How Nectar Sleep is appealing to the Hispanic market

Nectar Sleep, which launched in 2017 as the more affordable sister brand to luxury mattress retailer DreamCloud, sees potential for long-term growth by targeting the Hispanic demographic in the country. It’s a $1.5 trillion market, according to data from The Selig Center for Economic Growth, and with current revenues of $300 million per year, Nectar Sleep is priming to scale by building brand loyalty with what they believe to be an under-penetrated consumer group.

To lead the strategy, Nectar hired Jose Romero in July as its first business head of the U.S. Hispanic division. The brand’s Spanish-language site, Colchones Nectar, launched this week.

“The Hispanic market is not addressed by our competitors with messaging and marketing in a way that’s specific. So the competition is reduced and we can deliver our message at a lower cost to acquire customers,” said DreamCloud co-founder Craig Schmeizer. “But this isn’t about fighting for growth. This is about building brand loyalty in a market that has been overlooked by mattress and furniture companies.”

Nectar Sleep is fighting for growth, however, in an industry that has been flooded by e-commerce options: Casper, Leesa, Tuft & Needle, Purple, Saatva, Sapira, Helix, 4Sleep, Eve and Bear are all competing for market share and attempting to scale both online and offline. And as of Monday, the mattress industry, valued at $29 billion in 2017 according to Cohen, gained another competitor: Amazon released its first private-label bed-in-a-box to the market.

“These brands are catering to the busy urban, millennial lifestyle, and now, they’re looking at new growth engines [as they are] facing tougher competition with the entrance of Amazon into the mattress market,” said CB Insights analyst Thomas Sineau.

For DreamCloud, which Schmeizer said became profitable last year, raising only a small amount of venture capital ($10 million to date) and differentiating the business’ lines of revenue across distribution channels and brands have helped insulate it from partaking in a customer-acquisition spend contest in order to scale. DreamCloud consists of its namesake brand, Nectar Sleep and Level Sleep, a B2B mattress company selling primarily to chiropractors.

Differentiating Nectar Sleep’s demographic appeal is the next step. Schmeizer laid out the brand’s business playbook for tapping into the Hispanic market in the U.S.: Hire a dedicated team covering internal operations as well as customer service and sales, launch a Spanish-language website and flesh out its paid and organic social media strategies to appeal to the market across Facebook, Instagram and Twitter.

In addition to hiring Romero, Nectar grew its Spanish-language speaking customer service team from a group of six to 10, and, according to Romero, will build out a more specialized marketing team overtime as it tracks the progress of the demographic expansion. On the marketing front, the brand will bet on Spanish adwords and target Hispanics specifically on social media by income, product preference and location. The brand also plans to work with an outside agency in order to add creative that appeals to a Hispanic audience. More than just targeting the Spanish-speaking audience, Romero said that the marketing and customer service strategy will appeal directly to Hispanic culture.

“This is a long-term loyalty play, because this is an audience that, culturally, puts much more stock in recommendations, so word-of-mouth becomes a very powerful tool for the brand,” said Byron Beach, the digital social strategy leader at multicultural marketing agency Orci. “If you do it right, this audience is more loyal than the general market. So you build a highly valuable asset.”

To gear up for the launch of Spanish-language customer service, the new site and the marketing push, Schmeizer said that the DreamCloud team spent two months training its global team of 200 on the new initiative to make sure that there was a unified brand mission around the incentive, not just a weak-willed pivot to milk money out of an untapped demographic. He also said that overall, marketing spend went up to $100 million annually (an increase year-over-year, although he didn’t share specifically how much) in order to properly invest in new performance marketing.

“The costs, we believe, will be more than made up for by addressing this sizable market and building brand loyalty,” said Schmeizer. “Because it’s been underserved we hope that there’s market pay off.”

By differentiating its demographic targeting to include the Hispanic market, Nectar is preparing for its next phase of growth: international. It’s launching in the U.K. this year, and using its push for the Hispanic market in the U.S. as an early test for launching in Latin America next.

“We need to be part of the community,” said Romero. “This is a very important demographic that can be fiercely loyal.”

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