On this episode of Subscription Box Answers, I am sitting down with Assean Sheikh (The former CEO of Flavourly).
We're diving into the story behind Flavourly and discussing some very powerful marketing strategies to grow your subscription box business.
Assean's going to share how Flavourly's customer base skyrocketed, pulling in an incredible 50,000 to 100,000 customers. The secret? A smart mix of print media and direct response marketing. It's not something you hear about every day, especially in our digital world, but it's a very scalable channel.
He'll also talk about the challenges and differences between print and digital advertising. It’s not all smooth sailing, but Assean’s got some great tips on how to make it work.
So, tune in to hear Assean break down everything from testing the waters to fully running with print media. Whether you're just starting out or you want to put your foot down and scale, this episode is packed with insights you can use.
If you have a question you want answered on the show, then head over to www.SubscriptionBoxResources.com and join the free facebook group and post it there.
On this episode of Subscription Box Answers, I am sitting down with Assean Sheikh (The former CEO of Flavourly).
We're diving into the story behind Flavourly and discussing some very powerful marketing strategies to grow your subscription box business.
Assean's going to share how Flavourly's customer base skyrocketed, pulling in an incredible 50,000 to 100,000 customers. The secret? A smart mix of print media and direct response marketing. It's not something you hear about every day, especially in our digital world, but it's a very scalable channel.
He'll also talk about the challenges and differences between print and digital advertising. It’s not all smooth sailing, but Assean’s got some great tips on how to make it work.
So, tune in to hear Assean break down everything from testing the waters to fully running with print media. Whether you're just starting out or you want to put your foot down and scale, this episode is packed with insights you can use.
If you have a question you want answered on the show, then head over to www.SubscriptionBoxResources.com and join the free facebook group and post it there.
Welcome to Subscription Box Answers with your host, liam Brennan. You're no rubbish, no crap. Straight to the point podcast with real, actionable tips, real strategies and insights from the industry which will help you start and grow your own successful subscription box business. You ask the question, you ask the questions, liam gives the answers. It's as simple as that.
Speaker 2:Hi everybody and welcome back to another episode of Subscription Box Answers. I hope you're having a really good week. On today's episode, I have the pleasure of sitting down with Essine Sheik, who's the former CEO of FlavorVy and he's now doing some consulting for direct-to-consumer brands.
Speaker 3:How are?
Speaker 2:you.
Speaker 3:Hey Liam, Thanks for having me on. I am doing great Thanks.
Speaker 2:Thanks very much for jumping on. I really appreciate you taking time out of your day to come on and share your knowledge with the listeners. Well, you should definitely pay attention to what we're going to cover today, because this man has been involved in the direct-to-consumer subscription space for a very long time. First of all, what is FlavorVy, or where did the idea of FlavorVy come from?
Speaker 3:Yeah, flavorvy was one of the UK's leading craft beer retailers, most formerly known as a craft beer discovery club. Laterally in the business, we were mostly known for beer bundles, so one-off, transactional box of beer. Where the business came from is I got introduced to my co-founder at the time, who was running a food club. We both really liked the idea of subscription businesses. We liked the idea of festivals. We're both foodies, really into food and really into our drinks and that sort of thing. I was helping him with the food subscription club and we thought wouldn't it be great if we could have a beer festival in the box? There's so many food festivals, we can't get them all. There's lots of beer festivals, we can't get them all. Wouldn't it be quite cool if we could bring the beer festival to you in a box? That was where really the idea for FlavorVy Craft Beer Club was born. We're approaching like Father's Day in 2014 and we thought it would be a great time to launch the product, a great gifting product. That's where the idea came from and where the business came from.
Speaker 3:At that time back then, craft Beer as a category was very early in its development, but growing really fast. When we looked at the US. It exploded over there In popularity. There was lots of breweries that had sprung up and lots of brewers doing really interesting things with beers. There was a lack of access for the consumer Back then. There was very limited choice in the supermarket. To get really good craft beer you had to go to a festival or a specialty shop. That's where the idea came from was to curate and pick the best 8 or 10 beers each month and deliver it to the consumer based on their preferences. They were more interested in a mix box or a light box with lighter style beers or a dark box with darker style beers. It feels like a very, very long time ago.
Speaker 2:Really good idea as well, especially back then. It was so original. I remember at one point FlavorVy and you mentioned that briefly there was a filled subscription. What made you shift to beer?
Speaker 3:When we launched. We originally launched the Beer Club for Father's Day 2014. Pretty quickly, the response by consumers was enormous. So very, very quickly, the Beer Club overtook and outgrew the food subscription club. We're recruiting a lot more customers. The acquisition cost is very low and the retention was very good. We felt like we're really onto something in terms of there's a lot of consumer demand here. We're solving a really big problem. That's not to say the food club wasn't doing well. It was really just we were a very small team and we had to focus. Just, given the strength of attraction from the beer proposition, we decided to focus fully on the beer. There was a product that we really enjoyed. It was a really exciting time in the industry. That was the focus. That's when we made the decision to start focus on beer.
