When Looma Home co-founder and CEO Denver Rayburn was in his 20s, he moved around a lot. Every 12 months or so, he was packing up and going somewhere new, which gave him a deep understanding of the little things that make a home a home. He became intimately familiar with building a bedroom from scratch, as well as all of the purchases needed to make that happen. This experience led him to co-found Looma Home, a DTC home goods brand, with partner Ishaan Jalan. The premise was simple: They would provide ethically manufactured, high-quality bedding at an affordable price.
Denver credits making products in-house and being involved with each step of production as the defining factors in Looma Home’s success. This eliminates the retail markup and gives customers more affordable options in a competitive space. We recently spoke with Denver about Looma Home’s early growth strategies and success, and he provided some great insights into the ever-evolving world of mobile marketing.
WHAT WE LEARNED:
- New DTC brands need to be able to test a wide range of marketing channels on a tight budget.
- Your target customer may not be who you expect it to be.
- In a competitive market, you need to be able to offer customers something that similar brands can’t.
You made growth marketing a priority early on, and Looma has grown remarkably as a result. What role did mobile in-app play in your strategy?
When we were first starting out, we focused a lot on growth out of necessity, since we hadn’t raised any money. What attracted us to mobile in-app marketing, particularly through Tapjoy, was just the sheer number of eyeballs. It gave us an opportunity to play both sides — even if we didn’t get a ton of conversions right away, we were still able to raise brand awareness, which is huge for a new company. So mobile was a huge part of our strategy right from the start, particularly when it came to getting our name out there.
In your view, how should a young DTC brand approach growth marketing? How do the strategies of established DTC brands differ?
When you’re a new DTC brand, you need to try a lot of different things. More established companies can brute-force success with Facebook and Instagram via their huge ad budgets, but we had to try a bunch of strategies and branch out into different channels. In the early days, you need to grab a hold of traction wherever you find it.
When we founded Looma Home, we were definitely of the opinion that we should try 50 things early on, figure out which of those 50 were gaining traction, figure out why those channels were working so well, and then double down while applying what we’d learned to other channels. As things mature, you get a better sense of which channels are scalable and worth your energy and budget. But at the start everything’s an unknown, so you have to cast a wide net. Figure out what’s working for your particular brand, understand why it’s working, and adapt it into a scalable strategy.
I’ve also found that your target customer may not be who you expected it to be. One thing I like about Tapjoy is that the network reaches such a wide audience, all ages, all regions worldwide. Being able to reach that kind of network when you’re just starting out and likely strapped for cash can accelerate your learning and educate you on which demographics are performing well, and the results might surprise you.
“At the end of the day, there’s no downside to people seeing your name in the marketplace, even if you don’t expect them to convert right away. And doing this via a mobile advertising network is a way for startups to dip their toe into the pool without the huge upfront costs of more traditional advertising.” – Denver Rayburn, Founder, Looma
How does Looma strike a balance between brand awareness and direct response marketing? What is the advantage of a cost-per-action pricing model for DR campaigns?
As I mentioned, in the beginning, we were really focused on reach. In certain apps or regions, we tried out every possible campaign we could run. At the end of the day, there’s no downside to people seeing your name in the marketplace, even if you don’t expect them to convert right away. And doing this via a mobile advertising network is a way for startups to dip their toe into the pool without the huge upfront costs of more traditional advertising. So brand awareness was a big part of our early strategy.
The approach we’ve taken is that our campaigns aren’t necessarily only focused on brand-building or direct response marketing; we use a hybrid of both. Of course, tossing out a bunch of advertising campaigns can be pricey, which is why Cost Per Acquisition campaigns are so useful, especially to new DTC brands. I think from a financial planning perspective and unit economics perspective, there’s no more clear channel you can be in than a CPA channel. The rewards scale somewhat linearly, so you can use it to test new conversion strategies without the risk.
As DTC businesses grow in popularity, there’s more competition in every vertical. How has increased competition and customer saturation impacted your marketing strategy?
The most important thing we’ve found is that you need to have one thing in your customers’ minds that you can provide and your competitors can’t. There’s no question that the DTC space is getting more competitive, but the pie is still growing. There’s still such a huge shift of people coming from in store to online, and even now we’re seeing a monumental shift in consumer buying habits.
So although it is competitive, we don’t think of it as stealing from our peers. Instead, we’re fighting for people who are changing their buying habits and making that transition as easy as possible. We just want to be known for something different.
What role has testing played in your growth strategy? Has testing emerging channels ever yielded surprising results for you?
Testing has always been a huge part of our growth strategy. When you’re starting out, you can’t afford to spend a massive chunk of your budget on a single channel when you’re not even sure if it works, and you still have a lot to learn about your audience. If you rely on your own underlying assumptions about what works and those instincts turn out to be incorrect, that can break a startup.
We actually went almost too hard in the opposite direction. We were stretched so thin across so many channels that we even put an ad in the Harvard student newspaper! We tested every obscure avenue we could find. We’re not as broad in our approach now, but we still use a lot of channels rather than just focusing on one or two.
I think what surprised us the most was our demographic. As a late 20s coastal city dweller, I expected our customer base to be similar. You can’t help but think of who you are and where you’ve been when starting a business, and you form assumptions based off of that. But you can’t base your growth strategy on assumptions, which is where testing in every viable channel comes in handy.
What’s your take on the future of the home goods market? Is the department store paradigm giving way to direct brands? What strategies might give DTC brands a leg up on traditional retailers?
When we started to take an interest in creating a company that makes affordable, high-quality home goods, we realized that there are only a handful of DTC home goods companies on the market, as compared to thousands in the apparel business, for example. We’re also seeing a shift in priorities, with more customers becoming mindful about wellness and self-care, so that demand for better quality is rising.
I think the future is super bright for home goods, especially now that people aren’t turning to department stores as much. Traditional retail is hurting, but DTC brands can be a lot more nimble and thrive without a lot of overhead. We’ve created a process we can be proud of, and these are the kinds of things customers are now looking for — where is it from, how was it created? Is the company ethical? I think this is the future of business in a lot of ways.