CMO: we need to do a brand reset
CEO: wtf does that mean? like a new logo?
CMO: no. that'd be a rebrand. not what i'm talking about
CEO: then what?
CMO: first, let's define terms: the strength of our brand is ultimately measured in two ways: first, the customer acquisition we get when we turn everything off (e.g., ads, discounts, etc). second, our ability to raise prices (or reduce discounts) faster than the rate of inflation and not lose customers
CEO: never thought about it that way. go on
CMO: the fundamentals of our business are weakening, even though we're growing revenue
CEO: well, we need growth
CMO: i know we don't like to talk about it, but if we turned off our facebook ads and our promos, our revenue would fall through the floor. it's been getting progressively worse over the last 6 years, and we're not acknowledging how big of an issue it is
CEO: i acknowledge that's an issue. i'm not as close to the marketing numbers, so what exactly do you mean?
CMO: over the last 6 years, the revenue coming from branded organic search traffic (removing spikes and short term influences) on our online store have actually been steadily declining
CEO: but we've been growing
CMO: yes, we've only been growing the revenue coming from paid channels. we've been spending ad dollars to fuel our growth. that's fine if the revenue coming from organic sources is also keeping up, but it's not
CEO: i don't follow
CMO: we've been chasing these topline revenue growth numbers that i've allocated all of our resources (ad spend, creative budgets, etc) to driving highly-measurable short term revenue growth. this became a red flag for me last week when our facebook ads stopped delivering for 2 days and we had the worst August week 3 in the history of the company
CEO: oh that's what happened?! i thought we had a bug blocking checkout or something. site was working fine?
CMO: site was fine
CEO: yikes. so do you now think our '24 revenue number is in jeopardy?
CMO: we can hit the revenue number
CEO: great!
CMO: but we'll just be kicking the can down the road
CEO: what do you mean?
CMO: you know how i've been doing those P&L deep dives with fred (CFO) to isolate why our contribution margin has been going down?
CEO: yes, but we've got big COGS improvements coming in '24 that will take that number up
CMO: unfortunately, my latest rev of the forecast has our marketing costs more than canceling out gains from COGS improvements. we can only lean on existing customers for so long. we've already been over-emailing and sms-ing our list, especially existing customers. i don't know how much longer that can last
CEO: so what do we do?
CMO: two words...brand reset. 4 parts: 1) data deep dive to understand the true state of our revenue, 2) right-size cost structure to match the reality, 3) build our content machine, 4) systematically hack away at ways to build that resilient revenue base
CEO: sounds horrible. it's gonna be the best worst thing ever
CMO: yup
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