Happy Sunday!
I hope you're enjoying your Sunday. If you were in New York this past week for GROW, you know how exhausting this past week has been! So hopefully you're sitting on your couch, feet up, lights not too bright, and beverage in your hand — possibly an Olipop Vintage Cola.
This past week, Moiz and I dropped the first episode of our podcast, Limited Supply, sponsored by Tapcart! On most Saturdays, we go workout and then end up talking shop for a couple of hours, so we figured, these are really fun conversations others might enjoy listening to and decided to just record our hang sessions.
If you want to listen to the first episode, click here to listen to Limited Supply on Spotify. I believe we are planning to drop an episode every Wednesday. Also a big shoutout to the Workweek team that's producing this podcast behind the scenes — they are beasts!
Another amazing piece of content to consume, which Moiz and I plan to discuss on the pod, is the 2022 eCommerce Trends Report by Andrew Youderian and the eCommerce Fuel team. Lots of interesting insights as well as links to studies and other reports within it. It'll take a little bit to read it, but as I read it, I got really excited and fired up, so hopefully, you do too!
Alright, today, I want to talk about subscriptions. I have a bunch of notes I've scratched up, and I'm going to put them here with some additional thoughts to add color. If there's something you think should be added here, shoot me a reply!
Some interesting stats about subscriptions:
On average, 30% of revenue is driven from subscriptions for brands that offer it — that's huge. It swings depending on the vertical of the brand and the stickiness of the product, but knowing every month that you can rely on 30% or 40% of your revenue to just come in is really nice.
Brands offering subscriptions grew 26% faster and were 14% more profitable than those that didn’t. It makes total sense. You have a growing, engaged community of people who love their subscription, and naturally, you get all the ingredients that help you grow faster: more reviews, more word of mouth, more content, more social proof, etc.
Only 17.5% of brands generated any revenue from subscription offerings. This means that over 80% of brands don't offer any kind of subscription at all. I think that number of brands with subscription ON should be a lot higher, and below, I'll get into how/what you can build a subscription if you don't sell something like Long Wknd (highly consumable).
Reasons a brand should offer subscriptions:
Predictable revenue. There is no truer statement as to why a subscription exists. The #1 reason people love subscriptions is you know exactly how much money you already have coming in the next month. It's money you don't even have to think about, you just know it's on its way!
The lifestyle around the product fits into a routine. These are brands like Ritual, Pill Club, and Long Wknd. Telemedicine, as well as products that fit a timeline, are usually in this category. If it doesn't fit into an attached or required routine, then products might fit here that customers want to make sure they're not ever out of stock on.
New data set of high LTV customers. If you're a data nerd, there is a lot of high-quality data to extract by looking at subscriber behavior. The subscriber base is also a great data set for product launches, product sampling, surveying, etc. They are your "high rollers", so as long as you build a brand that keeps high rollers happy, you are winning.
Customer convenience. Sometimes you just don't want to carry your heavy water bottles from the shelf to the cart to the car to the door, you just want them to arrive.
Community building. Your subscribers are generally also your most engaged customers, and there's a high chance they have a lot in common with each other. As a brand, facilitating a community for others to connect is the best social proof for any new customers.
The types of brands that make sense for subscriptions:
Consumable products. This is Ollie pet food, Long Wknd deodorant, HelloFresh meal kits, or Olipop Vintage Cola. If there's a routine consumption habit, you can most likely offer a meaningful subscription.
Products within routine maintenance. These can be anything from AC filters to Canopy (with the replacement filter) or Jolie's shower head. It's a lot more convenient to just get a filter every 3 months, than it is to go to a store or go online to do it, and remember to actually do it, too!
Membership of benefits. These are more digital subscriptions — think Amazon Prime, Blank Street Coffee, Founders Card, etc. As a subscriber, you unlock a set of benefits ($1/shot coffee drinks, free 2-day shipping, lower hotel rates, airport lounge access, etc). I think many of these will begin testing NFT technology integration soon.
Telemedicine. With medical companies, there is so much opportunity to disrupt the doctor's office. The Pill Club, Maximus Tribe, Roman, Hims, Rory, Keeps, One Medical, Forward, Tend, etc. all make sense for subscription as there are generally tied to a course (sequence of pre-set steps). The companies here win with better content and a better experience.
Smart add-ons for subscription businesses:
Loyalty program. Someone is already showing you they are going the extra mile with you, not just buying once. Reward them! A good chunk of people will never care for your loyalty program, but it's an easy add-on if you already have a subscription going. It's your own form of chuck-e-cheese coins.
