“Leveraging Factored Quality is such a small cost in comparison to the potential downstream risks that it really is a no-brainer. De-risking your supply chain as much as possible is just the sensible thing to do.”
Brands cannot drive retention without consistent product quality
Venture capital for DTC startups is a rare commodity these days. As a result, every brand is doubling down on retention. And, in Mike’s experience, too many overlook the most basic lever for success: ensuring the undeniable quality of your products.
In the early days, before Factored Quality, two common issues harmed Canopy’s retention:
- Cosmetic defects — Small scratches or dents don’t impact functionality, but they do impact the customer’s unboxing experience and desire to visually share the product.
- Strong filter scents — Some customers would get hit by intense smells immediately upon opening due to the manufacturing process.
Then the Canopy team realized — these negative touchpoints were easily addressable through Quality Control.
He notes, “If you ship faulty products and do not realize it till customers start opening boxes and reporting defects — that is a huge problem. If it’s a large enough defect rate, you could end up in a very bad situation as a brand. And that genuinely can’t be fixed by throwing money at it.”
Factored Quality provides a single source of truth for global QC ops
Before discovering FQ, Canopy worked with independent inspectors in China — with all communications happening over WeChat and WhatsApp. They struggled to refine checklists and had to manually download and store reports and static photos of their factory floor.
Today, Factored Quality’s intelligent, tech-enabled solution provides what was direly missing: a single source of truth for Canopy’s global QC. We execute this in three ways.
- Centralize — Previously, QC data and assets wound up scattered across Dropbox and Google Drive. Now, the Canopy team can open the FQ platform and easily locate every PO, quality checklist, and inspection they’ve ever placed for their products.
- Leverage the data — “FQ enables us to unlock meaningful, data-driven insights we’d otherwise be unable to get,” Mike explains. If a supplier consistently dips below set AQL levels, Canopy will reach out and potentially start shopping for new partners.
- Deliver 24/7 support — FQ’s team in Hong Kong often works directly with factories. This is crucial if emergencies crop up during production runs, while most U.S. teams are asleep. Ultimately, FQ provides Mike with “a lot of peace of mind,” knowing trustworthy people on the ground will support Canopy overnight.
Mike mentions, “Previously, all of the QC work we’d done was just a snapshot. Nothing was dynamic or integrated. That piece of the puzzle was majorly unlocked by Factored Quality. We now have a single source of truth.”
During Q4 of 2022, Canopy worked with FQ to test 200 units of a shipment. We found 13 cosmetic defects on humidifier tanks — nearly 7% of the sample. “If it weren’t for Factored Quality, we would not have caught that,” emphasizes Mike.
Ultimately, we prevented a hit to Canopy’s NPS and any wasted dollars on the return process. Even if those customers had simply requested replacement tanks, that shipping would still eat into the margin dollars Canopy makes off each user.
Here are more trackable savings and metric wins driven by FQ for the Canopy team:
- $70K+ saved in rework and shipping costs
- Sub 5% reduced defect rate by improving QC
- 17% decreased returns by avoiding quality issues
“Setting high-quality expectations is a key piece of customer success. We are not going to be happy with a 7% defect rate — ever. With Factored Quality, we don’t have to be. If defects start to rear their ugly head, there is always someone to talk to on the FQ side.”
In the end, Mike describes Canopy as a “small, scrappy team” of less than 10 people. That’s why they have high standards for external partners and only seek out trusted, embedded long-term relationships: “people who understand our brand and our product in detail.”
Canopy found this in Factored Quality: from standardizing meticulous checklists to fielding late-night phone calls about overnight production. Looking forward, he and his team are excited to keep this partnership going for the long haul.