[Growth Study] Lululemon Athletica – How to Beat Nike by Creating a New Category
Part 1: The Levers of Lululemon's Growth and Success
“There is a company that makes yoga pants that are so tight, they cut off a circulation to the part of the brain that decides how much money it’s ok to spend on yoga pants,” - Jimmy Kimmel Click To Tweet
Lululemon Athletica went from 0 to 3.57 billion dollar company in 12 different countries around the globe. Lululemon went from one tiny yoga studio, which was converted into a store in Vancouver’s Kitsilano neighborhood in November, 2000, to a cultural icon behemoth it is today. In NPR's interview "How I Built It" the company is worth over 14 billion dollars.
How can an unknown apparel company reach such brand recognition and revenue worth in one of the most competitive industry — clothing retail?
I’ve written this guide in two parts. In the first part, I am going to break down the EXACT pieces of the puzzles that put Lululemon Athletica as one of the most recognized brands in athletic apparel.
In the second part, I am identifying few missed opportunities that Lululemon’s hasn’t fully engaged and/or optimized yet.
If you’re in a hurry, just click on one of the titles to skip to the most intriguing part:
[learn_more caption="Part 1: Lululemon's Pillars of Success" state="open"]
Chapter #1 - In retail, experience matters and the most important element in the retail business is cashflow
In case you want to skip to the Lululemon's growth gaps:
[learn_more caption="Part 2: Identifying Marketing Opportunities" state="close"]
5. Outdoor Out-Of-Home Marketing Channel[/learn_more]
Chapter 1: The Retail Experience
Founder Chip Wilson has had 18 years of retail experience behind him when the idea of Lululemon came into existence. He has already built a surfing and snowboarding apparel company Westbeach in 1979 already.
The company was relatively successful in the early days; mostly because of the market in Japan. The sub-brand Homeless did particularly well (Chip believed it was because of the letter L in the brand's name, which is a clear sign of American brand authenticity to the Japanese.)
But it was struggling nonetheless (in 1987 they barely made payroll). Chip decided to sell the company for $15 million from which he was able to keep $1M. That was the basis of Lululemon.
“In Westbeach I made 2 millions in two small vertical retail stores and I lost a million dollars on this global wholesale business. If I can deliver through vertical business at a price women will buy in volume. Click To Tweet
Since the founder has had the experience in snowboarding, skateboarding, and niche fitness apparel, he did not only learn from previous mistakes in the field but also gained access to journalists in the same field. Being one of the first in the fiel, gave him the permission to become a sort of a de-facto person in all things related to surf, ski, skateboard, and yoga business.
According to Wilson, the biggest lesson he learned was a steady cashflow (if you’ve read Shoe Dog, you could imagine how important it is). Steady cashflow allowed Wilson to pay the suppliers who delivered the best quality product on time, making sure the stores are stocked.
During the year, Chip also learned the key lessons of educating their staff. More on that in a later chapter.
Chapter 2: Emerging Trend
Business meetings with cigars and steak dinners have been replaced by 45-minute cycling classes at spin class, as Jason Kelly describes in his book Sweat Equity.
To think about it, how much are you spending each month to break a sweat? It used to be a $20 gym membership or putting on high school shorts and going out for a run or a pickup basketball session.
The professional segment started to embrace the premium fitness classes as the place of business development. And if you pay $34 per spinning class or yoga sesh with the potential strategic partner you better change your business suit to professional athletic apparel.
Keith Ferrazzi, author of Never Eat Alone, a book about networking, suggests taking business partners with you to create a stronger bond and close more deals.
Yoga joined the trend of high-priced fitness memberships with upper-class clientele. Harem pants were out of the question for the setting. The market responded with a constant feeding of magazine covers with slim/thin white women. In 2012 Yoga Journal study, 4 out of 5 yoga practitioners were high-income white women.
Members preferred smaller fitness classes with dynamic instructors because they felt more significant - as a part of the tribe. Once you start being a SoulCycle member, a Yoga practitioner or CrossFit firebreather, you also need to dress the part.
The Yoga industry has been growing steadily and is expected to hit 11,6Bn in the US in 2020.
Chapter 3: Building the Perfect Product
It’s almost redundant to talk about the quality of the product since this is always the prerequisite for any company to move forward. At Lululemon, they went all in on the design and the quality that resonates with their target persona (chapter 5).
