Chapin spoke for the CEO Summit at Villa Maria Estate last week. In his talk, he foregrounded Casper not as a mattress retailer, but as the first “sleep lifestyle company”, positioning it alongside Lululemon, Nike and Wholefoods.
Chapin summarises its mission as, “We want to help you dream your way to a better life.”
Before Casper was launched in April 2014, Chapin says, he’d noticed the emerging wellness trend, and realised there was a gap in the market for a market-leading company that focused on sleep as an aspect of overall wellness.
When it launched, Casper went to market with a single style of foam mattress sold in six US sizes and compressed into a box for easy shipping. The team had manufactured 150 mattresses by launch day, but within the first few hours, 193 had already sold. Chapin says it took two years for Casper to get on top of its back-orders.
The company had sales of US$1 million in the first month; US$100 million in 2015; and US$300 million in 2017.
Due to its core direct-to-consumer business model, Chapin says Casper can offer a lower price point than mainstream competitors. The original Casper mattress is priced at US$995 for a Queen size, with free shipping in the US and Canada. Casper has since expanded into selling bedlinen, pillows and other logical add-ons.
“We can sell a very nice product at a price that’s 40 percent of the equivalent quality,” Chapin says.
For a long time, Chapin says, Casper held no inventory and simply shipped its product directly from the factory to customers. It was always cashflow-positive, too.
“This is an incredibly simple business,” Chapin says. “Building a website that just sells one thing is actually pretty darn easy.”
Casper’s astonishing success was helped by the state of the traditional mattress industry at the time of its launch. Chapin has identified nine key areas where Big Mattress is slacking off:
- Terrible shopping experience.
- Complexity of choice.
- Knowledge mis-match between sales representative and shopper.
- Useless in-store trial.
- Buyer’s remorse.
- Low value for money.
- Transactional relationships.
- No brand relevance.
- Not in cultural dialogue.
Key among these, Chapin says, is the complexity of traditional mattress products. The vast array of mattress products is difficult for customers to get their heads around, particularly when they’re not shopping for mattresses often.
“You might be in the market once every seven to 10 years for a mattress, and it’s not something you spend seven years staying up to date on.”
This gives the salesperson a “real advantage” over customers, creating a transactional relationship which leaves shoppers feeling fleeced. Instead, Casper put effort into creating a customer relationship and building trust.
“We weren’t talking about great innovation in the product itself – the innovation as in product experience.”
“We basically did the exact opposite of what everyone else was doing.”
Chapin says the company deliberately avoided hiring staff from any aspect of traditional mattress sales. Its manufacturing staff were from General Electric and Toyota, and the sales division was renamed “product consulting.” Sales staff are non-commissioned.
“Their literal task is to understand and solve peoples’ problems.”
Casper’s focus on customer retention has resulted in a 10 percent repeat purchase rate. Chapin says lifetime customer value is a key metric in the venture space: “We will sink or swim in terms of company value on what that number is.”
At the same time as Casper was out-performing its competitors, Chapin says Casper’s marketing was raising consumers’ expectations: “priming them to have a bad experience and then they’ll come back to us.”
One of Casper’s early strategies was to “look a lot bigger than we were”, Chapin says. Before its launch, the company hired not one but two PR firms, at a cost of US$25,000 per month, to promote it.
“It was a big thing to bite off,” says Chapin. “We have a highly researched product. People will visit our site, or call our staff, three, four, five times before buying… this means human interaction is important."