The Case Against Buying Luggage
Miss us? We missed you, too. We took a little break for a side project, Casey.
Casey is a new business concept that Spark is incubating. Think of it as Rent the Runway-meets-luggage, another node in the increasingly complex sharing economy system.
Don’t worry: we’re not giving up our day jobs. But we needed a case study to explain what we do at Spark, and Casey turned out to be perfect. So perfect, in fact, that it may become an actual business.
OK, so here’s what’s going on.
Testing: We're All About It
Spark often works with clients to develop and test new business concepts. Why test? To answer questions like:
Will our business idea appeal to potential customers?
Who are the right initial customers? Where are they?
How big is the initial market for the concept?
How can we know all of these things with confidence?
Yeah, we could do a focus group or a survey, but those tend to be very conditional (…would you do x if it existed?) or meta (…tell us about the last time you bought luggage…) in ways that strain credulity.
Instead, we use advertising campaigns to find product-market fit, often before the product is completely built. Most people learn about new products on their phones or computers, often in a social media feed, so social media is a great place to get a sense of what’s appealing about a new concept and—just as importantly—what’s not working at all.
We had a lot of hypotheses about why a rental luggage service would appeal to people, and we tested the three strongest:
We also thought we knew the types of people who would be interested in Casey, so we created three discrete audiences on Instagram that looked something like this:
(Yes, Instagram and Facebook know all of this about you, but that's a different newsletter.)
We created two ads for each brand position, and we also built a landing page that explained that Casey was in development and that we’ll be in touch if you leave us an email address. Then we tested all the ads against all the audiences—12 pairs in all. The live part of the test took about a week.
What We Learned
The first thing we learned is that everyone is really interested in Casey. When we are testing a brand new concept, we are usually high-fiving in the office if one percent of people who have seen an ad click on it in the first wave of testing. After all, unfamiliar brands with completely new offerings take some getting used to.
With Casey, however, we were seeing click rates of 2-3%—an auspicious beginning!
In fact, 4% of people who saw our best-performing ad (below) clicked on it.
What else did we learn? No Closet Space was the most efficient value proposition (although not the best-performing ad, which was the Specialty Luggage ad above.) And Luxury Lovers were our best-performing audience overall.
But there were some surprises. Going in, we imagined that the concept would appeal to a younger audience, who are less likely to have closet space and a portfolio of existing luggage. And it did, but not as much as it appealed to the 45-54 age segment. Hmm…
What Happens Next
We have already run a second wave of tests. With more focused audiences and messaging, results improved: click-through rates on ads grew to 5-6%, and over 150 people left an email address. A lot of people left comments on the ads themselves, including one from a person who asked if she could come work for Casey.
We have also started to develop a plan and run some numbers. We know that logistics—dropping off and picking up luggage—will be the most difficult part of making Casey work, so we are learning as much as we can about different options. We are also analyzing luggage brands and thinking about things like number of turns and dry cleaning.
Spark is preparing to prototype Casey in NYC, so expect updates now and then on our progress. Send us ideas—we’ll test them!
And THANKS to those who helped us choose a name. You gave us great feedback and ideas!
Testing the Casey concept before building it helped us reduce risk. Instead of building Casey and then looking for customers, we have a list of 150 peoplewaiting for our launch—and we know the most efficient way to find more. We have road-tested ad creative, validated target audiences, and declining customer acquisition costs before we’ve officially launched. Thanks to Facebook/Instagram, we also have a good sense of how many customers there are in each major urban market.
Most important, we have confidence. Not just the gritty-certitude kind of confidence, but also the kind of confidence that comes from testing with statistically valid sample sizes.
As we say almost every day at Spark No. 9: THIS IS WHY WE TEST.