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Dive Brief:
Rent the Runway has restructured its customer service team with an emphasis on proactively helping customers rather than reacting after a problem is reported, CEO Jennifer Hyman said on a Q4 2024 earnings call Tuesday.
About half of new customers now receive a call from customer service after they join that explains key subscription features and answers any lingering questions, as well as mid-month and end-of-month check-ins. The calls help “ensure they have a great experience in those crucial early days after sign-up,” Hyman said during the call.
The team now spends about 14% of their workdays engaging in proactive customer contact and selling to drive loyalty, according to Hyman.
Dive Insight:
Rent the Runway is pursuing a turnaround by refocusing on customer growth and loyalty. But the apparel rental company still has work ahead.
Revenue rose 0.8% year over year to $76.4 million in the fourth quarter of 2024, according to a company earnings report. Its net loss shrank to $13.4 million during the quarter, compared to $24.8 million in the fourth quarter of 2023.
Active subscribers — the number of subscribers with an active membership as of the last day of a given period — fell 5% year over year to 119,778 in the fourth quarter of 2024.
The decline was attributed to a reduction in paid marketing spend as well as normal seasonality, according to CFO Sid Thacker. The company expects investments in onboarding experiences, customer retention and depth of inventory to fuel double-digit subscriber growth in fiscal 2025.
Rent the Runway’s customer service has consistently maintained customer satisfaction scores between 80% and 90% for the past three years, according to Hyman. However, she sees room for enhancing the team’s connection with customers.
“We’ve also heard from customers that customer experience is one of their favorite things about Rent the Runway, and yet, with our rejuvenated, customer-obsessed lens, we believe there’s even more our customer service team can be doing,” Hyman said.
Rent the Runway has been listening to its customers through a combination of online and in-person events, as well as a three-day campaign in March during which every employee, regardless of their usual role, called customers to win them back and gather their feedback.
“We’re encouraging a more collaborative and solutions-oriented internal culture so there is synergy between our technical and consumer-facing teams as a result of this new way of working together. I believe that we are identifying and executing innovation opportunities faster and more efficiently than ever before,” Hyman said.
The customer service revamp builds on earlier efforts to onboard new customers with a revamped website, including faster loading times and a simpler checkout.
Another key pillar of Rent the Runway’s strategy is growing its inventory to give customers more choice, according to Hyman. The brand found that greater depth of inventory builds customer loyalty, and 2025 will mark the company’s largest-ever inventory investment.
Customer experience improvements helped customers navigate the larger breadth of options, too. The company now offers new subscribers appointments with the styling team to help them design their first shipment, and it enhanced its back-in-stock notifications to let customers know when their size in a given style becomes available, according to Hyman.
“We believe that all of these activities reinforce one thing: Rent the Runway has an important role to play in the lives of our many passionate customers,” Hyman said. “And if we continue listening to them and delivering on what they want, we will be able to prove we have a best-in-class customer loyalty and retention strategy.”
