How Nectar Sleep Grew Revenue From $44m to Over $500m in 3 Years While Using ConvertFlow
When a rocketship startup like Nectar Sleep grows revenue from $44 million in its first year to over $500 million in three years, savvy marketers should pay close attention. Especially when it's done in the intensely competitive “mattress-in-a-box” vertical.
That’s why in this post, we’re going to go behind the scenes to see how Nectar achieved so much revenue growth in such a short time.
We'll take a look at:
- The Nectar back story (and how it contributes to success)
- What drives the company’s exponential month-over-month growth
- The insane value prop at the foundation of Nectar's success
- How its marketing team built a streamlined conversion workflow
- How they use split testing to find the best performing offers
- Why you should model Nectar’s full-funnel conversion strategy
Ready? Let’s get started 👇
Nectar Sleep: The back story
Originally from Brooklyn, Craig Schmeizer graduated from NYU with a degree in humanities. But at the time, he never imagined his career would take such an unexpected trajectory.
As fate would have it, Schmeizer worked in the financial services industry for the next 20 years and also ran a startup. Then, one day, he saw the global growth potential and relatively high price points the mattress sector offered.
As he took a closer look at the industry, Schmeizer noticed that the retail mattress business was undergoing a shift from traditional brick-and-mortar shopping to an ecommerce model.
Recognizing a potentially lucrative opportunity, Schmeizer and his co-founders Ran Reske and Eric Hutchinson decided to bring their unique skill sets and digital marketing experience to the fast-growing online mattress sector.
So, in January of 2017, the three men launched Nectar Sleep, which quickly gained traction and generated $44 million in revenue in its first year. Revenue grew by 525% the following year, reaching about $250 million—giving Nectar the title of North America's fastest-growing ecommerce retailer.
In May of 2019, the partners launched Resident Home—which became the parent company for Nectar and its affiliated brands, DreamCloud, Awara, and Level. Soon afterward, Resident announced a relationship with Mattress Warehouse, the company’s first large-scale brick-and-mortar retail partner, bringing Nectar mattresses into over 250 stores along the East Coast.
In spite of the global pandemic and lockdowns, 2020 was a stellar year for Resident and its Nectar brand, with sales in excess of $500 million.
Driving exponential growth
Because of their background in direct marketing, from day one, Craig Schmeizer and the company’s founding partners were skilled in “data and analytically driven marketing and strategy.”
This expertise is one of the primary reasons Nectar has grown so fast. Not only does its team know how to drive millions of visitors to the company’s website, but it also quickly saw the value in driving foot traffic to an ever-expanding retail network of brick-and-mortar stores:
As Schmeizer puts it: “We will be aggressively pushing consumers that are in our online funnel into our retail partners’ stores. This is much more than simply having a dealer locator, and we believe it will help close significantly more consumers.”
Communicating crazy levels of value
It doesn't matter how many CRO tactics you implement or A/B tests you run. If there isn't a compelling value proposition at the heart of what you're offering, you're on a swift train to nowhere.
And this is something the team at Nectar has nailed from day one.
Currently, Nectar sells its standard queen mattress for $899, discounted from $1,298—which is a pretty good price. But, there’s a lot more that goes into the overall offer.
First, Nectar isn't offering just a mattress. It's offering comfort and a better night's sleep:
And on a more tangible level, the offer is taken way beyond simply trading dollars for a product:
Trial it for a year. With a forever warranty. Free shipping and returns. And you can even spread payments over 12 months with 0% interest.
It gets further sweetened on the actual product page, too.
See how Nectar bundles in $399 of "Free Gifts":
And there’s even a chart cementing how compelling Nectar’s offer is compared to its main competitors:
If you happen to be in the market for a mattress, the value represented here is almost too good to turn down. And it's all a key pillar at the foundation of Nectar's success.
Building a streamlined conversion workflow
Nectar's success isn't all about the value prop, though.
By combining a data-driven marketing strategy with years of experience, Nectar’s marketing team also developed an effective workflow for finding the highest converting offers—then deploying those offers across Resident’s growing portfolio of direct-to-consumer (DTC) brands.
Two things Nectar does exceptionally well:
- Segmenting visitors based on a range of criteria
- Quickly launching targeted offers to those segments
Let's have a look at how each is done.
Segmentation is, by far, one of the most important steps when it comes to personalizing the ecommerce customer experience and conversion process.
Grouping site visitors and customers by specific criteria and the actions they take, helps marketers boost sales because they can offer people products they truly want and need. Better targeting and personalization help brands reach out to consumers when they’re most likely to buy.
Online sellers segment prospects and customers in a variety of ways:
- Geographic location
- Demographic attributes
- Behavior (E.g. How often they visited an online store)
- Which items they viewed
- People who’ve abandoned their shopping cart
- Which items they’ve bought in the past
- The number of orders they’ve placed
- The total or average value of their purchases
- How long it’s been since their last order
- The last time they opened an email
The truth is, site visitors can be segmented in countless ways. The list above barely scratches the surface of what’s possible with the right tools.
Ecommerce stars like Nectar skillfully leverage micro-segmentation, targeting, and personalization like this to build automated marketing workflows and campaigns.
Quickly launching targeted offers
After visitors and customers are properly segmented, Nectar starts serving them hyper-targeted offers on their website and online store.
