Growth And Retention Must Align

SPEAKER_00 0:00

The growth team job is to get somebody in the door and the retention team is to keep them. The easiest way to do that is to get them on a subscription and then the retention team works on keeping them. Great brands will have those teams communicate, but the best brands look at an entirely cohesive strategy. There's no brand loyalty until they have a good experience over a certain amount of time. Gyms are really just obsessed with getting you in the door, and that's all they really care about. And they make it really, really hard to cancel. That's their entire like membership strategy. And yes, sometimes they might work on equipment or other things, but like the truth is how you acquire somebody directly impacts whether they stay or not.

Welcome And Meet Matt Holman

Trevor 0:34

Yo, what's going on, everybody? Welcome to the Unstoppable Marketer Podcast. With me as always, is Mark Goldhart, my wonderful co-host. How are you, Mark? Well. Great. This is the first time I've introduced you and you haven't been on your phone. Not an interesting day today.

Mark 0:53

First for everything.

Trevor 0:54

Or you got I got your attention. Or we have a guest.

Mark 0:58

We have a guest. So you're being less likely to be on my phone when we have guests.

SPEAKER_01 1:04

Okay.

Trevor 1:06

Alright. I'm actually, I'm not offended. I am I take that as a compliment. Because we know each other so well.

Mark 1:16

We do. It's usually business related.

Trevor 1:18

Yeah. Fair enough. Let's introduce our guests. We got an awesome guest. This is this is a guest we haven't had on the podcast ever, which is kind of surprising because we've worked so much together and we've known each other for a long time, but we've talked about it enough. Have I been on your podcast? Yeah.

SPEAKER_00 1:32

Well, that's rude. And you're coming on again.

Trevor 1:34

Yeah, that's right.

SPEAKER_00 1:35

There's enough of a gap in between the appearances.

Trevor 1:37

It was a while ago, I feel like. Never gave him the invite. You were one of my first guests for that. Ah, I'm sorry. Well, anyway, if you're hearing this voice or seeing it, this is Matt Holman. Uh Matt Holman, welcome. Matt Holman is the uh co-founder of Subscription Prescription and the founder of Commerce Catalyst. Uh, tell us a little bit about subscription prescription and commerce catalyst. We work with both. Absolutely. Um, so really cool, two different businesses, but very similar goals.

SPEAKER_00 2:01

Right, absolutely. Well, it's funny because they kind of started around the same time. I I left, uh I was working at eHub, a local uh logistics company here in Utah, and joined uh my partner, David Bradley, on subscriptions, and at the same time founded a little meetup to help myself and a few other friends that were solo marketers at Bootstrap Startups. And that was the genesis of Commerce Catalyst, which is an e-commerce community here in Utah. We do workshops, events, we have two big conferences each year, Slack group, newsletter. It's all about just giving people in the space more access to resources, but also to each other, right? Like get to meet you guys at an event, that kind of thing. Um and then subscription prescription was just kind of like honestly, was started out as a marketing gimmick. We were trying to, we were working for a Shopify integration for our subscription app and wanted to create like a cool newsletter. So it just started out as a newsletter with tips and ideas based off of our experience managing subscription programs for clients. And it started to take off, not because people wanted to buy the software, but because there wasn't really anybody else trying to share advice that was fairly independent or objective. And so now, you know, fast forward a few years with the newsletter podcast, we work directly with subscription brands to grow their subscription programs. So we've worked with a lot of people together, uh clients like Learning with Kelsey, uh Behide Meals, um, currently working with Just Ingredients, another big well-known Utah brand. And a lot of what we do is helping brands figure out how to get more subscribers and keep them in a way that makes sense for both the brand and the consumer.

Trevor 3:32

Totally. Yeah, we've worked with Matt a lot. I mean, anytime we have a subscription business, generally we try to pass that, pass in that way because it just it's a it's a different element to the overall ecosystem of e-commerce. Like it just adds a whole different piece to the puzzle. And when you are unable to when you work so hard on acquisition, you can't get people to stick around, especially when you have a product that you need people to be sticking around for, there's just no point. And so almost like instantaneously, the moment we we work with somebody, we're like, hey, at least talk to Matt, you know.

SPEAKER_00 4:11

And if you think about like a typical paid media agency is normally like really concerned with just CAC and they're like, but you guys have a totally different philosophy where you're looking at like lifetime value and payback period and overall profitability of customers you acquire. Totally. Well, it makes sense that if a brand you're working with has crap for a subscription program and a huge leaky bucket with subscriptions, like your work is gonna be that much harder, right?

Trevor 4:35

And it's not even that, it's like we won't work with them very long, right? Because they'll you know, we could be doing great work, but if it's they're not gonna see the bank's, yeah, exactly. If their payback period isn't for three months and they need it to be two months or something like that, you know, and the there nobody's actively working to accomplish that, then our work is too expensive. Yep. You know, um so even non-subscription total brands, right?

Mark 5:04

Like there's a payback period for LTV and like you have to realize it within a certain amount of time. Right. And and a lot of the strategy depends on that. Because even if you're first order profitable, there's still cash flow, there's still other issues, there's op ex, there's all this other stuff going on. So in order to grow profitably and at the right rate, you have to strategize around that realization period. But I have a question for you, Matt.

unknown 5:27

Sure.

