Outsite wanted to build a global coliving brand for remote workers without relying on hotel booking sites.
Outsite's property plan inverted the usual script. Instead of opening a large space, optimizing, and expanding slowly, they decided to build their network into their value proposition from day one. They did this by opening up a dozen or so small (under 10 bed) spaces, often in residential buildings, around the USA and internationally.
This was attractive to customers, but presented a few pretty significant growth problems. Small spaces meant small margins, making investment in location-specific advertising inefficient. On the other side, third-party marketplaces took a huge commissions when they did sell a space.
Not only that, but Outsite was a unique solution for a specific kind of customer, and booking sites couldn't control for persona.
Membership Community > Selling Rooms
Outsite's target market had a few major advantages to a traditional hotel market. Travelling remote workers (or "Digital Nomads") are easy to find, travel a ton, are flexible with where they travel to, and are generally alone but looking for others to hang with.
They're also a relatively nascent and underserved customer segment, which led us to our first key insight: nomads crave community. So we decided to build that community and link it to our network of spaces.
Building a paid community accomplished two key things for us.
a) Gave us a revenue channel for users who may not currently (or ever) have the opportunity to stay in one of our coliving spaces
b) Allowed us to focus on community building as our key growth metric rather than try a ton of small scale inefficient tactics to fill rooms
Focusing on building the audience and community simplified things greatly, but with one caveat - it didn't help fill our less popular locations. Over time, we build property contracts that placed more risk on the property owners so this became less of a problem.
Community Growth as North-Star Growth Metric
Selling rooms without relying on OTAs like Airbnb and Booking.com is almost unheard of in modern hospitality. And capturing demand-gen for hospitality on your own is even more rare.
Now that we were community first, we were ready to build our growth engine. We knew a few things that helped shape our thinking.
a) People liked our emails, and really liked when we announced new locations and talked about people in the community
b) Almost nobody converted to a Membership or Booking after their first or second ad interaction
c) Customer LTV was around $1500
Because of all this, we decided against using direct CAC as our primary measurement of our social advertising success. Instead, we moved that up to cost per email, and organized our funnel, landing pages, and email automation system around that.
Our real KPI was still "marketing spend / New Members", but all our campaigns were optimized to capture emails. This allowed us to remarket and email over a long period of time, which is what we knew we needed to be top-of-mind when a person was planning on travelling to a place where an Outsite location was, or to provide them a reference point to help guide them in their travel plans.
We developed a multi-layered funnel and a rigorous A/B testing regiment for landing pages, audiences, and ad creative. Soon enough, we hit a few months of getting email leads for under $2, and quickly became profitable just from selling Outsite Memberships - all booking revenue on top of that was now gravy.
"Soon enough, we hit a few months of getting email leads for under $2 and quickly became profitable just from selling Outsite Memberships - all booking revenue on top of that was now gravy."
COVID and Growing Average Booking Size and LTV
COVID-19 hit coliving hard, but Outsite did a pretty good job weathering the storm. One of the key reasons why is the fact that we transitioned very quickly to catering to longer term stays. If it's difficult to acquire new customers and people can't travel, we figured we'd cater to those who could travel and make it much easier and more attractive to stay with us. We had a backlog of survey data to help guide us as we built a roadmap to cater to our customers inn the COVID environment.
First, customers wanted to feel like we wanted them to stay longer. For this, we decided to provide obvious financial incentive to longer bookings, so we expanded our length of stay discount from 30% off for 30+ nights to 35% for 60+ nights.
We also heard from users that inventory was often hidden when users tried to book longer stays. When users set their desired dates for longer periods, the chances that one particular room was available the entire booking length reduced to zero, making users feel like there was no inventory. To address this, we created an easy "Quote Request" flow that fast-tracked self-serve bookings to our customer success team. Doing this allowed our team to create custom bookings in multiple rooms, opening up much more creative bookings.
After that, we were buoyed that many users were putting rent-like amounts on their credit cards, all in advance - sometimes up to $10k. To help ease this burden, we built a "Half Now, Half Later" payment feature. When a customer tried to book a stay over 30 nights, we automatically split their payment in two.
Finally, we packaged it all up under the product label of "Extended Stays" and now list it on the homepage.
Since implementing these changes, our average booking revenue has improved dramatically.