Rachel Nilsson is the founder and CEO of Rags,¹ a clothing company that combines function, fashion, and fitness to make rompers and other outfits for children. Rachel’s presentation at the 2020 Business Growth Summit explains how to grow your customer base and retain the majority of your customers.

Rachel’s business started as a handmade hobby she engaged in while her husband was going to law school. From these humble beginnings, Rags has gone on to partner with Disney to produce Star Wars and Marvel-themed children’s clothing. Rags has been featured in multiple national media outlets, including Vogue, HuffPost, and Forbes.

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Product is king

Rachel has seen firsthand how to turn nothing into something in the business world. As a stay-at-home mom, she was frustrated by the snap-up, one-piece outfits she dealt with on a regular basis. These outfits made changing diapers and getting her kids cleaned up more of a chore than it needed to be. Plus, those one-piecers looked kinda cheesy.

Showing some mom-powered ingenuity, Rachel developed her own style of romper for her kids and began selling them from home. She used social media platforms to get the word out about Rags, and the reaction was “insane.” All of a sudden, Rachel realized she’d tapped into a demand for comfortable, stylish kids’ clothing.

Rachel found herself acquiring more and more materials to make her one-piecers. The demand became so great that she had to make deals with manufacturers. She’d gone from creating clothing from an apartment in her parents’ basement to running a flourishing business.

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An appearance on the television program Shark Tank² only sped up the growth of Rags. Rachel’s company also relied heavily on social media influencers to share her product. Getting mentioned in multiple online publications, like HuffPost and Forbes, didn’t hurt either.

Clearly, Rags owes some of its success to the platforms and content that spread the word about its unique product. However, Rachel disagrees with the now commonplace statement that content is king. Instead, she believes it’s the product itself that’s been the primary source of her company’s success.

The first lesson she shares with the BGS audience is that a quality product is king. She encourages entrepreneurs to develop a product that you can be proud of. If your product isn’t something that meets and exceeds consumer needs, then no amount of content can spur the growth of a company like Rags.

Experience is queen

Once you’ve developed a unique product, you’ve got to keep your customers coming back. For Rachel, identifying her audience was easy, because she’s her own audience. She knew she needed to create a magical experience for devoted moms hoping to dress their kids functionally and fashionably.

One thing Rachel knew for certain: consumers, especially moms, love talking about their scores. They like telling their family and friends about the latest deal they discovered, whether it’s online, at a big box store, or a local boutique. Rachel went about trying to promote these types of conversations, keeping them geared toward Rags’ product.

The results have been astounding. Rachel says that eight out of ten customers come back to purchase clothing from Rags. She attributes this retention to the company’s ability to instill F.O.M.O. (fear of missing out) in their customers.

How do you create F.O.M.O. around baby clothes? Rachel has established a demanding schedule of limited edition clothing that becomes available every week. She understands that putting out a new outfit once a week is incredibly ambitious, but she also recognizes how much people crave a unique customer experience.

These limited-edition outfits now have department stores groveling for Rachel’s smaller brand. Another component of Rachel’s approach to retention is marketing to the different types of moms out there. She says identifying and marketing to these various personas can be a bit granular, but for Rags it’s worth the effort.

There’s still plenty of noise in the kids’ fashion space, and Rags tries to be heard over it. To escape the noise, Rachel’s team has created Facebook groups dedicated to selling and trading Rags. These groups have ended up supplying Rags with a whole new sales funnel they never imagined possible.

A road map for growth and retention

Beyond the two basic ideas that product is king and experience is queen, Rachel lays out a map for growth and retention that up and coming businesses can utilize. She says growth and retention will develop naturally by providing the right product or service and through building a community of customers that look forward to engaging with your brand.

1. Find the right product or service

First, identify a need. In Rachel’s case, she saw that there was a lack of functional, fashionable children’s clothing. After recognizing this gap, she addressed it by creating a romper with an elastic neckline and no snaps. Identifying a need doesn’t mean you have to reinvent the wheel; sometimes it’s as simple as adding some elastic and ditching some buttons.

2. Play the game

Your business should create and drive interest by offering a unique outreach and engagement with customers. Rachel’s company is an expert in this area. They’ve reached out to their customer base using social media platforms and established interactive experiences like Facebook groups to provide ongoing engagement.

3. Keep customers engaged and build community

The game must go on. Once your business has an established set of channels, consistently engage with your audience on those channels. The Rags Facebook group has roughly 16,000 members that have been accepted via application only (Rachel says she wants to keep the trolls out). Shockingly, 85% of these members are active in the forum on a daily basis!

4. Keep things interesting

Rachel recommends spicing things up in your engagement. Offer an element of surprise to maintain freshness and excitement surrounding your brand. Marketing campaigns like promotions, educational opportunities, and giveaways keep customers intrigued and loyal to your brand.

5. Make your customers feel valued

Social media is an important way to help customers feel valued because it gives them immediate validation. Package inserts with a message of appreciation can also build rapport and demonstrate how much your business values its customers. As long as customers experience connection and meaning while engaging with your business, they’ll keep coming back.

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  1. rags.com
  2. Ep. 2 – How Rachel Nilsson Founded RAGS