Does anybody remember Nectar Sleep? Launched in 2017, the DTC mattress brand generated $40 million in revenue in their first year, then surpassed $250 million last year. Those who follow the crowded mattress marketplace will have to pay closer attention to find out about the next chapter of this competitive rising star – even as the company is projected to bring in $400 million this year. In May, Nectar Sleep rebranded as Resident.
The change is more significant than the marketing version of a clean set of sheets. Even though Nectar mattresses are still being sold – online and through a network of 1,100 retail partners – the company is moving beyond beds to become a “home furnishings company that also sells mattresses.” The Nectar people didn’t want to have to stay in their bedrooms. They wanted full run of the house.
There’s another reason why you might not recall, or might never have heard of, Nectar Sleep. Ask yourself, have you moved any time since 2017, or actually been looking to purchase a new mattress? Certainly, regardless, you’ve heard of their competitor Casper, whether you needed a bed or not. But even though, according to the company, Resident spends $100 million annually on marketing, they use their data effectively to communicate to shoppers who have intent to purchase.
Resident’s Chief Marketing Officer Gil Efrati recently spoke with me about the evolution of the brand and their strategy. They execute performance marketing strategies to reach their audience and to draw on their own custom built data warehouse, including a pool of over 500,000 “happy sleepers” and counting. Digital native DTC brands, the Warby Parkers of the world, can give the appearance of millennial hipness, but are they driving growth by using their data in a similarly savvy way?
“There is a common joke that if you look at 10 different ads from 10 different direct-to-consumer brands selling all different products, all the ads look exactly the same, reaching out to a specific millennial audience,” said Efrati, who spent several years at Google before joining the Resident team. He added that for Resident, their audience is the “everyday sleeper,” who sometimes skews a little older than millennials. “We’re proud that our audience is not necessarily homogenous, it’s everybody.” This includes people across the country, not just coastal city dwellers. For the slightly older audience, they still are willing to buy online, even for a big purchase like a bed. With rising trust in mobile payments, they’ll even complete their purchases on their phones.
With the Nectar brand, the Bay Area founders of Resident passed the savings from their low-cost DTC business model onto the consumer. Their memory foam mattresses were priced roughly $300 lower than the industry average for a similar product, while insisting on keeping customer service and quality as top priorities.
“What a lot of digital native brands don’t do today is talk to their customers,” Efrati explained. “We like to think our best customers are the ones who gave us either a five-star review or a one-star review. When we talk to our customers, they tell us what else they wanted to buy from us, if they could. We hear about sofas, rugs, textiles and so many other things.”
The corporate rebrand as Resident communicates to these customers that they make up a family of brands that all meet the same standards of service, at different price points. Hybrid beds (foam and springs) under the DreamCloud brand, along with the eco-friendly Awara line (made with organic latex and cotton), are positioned to compete with mattresses that cost three to five times more.
According to Efrati, Resident’s goal is to be a one-stop shop, expanding out from the $17 billion U.S. mattress market, to the broader furniture market estimated at over $200 billion. “As time goes by, we’ll add several brands per year to fill every room in the house, and we will continue to grow the pool of our brand loyalists,” he stated.
Along with the May rebrand, Resident introduced its first furniture line, Bundle by Resident, described as a collection of “flexible seating.” Big-ticket items in the collection include a custom sofa, as well as beanbag chairs from $349.
“You can have the best product at the best price in the market, but if customers don’t know about you, you’ll get no sales,” Efrati told me. “In our space, we are the best performance marketers…For us, the main goal is to pick and choose who we target and get to a point where we are very effective in customer acquisitions.”
Across the different products Resident offers, customers average 12 touchpoints in their journey. Efrati says they look to contact these customers at their “zero moment of truth,” when deciding to purchase a mattress, or another item.
In this age of precise customer-centric messaging, for the most successful retailers at least, you still might not hear from Resident or Nectar until your next move. (Unless you’re a data-driven marketer reading this article.)
For Efrati, the customer is Resident’s channel, he said. They work closely with Google and Facebook teams to reach their audience, and from a data perspective, they use the Google suite of tools, then have their own solution on top of that. “We’re not dependent on a single platform,” he stated.
Resident’s spin on the maturing digital-first DTC phenomenon is to develop a family of like brands in different segments of the home category. Because, for instance, only 20 percent of bed are purchased online, they will also maintain their retail partnerships for the time being. They also recently opened a single brick-and-mortar shop in Virginia.