Speaker 2:I remember Ryan appeared on Dragons Den UK and he got a fair few offers on the show and we're actually we're going on Dragons Den Ireland. I remember us getting some advice from him around the time. It was very helpful. But you did something very smart the night the show went out to raise money through crowdfunding, I believe. Do you want to speak a bit about that?
Speaker 3:Yeah, yeah, of course. So yeah, dragons Den like feels like again, feels like the lifetime ago. So Ryan did her pitch. I remember like staying up super late to write the pitch and practice with him. So, yeah, it was a was a really interesting and fun time.
Speaker 3:And an interesting story is we piled up quite a lot of stock in anticipation of like going live, because we had been told from like other brands that had been on the show that you know you can generate quite a big spike in sales. So we sort of invested like a lot of capital in building stock and you know, for the big sales day and we got a call shortly before we were supposed to be aired that we're going to be pulled because one of our competitors had complained about our service levels, which was, which was very bogus. So some very nervous phone calls with the BBC producer to convince them like our service was really good and you know that we shouldn't be pulled, and so thankfully, you know, the last minute we we managed to get back on air. So that was a. That's something that a lot of people don't really know about, but that was very, yeah, very, very, very nervous moment for us, especially working around the warehouse with huge amounts of stock In terms like the, the Dragons Den pitch. So Ryan got quite a few offers, one of which was a job offer from Kelly, offered them, actually offered him a job, which he had to play with the client, which I'm happy to decline, and at the time, like we, we there was a bit of a lag between like doing the pitch and then actually that being aired.
Speaker 3:And so when we're going to be aired, we we decided to do a little crowdfund. We looked at the success of other consumer facing businesses which had enabled their customer base to like, invest and support the growth of the business, and so we felt like we would like to do something similar and so we partnered with CrowdCube to launch a crowdfund campaign. And we sort of launched a campaign like to coincide with the airing of Dragon's Den, and so that's what we did. I believe that we were might have been the first or one of the first that sort of put our, you know, crowdfund campaign live around the time of like being aired. And you know, obviously when you're aired on Dragon's Den, lots of consumers will go to the website, you know, during the break or whatnot, and just you know, sort of check it out, check the product out, and we had the crowdfund campaign live, and so that worked.
Speaker 3:That was quite well. That worked quite well for us Really sort of helped support the campaign that were running. And you know, we did generate really good sales. So we had, like, all of our friends and family over for the airing and ordered some pizzas, and you know that sort of thing thing had the whole team, had the whole team there. So yeah, quite long time ago, but it was quite an interesting, quite an interesting time actually.
Speaker 2:That's genius putting the crowd cube or the crowdfund and site live on your homepage when you actually get that exposure. I never realized that. So somebody actually tried to get you pulled before it even went out. Yeah.
Speaker 3:Yeah, yeah. All we were told is that we've had a complaint and we sort of like I used to do so. It was like a complaint from a competitor. We don't actually know who it was to this day. To this day the producer wouldn't tell us. But we, you know, thankfully ran down a great job of like convincing the producer that you know our service levels were great. There was nothing to worry about. Our understanding was that the competitor had sort of said, like we've got really bad service levels and it would be reputationally bad for the Dragon Stands, like from what a brand that couldn't handle the sales sort of thing. You know if there was a sales bike. So yeah, that was. Yeah, it's quite a big thing. And you know, we'd invested like quite a lot of the resources in the company, building building stock, just in case we did get a big sales increase. So yeah, very scary couple of days for us.
Speaker 2:I'd say so 100%. That's crazy. I never even knew that. It just goes to show like what kind of people are out there. If they'd actually go out of their way to try and get you pulled off and TV, that would be like actually heartbreaking. We were on the Irish one and it's way smaller than the UK one, and they said they were considering pulling it because we accepted offers on the TV. But we turned them down before I actually went live because the offer was quite poor and the Dragon who invested at the time and apparently could have pulled it if he wanted to produce or said, but thankfully it never happened.
Speaker 3:Yeah.
Speaker 3:So for us we had a number of offers and the reason we didn't accept the offers was we actually just wanted like some FaceTime from the Dragons and back then we were sort of dealing with like the portfolio manager.