- Design - Shannon Wilson (Chip’s wife) and Chip were both coming from the apparel design background. Chip was adamant on having stitches on all the right areas. He doesn’t hide the fact that yoga pants are intentionally designed to be as comfortable and as flattering to the female body curves. And let’s be honest, women love it too.
- The Tech - Primary function of performance and fit has been achieved by the construction of the garment which hugs and promotes performance. Lululemon's’ apparel includes reversible, brushed and textured fabric with water repellent finish and Silverescent tech (prevents funky BO).
- Materials - to add a special flair and solidify the brand, big brands “invent” their own technology. Lululemon calls itself a technical apparel company. That’s why Lulu yoga pants are made from engineered fabric (Luon™, Luxtreme™, Nulu™, Nulox™) depending on the compression level and the intention of the garment (run, train or yoga practice).
These names aren’t just an easy way to differentiate from the competition but they also carry unique features.
Luon is 86 percent nylon and 14 percent lycra. VitaSea fabric is made from SeaCell. SeaCell is a yarn made from seaweed and blended with spandex and cotton. VitaSea allows for an ultra-soft fabric that holds its shape and stays soft after many washes. This can be found in the company’s t-shirts and light layers. Silverescent is a stink-stopping fabric technology. The X-Static technology is woven into Silverescent fabric bonds 99.9% pure silver into the surface of each fiber.
- R&D - besides having the internal designers and innovators working on the designs and fabric options, Lululemon innovates through customer feedback and their retail staff. Some Lululemon stores have a blackboard where customers can leave suggestions or they share it with the staff. The store managers translate the gathered qualitative info back to Lululemon’s HQ in Vancouver. There are no focus groups or website data collecting. This (conscious) lack of data collection works great for Lululemon in product innovation: however, it hurts them a little on the e-commerce shop (more on that in part 2).
- Price - the quality justifies a high price tag, the target profile and creates a healthy margin for expansion. Just like Apple, Tesla and other premium golden-goose products on the price matrix (high quality, high pricing), Lululemon products don’t have discounts. That would be detrimental to the brand.
- The practicality of it - As much as it is frowned upon (especially for men) to wear sweatpants as a streetwear, Lululemon yoga pants doubled the activewear as streetwear, thanks to the design aspects of the product. The new trend was born - athleisure - more on that in the Law of Category chapter)
The incredible part about Lululemon is that they have done such an incredible job with the product, they really don't need to over-advertise the brand. — Robyn Young Click To Tweet
Chapter 4: Nailing the Niche - Law of Category
In the book, 22 Immutable Laws of Marketing, the law of category states: “If you can’t be first in a category, set up a new category where you can be first.
Example: What’s the name of the third person to fly over the Atlantic Ocean solo? You probably don’t know. Yet you do. It’s Amelia Earhart. But she isn’t known for that. She is known as the first woman to do so.
Lululemon completely embodied the law of category. They stepped into the emerging trend of premium athletic apparel and targeted it directly at the yoga industry.
They picked a narrow field and focused on the target persona of a middle to upper-class women who appreciate the comfort and designer clothing.
If they’d just become another athletic apparel they would have to compete against Under Armour, Nike, and Adidas, which it would be waging a losing battle. The Law of Duality from the same source says that in the long run, every market becomes a two-horse race (e.g. Pepsi and Coke or Samsung and Apple).
Lululemon yoga pants became an iconic piece of clothing of the fitness economy. In its utility and ubiquity, sleek and expensive epitomizes how fitness has shifted from Old Navy practical running shorts to a piece of apparel that tells the person and the observer who we are.Key Takeaway #4 - Find a unique angle only your product provides. Be the first one in your niche. Click To Tweet
Chapter 5: The Cultural Shift and Nailing the Target Profile
While it seems like the founder, Chip Wilson was just at the right place at the right time, he actually used demographic data to predict the ripe environment for his idea to grow.
According to TedX talk, Chip expected a gap in the market that would serve his company in talent section as well as in customer audience.
In the late 80s women in a managerial position weren't so common. He has noticed that 60% of University graduates were women (and the trend of university graduates have skewed even further in the women’s way). This makes some sense but there are also some off-the-wall statements, such as connecting the success of Lululemon and the increase of breast cancer and high divorce rates to,“Power Women” who were on the pill taking on work-related stresses, only previously assumed by men. These all lead to the future market of Lululemon’s clients.
