Happy Sunday!
I hope you’re feeling relaxed, hydrated, and ready to get into another Sunday newsletter today. If you’re new here, here’s how we like to set the mood for the Sunday newsletters… get a cozy spot on the couch, kick your feet up, grab a beverage of your choice (perhaps a Via Carota Negroni?), and pull that weighted blanket over your lap. Today we’re going to talk about subscriptions, and my goal is for you to get 1 or 2 nuggets to apply in your own business.
Before we get into that, did you check out this past week’s Limited Supply episode? Moiz and I invited Mary Berry on Limited Supply to talk about what it’s like running a contract manufacturer in the personal care category. She had some great stories and insights. When Native was growing, her company did all the production until the sale to P&G. Check it out on Apple Podcasts or Spotify. We did this one in person, so the vibes are immaculate.
Also, if you were forwarded this newsletter, do me a favor and sign up for yourself: click here to subscribe.
This past week, I was in Los Angeles to emcee the GROW conference, which was a ton of fun. If you have never been to a GROW event and you have a brand, I highly recommend going in the future. They do the best job of filtering the group to really be a group of eclectic founders, CMOs, and executives. With sponsors, they do the same, which is amazing, too — the vendors with booths have been highly vetted and solely focus on teaching you things. The organizers did an awesome job. But that’s not the only reason it was an exciting week…
One of the companies I invested in is raising a heavy growth round, which means a detailed business performance deck. Another is gearing up to do the same but provided their stats from 2022 in detail. There are few things I love more than going through growth-stage investment decks for consumer brands; you get so many amazing learnings from the deck. In this deck, the biggest takeaway for this brand that mainly sells a consumable product was the power of the subscription business they have built. So with that said, I wanted to put together an email around subscription, with a focus on a few areas:
- The type of subscription business
- The offer & its benefits
- Subscriber retention
The Type of Subscription Business
Your iPhone is probably being paid on a subscription model. Just because we’re talking about subscriptions doesn’t mean you must sell a consumable! If you have a Soho House membership, that’s also a subscription. These are the most common types of subscription businesses I see:
- You sell a consumable product. Think coffee, protein bars, pre-workout powder, Hint, etc. It’s something that is consumed on a regular basis, and a subscription makes sense. I wouldn’t put frozen pizza or a bag of chips here because it’s not routine (Unless it is a routine for you, in which case… Congrats and enjoy!)
- You sell something that requires a scheduled replenishment. This could be filters for your Jolie shower head, a Canopy humidifier, or something similar.
- You sell a membership subscription with its own perks. These can be things like 20% off each new order, getting free shipping every time, or getting access to new products weeks before non-subscribers do.
Even if you sell apparel, you can build a subscription with the third option. The subscription model gives you the ability to drive cheap revenue. I call it “cheap” because they’re not paying a CPO tax (cost per order tax) to get these people to purchase again.
The Offer
What’s in it for the consumer? Generally, this is done in 1 or 2 ways:
- Hint gives you 17% off (weird number). Black Wolf Nation gives you 25% off. Olipop gives you 15% off. Amazon usually gives 5% or 10%.
- Free shipping. Always-on 20% discount. Access to new products 7 days before everyone else. Mystery items from the catalog with every order. Exclusive content (great for celebrity brands). Faster customer support with a dedicated number. Access to subscriber-only SKUs (great for design/color or scent variants) or sales.
Just because you think it is “convenient” to have your product on a scheduled delivery doesn’t mean that is how most people would perceive that. You’re drinking your own Kool-Aid if you truly believe subscription should be an “obvious” choice. You need to have benefits that they can’t get on Amazon from either your exact product or a close competitor.
Subscriber Retention
Just like any customer, you want to retain your subscribers.
This brand was able to 5x its subscriber base in 1 year (they started with a 4-digit subscriber count). For every customer, they make about 2x their CPA in customer LTV. But for subscribers, that’s closer to 5x LTV against the CPA. So, it’s important to keep these subscribers happy. Here are a few ways to do that well:
- Send surveys often. Whether you send them by email or text or send surveys via Instagram DMs to everyone who tags you, make sure you’re constantly listening. You’ll immediately hear all the things it would take to extend the LTV, directly from your subscribers.
- Use a great subscription platform. Subscription platforms are all built on top of Stripe Payments, which is what holds the actual payment token for every subscriber. Stripe is your gasoline. The engine on top is the subscription app you choose. After seeing the capabilities of Stay.ai’s platform for their churn prevention, growth-marketer-friendly tools/insights, and overall ease of the platform, I fully recommend it.
- Innovate with content. The best way to keep your customers retained is stay top of mind. Continue being the brand someone was extremely excited about when they first subscribed. You have to build the brand and lifestyle around the brand.
Ok, what else did I miss? Was there a nugget that was helpful for you? I hope so. On to some fun stuff…
Vendor of the Week:
Retention.com — The secret tool that all the biggest performance-oriented brands use to increase their overall ad efficiency.
This past week at GROW LA, one tool was on everyone’s mind — Retention.com. The way it works, it sounds like something that you’d get by rubbing a magical DTC genie’s lamp. They have a pixel that sits on your site, and as site visitors come and go, Retention.com’s pixel matches those site visitors with people in a database, and loads their emails into a welcome series email flow.
I know, it sounds crazy, but it’s fully legal and works. Brands like Tonal, Warby Parker, Dr. Squatch, Kitsch, and others all use it — and they integrate directly into Klaviyo and 50+ other partners. At GROW, Dr Squatch mentioned they invested $20k into the software, and through capturing and setting up an optimized welcome flow, generated an incremental $1.2M in revenue. Most of their merchants (at a high traffic volume) see the same result.
If you want to see if your store is a good fit, click here and sign up for a demo!
LP of the Week:
This week’s LP of the Week is for one of the buzzier brands that don’t give you a buzz — Ritual, a zero-proof spirit. In this instance, they bought a pack of pages from HOOX and for this page, it was about how we cater the product to expecting mothers who still want a cocktail, without the hard alcohol.
Click this link and checkout the shoppable listicle here.
I’m excited to see how this page does, since I wrote the copy for it. If you’re ready to get a landing page for yourself, please book a call with us at HOOX.
Quick reminder: when you buy a HOOX landing page, we do the research, strategy, wireframe, copy, design, and development. Oh, and then we put the page in your Unbounce or Shopify account, so you can make as many duplicates/variations as you’d like.
That's all for this week
I hope today’s email was valuable for you. I’m excited to be back in NYC (for a week), before going to speak at eCommerce Fuel in San Diego. Later this year I’ll be at OAAA (Out of Home Advertising Association of America), and VidCon, amongst some others. I hope to continue meeting you all who read this newsletter!
Until next Sunday, I hope that you have an amazing week. Get those 9 hours of sleep. Get a good sweat in. I’ll see you in a week!