Building a loyal customer base dominated by repeat purchasers doesn’t just happen overnight. Here’s how one startup is pulling it off.
By Lorraine Sanders (Contributing Writer, Women 2.0)
When San Francisco-based Stitch Fix announced that it had shipped its 100,000th “fix,” a box containing five items of clothing and accessories chosen according to a member’s personal style profile, the number stood out. It is, after all, a nice, big, round, noteworthy number. It didn’t, however, surprise me.
That’s because the company, founded by Harvard Business School alum Katrina Lake in 2011, has been growing steadily for more than a year, with new hires such as former Netflix-er Eric Colson as chief analytics officer and Walmart.com’s Mike Smith as COO sending the signal that there’s a lot of promise within the walls of the San Francisco office. Then there’s the 90,000-square-foot warehouse that Stitch Fix moved into this spring to accommodate inventory and shipping, as well as steadily rising numbers of shipments each month and improving customer retention stats. When I spoke to Lake in May, for example, the company reported sending an average of 2,500 shipments during the month of April and counting 60% of its customers as repeat buyers. Stitch Fix released new numbers last week, and they’re even better, with an average of 4,000 fixes sent in July and 70%of clients reordering within 90 days.
A $4.75 million Series A funding round announced in February and led by Baseline Ventures and Lightspeed Venture Partners with participation from Western Technology Investment has helped the company to triple its workforce to reach 145 employees over the last six months. But even with the cash infusion, Lake’s entrepreneurial approach stands out for being measured and pragmatic in the move fast, break things culture.
Want your current project to reach its next milestone? A few lessons you can learn from Lake:
Learn From Your Mistakes
By some estimations, Stitch Fix has grown slowly. But that’s because the company has spent time assessing customer experience and using that data to improve personalization and accuracy. “We actually needed a lot of data and a lot of historical data…and we kind of couldn’t have as accurate of buying and styling now if we didn’t collect that data over that course of time,” Lake said. That data – along with 100 distinct pieces of information about each client culled from the sign-up and styling process – helps to make repeat customers’ future fixes increasingly tailored to what they want and fuel a more predictive system overall.
Grow at Your Own Pace
Early on, Lake bypassed opportunities to quickly acquire customers and court high-profile media outlets for coverage. “Going big before we felt like we had the right experience was something we felt like was really risky,” she told me. Instead, Lake and her team focused on customer experience and building a user base made up of Stitch Fix fans, and not just merely names.
Surround Yourself With Good People and Make Them Better
C-level hires (such as the aforementioned Colson and Smith) with backgrounds at heavyweights such as Netflix and Walmart.com bring no small amount of knowledge to the table, while company practices like a bootcamp that puts new hires through every step of the fix process – from picking items out to packaging and shipping the box – provides a common baseline for the entire team. And it doesn’t end there. “We start out every single all-hands meeting with styling a fix for a client,” Lake says.
Be Your Customer
When Lake and I spoke, she let me in on a little secret: she orders her own fixes, but not because she’s in a style rut. She actually uses a mystery account to order from her own team of stylists. That way, she can see firsthand what her customer experiences and tweak things accordingly. “I never want to lose touch with what the customer experience is and how it’s evolving,” she said.
Keep Your Hands in the Game
Along the same lines, Lake reports staying tied to day-to-day tasks that many startup founders would pass off to others in the face of a plate piled high with the demands of leading a company. That means reading bloggers’ posts about the company and responding, styling five fixes a week and working in the company warehouse to pack and ship fixes for part of a day each month.
About the blogger: Lorraine Sanders is a journalist, blogger and media consultant. She is the author of the San Francisco Chronicle Style Bytes column and writes regularly for FastCompany.com and others. She is founder of the blog Digital Style Digest and an inhabitant of the San Francisco Writers Grotto. Connect with her on Twitter @digitalstyledig or @lorrainesanders.