Ocean and Duke - Lululemon’s Customer Personas
Many companies identify and create a profile of a perfect client. To embed it into the marketing heads, this illusionary person has a name. In Lululemon’s, these muses are Ocean and Duke.
|I'm Ocean||Hi, I'm Duke|
Ocean is a smart 32-year-old woman, who is well travelled, athletically fit with her own condo and just about to be married. In NY article, Wilson explains the observations in yoga classes. As he looked around the mostly female yoga class, he noticed that women wanted well-fitting athletic clothing that also easy on the eyes. In his opinion, there will be a market segment of women that fit a specific target persona.
Going narrow also means eliminating a broader segment of the market. Founder Chip Wilson was notorious with his statement that some women "aren't a good fit for Lululemon's product". This is true. His delivery has ruffled some feathers but the company's plan to circumvent the plus size yoga athletes was on point.
“We don’t have plans to change our current sizing structure which is 2-12 for women.” - Lululemon's statement Click To Tweet
Are they hitting their customer persona audiences?
Absolutely — one quick insight from the demographics section of their websites tells us the majority of visitors are coming from 25 - 34 years old women.
By the way, if you want to see the sizes from 10 to 12, you would have to go towards the back of the store or simply ask the staff members to bring it to you.
This is definitely a ballsy decision, since opening the plus sizes would bring Lululemon Athletica to tens, if not hundreds of millions of fresh new revenue — according to NPD's 2012 report, women are craving for bigger sizes of premium apparel. But that would move them away from their core branding decisions and those are sacred.
Lululemon's launched another brand name Ivivva which tailored to young girls. You could see this target profile wouldn’t fit into the main brand of Lululemon. That’s the reason to develop a sub-brand.
Chapter 6: Happy Employees
Happy employees definitely help with the growth of your business and the representation of your brand. Lululemon takes special care of their talent. In retail section, they pay over 30% over the local rate. The higher wages also mean less turnover and progression up the chain of command.
These are mostly younger, educated women straight out of college.
Every “educator” is asked to write multiple year goals and share them publicly. Chip Wilson is also known to be a big proponent of the Landmark Forum program — a self-help personal development program that is supposed to help with the growth of your integrity and leadership capabilities.
On the HR end, Chip created an environment for women who can grow the company with their skillset, resourcefulness and grit while still having a family life and a time-off for maternity leave. Since retail workers are usually underpaid (especially women) he decided to pay them much better so the workers would have a financial incentive to come back and continue working for Lululemon.
For all those reasons, Lululemon is on top 10 Best Places to Work according to Glassdoor.Key Takeaway #6 - Keep your staff happy. Click To Tweet
Chapter 7: Branding Perfection
In retail, a brand is of the utmost importance. We’ve already mentioned that people buy the identity more than just a product.
There’s a problem with branding since there are so many intangibles connected with the term. Can you measure ROI of the brand with an exact dollar amount?
However, we can see the consequences of building a good brand:
- Higher ROAS, gross margins, and LTV
- Our CAC is going to be lower
- We will attract more and stronger talent
- PR pull is greater and we can reach more
But the best reason is — speed.
Once the company knows what it stands for - its values, what their audience cares for and who they are, the decisions will come naturally. It sets the tone of how the company behaves, what is its voice.
According to Scott Kraft (CMO of Menlo), the brands start with brand pillars, which serve as a foundation of the company — the core values. We all know what MVP stands for — a product that with just enough features to satisfy initial pain points for core clients. But there’s an idea about MVB — minimum viable branding.
The key components of MVB are:
Audience needs and functional needs are the products’ domain. Real branding starts with the emotional benefits - the fuzzy area where we are touching our audience. Then you have the personality which determines how the customers are going to perceive you.
The difficult part is that the emotion, personality, promise, and vision are intangible. Lots of companies just pulled the nice adjective from thin air and put them on the about page. As you are going to find out, Lululemon took branding extremely seriously.
And it paid off better than anyone could have imagined.
What are the Brand Pillars
What are the 3 attributes that the company couldn’t exist without? If you’d have to choose what three adjectives describes your company the most - what would they be?
For example, if we put together: American, Free and Badass a brand like Harley-Davidson comes to mind.
Lululemon Branding Breakdown and Personality
Lululemon as a brand that triggers an emotional impact. The point of branding is to bring people to the point of making somebody feel [insert the emotional benefit here].