Why Subscription Is Not Just Retention

Mark 5:28

Because I think a lot of people who start a subscription company or maybe they already have a company and they say, hey, let's introduce a subscription, think that subscription is just retention.

SPEAKER_00 5:42

Yep. That's what a lot of people think. Well, the point of the words, you're talking about this problem. It's like a lot of brands, they have a growth team and they have a retention team. And the growth team job is to get somebody in the door and the retention team is to keep them. And sub and the growth team often views the easiest way to do that is to get them on a subscription, and then the retention team works on keeping them. And great brands will like have those teams communicate, but the best brands like look at an entire like cohesive strategy for how they're acquiring stuff. Like, if you look at a brand like Groons, right? Like, they didn't just grow to that size because they were great at paid media. They grew to that size because they were disciplined on their CAC to LTV ratio. And they would only acquire customers if they knew, based on how long they were going to keep them, how profitable that would be for them, right? And that is top, that has to be top down for that to work. But I don't know if you if you even got your question, I might cut you off.

Mark 6:35

Well, no, I just because I want to hear from you why is that flawed thinking? Is that just like a regular retention strategy works in subscription? And and why why do we find these leaky buckets that are different than just regular retention marketing?

The Gym Analogy For Bad Fit

SPEAKER_00 6:50

Yeah, I do think because a lot of people think about it as kind of like a two-step process. Or I mean the analogy that I love to use is just like a gym, because I think most people have had a gym membership at one point in their life, but it's like gyms are really just obsessed with getting you in the door. And that's all they really care about. And they make it really, really hard to cancel. That's their entire like membership strategy. And yes, sometimes they might work on equipment or other things, but like the truth is is like how you acquire somebody directly impacts whether they stay or not. And in the case of the gym example, if you're running really, really big specials around January and you're getting a lot of people in there that aren't gonna stick around, those people are gonna cancel really, really quickly. If you're not focused on acquiring the type of people that are gonna find a lot of value out of your particular gym, whether that's a VASA or a boutique gym or something like that, you're gonna have people that are gonna be dissatisfied when they're there, or they're not a good fit, or they're gonna come in, they're gonna come once, they're gonna hate it, and they're gonna never come back again. The same thing happens with subscriptions. So if you don't think about that as an entire experience, you're basically just you're just putting things in to see what happens. And then the only real mechanism you're left with at that point is like discounting or trying to make it harder or trickier to cancel, or you're gonna give away the farm to try to keep somebody maybe for one more order that isn't gonna be profitable for you either. So you you lose a lot of tools if you just dump people in a retention bucket and hope that they'll they'll stay.

Trevor 8:18

Do you have something that you wanted to follow up with that?

Too Much And Too Expensive

Mark 8:22

Well, the follow-up is just I think in the subscription world, it tends to lean consumable, right? Which is inherently a tighter margin business model. Which is why it matters even more to have that LTV to CAC ratio, right? Because there's a lot of subscription brands that are like, but they don't even care if they're profitable first order at all. Right. You know, they're they're just counting on, hey, if I can get an 80% retention rate over the first three months and then a 50% over the next three months, or whatever those ratios are, they come out positive. Right. So it's a it's just a totally different game that they they end up playing, and a lot of people don't realize how competitive it is in that space, not just on the acquisition side, but even in the retention side. There's no brand loyalty until they're they have a good experience over a certain amount of time too. So the subscription side, I think that's what's interesting, is like you have the subscription itself and the tactics of keeping people within a certain subscription tier or elevating them or making sure you know we saw we've seen a few times, right? A big time reason people cancel is they have too much of something, for example. Trevor Burrus, Jr. Too much and too expensive. Yeah. Top two reasons. Too much, too expensive. And that's not exactly retention. You know, like these are just it's almost like an OpEx category in a in a way.

SPEAKER_00 9:40

Aaron Powell it is. Well, it's also like, you know, you when you think about the the answer too much product, right? Does that mean that I actually just order too much? So like I'm ordering for my puppy and I I accidentally ordered way more than my puppy's gonna eat?

SPEAKER_01 9:54

Yeah.

Designing Renewals Around Usage

SPEAKER_00 9:54

Or did I order it and my puppy hated it and now I have too much product sitting in my cupboard and I don't want it anymore, right? For sure. Like and and same thing with other consumables. Is it's really important when you're getting into that. Like like this is like more of a tactical thing of like trying to break that example out or that answer out to say, do I have too much product because I know you never used it? Or do you have too much product because you ordered the wrong thing? Because if you order the wrong thing, let's adjust your schedule. You you like the product, you're just canceling you have too much. Okay, let's delay your shipment, get get it every two months instead of every month. Right. If you have too much and you never used it, well, can we provide some education or some reasons why you should start with that, start start that up? Let's delay your next shipment because of that kind of thing. So that I think that's where the a lot of this nuance comes into is people do think of every subscriber as kind of like the same, or you think of them as just one big cohort instead of like trying to understand that there's information that you can gather, point of purchase, right? Post you guys know this very well from post-purchase, like understanding like intent behind why somebody bought your product, understanding how much they they usually use. So, like a really great brand example of this is Javi Coffee. Javi is incredible at optimizing for first order profitability and high first order AOV because they get you to buy, essentially, they create an incentive to get you to buy a lot more of their product.

SPEAKER_01 11:10

Yeah.

