I guide entrepreneurs from across the globe to achieve profitable, scaleable growth and create businesses that are Built To Succeed™. Built To Succeed™ is my proven success system, developed during my 8 years in the trenches as a CEO, 25 years’ experience at senior leadership and managerial level and training at Cranfield School of Management, the UK’s leading business school. It’s this background that sets me apart and helps my clients to get BIG results.
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