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Quiz! How Did This Leader in Women's Fitness Wear Create Millions of Loyal Shoppers? How Kate Hudson created an army of passionate customers with a simple engagement tool.

Actress and Fabletics co-founder Kate Hudson

For any ecommerce company, getting customers to make one purchase is a feat in and of itself. Getting them to come back again and again is a challenge that plagues countless entrepreneurs. But one company found success by creating a system that not only addresses this issue, it also provides a huge benefit to its customers.

Meet Fabletics, an athleticwear brand that offers stylish and high-quality apparel at an accessible price. Founded by actress Kate Hudson along with TechStyle Fashion Group founders Don Ressler and Adam Goldenberg in fall 2013, this trio knew how to get customers to return to the site at least once a month: a lifestyle quiz. Here's why it works:

A new customer lands on the site and is prompted to take the quiz. She's then led through a series of fun questions about her exercise habits and style preferences. Upon finishing the quiz, customers are sent to a page full of outfits chosen specifically for them, based on their results.

It only takes customers about one minute to complete the quiz on average.

From there, customers have two options: they can choose to shop as a visitor and purchase styles at regular retail price (tanks start at $15.95; dresses start at $64.95), or they can opt in to Fabletics' flexible VIP Membership Program. VIP Members immediately receive special treatment with an exclusive intro offer of 50 percent off their first outfit. But the perks don't stop there. VIPs also enjoy continued savings on every future purchase (up to 50 percent off retail prices), free shipping on orders over $49 and easy exchanges.

It's like ordering a nonfat caramel latte – you get all of the flavor, but half the calories. At Fabletics, you get twice the style for half the price.

Each month, the brand offers a new collection of signature styles – everything from leggings and running shorts to sports bras and jackets – in a variety of on-trend prints and colors you won't find anywhere else. VIPs can shop the latest and greatest or skip the month at no cost. If they forget to skip, then they'll be charged $49.95, which becomes a credit that can be used for any future purchase.

So far, the quiz has been effective. Of the more than 53 million people who have started it, more than 34 million have completed it.

"Our members absolutely love it," says co-founder Adam Goldenberg. "We now have more than 1 million VIPs in fewer than three years. Members are visiting their boutique 20 to 25 times per year and buying about four times per year on average."

This strategy of immediately engaging customers with a quiz and encouraging them to visit the site once a month provides two significant business advantages:

  • Inventory waste is remarkably low because the brand offers styles it knows its customers want (calculating style preferences and predicting production at 95 percent accuracy, the company says).
  • Marketing dollars can be put to use acquiring new customers rather than constantly re-acquiring existing customers.

These two factors reduce Fabletics' overhead by 30 percent to 50 percent when compared to traditional retail. And the VIPs are the ones reaping the benefits via their exclusive pricing. "This relationship is a big part of our success," Goldenberg says. "It allows customers to get Lululemon quality at a fraction of the cost."

Fabletics says it has shipped more than 4.5 million orders since it launched three years ago. It even started expanding into brick-and-mortar stores throughout the U.S. last year. Who knew a simple online quiz could pack such a powerful business punch?

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