SPEAKER_00 11:10

And there's different flavors. So there's an incentive to want to buy a lot of those things, but it's also like a coffee concentrate. So if you get four or five bottles, you it it actually takes a while to get through all of that. So if I'm gonna sell you four or five bottles and a bottle lasts one month, is are my default renewal rates gonna be at three months or four months or five months? And yes, and as a brand, you can maybe err a little bit in your favor, like so it's a little bit sooner than maybe ideal because you can still catch capture a lot of revenue that way. But so you do have to kind of think about this of like, okay, how are we gonna acquire somebody? What does this life cycle look like? What's gonna work well for the consumer? In my opinion, short-term wins can often work in your detriment. So if I'm optimizing for first order profitability instead of looking at my payback period, right, I potentially will sell way more and then my retention will fall off a cliff and I might potentially just lose somebody because they have way too much product. Totally. If I'm optimizing for the right scenario up front, um, then that renewal rate can can be stronger, but it really always comes back down to product. Yeah. Does the product work? Does it do what it says it does? Like, do you have like first like product experiences that make people love your product or use your product? And so consumables are great for that because you can often feel something or taste something right away. Sure. Then see if it works. But you know, when you get into areas like I think we know there's a local brand here in Utah, mixers, where um, you know, you take a supplement, it takes several months to feel that effect for women. Another good example is Mars Men. It's a brand that we worked, we've worked with last year, testosterone supplement. How long can you convince somebody to keep taking a supplement when it takes four to six weeks to start feeling significantly different? So then you're looking at like, okay, now I've got to build this whole education series. Totally. So it is thinking about that process and what do people need. So, like a brand like Mars Men, you heavily invest in education up front because you want to drive product adoption. But if I have a really, really tasty like groom's gummy and my kids start taking it right away, I maybe don't worry about a ton of education. Yeah. I just want to make sure the kids are taking it. And then, oh, by the way, maybe a month or two from now, we have another product that works for you kind of.

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Trevor 13:20

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Survivorship Bias And Hidden Churn

Mark 14:09

Yeah, it seems like in the subscription world, it's a you're dealing with a lot of survivorship bias analysis. Yes. Right? Like it's not necessarily what the data that's showing up is telling you, but what is not showing up is telling you. Yeah. It's one of my favorite, favorite uh lessons, survivorship bias.

Trevor 14:28

Explain what you mean by that.

SPEAKER_00 14:29

So if you know, you know.

Trevor 14:32

Explain.

SPEAKER_00 14:33

Okay, so there's a really great story of this from World War II. Okay. So World War II, America's making all these bombers. That's one of the earliest ways we entered the war in Europe. And so what happens is these bombers would come back and they would have they basically would look at where all the bullet holes had hit or not. And so, like US High Command is looking at all these bullet holes and they're thinking, well, we need to heavily reinforce the armor for where these planes got bullets. But the mistake that is is in that is you're only seeing the example of people that survived. If that plane could take bullets in those areas and live, why would you reinforce that area? They survived. Right. The planes that didn't make it back got shot in areas that weren't shot. So, like the engine and other areas that planes that survived weren't getting shot in.

SPEAKER_01 15:21

Yeah.

SPEAKER_00 15:22

The planes that were getting down, that's where they were getting shot. So they needed to reinforce armor in the areas that the survivors weren't being hit in. So it's a very counterintuitive thought. But the idea is I'm only getting information from people that are willing to give me information, or I'm only getting information from people that last. I'm not collecting information from people that are failing early on. And so a great example of this would be if I have a subscription brand and I'm not calling customers or doing research to find out how their first five, seven days are going, I'm only finding out when they cancel.

Simple Ways To Learn Intent

Trevor 15:54

I want to get into this. Like what are some recommendations? Because I I think what could be cool about this episode is I think there's a lot of like actionable things that you can because all this makes sense. But I hear a lot of people when we talk to people on the subscription side, you'll have people who say, like, well, how do I find out why they don't why they're unsubscribing? Right. Like things that seem very basic, like, oh, you could just at the very end when somebody's canceling, you could every subscription tool has a post survey that is asking why. Right. But a lot of people just don't know where to start when it comes to diagnosing and figuring that out.

SPEAKER_00 16:32

So where do you want somebody one of the simplest things I would start for any brand, period, subscription or otherwise, is is looking at how you're offering pop-ups when you're collecting information on your site. And if you're not leveraging, like, so let's just use a simple example like turmeric, okay? Because that's a really popular or or maybe collagen, or I don't know, maybe do you guys have an example of a product you want to throw out there? Because I just use protein. Protein's a protein's a big one. Protein's a great one. So let's just say protein powder. We're selling protein powder. So on a pop, and and the interesting thing about protein is we all make assumptions about who takes it, right? But I right now, we could all probably list five, 10, 20 different reasons why people take protein powder. Yep. My wife takes it for a reason that's different than mine. Sure. Right. My kids, if they're gonna take it, it's because they're trying to trying to grow. So if I'm selling protein powder, on my site, when people come to my site, I want to use a pop-up to start identifying why they why they're interested in the product, right? So, like what brings you to our site today? Are I trying to lose weight? I'm trying to gain muscle, I'm trying to like, you know, recover from an injury, whatever those reasons are. Yeah. So that's that's a touch point. And then post-purchase, I want to ask similar questions again related to that, but I also might go a little bit deeper about what other protein products you have tried, what other protein products are you taking, right? If it's a protein powder, are you using that in a shake? Are you using that as a meal supplement? Right. So there's again, I'm not even getting that much deep into the nuance here, but that is actually much deeper than most brands go. Totally. And then I wanted the then at the point of cancellation, I'm asking questions around product usage too. Like if the that too much product question, yeah. I want to just break that. So very simple things of like, is it too much if it's too expensive? I actually want to know, did you not see enough value or did your budget change? Sure. Or you found a cheaper product. Yeah. If it's too much product, are you not using the product? Or or is it not the bang for the button? That's another thing. Right, exactly. So so then what happens is I start to find that, oh, like, okay, 50% of my buyers are saying that they're here to gain, they're trying to gain muscle. Okay. Well, when I'm onboarding people, now I have an opportunity to potentially educate them a little bit more about how our protein powder synthesizes for muscle creation.