When you’re wearing Lululemon you will feel more beautiful, protective, cared for.
- Branding Pillars: Quality, Fun, Empowerment
- Top Audience: Women who do Yoga. Narrower Audience: Successful Women in Early 30’s Doing Yoga who need gear designed for modern practice
- Emotional benefits - Feeling Vibrant, Sexy, and Balanced
All those components combined lead to Lululemon’s personality: A Cheerleader of the New “modern” Yogi
Lululemon built an amazing brand. Their customers are proud to show-off their product (exposure through UGC content) on social media. They strut on the walkways with the company’s branded shopping bag with the manifesto printed on it.Key Takeaway #7: Spend time to develop your own MVB. Decide what are your the pillars of branding, your top customer audience, their top 3 needs and top 3 emotional benefits. Click To Tweet
Chapter 8: The Customer Experience
If there’s something we have learned from the companies that made their name for customer service is that it solves two major problems
First, It creates a foundation for the company culture. If ridiculously good customer service becomes a keystone habit in the company, it starts pulling all other positive elements in the big picture.
And second, it starts the word-of-mouth effect among customers. Zappos customer service is so good it made a book about it. Every time I have a chance to go to Trader Joe’s I feel like a fat kid in a candy store; the TJ crew is always positive, helpful and chatty.
Best customer-faced salespeople establish the personal relation first. Finally, they lighten the mood and really take the time to get to know the potential client. Once the solid foundation is established, only then they move into the sales section.
Lululemon, as is expected for their incredible focus on company culture, translated that into the customer service. Shopping at Lulu’s is an experience. The customers are asked by their first name before they go into the changing cabins. The retail salesperson (referred to as ‘educator’ in Lulu’s naming convention) scribbles the name on a tiny whiteboard and proceeds to address the customer by their first name.
For the whole procedure of the sale (customer success journey), the customers are called by their first name by the entire retail staff.
Consider the product they are selling. There are cheaper alternatives with arguably better value. But one of the core values at Lululemon is to feel significant. Hence the first-name basis, hence asking about the needs.
If the price is the objection (which usually isn’t), then they come up with the technology (which is often just a way to justify the high-price product purchase. “I bought the Mercedes-Benz because it’s safe”, right?).
Sometimes they turn the entire store into the free yoga studio. These social pop-up events start building even more positive connections to the brand. What was that one class-based fitness craze that has been growing like crazy in the last 10 years? Oh yes, CrossFit.
Combined with the quality of a product and having a sense of being in the premium circle the experience becomes addicting.
Since every store has only a limited stock of products (thus creating a sense of limitation).Key Takeaway #8: Go out of your way to create a meaningful personal shopping experience. Click To Tweet
Chapter 9: The Ambassador Program - Lululemon’s "Secret Sauce" Influencer Marketing
Adidas is paying millions of dollars to dress the biggest icons in sport. Crossfit athletes and UFC fighters are wrapped in Reebok from head to toe and Nike put on neon banana track spikes on every track athlete in summer Olympics.
There’s a clear necessity of putting an influencer, an icon or archetype of an avatar in front of people. These are usually charismatic celebrities in sports, entertainment and even business (I’d be curious to know who buys a golden apple watch for the features only).
When you target a narrow niche, especially in a hyper-local environment you have to take the local stars and put them on the pedestal. This strategy worked out great because it works in symbiosis. The local yoga and fitness coaches got exposed in the store, got free high-quality products to wear and started growing their business. In return, they have to put in a number of hours inside the Lululemon retail stores and run free yoga classes and represent the brand.
Since Lululemon's has such a large reputation, the ambassadors are getting a significant surge in business. Some of the trainers and coaches are trying hard to become ambassadors.Key Takeaway #9: identify the leaders of the community you are serving. Recruiting them by making them look better. Click To Tweet
Chapter 10: Tackling Social Marketing
If you would have to pick a social media channel and your audience are women interested in fitness and design aged between 25 and 35, what would you pick?
That’s right, Pinterest is known to have a massive female audience and Lulu is making a killing on it.
While it’s arguably a tough channel for selling, it does well for branding and inevitably serves as one of the touchpoints that leads to a sale.
However, even though those numbers look fabulous, it works mostly in branding perspective. Hence the photos are high quality, professional and highlighting the design features — perfect for saving them in a lookbook for the next Lululemon haul.
