Five Questions With Bonobos' Tracy Keim

Online Retailer Cuts Marketing in Half, Sees Growth in New Customers

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Bonobos, the wildly popular online fashion retailer, is taking a back-to-basics approach to marketing and reaping the rewards.

After cutting up to half of its marketing budget in February, Bonobos has not only reduced customer acquisition costs by half, but it has seen an increase in transactions from new customers. The average order size from new customers has also gone up. And in April the clothing site inked a $16.4 million partnership with Nordstrom.

Tracy Keim
Tracy Keim

Tracy Keim, VP-integrated marketing for Bonobos, says the improvements weren't influenced by the looming Nordstrom deal, but by the company's three month "cut and reset" period. She said the team asked, "With minimal marketing spend, what will the return on investment be?"

The exercise, executed this spring, helped Bonobos identify which media channels were performing -- and which were not. "It helped us understand the gap between what our current initiatives are and what we need to do to hit our plan," Ms. Keim said.

Bonobos now plans to increase display marketing by at least 15% and double search-engine marketing (no marketing dollars are expected for print). "We are on track to double our customer base this year; however, this reset wasn't about driving growth," Ms. Keim said. "It was about having the confidence to cut inefficient marketing channels and relying on the organic health of the brand."

Bonobos' store experience.
Bonobos' store experience.

Ad Age : How has it been transitioning from strictly online to having a bricks-and-mortar presence with Nordstrom?

Ms. Keim: I wouldn't say operations have changed, but our footprint has grown. A lot of people are excited to be able to engage with the brand at a local level. The one-on-one component -- it allows men to engage with the brand without actually having to be in fashion. Nordstrom's brand is in line with our brand value, people before profit.

Ad Age : When did you cut your marketing spending? And what exactly did you cut?

Ms. Keim: We cut the budget in February. Our year begins in February, and when our CEO sat the team down, [we] discussed what was working. One of the hardest things was coming off the holiday season. We cut between 40% and 50% of our budget, and really analyzed the cost of acquisition by channel. We cut a significant percentage of print, display and affiliate -- just focused on taking away for those three months, so that we can now go into the next quarter and know how to add back to it. Our goal is to scale the brand without sacrificing the brand voice.

Ad Age : You've been in operation for about five years now. Why are you just now adjusting your marketing budget?

Ms. Keim: 2012 is a big focus for our brand. As a startup, the power of data is really important. We actually have the technology, the team and the data to work with now. We didn't really know what was working. This wasn't like okay our budget is being cut. It truly was a reset period. Previously we didn't have a clear focus. There was too much noise.

Ad Age : Is this approach something you think would apply to other online retailers?

Ms. Keim: Of course it would be different for a more mature brand. But one of the key takeaways is not to be afraid to reset or reduce your number of partners. The other key is to understand that base line and have a clear understanding of the business with minimal marketing. Take little bets and have that test -and-learn period. If you're not sure if an initiative or channel is working, cut it and solve that problem going back into it. Now we're going back to a lot of the partners. We're just smarter about what we want to test and the amount. What we will do is hold on print until we understand how that medium will work for us.

Ad Age : Tell me about the Guideshops, an offline model. Why focus on that when the brand has a successful history of selling only online?

Ms. Keim: We're meeting the needs of consumers who prefer to shop offline. The Guideshops started off in our lobby headquarters -- appointment-based, online. Men come in and actually walk through everything we offer online. We've had tremendous feedback from men loving this experience -- loving not having to wait in shopping lines, not having to go to a shopping mall. We've actually just been reacting to the demand, and now it's just become part of our plan.

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