SPEAKER_01 18:42

Yeah.

SPEAKER_00 18:42

Okay. And then if my product isn't any better than every other protein powder on the market at doing that, then I potentially have a product like defensibility risk.

SPEAKER_01 18:52

Sure.

SPEAKER_00 18:52

But once you just start to get into that, I can start to understand too like how many times other people are taking protein. Because protein is like some people take a shake every day.

SPEAKER_01 19:02

Yeah.

SPEAKER_00 19:02

Some people taking two shakes a day. Some people are using it every third day, but they're taking a gummy or they're taking a protein shake that's pre-made from Costco. So I if I can get a little bit of that information and then I'm just going to spend a little bit of time talking to people that buy.

SPEAKER_01 19:16

Yeah.

SPEAKER_00 19:16

As a founder, when you're early on, when you're a big brand, you can use software and customer service reps and all this stuff to do this. But just a simple like if I could talk to five clients a week, five customers a week about how they're using my product and how they're prepping it. So a great example of this is Space Goods. So we interviewed their brand recently and they talk, they do this coffee mushroom, mushroom coffee stuff. And they started finding out that people that made it a certain way had it just tasted better if you made it this way. And guess what? If you make, if you buy mushroom coffee and you've tried it a little before or not before, and it tastes funky, you're not going to ever drink it again. Sure. Yeah. If you can have a really great cup. So what they've started doing is after just a little bit of this research of figuring out how that works. And oh, by the way, these people over time last longer when you look at it in the data. Yeah, we're going to push really hard to get people to make this particular cup the first time. So that's what you start to learn is what people are doing with the product, what's not working. But the other piece would be expectations. A very simple one with say, like the Marsman testosterone example would be if you're finding people that are saying, like, hey, I'm trying to feel better right away, or I'm taking this for libido or something like that. Well, if they go to have sex with their partner like two days after buying the product and they have a bad experience, your product doesn't work. I'm gonna point the finger at you, yeah. As opposed to saying, hey, this is how much how how long it takes to feel this, what you should feel over time. Yeah. Um, those types of experiences, like that's how you start connecting those dots and getting into what people are doing with your product.

Trevor 20:52

Totally. Have you what have you found to be one of the best ways to communicate with um a customer? Like, are you feeling like brands need to give incentives to get them on the phone? What what can brands do to like if if they wanted to start today, do you just start making phone calls? Do you offer something? Do you send an email out and say, who's willing to talk to us? What do you do?

SPEAKER_00 21:14

I think you do a mix of both because every brand is a little bit different. But I do think like founder getting on the phone, like if anybody's giving you their phone number in Shopify, like you can call them personally. The laws around that are different than if you're using opting them into marketing messages. And I think almost everybody on the planet, if you just bought somebody, bought something and you get a call from the founder or the co-founder or the head of product, most of the time people are gonna be like, whoa. Yeah. Right? Like how I I I very, very rarely get a call like that. Right. So it's actually pretty rare. I get emails all the time asking me for feedback. Totally. And unless it's a brand I really, really care about or I hate for some reason, I'm not gonna spend. And that is again the problem is surveys is they either really, really love you or they really, really hate you. And you're missing out on everybody in between. But you can test a simple example. Examples is like, hey, we we're just I I I like actually Zamo for this. It's a Utah brand tech uh you can embed like a little quick little survey. So just click a couple things on the email. It doesn't load another form or another page to start getting more feedback. We're using that with Justin Credians right now. It's really effective.

Fixing Product Adoption In Week One

Trevor 22:18

Awesome. Um what are some of the what are some of the biggest mistakes you're seeing brands make uh when they're not playing offense, meaning they're not gathering that information? What what's what's the biggest thing you're noticing?

SPEAKER_00 22:35

Yeah, the biggest thing is you will probably miss out on like really obvious mistakes you're making in your program. Like I bought a uh sleep supplement a couple years ago. Um you know, I'd seen the founder's content, and I'm a big like I'm always trying to optimize sleep, staying asleep. And um, it was uh you make a cup of c of cocoa with this stuff, and there's nowhere on the bottle in the box about how long you should take it before bed. And so it's something just so so obvious. Is and you're missing out on that. Yeah. Um the other thing would just be looking at like what what does a first product experience look like for us? Is the best way to both be offensive but also educate at the same time. So an example uh that I love a brand I I love is uh called X Endurance. They sell like it helps you better with like endurance sports, CrossFit, ticket and stuff. Um their onboarding looks like don't take our product right away. Go do your big workout of the day or your big run of the week or whatever. Yeah, track it, time it, start taking our product, and then seven days later go do that same workout again. They're basically asking you to prove that their product works right away. Interesting. And so not every brand can do that drastic of a thing. But if it's a cup of cocoa, if it's matcha, if it's uh in if it's uh an electrolyte, whatever that is, like are there simple things that make product adoption like, you know, if it's something as simple as putting like, hey, as you're mixing this up, like make sure you go for like 30 seconds because that creates better dilution, which you will feel in your body, right? You know, things like that.

