Sramana Mitra: Where was that factory?
JT Marino: That was in Southern California. They were willing to take a chance. Their primary business wasn’t even mattresses. We had to go to a factory that didn’t produce mattresses and convince them to produce them. As far as the marketing side goes, we were using family, friends, social media, and doing some Google AdWords.
Customer service was critical to the whole experience. We did very well on that. We would follow up with every single customer and get feedback as to what they didn’t like. We used that to iterate on the product. That drove down our return rate and drove up our customer satisfaction so that it became organically viral.
Within that year, we grew to almost 70% with organic growth. The people that we were acquiring started telling people to buy Tuft & Needle. That’s how we effectively scaled our advertising even when faced with enormous amount of competition. We had to be exceptional with service and delivery speed.
Sramana Mitra: How were people finding you?
JT Marino: It started with Google AdWords. It started to pick up organically. We had these customer champions. That was the first major step. The second major step was we ended up putting our product on Amazon. The whole objective of putting on Amazon was actually to have a reliable and trustworthy source or reviews. It wasn’t for the sales channel. We wanted a place we could send customers to write reviews.
What ended up happening was because we focused so much on iterating the product and having great service, the reviews started pouring in five stars. It’s almost an anomaly of how great the reviews are. We have over 10,000 reviews on Amazon and 90% of them are five stars. Based on all those reviews, we just took off on Amazon. That then flywheeled with our website. Our website then grew. It became this echo chamber of referrals. That’s really what happened the first three years.
Sramana Mitra: What was the price point that you were selling at?
JT Marino: $600 for a queen.
Sramana Mitra: The first year, you did a million and then $9 million the next year. This is all based on primarily the Amazon business that you were generating?
JT Marino: Amazon was one of the growth engines but Amazon was less than 25% of our business.
Sramana Mitra: The rest of it was happening on your website?
JT Marino: Yes, our website.
Sramana Mitra: Are you doing Google PPC?
JT Marino: We do PPC.
Sramana Mitra: PPC drives most of your business?
JT Marino: Yes, that’s how we initially started.
Sramana Mitra: You’ve obviously described the tremendous growth trajectory. What else have you done in the course of building this business that is worth discussing?
JT Marino: Another factor is we pioneered this return process. We built a massive network across United States and helped a lot of non-profits on-board into accepting returns. We had a free trial. When a customer didn’t like it, we would take that and have it donated to somebody in need. It reduced our cost of shipping the mattress back. It kept the mattress out of a landfill. Service has also been absolutely key – being there for customers even past trial. Just honestly doing the right thing for our customer. That’s what has led to our virality.