Unfortunately, they are not utilizing it as much as they could (more on that in the second part). This might be the result of Wilson’s persistence in ethereal, transcendental conviction on branding alone and abstinence for numbers and data. His replacement Laurent Potdevin (ex-top of Burton Snowboards) incorporated more data-driven approach which resulted in increased sales and better social media presence. But there are still opportunities.
“Despite the sudden exit of its CEO last month, Lululemon Athletica is seeing sales success thanks to a focus on digital improvements and brand marketing. The Canadian yogawear marketer reported an 18 percent increase in fourth-quarter net revenue to $928.8 million, along with a 12 percent increase in comparable sales.” — AdAge
The Facebook and Tumblr are also doing ok, however, nothing too earth-shaking. The one thing that works really well though, is the symbiosis with the ambassador program. Each ambassador has its own social circle of influence which extends to the online reach.
The Instagram Control Center
Instagram proves as one of the biggest opportunities. The social media channel has just reached 1 billion monthly users and is great for branding and impulsive decisions. It would be interesting to use it locally to invite yoga practitioners to the free classes.
Lululemon's capitalized on it just recently. Even with all the confusion about the CEO, the Canadian yogawear marketer reported an 18 percent increase in fourth-quarter net revenue to $928.8 million, along with a 12 percent increase in comparable sales. This is all thanks to invigorated effort online and e-commerce.
Their account is filled with live events, motivational sayings and no sales posts whatsoever. Those product-pushing posts are now a part of the stories section where people are more inclined to impulsive purchases.
With a 2.5 Instagram follower base, Lululemon developed multiple destinations where the brand followers can turn to.
- The Spotify soundtrack. Goal: Brand affiliation
The keyword 'lululemon' in Spotify and Apple Music leads to Lululemon created playlist for various workouts.
Goal: Brand affiliation
- The Desktop Instagram Dashboard
With a click on the explorelululemon, the Instagram desktop app will curate and duplicate the content of the original post wall into CTA funnels for each image. This is the service Lululemon is using for each post — Curalate.This is a regular Instagram post on desktop and mobile:
And this is the post with Curalate add-on with CTAs that lead to the online shop:
Goal: Multiple — Brand Experience and sales through events and residual word-of-mouth points from attendees
- The Instagram stories.There's more to the brand than just clothes. Lululemon developed a wholesome lifestyle catered towards the modern yogina:Fuel - Light nutritional recipesDiscover - Upcoming trends
What We Love- In-house weekly news of new product arrivals
Visio+Goals- Motivational, goal-setting stories
Travel- Travel tips and styles mixed with travel destination's inspirational imagery
Workouts - Yoga sessions, HIIT classes, movement
What's New- New productsIGTV - On the Instagram mobile app you will also find the newly launched IGTV section where Lululemon's shows off longer 20 minutes Yoga flows
Goal: Content marketing and brand affinity.
Part 2: How Can Lululemon Grow Even Further
Lululemon has made an incredible job in becoming a household worldwide brand. The focus on branding, retail experience, and constant innovation is keeping them in the forefront of the premium tech apparel.
Their website has become a high traffic destination for clients worldwide. They are doing a good job segmenting the users based on geographical locations (they cover free shipping worldwide) and the bounce numbers are way below 50% which tells me that people are looking at products (8 page views on average).
But the intangibles around the culture could also cause the company to spin their wheels. The unnecessary PR stunts didn’t help either.
The online shopping has some glaring holes and opportunities that could be fixed and built upon. The digital shopping experience is as important as the ‘in-store’ one. While they can surf the benefits of their renommée, a lot can be done to skyrocket their reach and sales numbers on the Internet.
It’s a bit surprising the company hasn’t put a bit more experimentation and data science on it. I’m sure they must be doing it now. They are getting tons of traffic on their website already. Retail giants like Nordstrom are hiring dozens of data scientists to maintain growth through the years.
This section will review a couple of strategies with which Lululemon could improve their revenue goals.
1. YouTube and Instagram Influencer Marketing
Lululemon prides itself with ambassadors in every brick and mortar shop and retail space. However, they seem to be missing the train on online influencers. Channels like Instagram and YouTube are the perfect fit.
First, people believe word of mouth much more than one-way communication from company-to-client.