Trevor 24:13

Yeah, for sure. Yeah, I remember I remember um there was a company called uh, well, there still is a company called Seek. They were one of the very first brands in the clear protein. Um and at first there wasn't a lot of education around um when you would froth uh the the solution in water, the protein in water, it would have like almost two inches thick of like foam on the top for whatever reason. And if you just ingredients says the same thing, you know, clean simple eats like it's the same thing. And so they started to you would notice people in their comments on social media would talk about this. And so eventually what they did was they on the bottle, like on all of their bottles, it was like wait two minutes after because what happens is like you would drink it and it's it was so disgusting. But and you would think that that's just a natural thing that people would say, Oh, I'm not gonna drink this right now, right? You know, but I think people thought it was a problem, and so I think there's a one of the things that you've you're alluding to is I think that a lot of people nowadays think that a really good way to communicate with your audience is through things like text message and email, which it isn't a bad way, right? But when it comes to the like most important instructions, how important is it that that's physically in front of them?

SPEAKER_00 25:37

I'll go one step further because there's a Utah brand here, they're not necessarily around anymore, but Ruby, because they were in this green space. And so I I bought a packet and I went to make it and it was super clumpy and I was super like pissed. Yeah. And then as I'm like dumped it down the sink and I'm going to throw the package away, it says on the package, be sure to break it up before you make dump it into the cup because otherwise it'll clump. And and the irony there is it, they had it on the package, but I didn't see it. Yeah. And so my my particular belief here and where we see this effective is as you start to gather this, these, this information and you talk to customers, you start to realize what an ideal product experience might look like. Yeah. You need to lean into it on every channel. So, like the confirmation email when you get your order or you're welcoming somebody with a subscription should mention something as significant as that, as making that, like that seek issue. You should be getting uh on the package, but also a product insert for first orders. Like, how hard is it to trigger a first order um insert in Shopify now? Like it's the easiest thing in the world. Yeah. So now it's like, hey, here's how you make your perfect cup of clear protein. Right. And it's and that's in the instruction. Now wait two minutes for the foam to go down, right? And then now you've overcome one of your largest hurdles in product adoption, yeah, which is it's really easy to see that long term, but it's I sorry, I should say it's hard to see like that kind of impact like right away because your first month churn might not change very much. Sure. But your second month and your third month is going to be better because now people have started using it early on and now they like it and they use it regularly. Because the goal for any subscription brand should be is if I can create a subscriber out of the first seven to ten days. Totally. That's what you should be focusing on after you've sold it. Everything should be around that. Yeah, for sure. And how much product market fit matters.

Mark 27:30

Oh, I mean, when you're talking about this whole situation, this example, you go back to a Grunes example, right? So why was Groon successful? Is because with the gummies, you don't have any of that.

SPEAKER_00 27:43

Yeah. The Athletic Green paved the way for there to be a market and an appetite. And there's a lot of other brands, like there's Balance of Nature here in Utah and others like that. And then they roll out a gummy. Yeah. And think about what you'd give to a kid. Are you gonna mix up a drink for a kid? Like, come on. Like that that's what a lot of brands are trying to do. Yeah, you might.

Mark 28:03

And even for yourself. Right. I mean, it's just the convenience factor. So, like the product market fit side, I think there's a lot of people who think they have a subscription or they have a product that will work for a subscription without thinking about what's the actual product market fit equation and what's the product life cycle. Because every product has a life cycle in the market too. So you're left kind of piecing some of those things together. And it's like, hey, this might work over time, but you're gonna have to make significant changes to what your actual product is. Right. You know, I mean, we've seen that before. It's just just the way the product is presented matters. Absolutely. Especially with consumables.

Trevor 28:42

Yeah. I I just talked to I just talked to a brand yesterday, and they are they have a big retail presence and they're getting ready to launch online and it's a consumable. And so in our discussion, it was very like heavily around well, hey, hey, if if you want to make this work, right, right now you're you know, to purchase that product in stores, you're talking about$10 to$20.$10 to$20 is too little of an average order value online unless you can have somebody subscribing. And even then, you probably need it higher. And so this was a huge discussion when we're talking about the product market fit and the offer. They were offering somebody, you know, like in stores, you can buy them and test them out, and you're buying these things in packs of four or five, which is great for like a hey, I went to Harman's, I'm gonna test this out. This that was really good. I'll go buy more. It's almost kind of the way you would buy ice cream, right? Right. If I buy a pint of ice cream, that's gonna last me a couple of days, maybe a day if I'm sharing it with somebody, maybe. Or if you're watching a Hallmark movie, it's gone and an hour. If you're Mark, you're eating it twice a week, you know.

Mark 29:48

If it's me, it's three times a week.

