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Jun 8, 2017

Data-Driven Personalization Serves 1.2 Million Loyal Fabletics Customers

Reposted from Retail TouchPoints Magazine by Adam Blair on May 25th, 2017

Many retailers talk a good game when it comes to personalizing interactions with each customer, but Fabletics really walks the walk. The brand is gathering extensive customer data from the 1.2 million members of its continuity-based subscription retailing program; Fabletics supplements this data collection with sophisticated in-store technologies that build comprehensive customer profiles in near real-time.

But Fabletics also uses that data, in ways large and small. This continuous feedback loop gives the retailer a competitive edge in a number of key areas, including:

Product fit and quality: Fabletics analyzes in-store conversion rates on its key apparel items to pinpoint fit issues, and is able to quickly adjust manufacturing parameters to fix them;

Enhanced in-store experience: Interactive signage in fitting rooms gives customers the ability to “ping” associates when they want to try on different products;

Improved forecasting and inventory turns: The link between customer and product data gives Fabletics an advantage in merchandise planning;

Data from stores improves online merchandising: Fable
tics uses brick-and-mortar activity to shape which items to feature on its site as well as upsell recommendations;

In a presentation at the recent Retail Innovation Conference, Fabletics SVP Dustin Netral shared many of the techniques that have helped the fast-growing brand generate $270 million in global sales in 2016.

For example, Fabletics uses store-based data for rapid product improvements. Technology in its 22 stores allows the retailer to track each SKU that customers take into the fitt
ng rooms.

“The overall conversion rate for our best-selling leggings are 81% when the customer tries them on,” said Netral. “We were noticing that the X-Small and XX-Small conversion rates were lower than that, and discovered the reason — there was a tapering around the ankle affecting the fit. We pulled the product, changed the tech pack for it, and introduced the change to customers in approximately 16 weeks. By last month, the conversion rate on these items was up to 85%,” he explained.

Netral identified several of the ways Fabletics uses data in ways large and small:

• Sending a personalized “monthly boutique” email to each member, using a continuously refined algorithm to build the selection and offers;

• Offering community-based perks such as digital workout classes;

• Providing call center agents with complete customer data, including items currently in a customer’s shopping cart, those she’s looked at on the web site and her purchase history;

• Beginning in June 2017, Fabletics will add an OmniCart function that allows shoppers to complete transactions started in the physical store on their smartphones.

Setting Up A ‘Win-Win’ With Member

The basis of Fabletics’ data advantage is its status as a membership-based retail organization. “The bulk of our members use their purchase as a ‘monthly treat,’ said Netral. “Most don’t purchase something every month, but they visit our web site more than 30 times per year.”

Each of those visits, along with members’ responses to the curated “monthly boutique” emails, provide Fabletics with additional data points. “Members vote with their wallets, which helps us determine how we did with the selection,” said Netral. “That allows us to continuously refine the algorithm.”

VIP members get everyday product discounts of 30% to 50%, along with community-based perks and additional loyalty rewards based on their purchase levels. Fabletics gets its “wins” as well:
Improved forecasting: “We have 95% forecasting accuracy, and are able to turn our inventory 12 to 14 times per year,” said Netral;

• The ability to release products more frequently;

Lower marketing costs around re-engagement campaigns; and

• More predictable revenues.

Omnichannel? No, Channel-Agnostic

Fabletics began as an online-only retailer in October 2013, opening its first brick-and-mortar store two years later. “We wanted to make it about community, product and lifestyle first, then bring customers in via digital advertising,” said Netral.

Fabletics is proudly agnostic about how and where its customers shop: “We’re not using the web site to drive people into the store; we aggregate all our business, online and offline, and figure it all into our financial results,” said Netral.

The stores, which average 1,800 to 2,200 square feet, have proven to be another great data source. “More than 40% of the people coming into the stores are members, so we can track their one-to-one interactions in the physical environment,” Netral noted. Fabletics places iPads outside the store fitting rooms that scan the items shoppers bring in to try on: “We know the customer’s name and the items she has selected,” he said.

Adding a brick-and-mortar channel has been positive for Fabletics. Customer lifetime purchases are 142% higher for omnichannel customers vs. online-only shoppers, and Net Promoter Scores are 53% higher among the omnichannel shoppers.

Fabletics uses its brick-and-mortar data advantage to sharpen online offerings: “We use the store data, including item-level conversion data, to help drive digital decisions, for example around merchandise designs,” said Netral. “On the site, we will feature items with higher conversion rates more prominently, and our upsell recommendations are powered by the physical experiences in the stores.”

Home-Grown Technology Supports Data-Driven Enterprise

The Fabletics team is not intimidated by technology. The retailer makes extensive use of the FashionOS, a home-grown platform developed by Fabletics’ parent company TechStyle. “We call ourselves a tech company that just happens to sell handbags, shoes and apparel,” said Netral, adding that “our goal is to use technology as an enabler that reduces friction.”

Fabletics also has the advantage of not being held back by long-standing business practices. For example, the retailer spends half of its ad budget on social media rather than more traditional marketing channels. The retailer also has recognized the current mobile-first nature of shopping: “For 80% of the customers we acquire, their first contact with us is on a mobile device,” said Netral.

“Market share strategies have changed,” he added. “The disruptive players — Amazon, Google and Facebook — have changed the geographic focus of stores. That’s one of the reasons why we see many retailers struggle with creating loyalty among their customers.”

For Fabletics, the ability to both collect — and use — data from multiple sources has given it a strong leg up in the ongoing struggle for customer loyalty.

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