Surprise & delight program. If you understand when a customer is likely to churn, and you're able to implement a surprise and delight program to sustain their membership, you can reduce churn significantly. Check out the "At Risk of Leaving" part of this article.
Exclusive subscriber-only benefits. This is an easy one and a win-win-win. Brand A gets to offer something exclusive to its customers. Customers of Brand A get a discount to try something adjacent or complementary to Brand A. Brand B gets customers for the cost of a 20% discount on gross revenue. No one is against giving you a discount for their brand, to go to your whole list — more people need to do this.
Easy misses for subscription brands:
Bad customer portal or backend. If it's hard for a customer to skip shipments, swap products, or cancel their subscription without getting frustrated, you're likely churning higher than you need to be, your customer service inbox is getting full, and you're exposing yourself to chargebacks.
Bad reporting. If you're doing reporting the same way you were before a subscription program, you're going to miss key insights. You should at least be segmenting reporting by new customers vs all one-time purchasers vs subscribers. Highly recommend Tydo's cohort tools (it's free).
Not diving into subscriber acquisition data. If you tag your customers right on the way in, you should be able to understand where your best subscribers came from, down to the ad, so you can be sure to keep those insights in mind going forward. Also building out a sophisticated churn survey.
Treating subscribers like an excel sheet. Your subscribers are not just a recurring revenue stream for you! Go out of your way to keep them happy with access, content, surprises, etc.
Non-branded emails and texts. If you're using Shopify, there's a good chance your subscription platform sends the emails + texts for upcoming subscriptions. Make sure it's rebranded and designed to fit the rest of your brand.
Trying to get customers to subscribe right away. Most likely, your best subscribers are NOT going to be the ones that subscribed on the first purchase. In my experience, it's the 2nd or 3rd purchase. Don't force people into a subscription, especially by tricking them. You'll have a terrible BBB rating and get punished by the ad platforms, too.
Being "okay" with churn because it's "normal". Just because the industry average for churn in your category is X%, don't let yourself just be at that average. Your churn might be a bi-product of a broken pipe, not because it's normal.
Ok, that's all I got on subscriptions for today. On to some fun stuff...
Vendor of the Week:
Smartrr — The subscription platform built for Shopify merchants, with an understanding of why legacy subscription software absolutely sucks.
When Smartrr was being built in the early days, I was a huge fan right away because they focused on all the features that legacy subscription companies (who must not be named) have failed to do — permalinks for landing pages, easy product swapping, and upselling, better analytics, etc.
For brands like Starface, Jolie, Daring Foods, and OUAI, merchants have seen increased success on Smartrr, compared to being on the-platform-that-must-not-be-named, like:
100% subscription revenue growth in <90 days
70% decrease in customer support tickets
5x more sales over the subscriber's lifetime
94% avg monthly subscriber retention rate
Most of this is a factor of how good the customer portal is, as well as the merchant analytics (to let the merchant focus on better retention efforts).
Smartrr is also launching its own version of a loyalty program, to build on top of your best subscribers. You'll never have to go through a 6-month integration process with the-large-loyalty-program-company-who-must-not-be-named again!
If you want to get the first look at Smartrr, click the Get a Demo button on this special link. Tell them Nik sent you and you don't want the waitlist.
If you get on board, you can have an entire subscription program set up in less than an hour — on the PDP, communications emails, benefits, etc.
Get more out of your customers, and get first looks of Smartrr's new platform today!
Jobs of the Week:
Sharma Brands — UX/UI Designer
Chamberlain Coffee — Marketing Coordinator
Homestead — Senior Paid Social Media Buyer
And if you're a brand that just needs someone for a short period of time, check out MarketerHire!
Question of the Week:
How do you currently plan ahead with inventory?
I ask out of my own curiosity because I think it's the hardest thing to do, and very costly. Now we use Cogsy (you can try it free), and it has made the sell-out periods a lot shorter.
Brand of the Week:
Update — An incredibly tasty new energy drink with an Apple-esque site and brand
Daniel Solomons has been creating Update for the last couple of years, and it finally launched recently. The website reminds me of Apple's website as you scroll, too.
Most energy drinks are made out of caffeine. Update is made from a proprietary ingredient called, Paraxanthine. It is isolated and refined from the caffeine compound, so you get all the benefits of caffeine without the side effects.
I tried it, and have been testing the product as it's evolved, and it's amazing.
I highly recommend trying the product at DrinkUpdate.com!
That's all for this week
I hope this newsletter of notes was helpful! If you have feedback, please send it along!
Get those 9 hours of sleep tonight, stay hydrated, get a sweat in, and have the best upcoming week ever. 😊