Trevor 29:50

If it's Jenny's ice cream, you're he's going through two or three of those a week, you know. So not a joke. It it is the best ice cream. It is the best ice cream. I'll just say I I've had to cut back a little bit on my ice cream consumption. It is it is good. But you have to, I told them, I said four is not enough for a subscription product because if it is a suite, that doesn't mean someone's eating it daily, right? But four could be one day for one family.

Memberships That Create Real Value

SPEAKER_00 30:17

Snacks are just really, really hard because they're it is they're so different. People are so used to just picking them up when they need them. We're just now seeing a strong trend with like like uh you know, Walmart delivery or like you know, Uber Eats or something where you're like you're door dashing or having something delivered from you that's from a snack. But snacks can be really tough. Beverages are really, really hard. Yeah. Like because people are just used to one, the the cost to ship them makes it tricky too. But people are just used to like like same thing in our house. Like I've got so many, so much root beer in our fridge because we just kept drinking it and now nobody's drinking it. Yeah. And you know, same thing with snacks. I go to buy a giant other box of like mixed Chips Ahoy cookies, and my kids haven't touched it because they're just not into that right now. Yeah, my own preferences and everybody. So snacks are really hard. I think that it's often about like simplifying the offer so that you're not necessarily like if I'm gonna get somebody on a subscription, it should be like there's a really good reason to be on that, other than just discounting or convenience. It's like, hey, we have like often it might be a membership option, might be the better offers. Like, hey, if we have all these snacks, but we have these elite special snacks that are only available on subscription, or they're only available to subscribers, or they're only available as a gift to subscribe. I'm glad you segued into the membership model. Yeah. So memberships is what becomes really compelling for that because now instead of me worrying about how often you're consuming snacks, I can use memberships as a mechanism, as a leverage for you to come back to buy your snacks from us, meaning we'll give you 5% cash back, we'll give you$50 in store credit, we'll give you a if if you buy a hundred dollar membership, we'll give you this special elite snack that people talk about online that this is the only way to get that kind of thing. Or it's a limited run because we don't have a ton of them. You know, it's the Costco model.

unknown 32:04

Yep.

Mark 32:05

And and I think that's where a lot of people, when they when they're thinking about a subscription for their business, especially on the e-commerce side of things, um think about memberships too. You might not have a product that it makes sense to have a subscription in the sense that they're getting something every month. Sure. But maybe if you're a clothing brand and they have a hundred dollars subscription membership a year, well, you can get that lifetime value up by a hundred bucks, and then you can get their AOVs up by offering them these very limited edition or unique experiences that only they can get. So it's very limited launches, runs that only your VIPs are going to get.

Trevor 32:48

Special offers, if they spend a certain amount of money, they get a free gift with anything they buy.

Mark 32:52

Right.

Trevor 32:53

Yeah. Yep. For sure. Any uh I I'm interested in that membership. Any brand right now, because you you have a lot of people who want to start some sort of subscription. But like you said, if it's a if it's a clothing company or a shoe company or a jewelry company that just naturally doesn't make, you know, off the first of your head, the first top of your the top of your mind.

SPEAKER_00 33:16

Top of your mind.

Trevor 33:16

You're not thinking, I'm a subscription company, right? Um any examples of brands that have a cool membership program that people who are thinking about how they can implement that in their world can look at?

SPEAKER_00 33:29

Yeah, there's some interesting ones in fashion, but I'm not sure that that's maybe a little bit too of a rabbit hole. Um I there isn't theirs isn't around any, I don't think theirs is active anymore, but Little Milk Bar was doing this for a little while. So they sell desserts online. Uh-huh. So coming back to the snack question. Yeah. And they basically, and again, this comes to paying attention to your customers. They started listening to people loved all these drops and wanted to get early access to new recipes or things they were doing. And so they actually started a subscription. It was technically really more of a membership where you're paying like 150 bucks a month to get a new item they were creating that wasn't available on the rest of the site yet. And they would create a little video with the founder and the head chef, like how they had developed that. Like that was probably one of my favorite ones, but they ran out, they ran into issues with their making cakes. Like it's hard to do that at scale and keep quality the same. So they ran into some scale issues and they have a anyway. So that's probably one of my favorite ones in recent memory. That's a not necessarily a typical like subscription offering. But um I I'll point out a couple of brands to go look at. So, like X Endurance, I mentioned is one because they do both a subscription and a membership. So you can subscribe to their supplements and they also upsell you on a hundred dollar membership that gets you free shipping and store credit. But also, they've partnered with all these other endurance like apps and companies on you get discounts or access to like their whole strategy is just what value can we stack on the membership. Yeah. Right. That's their entire strategy for that. So I really like them. Um of course I'm spacing on the other one.

Trevor 35:02

Well, I mean, you have you have I mean, one I can think of like you've got like Amex that does stuff with Delta, like, you know, we like I'm a huge reserve card person because I it which is what 700 bucks a year. Right. But I get all of these small benefits from you know, Sky Club access to hotel credits to I know I just realized I get like an Uber Eats premium or something for free on the case.

SPEAKER_00 35:27

Exactly. I've had the car for like three years and I just opted in the back of the case.

Trevor 35:30

I think I get like Hulu for free or something like that. And so you can do these cool partnerships that are maybe even outside of your direct world. Um obviously Amex has such a good deal with Delta, so the Sky Club is a very natural thing.

