Slumberkins was built for this crisis, even if the founders of the emotional learning brand never quite had it in mind.
In 2016, best buds Callie Christensen and Kelly Oriard applied their backgrounds in education, therapy (and being moms) to pairing cuddly creature toys with board books that taught youngsters lessons in emotional coping and socialization. First sold on Etsy, then accelerated by a "Shark Tank" appearance, the company has grown exponentially mainly on the strength of its deep social media interactions and organic growth.
Christensen and her vice president of marketing, Vanessa Holfert, joined us to discuss growing a social-first brand. It turns out the Slumberkins product and marketing model were well-positioned to serve the needs of the current situation. Our weekly Brand Insider podcast has the full audio interview with Callie and Vanessa.
MP: Much of your growth has been via organic social. You only started paid media recently.
Christensen: We didn't use paid media until October 2018. It was this organic community that gathered around the brand on Instagram just because the user-generated content was so strong. That being said, it was a hustle to get the content out there, understand how to make a cohesive Instagram feed and elevate the brand behind the scenes as we were going. But then we just started to notice that a lot of these moms in our community were wanting to have conversations with us and with each other on Instagram comments and our DMs. So we started a Facebook group, which has 14,000 moms or parents or adults now. But that has been our secret weapon of organic marketing. They are our most engaged community that we have for the brand, and they provide us so much feedback on what they want to see next.
MP: So around fall of 2018 you started moving into paid media. What did that plan look like and what has it evolved into now?
Holfert: We started doing, pretty exclusively, Instagram and Facebook advertising. We see such a huge amount of adoption of our mission and really an understanding and wanting to have more of that dialogue versus just us putting out a message. It's so helpful to have comments on ads, where our team is monitoring those questions that are coming up and we're able to have this dialogue with customers.
MP: Are you Facebook Live as well?
Christensen: Yes, we do a lot of Facebook Live specifically into the group. The thing about the group is that the notifications for the group show up in people's feeds really easily. That's where we get a lot of feedback. Just the other day, Kelly and I went live for about 10 minutes to announce our upcoming campaign and within the 10 minutes we had over 2,400 comments from people showing up and engaging. It shows the organic traction side of that group.
MP: What's the composition and the size of your staff? How are you managing and responding to that much feedback?
Holfert: We have about four full-time employees that handle ongoing engagement. By ongoing, I mean we all work on Thanksgiving, we work on Christmas Day. There is this expectation from the community that we are going to respond to every single post that has us tagged on it. When you look at a high-growth startup like ours, the amount that we put toward our media spend is very conservative when we think about how much we're able to secure with our community members being our brand advocates. So whatever we can do to keep that lifetime value of the customers up and to keep them talking positively about the brand, we just seen the return.
MP: You're no longer making your own books. Where was this stuff being manufactured and how how has that part held up?
Christensen: We were really lucky. Back in 2017, we started the process of finding a really worldwide-renowned, really great production partner that was based in Vietnam and China. They had the capability to produce in both countries. And then about two years ago we were introduced to Maxine Clark, the founder of Build-a-Bear [Workshop]. She's become a very close friend and mentor to Kelly and myself with this business, and she introduced us to another production partner. We did the work to prepare for something like this and not just be stuck with one production partner in one location.
MP: How have sales been impacted?
Christensen: When shelter-in-place went in, Kelly and myself and our CFO sat down and tried to brace for worst-case scenario and tried to look at our goals for the year, which was to do 120% growth from last year.
We tried to scale down the growth goals a bit and remodel out the budgets just to conserve and brace ourselves. We had a few different financial plans to execute against. We went with a plan that was just about 100% growth from last year instead of 120 and stripped out all of the discretionary spend, all marketing spend. We do have some advertising spend, but it's probably 75% reduced from what it was previously. Sales have been over-performing, and 100% or 200% higher from our projections that we had set forth.
It's kind of a perfect mix of being a direct-to-consumer brand not dependent on retail with a strong online community and the right product for the right time.
Holfert: The only two areas that we've seen any decline are the non-surprising ones. Amazon has caused some issues because we're a non-essential brand. And with the shipping windows being six weeks out, it just makes more sense to buy direct from us.
MP: So you already had such organic social traction, that this really didn't change much of your marketing mix.
Christensen: We flipped the script on not having to rethink the marketing mix by channel but rethinking the marketing mix on content and our mission. Being educators -- and moms -- we know what parents and educators are looking for in this time period. We quickly pivoted and rolled out a program called Slumberkins School where Kelly shows up as her school counselor self — as Miss Kelly — and does a read-aloud for kids on social media.
There's a library of free resources for parents. It's not the time to push product sales. It's more about the time to show up to say, "We're in it with you. We're in this together and we hope that this is useful in your lives right now."
MP: Were those free resources newly created content?
Christensen: We did have a content library of free resources like coloring sheets and such but our team was buried in all sorts of free resource content creation for a couple weeks there.
MP: Are you getting new customers during this or are you basically servicing your existing base?
Holfert: We're growing our customer base beyond the expectation we would have had. It's pretty remarkable right now the amount of people that are looking for a brand that can support their family. And we've done a lot of earned media to bring new eyes to the brand. We've seen that converting into sales at a rate that is impressive. We're able to then increase our newsletter database. And that has been helpful to stay in front of this customer.
The objective right now is, first, provide a resource. Second, enhance that resource with a physical product. But we're seeing that so many people are making that choice to make a purchase because it makes sense. What their family needs right now is tools, not just for the scholastic STEM but also how do you talk to your children about their increased anxiety, about sibling rivalry, about grief and loss if this COVID-19 hits their family directly? Our product lines very much speak to the realities of families more so than at any other time.
Christensen: In the last 30 days our return customer rate is 27%, which I love seeing because, usually, it's like 40 to 50%, which shows the power of the organic community. But then I love seeing that new customers are coming to the brand and it is the result of our PR team and our earned media efforts coming to fruition all at the right time.
MP: What surprised you most during all of this?
Christensen: It has surprised me that with a lower marketing budget, our sales have doubled from what we have thought they would do. That's just a perfect mix of our team hustling hard to pivot to relevant content, to the community still showing up to support the brand and then new customers resonating with it.
Holfert: There wasn't a moment to project ahead of time because it happened so quickly. But what we did see was that that lower ad budget actually didn't affect us in the way that we had projected in that cost per clicks are so low right now in our media. So that has helped us out quite a bit and being able to stretch those dollars. And seeing that community show up in a way that's amazing and really heart-warming, to see how many people are turning to this brand as a resource. We are a mission-based company, first and foremost, and to see that really resonating with people right now is the silver lining in all of this.
MP: Do either of you expect something that's going to change permanently after this in terms of your product, your customers, online marketing?
Christensen: I think it will change the trajectory of the brand in the sense that we started out kind of us this "mom made," cute little hustle from these educators and it was more about the product. Now it's really leaning into the educational component of the brand, which is really exciting. That will permanently change the direction of the brand.