How Customers Helped ModCloth Grow Into a $16 Million Company

November 29, 2010

ModClothFashion is, by definition, a notoriously fickle business. As Heidi Klum has taught us all: “One day you’re in, the next day you’re out.” Auf Wiedersehen.

So what’s a company to do to keep the fashionistas coming back time and time again? Online fashion hub ModCloth stays hip, happening, and fresh by putting a heck of a lot of authority and decision-making into the hands of its customers. Whether it’s offering up personalized advice on what does go with those magenta boots to letting them vote on inventory, ModCloth’s customers wield an impressive amount of influence.

“Customers are actively involved in the growth and direction of the business,” says Natasha Khan Kazi, Modcloth’s social networking coordinator  “From our blog and Facebook pages, to the interaction customers have when they call, customers know what’s in the works at ModCloth, but more importantly, who ModCloth is – they identify with our employees.”

It’s made this company that started eight years ago in a dorm room one of the fastest growing retailers on the web.

ModCloth selections

Eclectic pieces and input from customers on various styles has driven ModCloth's success.

Eric and Susan Koger, the company’s founders, met in high school and went to college together. Susan was an avid hunter of vintage clothes, and when her collection began to outgrow her closet space, aspiring boyfriend Eric created a website to help her sell her finds to young women looking for unique yet affordable pieces – in other words, she was able to identify with her customers from the very beginning. The relationship blossomed into a marriage, and the company grew to $16 million in revenue and more than 100 employees. Susan continues to search out independent designers and the occasional vintage piece, and the site’s product selection combined with the company’s personal connection to their customers is key to driving shopper loyalty and keeping customers checking in frequently.

“We’re very lucky to have an engaged customer base,” Kazi says. “Our fans identify with the brand, and many have made it part of their online shopping routine. The majority of our almost 100,000 Facebook fans actively engages with us on a monthly basis. That statistic, according to Facebook, is above average. That lets us know that our fans aren’t just shopping online, they are taking the time participate in our online communities. Many times, before we can answer a question on Facebook, one of our fans will step up to answer the question for us.”

ModCloth’s Six-Point Approach to Social Media

  • Listening first, selling second: Many companies say they listen to their customers, but we think there is a difference between active listening and passive listening. Active listening is responding to wall posts on our Facebook fanpage, tweets, and other social media communications – and sharing this feedback with the organization and showing our fans how we’ve implemented it!
  • Act more like party planners, aggregators, and content providers than traditional advertiser: Broadcast marketing for internet users becomes part of the noise. We want to pull customers in with content that interests them. Our blog not only covers fashion, but a full array of topics that would interest the ModCloth woman. Our social media content follows the same model, sharing info on music, movies, books, and hobbies.
  • Stay “top of mind” with our followers and fans: We use social media to have a touch point with our customers every day. Our demographic is highly engaged on Facebook and so we find it a unique opportunity to reach them on a weekly basis.
  • Create a genuine narrative, the ModCloth voice: ModCloth started in the dorm room of our founder, Susan Koger. No matter how large we become, we want to make sure our customers still have that intimate connection with us. Social Media is a great tool to stay close to them!
  • Don’t just say it; get them to say it to each other: Social Media amplifies traditional word of mouth. Part of our strategy is to give our customers the tools to share and talk about everything we do.
  • Go with the flow: When working with 3rd party platforms, you soon learn you can’t control much of what is going on! Our strategy is to always listen, observe, and be flexible.

(Source: Natasha Khan Kazi, ModCloth)

Besides a typical “fan” page, ModCloth has a team of fashion advisors dispensing wisdom on the “ModStylist” page, answering customer questions like: what holiday dresses on sale now would look good on someone who has broad shoulders? I bought the (insert ModCloth inventory here), how can I style that now that winter is coming? I have navy floral fishnet tights, what can I possibly wear with them? The ModStylist team is quick to respond with friendly advice and product suggestions from the site, and customers chime in on each other’s ensembles. “Our ModStylists really help to give our customers one-on-one styling assistance,” Kazi says. “They will create a style board for a customer based around an item of their choosing along with a few personal preferences.”

Another way ModCloth keeps customers engaged is the Be the Buyer program: customers are given previews of potential inventory and then vote on what makes the site. If an item makes the cut, voters are notified by e-mail that their selection is available for purchase. Not only does this bring customers into the process (furthering the company’s goal of “democratizing” fashion,) it gives ModCloth guidance on how many pieces to order, a key to maintaining profit margins. This kind of innovation drew the attention of venture capital firm Accel Partners, which recently led a $20 million round of funding for ModCloth. Accel, which also counts Facebook, Etsy, and Groupon in its portfolio, thinks that social networking has ignited ModCloth’s success. “ModCloth is helping to change the way people shop in the same way that Facebook changed the way we communicate. In a very short period of time and with little outside capital, the company has leveraged the social web to empower a wildly loyal and engaged customer base,” Theresia Gouw Ranzetta of Accel said upon joining the ModCloth Board of Directors. Even in today’s technology-rich retail world, good-old fashioned connection with the customer never goes out of style.