Andrew Rea (a.k.a) Binging with Babish also generates millions of views for his high-production cooking videos. Squarespace has already approached him and I’d be curious to see how many conversions happened towards Squarespace. Plus, creative artists on the rise have a chance to become viral (Here’s a reminder how virality works) which gives you the opportunity to get massive exposure when a content snowballs to daily trending page.
How I would do it:
Identify the rising movers and shakers on YouTube and strike up a deal. One of my personal favorite channels is Yoga with Adriene. The charismatic and warm Adriene gets millions! Of views for her 30 day Yoga Challenge. She’s personal, warm and friendly. Her good humor and occasional pop culture jokes keep you returning to her videos. The Day 1 of 30 Days of Yoga Challenge clocks in at 15 million views.
The following days are naturally having a lower view count but they are averaging around a million
Lululemon already has some ambassador practitioners who would film a high production flow class; however, these are one-offs mostly aimed towards the local audience. A 30-day free yoga challenge offers continuation, relationship building and a deeper connection at the end. It serves as a perfect TOFU content.
Is it worth it?
Take a quick look at the chart:
I’d dedicate a budget to find micro-influencers on Instagram (there are fitness models with millions of followers) and run a two-three month experiment. During the creation of this growth study Lululemon has done an amazing job of optimizing the Instagram channel, but there's still room to grow. Just like their local ambassadors, the online world has their own community ambassadors that have an enormous reach. Just one quick research about Twitch streamers and YouTube creators confirm the theory.
Every industry has their own pockets of communities. With millions of data points, Lululemon Athletica should crunch the numbers and find the thought leaders among the VIP / highest LTV clients.
As a reminder, Lululemon has a very healthy margin profit on clothes. Imagine the ARPU or LTV per customer.
The second part of the budget would go to YouTube creators with 100k or more followers that fill in Lululemon’s target profile. Setting up an alert and watching daily trends would quickly identify a couple of those users.
Low hanging fruits:
- Define relevant and measurable CTAs for YouTube and Instagram influencers
- Identify potential influencers
- Run a 90 days test pilot program and measure the results
2. Personalized Quiz and Better Email Onboarding
“There are emails you sort of gloss over, delete or actually look forward to getting them. To be a successful e-commerce you will have to earn your customers' inbox real estate. And if you solve email, you have a permanent communication with your customer
Looking at Lululemon, their emails are nothing special. To see the masters of the email game, check Chubbies (I’m not a customer because of geographic distance, but I enjoy getting their emails just because they are fun).
Of course, Lululemon can’t switch to Chubbies language which has their own set of rules for communicating with their target profile, but that’s no excuse for drastically refreshing their email game. Their audience has their unique set of values and messages to respond to.
Warby Parker’s Home Try-On is an excellent use case example. The service sends a potential customer up to five different frames.
On their website, you can take a short quiz where you decide which 5 frames look the best. In the end, you provide them with an email and address. The 5 frames you’ve chosen are going to be sent to your address.
Amazing idea, but the execution is even better. The email sequence that accompanies the process has clearly gotten a lot of attention and thought.
Here are the emails and their subject lines and screenshot (The full case study was captured by Joe Putnam at Rejoiner):
- Email 1: We received your Home Try-On order no. 101767816 - Confirmation for the Try-On order
- Email 2: Right on Track - order has shipped
- Email 3: 954 questions later - an email that shows a client the most popular frame based on customer’s inquiries
- Email 4: Touchdown - package arrives on destination & advice on how to find the perfect pair of glasses
- Email 5: Signed, sealed, delivered - CTA on choosing the right frames from the ordered package
- Email 6: First impressions and second opinions - WP is asking the client to send pics on Warby Parker’s Social Media (FB, TW, IG and email). This is ingenious since the WP is getting UGC first, plus creates a valuable relationship with the client
- Email 7: That was Fast - instructions on how to send back the try-on frames
- Email 8: Nice job - WP thanks the client for sending back the frames with a soft sell ask
- Email 9: Help is on the way - In case the decision hasn't been made, you are welcome to call a personal consultant
The experiment doesn’t require a lot of engineering and judging by the Lululemon’s high-price items, this would be a very interesting test to pull out. Warby Parker has a dedicated department, which core purpose is to make the process of buying glasses as easy and fun as possible.
