Word-of-Mouth and Referral Marketing Blog

How Rent The Runway Created a Multi-million Dollar Clothing Rental Legacy

Rent the Runway Featured Image

Attention all ladies: Ever wanted to go for a party but had trouble figuring out what to wear? Something cool, sexy, and most importantly, never been photographed before? Rent the Runway has you covered. As the name suggests, they allow women to rent designer dresses and accessories, fresh off the runway, for any occasion you choose.

Rent the Runway co-founders Jennifer Fleiss and Jennifer Hyman | Photo: Jamel Toppin

Jennifer Hyman and Jennifer Fleiss launched the company together in November 2009. Rent the Runway has been named the ninth most disruptive company in the world together with Airbnb, SpaceX, and Uber. The company currently does more than a hundred million dollars a year in revenue, and it is still growing.

Let’s take at how Rent the Runway got to where they are today, and how we can learn from their success:

A. Rent the Runway provides a solution that their customers and the industry really needs.

The lightbulb moment for Rent the Runway: Wanting the experience of wearing an amazing dress

Rent the Runway marketing expensive dress
What looks like Becky’s uber-expensive dress | Image: Rent the Runway

The idea for the company came from a conversation that co-founder Jennifer Hyman had with her sister, Becky. Becky had spent a bomb on a dress for a wedding she was only attending. When asked why she spent so much money on such an event, the response was that she did not want to be photographed in something she had worn before.

I realized I was having a conversation with my sister about the experience of wearing an amazing dress – of walking into a party feeling self-confident and feeling beautiful, and that’s what she cared about. And she didn’t care about the actual ownership of the items in her closet.

At that moment, Hyman realized that this was exactly what people were starting to go for: an experience economy. The idea of owning a wonderful piece of clothing was becoming outdated and experiential consumption was the new direction.

Looking at consumer behaviour, we can see that people want to wear more but spend lesser. That’s why the fast fashion industry has become so popular and commonplace today.

Designer brand woes

Rent the Runway Flashship store in New York | Photo: Rent the Runway

With this insight, Hyman and Fleiss approached bigger luxury brands to seek a collaboration. Crazily enough, they managed to gain an audience with Diane von Furstenberg who gave them valuable insights and contacts.

As Furstenberg shared, her brand (and presumably others like DVF) had fewer young customers, and one reason could be affordability. With a “more is more” mentality, it’s hard to justify buying expensive clothing that can only be seen a few times.

Jim Gold from Neiman Marcus seconded that notion by stating,

Women have been renting the runway from my stores for decades. It’s called buying something, keeping the tags on and then returning it to the store.

Hyman and Fleiss’s rental solution would address this extremely high refund rate of clothing, with their service already ‘validated’ by their target market.

Rent the Runway could help customers spend lesser to wear more, reduce fashion wastage and help designers reach a broader audience.

Rent the Runway’s Ladder of Needs, by Kit Ulrich

In an article by Kit Ulrich, she notes that a ladder of needs is essential in helping you shape your marketing narrative and plan your product strategy.

Rent the Runway understands how they fit into their customers’ needs and that helps them do it even better. Their newest Rent the Runway Unlimited is just that. Combining rentals with a subscription package, customers now have rental “wardrobes” for holidays or date nights.

B. Rent the Runway leverages on word-of-mouth by encouraging customers to share photos of their outfits.

Social media was the new big thing around the time of Rent the Runway’s journey. People were experimenting with the idea of having a public persona and online platforms to express their personalities and preferences.

Rent the Runway encouraged their fans to post photos of themselves wearing their dresses and their customers were happy to do it. They share photos of their new outfits on their social media and the brand can utilize user-generated content for their marketing.

In a post we wrote about Jonah Berger’s book Contagious, social currency is one key reason why topics get shared virally through word-of-mouth. Social currency is the notion of being perceived as cool/funny/smart/stylish by sharing messages of that nature.

Customers can be perceived as cool for adopting this renting mindset, this “secret” novel solution for their wardrobe woes. By sharing this hack they found, they appear as more environmentally-friendly for getting behind consumer waste reduction.

C. Rent the Runway’s referral program incentivizes customers to share the love (and brand) with their friends.

Rent the Runway’s Referral Program

While we are wired to share good experiences with people around us, it is very easy for us to forget. In fact, 83% of satisfied customers are willing to refer products and services, but only 29% actually do so.

Rent the Runway’s referral program encourages more customers to share the brand with their friends. By providing a win-win situation ($30 each for the referrer and referred friend), they are more likely to share. Plus, when you go to their link, there’s a helpful little graphic to suggest who else might love a RTR referral (and where you can get $30 in credit):

rent the runway marketing strategy recommended referrals

And when you sweep into the hall wearing an amazing-looking dress for an incredible evening, getting admiring glances and turning heads, someone’s bound to ask you where you got your dress from.

That’s when you share your referral link.

How can you apply this to your business?

  1. Understand your customers’ behaviour and solve their problems – In this case, it was delivering a unique experience to a market that was craving such an experience. Conducting customer interviews can help you understand the problems they face on a much deeper and subtle level. This will give a better appreciation of their problems, and their trust in you wanting to genuinely help them better.
  2. Encourage them to share via providing social currency – A clothing rental service helped customers look cool for knowing this new secret to cut costs while having an infinite wardrobe. Associate your brand message with something cool/fun/interesting and they will want to share.
  3. Use a referral program to incentivize sharing and word-of-mouth – Customers pay more attention to and have more trust in recommendations from friends. Encourage your customers to share with their friends to create a win-win-win situation for everyone.

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Read next:  The Brilliant Marketing Strategy: Behind Nike’s Utter Domination of the Sports Market

Or, head back to our Epic List of 77 Referral Program Examples!

Samuel Hum

As a finalist in Esquire's Best Dressed Real Man contest, Samuel is ReferralCandy's fashion ecommerce expert and resident sartorialist. He is obsessed with human behavior and social psychology.