By Veronica Perry(opens in new tab), reporter at Grow Wire
⏰ 8-minute read
Data is an extremely powerful tool, especially when it’s used to improve consumer experiences. YogaClub is a startup that knows this all too well.
YogaClub’s story also speaks to knowledge management, or what businesses actually do with data to influence organizational outcomes.
YogaClub’s many wins include the creation of an interactive survey that not only gathers consumer preferences and perceptions but also informs future business development.
Subscription models can work magic(opens in new tab). However, it can be tough to find an open niche in the saturated subscription sector(opens in new tab). YogaClub is one of the conquerors: The startup regularly mails consumers high-quality yoga outfits for a slice of the retail price.
We interviewed YogaClub Co-Founder and CMO Nick Nomann, who is responsible for navigating the strategic growth of the business. YogaClub is a subscription box service that styles its customers for 50% or more off of retail prices and delivers name-brand products to their doorsteps.
Prior to the launch of YogaClub, Nomann believed that many high-quality activewear brands were missing a key market segment.
Nomann said, “The fact that a pair of leggings would cost north of $100 blew my mind, and I knew there had to be a better way.”
“The fact that a pair of leggings would cost north of $100 blew my mind, and I knew there had to be a better way.”
YogaClub was founded on the principle that name-brand activewear should be accessible to all women. As many shoppers know, this is not the current case.
To test his hypothesis, Nomann created a basic Shopify website and promised his customers $100 worth of name-brand activewear for just $45.
“For me, the test was: If I could get 100 women to ‘sign up’ for this program in one month’s time, I knew I had something,” he said. “Forty-eight hours after the launch, we hit 100 ‘signups’ for a business that didn’t exist.”
YogaClub's subscription-service box (opens in new tab)
However, Nomann didn’t have any connections with the name brands, and his business wasn’t fully fleshed out yet. He recognized this as an “aha” moment, but shortly after discovering his strategy worked, he actually shut down the site. He then proceeded to call everyone who signed up for the non-existent service to explain that their purchases were part of a product launch test and their credit cards wouldn't be charged.
“I promised them in 90 days we would make this business a reality,” Nomann continued. “Half of these women thought I was absolutely insane, the other half were our first customers.”
Nomann markets YogaClub’s service to three demographics: the yogi/fitness girl who works out often, the busy mom who is always on-the-go and uniquely shaped women who don't have many options when buying activewear.
“Early on, we invested in building a world-class technology team,” he said. “Having an in-house tech team has allowed us to solve very complex problems that most other businesses aren’t able to. This investment continues to pay off and has allowed us to scale very quickly.”
YogaClub customer and body positivity activist Lexi Nimmo (opens in new tab)
Nomann considers the company’s investment in machine learning its biggest competitive advantage.
“Our business revolves around matching the best outfit we have in stock to the right customer at the right time,” he said. “Our matching learning algorithm gets smarter every day as it analyzes our customers’ outfit selection feedback.”
In order to gather this valuable data, YogaClub prompts its new members to complete a “Style Quiz” that personalizes the outfits they receive based on their ranking of various outfit combinations. Then members can determine how often they’d like curated, three-piece matching outfits delivered to their door. Some choose to limit the frequency of their subscription to once a quarter, while others unbox new yoga gear once per month.
Each order contains a matching three-piece outfit from high-quality name brands like Free People(opens in new tab), Threads 4 Thought(opens in new tab) and Electric & Rose(opens in new tab) for less than $60.
“That’s less than the cost of an average pair of leggings [at Lululemon],” Nomann said.
A YogaClub customer unboxing
Because YogaClub is subscription-based, it relies on recurring billing of members as its main source of revenue. In order to both make profit and offer high-end outfits at a third of the cost, Nomann and his team forged strategic manufacturing partnerships with some of the biggest activewear brands in the industry like Columbia(opens in new tab), Manduka (opens in new tab)and Beyond Yoga(opens in new tab).
Challenge #1: Difficulty controlling the consumer experience
These partnerships allowed YogaClub to purchase brands’ excess inventory at a fraction of the sale price.
“It seemed like a win-win because the brands wanted to get rid of the product that didn’t sell through, and we could buy the product really cheap,” Nomann said.
Nomann explained that this strategy worked for a while, until it didn’t. As the business grew, it became nearly impossible to control the product experience for customers because each member received a unique outfit.
“It was nearly impossible to replicate the wins and avoid mistakes. We realized this wasn’t scalable so we decided to change the way we purchased inventory,” Nomann recalled.
Solution: Standardizing the outfit selection
To adapt to its increasing subscriber base, YogaClub created another data collection tool called the “Trendsetter Survey.” This quiz limits the options consumers see while engaging decision-making, which inherently standardizes outfit selection and gathers valuable data in the process.
“We create a series of top outfits which our members vote on and launch new outfits each season,” Nomann said. “Our members dictate seasonal trends, and their opinions guide every outfit we produce.”
“We create a series of top outfits which our members vote on and launch new outfits each season. Our members dictate seasonal trends, and their opinions guide every outfit we produce.”