SPEAKER_00 35:43

But I would just say with that, it's it's it's it's really all about paying attention to your customers. This comes back to the same question. Like, so X Endurance has launched that because they know they have endurance athletes, they know what they care about. And ironically, they launched a skincare. So they're a supplement company for a bunch of outdoor athletes. They launched a skincare brand, which normally would not be next up on your product development bingo card, but they were getting makes a lot of sense for endurance athletes. But if you think about how often, like, and so here's the irony is I hate buying random crap online. I'd rather go into the store a lot, which is irony for what the industry I work in, but I bought it because I I trust that brand so much because of how how much their supplements work. And again, I've done that test. Sure. I could tell you it changed how I performed. Yeah. I I bought it to try it. Now I'm onto a different skincare thing now at this point, but that's you know, more about consumer behavior and anything. So I think if you pay attention to what people need, what they're wanting, um, you know, brands we've worked with, like, you know, if you look at like Beehive Meals, like they're looking at trying to add more options to the menu, but different ways to make that. So like they've added different ways you can prep food. They've got like rubs or salts for like barbecuing and other things. So they're trying to listen to what their ideal customer is doing with their product and say, what more could we add? Or that would be a great offer. Oh, I'll remember that. The other brand that I love that does this really well is Carnivore Snacks. So they um are selling like basically like jerky that's made with just like beef and salt. Yeah. And so they have a one-time product, they have a subscription, but their membership has some of those same like cash back stuff. But again, this comes down to a constraint in the business. There are certain product lines that they can't get enough of to sell on the site to everybody. They might have a limited run of some like special Wagyu out of Wisconsin. They only have 10,000 units.

SPEAKER_01 37:29

Yeah.

SPEAKER_00 37:29

So guess what? Those units are only available to members.

SPEAKER_01 37:32

Really cool.

SPEAKER_00 37:33

And there's a member page or a member that can filter that. So, and that means so their numbers are like, hey, a subscriber is worth like two times as much as a one-time person.

SPEAKER_01 37:42

Yeah.

SPEAKER_00 37:43

A member is worth three times as much as a one-time person. So even more than a subscriber would be worth. And then you combine those two together and it's even bigger.

Trevor 37:51

Interesting, because I don't think a lot of subscription brands think that they should add a membership on top of it because oh, we already have it. Yeah.

Mark 38:02

And special launches.

SPEAKER_00 38:04

If you're charging for shipping, that's why you're charging for shipping for everything, then I would look at doing it because you could potentially get somebody's buying a few times a year to want to buy it for that. Totally is another one. But yeah, you're right. It there needs to be some kind of limited element. And this does come down to like the nature of the company, what they're releasing. Like if you're releasing products all the time and people love that you do that, then a membership option may might work for early releases. The the the irony of like, say, like little milk bars method is they were basically getting customers to pay them to give them product feedback.

SPEAKER_01 38:32

Yeah.

SPEAKER_00 38:33

Because if they loved the product, they would put it into the main line. If they didn't like it or had some mixed feedback, they wouldn't. Yeah. Sure. People were paying them for the privilege of doing that. That's cool.

Mark 38:43

The cool thing about membership is if you can make it work and if you have the right business for it, but it it's monetizing FOMO out of your most loyal cohort. So your most diehard fans, you get to monetize that FOMO. Yeah. In a way that makes sense for them, like you're adding a value for them and for you. So it makes sense, it makes it make more sense to offer that cohort unique things for your business as well.

SPEAKER_01 39:10

Yeah.

Mark 39:11

So it's not just you know, it's not just predatory from the business side of, oh, we're just trying to get more money. It actually allows your business to serve that group in a different way.

SPEAKER_00 39:21

Sure. Yeah. Which ultimately I think most brands should be thinking about how they can better serve their VIP customers because they're still making up the majority of the profit in their business.

Mark 39:29

Oh, 100%. Yeah, we uh we do that analysis a lot.

SPEAKER_01 39:33

Yeah.

Mark 39:34

And it's always shocking. It's never not shocking. I know.

Trevor 39:41

What's what's uh what's a couple things like for people who are listening that um your average subscription business that you talk to that isn't putting a lot of time and attention, if you had like two or three things you would say for them to focus on, what what would those be?

SPEAKER_00 40:01

Yeah, the first one, like I think is maybe the easiest one to understand is the billing reminder. Yeah. Um so most brands treat that as like a transactional email. They might be using it like default out of their subscription app. I would I would highly recommend pushing that into Clavio or whatever email service provider you're using. And the the m mistake brands are making is they'll say, like, hey, your order's about to renew, like click here to make changes. Yeah. And so you're basically just it's a bad psychology of I'm just prompting you to go cancel. Yeah. As opposed to like, let's say, the the protein powder example we were talking about. And I know that the majority of people coming in are looking at gains and muscle. Sure. So, you know, billing reminder email might look at something like, you know, hey, here's another month of gains coming your way. Like, remember to stay stay serious. Here's some tips. Hey, we we dropped this new article on some different workout strategies for muscle building. Like you can grab that here. Um, oh, hey, by the way, like we've also got a creatine you can add to your next order. And by the way, if you have too much product, which is a common issue with this, you can click right here to skip or delay your next order. And then I've got my manage my subscription button. Got it. So I'm leading with value and education. It's a huge real estate that most brands aren't leveraging. Yeah. Um, I would also argue that like people that aren't sending that, like you're missing out on a big opportunity to offer some of that control and upsells on that real estate. Like we run a lot of tests where the billing reminder does not sending the billing remote does not actually impact overall churn uh if it if done well.