I signed in on the newsletter to see what kind of messages I’d receive. It was a generic weekly retail email without any kind of personalization. They didn’t ask me what kind of fitness regimen I’m running. Not only that, I’ve received 90% women-related product announcements.
Email is one GIANT opportunity where the company needs to gather data, come up with a fun customer journey and develop the brand. Again, I’d point out to Chubbies who are masters of using the language that their target audience understands.
- Segment initial customer base by gender and activity
- Create personalized sequenced journey for each segment
- A/B test them
3. Keep The Dirty Clothes Outside the Public
Founder Chip Wilson has done a lot of good for Lululemon Athletica. His expertise in retail apparel and specialization in technical wear and branding was the reason Lululemon took off the way it did.
But some of his public appearances and statements hurt the company. There were the "Lululemon products aren't a good fit for some women's bodies" one and the "worst apology one". His reasoning about women and future buying power is controversial. Even though Chip Wilson meant good, the news media is praying for exclusivity and dramatical conclusions.
It cost the company's reputation they spend years to build. Similar to Uber's Travis Kalanick, the stock dropped by almost a third overnight after the incidents. We have all learned from Uber to keep our dirty secrets away from the public eye.
Low Hanging Fruit:
- Have a common-sense and experienced PR people for consultation before winging it out on camera or in press
4. Narrow targeting can be expanded to the new niche
Potential mistake - targeting men in Lululemon would be difficult since it’s so much further away from the core company’s brand personality.
On the other hand, women are already using Lululemon’s product in CrossFit gyms. The target profile fits perfectly, the product has been tested through millions of WoDs and the audience has money to spend on premium apparel (gym memberships for Crossfit classes even exceeds yoga studio membership).
Crossfit is (still) a growing trend which attracts worldwide attention. The biggest opportunity would be after 2020 when the Reebok’s monopoly runs out.
Brooke Ence - a Crossfit Athlete influencer has over 1M Instagram followers and appears to be rocking Lululemon pants. Unfortunately for Lulu, Brooke launched her own apparel company — EnceWear. Before that she was promoting No Bull crossfit trainers.
I see two potential problems:
- It might be too late - in early 2010s Crossfit was mainly supplied with Reebok’s merchandise; however, Nike has made its move with Metcon trainers, while other niche companies started popping out to fill the gap (i.e. NoBull, Hylete (mostly men), 2pood, 21-15-nine). For now, these are more aggressive brands, which are more suitable for men, so… there’s a chance.
- It could dilute the brand. If Lululemon would take up on the opportunity it would have to be in a similar fashion as Ivivva - special line for a special segment of customers. One good thing is that they could use the same hyper-local ambassador strategy but also extend it to online communities and specific social media channel influencers (Instagram, youtube).
5. Outdoor Out of Home Branding Exposure by using Data
Out-of-Home advertising or Digital OOH is usually the domain of big brands since it’s so tough to measure ROI and one of the last things on our minds. But looking on Spotify, which is an entirely digital product, they have enjoyed a lot of success by having fun with their collected user data.
Spotify’s OOH campaign was very personal and particular. They injected humor and lighten up the advertising environment. Instead of screeching down with salesy banners the OOH campaign made the passersby stop and smirk.
Spotify’s first forays into OOH happened in 2016 with the “It’s been a weird Year” campaign. The public response was so positive, they scheduled the outdoor advertising for the next year.
Here’s the banner of 2018 Goals OOH campaign.
These ads work because they are personalized, funny and localized.
One of the pillars of Lululemon’s success is the hyperlocal influence marketing. Expanding a message that either combines or takes the elements of local heroes, branding power or their manifesto on the streets would be an interesting experiment to try.
The problem that comes from this is, the ROI is tough to measure since it's mostly brand awareness. There is a way to include specific OOH, dedicated CTAs and hashtags to track the public response. Until more sophisticated DOOH technology become more standardized with clearer outcomes, this is still a great way to increase hyper-local awareness which Lululemon has already done amazingly well with the Ambassador program.
Feel free to steal these ones for yourself 🙂
Excerpt from NPR's Interview:
RAZ: How much of your success is because of your intelligence and work, and how much of it is because you were really lucky?
WILSON: I think I was pure passion for athletic technical product, and I would've worked 18 hours a day for the rest of my life for no money. Now, I think what happened is I got lucky because my drive and passion met a world that wanted what I wanted, and that was the lucky part.[/box]