To launch new offers, Nectar’s team uses ConvertFlow to tap into peoples’ behavioral data and to craft targeted on-site messaging. Having the ability to do this without depending on developers, helps them get measurable results in far less time than if they had to custom code every site message and call-to-action.
In the screenshots below, you’ll see how Nectar crafts a wide variety of CTAs in the form of overlays, hooks, sticky bars, and exit popups to rapidly launch and test different types of offers on their ecommerce site:
As you can see in the examples above, Nectar launches CTAs to achieve different objectives, including, but not limited to:
- Email capture
- Phone capture
- Offer upgrades
- Bundled offers
All of them highly targeted to show to the right visitors, at the time time.
Split-testing their way to success
I once heard a renowned copywriter and direct response marketer say, “Nothing happens until someone makes an offer.” And nowadays, that adage is truer than ever. The fact is, most commerce depends on someone making an offer and someone accepting that offer.
That’s why all marketers, especially those in the online space, need to regularly ask themselves the following question:
“Are we making enough offers?”
If your sales are lagging, take a look at how many offers you’ve made in the past few months. Chances are, you’re not promoting enough offers.
You don’t always have to come up with a completely new offer. Just create a new version of an offer that grabs people’s attention and compels them to buy.
Here are a few examples to get you started:
- Discounted offers
- Value-added offers
- Upsell offers
- Down-sell offers
- Bundled offers
- Time-limited offers
- Holiday offers
- Limited-quantity offers
- Continuity/subscription offers
When it comes to offers, you’re limited only by your imagination. So, go ahead and make several creative offers to new and existing customers and see what happens.
Nectar is a perfect example of how to do this. The team there is always experimenting with new offers designed to drive both online and brick & mortar sales using ConvertFlow’s targeting and personalization capabilities.
Here's just one example of a highly targeted offer:
And it doesn't stop there.
For each targeted CTA, Nectar’s team creates multiple variants—split testing different language, messaging, and value props to see which one converts best with their audience:
A final thing we’ve noticed is that Nectar rarely lets marketing experiments and online offers run for extended periods.
They test lots of different CTAs with time-sensitive and limited offers (often adding urgency by basing them on seasonal dates in the marketing calendar):
After finding what’s working, they'll then create new variants to see if they can top the highest converting variants up to that point. Of course, launching and organizing all this is made simple with ConvertFlow's all-in-one management capabilities 😎
Embracing a full-funnel strategy
Another secret to Nectar’s extraordinary success and meteoric growth is its full-funnel approach to conversion and customer experience optimization.
In other words:
The company’s CTA strategy isn’t limited to just offering discount coupons and capturing email addresses. It also smartly incorporates full funnel elements, like:
- Offering financing options
- Abandoned cart recovery
- Refund prevention
At the top-of-funnel lead capture level, Nectar capitalizes on exit-intent popups with special offers based on holidays and key calendar dates to create a sense of urgency.
Here’s an example of a generic holiday popup with an offer that gives new buyers an opportunity to get “10% Off Everything”:
And here’s an example of a “Labor Day” offer with a $125 discount on the customer’s mattress purchase, plus two free pillows:
But, it's not just about capturing that lead and filling up carts.
The Nectar team understands that not everyone is able to shell out $1,000+ in one, up-front payment. So, they push different payment options in order to drive the sale.
There's a special "failed payment" popup that triggers when someone's payment card is rejected:
Rather than Nectar admitting defeat and losing someone so close to buying, this popup clearly directs them to a place where the sale can be salvaged.
But it doesn't even stop there.
If you go down one of the payment option routes and don't convert, there's an exit-intent that fires to push you towards an alternative option:
These CTAs aren't just token gestures, either—with almost a third of viewers taking action:
If your product or service lends itself to some sort of payment plan, you may be surprised at how fast your sales increase when you start offering direct or third-party financing options to your customers.
Minimizing complaints and refunds
Even once the sale has been made, the campaigns don't stop coming from Nectar.
Most people would agree that it’s smart to anticipate a possible issue or complaint—especially when operating at order volumes like Nectar. So, it's a good idea to proactively reach out to buyers before they have a bad experience or ask for a refund.
That’s why Nectar uses another popup to connect with customers who may be experiencing a delay in the delivery of their order.
If a customer that fits into this segment returns to the website, they'll be met with this:
This does three key things:
- Positions Nectar as ahead of the curve by addressing the problem head on
- Helps people find a solution to their issue as soon as possible
- Reduces strain on customer support teams as fewer people will be getting in touch to enquire about their order status
All resulting in fewer cancellations and refunds needing to be made.
Start modeling Nectar’s success today
Great! Now you should have a better understanding of how Nectar, a leading, digitally-native brand, used a streamlined conversion workflow to help fuel their rocketship growth.
When a startup goes from $44 million in revenue in its first year to over $500 million in just 3 years, it must be doing something right.
And that's why marketers, especially those in the ecommerce space, should pay close attention to what companies like Nectar are doing to gain an edge in highly competitive verticals.
Want to model Nectar's successful ecommerce conversion workflow that helps them quickly test hyper-targeted offers? Start a 14-day free trial of ConvertFlow Pro and get started on your first campaign today.
This story was written and published in collaboration with StoryOps.