Trevor 41:27

So that's well, if done well, it actually will like really help it because there are plenty of times where it it just solves the I have too much of, especially in the consumable space.

Mark 41:40

Instead of canceling. Instead of going to the portal where the cancel buttons.

Trevor 41:43

We we've been just ingredients subscribers for like two years, and we get we go through I want to say three bags of protein like every six weeks or something like that, you know, and then we get some electrolytes and stuff like that. And uh every now and then, if we happen to if I'm lifting a little bit more, and so I go from one shake a day to two shakes a day, like there will be a time where I don't have enough. Right. And so I'll go to the store and just pick it up. Right. And then over like, you know, six months of that happening a couple different times, maybe, you know, all of a sudden now I have too much. Right. And so we just did this the other day where we were able to skip it for like four weeks. Yep. And versus my wife just being like, hey, you've just been buying this at the store. Should I just cancel this? And and then potentially risk us now moving into something else, you know, and and seeing, oh, well, Clean Simple Eats just had a deal and their protein powders are very similar. I'm gonna go buy theirs now. Yeah.

SPEAKER_00 42:46

So that building reminder is kind of the first place. I mentioned the cancel flow. Like, try just breaking out some of those reasons. Like to me, cancel flow stuff is more about the is creating a founder video. So uh we see this be really, really compelling where you as a founder just take one minute to explain, like, hey, here's the reason. You know, the reason we started this company was we just really wanted to put a higher quality of protein in the market. We care about you as a subscriber. So if you have any issues, like, you know, reach out to support, or you can pick one of these reasons. We'd love we know we care about you. Something just as simple as that, shot on an iPhone, again, one minute. Like we see that save rates on brands go from like a 5% cancel save rate to like 15% just by adding a video. So just something simple like that would be the second thing. And then the third one is Are you saying that a human touch matters? Yeah, it's shocking. Especially considering the the ones that that will kill you is when it's a founder-led brand who's in like all of their ads on their homepage, on their product page, in their emails, all that stuff. And then their cancel flow is like, tell us why you canceled. Yeah. And I'm like, wait, wait, you missed the last step. Like they bought because of this person. Why isn't that person at the last touch point to remind them why they bought? Um interesting. But but the last thing is more of like if you're thinking like long term, if you're thinking about as You're a brand, you're an average subscription brand, and you want to know what the biggest muscle to build in subscriptions is your growth tactics. It's how you're offering subscriptions. So looking at offer testing, whether you're doing bulk options or free gifts, look at all the other brands out there that are doing to get ideas. I just drop this into Claude and just tell it that here's 20 brands. I want you to go look at what they're doing and give me feedback and just look at how you can get better at that. Because if you can get better at offer testing, you'll start to acquire the right subscribers that will naturally want your product more. Just as a very simple example of if I'm selling protein powder and I run a test where I give a free bag of creatine to people that buy like two bags on a subscription. Well, anybody that's interested in protein and creatine and they're building muscle is a more ideal customer than just some random person buying a bag of protein, right? So just something simple as that will actually get you they spend more, conversion rates go up. Totally. And your retention improves.

Trevor 45:01

100%. Have you seen uh one brand that's doing this really well right now? It's it's kind of like a newer brand that they're like on this massive surge is IM8, David Beckham's. No. Uh uh. You'll have to look at you'll have to look at them. Like one I think I've read about his like one, they're massively uh going after like athletes. Okay. So you've got like for I was at Indian Wells, which is a big tennis tournament in Palm Springs, and the number one woman in the world, her whole entire team was decked out in IM8. So they're doing that, number one. And then number two, the their first-time profitability thing that they're trying to accomplish of getting people to spend more money um with the amount of gifts and things that they're doing is incredible. And they're they're not, it's fun to watch. And I've watched I I I just keep track of that offer because it changes because they're doing these. Yep. But I am eight's a really good one. It's I am and then I am the letter and then the the number eight.com. So it's it's a good one. That is cool. Yeah, you'll have to check it out.

SPEAKER_00 45:56

Well, dude, thank you so much. Where can people find you? Yeah, big on LinkedIn, uh Matthew Holman, um, or you can learn more at thesubscriptiondoc.com. I actually have a ton of free resources there with like email ebooks, uh, actually a script for that founder video I mentioned. You can drop into AI with your brand and rewrite it for you. So yeah, that's the best place. Amazing, dude.

Trevor 46:15

Thank you so much, man. Appreciate it. And thank you everybody for listening. And we will see you guys uh next week.

unknown 46:20

Awesome.

Trevor 46:20

Thanks, guys. I always say we'll see next week, but it's actually every other week now.

Mark 46:24

So we'll see you next time. Bi-weekly. Yeah. Just confusing.

Trevor 46:28

So confusing. Thanks, brother. Thank you for listening to the Unstoppable Marketer Podcast. If there's a brand campaign, strategy, or marketing tactic that you want us to review, please DM me at the Trevor Crump on Instagram or TikTok or at the Unstoppable Marketer Podcast. And of course, if you got value from this episode or if you like it whatsoever, please make sure you're subscribing, you're liking, you're following, and for sure go leave us a review to let us know that we're doing a good job. We will see you guys next time.