Now, customers know what their outfits will look like before the YogaClub box arrives at their door ... and YogaClub is more certain the outfits will be a hit.
Challenge #2: Free exchanges jeopardizing the business
In the early stages of YogaClub, the team offered 100% free exchanges and returns(opens in new tab), no questions asked. Members enjoyed the ease and convenience of these free exchanges, but it nearly put YogaClub out of business.
“From a business point of view, it is very expensive to process a return and exchange,” Nomann said. “From shipping both ways to restocking and inventory in transit, it’s complex. With this free exchange policy, our members thought of us like a Stitch Fix or Trunk Club type business where you pay the full retail price but can easily send back what you don’t like.”
Nomann continued, “Because we already discount our membership heavily, offer over 50% off retail and don’t charge a ‘styling fee,’ it was impossible to continue with this liberal return policy with our current value proposition.”
New sizes = happy customers (opens in new tab)
Solution: Integrating an exchange fee
To solve this problem, YogaClub added a small exchange fee and took the return label out of the boxes it shipped. However, if the product doesn't fit correctly, the company will always provide a free exchange. Nomann explained that these small tweaks to its service allowed the business to continue offering high-quality products while still permitting returns for members who weren’t totally satisfied.
Challenge #3: Rapid growth
Nomann describes YogaClub’s subscription trend as seasonal: Some months yield higher rates of new member subscriptions than others.
“Navigating how quickly we can grow has been a challenge, as we have physical inventory limits and constraints across the team,” Nomann said.
He noticed that when a certain month yields a higher volume of subscribers than expected, every department in the organization is affected, sometimes adversely. For example, he noticed that during periods of high subscription volume, employee stress can increase and productivity can suffer if communication is not prioritized.
Solution: Prioritize organizational communication
Nomann tackles this challenge head on, placing greater value and emphasis on improving organizational communication(opens in new tab). He noted that communication “must be stellar between the marketing team, buying team, customer service, curation and finance.”
Methods he uses to achieve effective organizational communication include: Daily communication, weekly 1:1 meetings, monthly KPI meetings, quarterly planning and forecasting.
Determinants of success and industry trends
Nomann described three trends that affect his business's ability to succeed. First, the decline of retail has decreased the number of clothing options consumers can purchase in-store(opens in new tab), forcing them to buy online. And second, according to Nomann, “brands have less wholesale businesses opening up doors to partner with them in creative ways - like our business model.”
Finally, YogaClub is investing much of its resources to fill the demand for high-quality, comfortable activewear for diverse body types who fit a variety of sizes (XL-3X), in line with a broader industry trend.
“It’s shocking how traditional retail has neglected this market and that this community is just starting to have affordable, high-quality options,” Nomann stated.
Prioritizing inclusion (opens in new tab)
Nomann built, maintained and grew a community of roughly 30,000 active members in less than three years. Over the past several years, the company shipped over 1 million pieces of activewear. Publications describe the brand growing into a household name(opens in new tab) and making innovative use(opens in new tab) of the subscription model and technology.
Nomann attributes the company's success to a variety of factors, but his “Gold Price Point” method definitely stands out. After running his initial test with a $45 price point, Nomann experimented with a $79 price point but didn’t feel this was accessible enough to the consumer.
“Seventy-nine dollars limited us from a much larger audience,” he said. “We’ve found that when we sell our main product (three-piece matching outfits) at $59, it becomes accessible for a much larger group of people. It’s a ‘no brainer’ price point, as most users spend more than this for just a pair of leggings. This price has unlocked exciting growth for the company!”
Nomann explained that YogaClub’s mission is centered around community building, not just affordable name-brand yoga clothes. YogaClub community members can connect and interact via the company’s Instagram(opens in new tab) and Facebook(opens in new tab) pages, but members can also log in to the site to access community discussion boards.
He said, “If we are doing our job correctly, YogaClub delivers self-love, body positivity, size inclusivity, a support group and compliments.”
“If we are doing our job correctly, YogaClub delivers self-love, body positivity, size inclusivity, a support group and compliments.”
Vision for the future
When it comes to YogaClub’s future, Nomann prioritizes developing and testing strategies that build and maintain long-term relationships with members.
Nomann hopes that, in 5-10 years, YogaClub will be the largest direct to consumer activewear business in the U.S. and that its machine learning technology will also be used to help the retail giants build deeper, long-lasting connections with their customers online.
Advice to similar budding businesses
Nomann advises new subscription-based ventures to pay attention to their customers and have a deep understanding of their motivation to subscribe. In other words, analyze behavior patterns of consumers who see your product as a must-have vs. a nice-to-have, and fully understand why that is. Nomann suggests that upcoming businesses should take these “must-have” elements of their product and focus on improving them.
“We’ve listened to our customers closely from day one and make decisions based on the hard data (not personal thoughts) they are providing to us,” he said. “This has helped us navigate and prioritize our growth initiatives. If you give it a try, I guarantee you’ll be surprised by what you find.”