Speaker 3:So like on the show, Ryan agreed to deal with peers and like it was a sort of joint deal and yeah, we just we'd have preferred a time more than anything, because at that point we didn't really weren't desperate to raise investment and the terms weren't great. But I think that's. I think you go into the show, expect and like you won't get the best terms. But if you know what you're looking to get out of the show, like you know, if you really do want to get a dragon on board and get their expertise and you know their network and their brand, then there's a price for that and it's probably a lower valuation than you would like. I think for us we would have liked to be able to access like more FaceTime from from the Dragons, which which wasn't possible. And you know, their portfolio manager explained to us like they've just got so many, like they've got a huge number of investments, and if they gave every investee like an hour a week, sort of thing like the that would be their entire day job which.
Speaker 3:I guess makes sense when you put it into those terms. And so you know we, we decided like it wasn't for us then, but like on the, on the sort of best, most like amicable way, like you know we, it's just not for us because we really want more FaceTime, sort of thing.
Speaker 2:Yeah, yeah. Now I understand completely. It makes sense, like with the amount of investments that I'll show on the show, they literally just be doing that all day, every day. So it definitely, yeah, yeah, definitely makes sense. Now, in regards to customer acquisition and I think a lot of people I can't find this very interesting because a lot of people listening are based in the US. I mean, all the majority of the audience is in the US and this isn't something that happens so often in the US, but you managed to recruit a ridiculous amount of subscribers like a crazy amount of subscribers for flavorfully true direct response and insert marketing. Do you want to talk about that? Yeah, of course, yeah.
Speaker 3:So we recruited a combination of subscription and also sort of pay as you go transactional customers and the pay as you go transactional customers. We would then look to try and cross sell them into subscription and then vice versa. When a subscription customer canceled and we couldn't reactivate them, then we would enable them to buy one off. The way that we approached, I guess like direct response marketing so you sort of mentioned inserts we did quite a lot of, we've done quite a lot of like channels, so offline media and online media, and most of the activity that we, the way we approached like almost everything, was like through a direct response lens. So for us, like direct response means like the objective of the campaign is to generate sales and it's very. You'll hear people talking about funnels like upper, middle, bottom of funnel. The sort of thing that we do, we focused on is very bottom of the funnel and basically it's the way I think about it. It's like it's the balance between like harvesting existing demand and like needing to generate demand in the first place. And so, given that we were in a market which was like growing really fast, lots of new breweries, there was lots of noise around like craft beer, that sort of thing. There was a lot of increasing levels of awareness around, like craft beer, what it is, that sort of thing. And so, like, direct response for us, like harvesting that demand works very well. So direct response, like, typically objective is to generate a sale, an immediate sale or as many sales as possible. And the way that we would accomplish that is we would focus on like a really strong like introductory offer. So it's about, you know, giving the customer very good offer to de-risk the proposition for them initially. So we might be, you know, it might be a new brand you've not heard of or new concept, and so the way we got them to sort of take a you know, de-risk it for them was a very aggressive like introductory offer. And we tested lots of offers, like dozens and dozens of offers, and then we would then the conversion funnel. We did a lot of work on conversion funnel. So, you know, sending a customer from like, from direct response, paid media to a landing page work best for us. We also sent them to the home page and various, you know, various other user journeys. But ultimately for us, going from paid media to a landing page which replicated the paid medium is very, very focused on conversion work work to best. So we did. We operated like through lots of different channels. We tested lots of introductory offers, lots of creatives and the customer conversion process.
Speaker 3:And one of the channels you touched on was within, that is, insert media. And so like inserts are they're effectively leaflets and there can be different formats of leaflet. So leaflets are sort of like a flat somebody will call it like a flyer or you know sort of piece of paper which is can be one print on one side or print on both sides. Typically, you know, a five format is very common, but you can also have like DL, you can also have like different thickness of paper, different finishes, you know mac loss, you can also have biglets. So there's there's different, there's different formats of the actual, of the actual insert, and typically where you would put these inserts is there's a couple of different places you can put them, but we would I would typically think of them as like this product dispatch, which is to say that you put the insert inside like the an order being dispatched from another brand. So it might be another retailer, maybe a bigger retailer, but effectively like there is a brand who sold something to a consumer and inside their delivery to the consumer, inside the box who would put your, put your insert.
Speaker 3:You then also have things like magazine subscription, which is, you know, I'm going to give a few examples but let's say, somebody subscribed to like Top Gear magazine or or a good food or that sort of thing, where you can then have an insert, insert into the magazine which would be posted out to the, to the subscribers of that magazine. And then finally, you've got things like. You've got things like newsstand, which is like if you get into like a supermarket or convenience store, that sort of thing, where they've got the magazines and you sometimes open it and you'll have inserts and you'll have leaflets and vouchers which will drop out. That's, that's another area. And so the actual marketplace for inserts is is very, very large and ultimately the way you would generally pay for buying the media is you buy it on a sort of cost per thousand basis. So you know we call it sort of CPT, and the way that you would, whether you typically trade the media or approach the channel, is the same as you would approach any channel.
Speaker 3:So you know what we did is we actually got our, our acquisition cost on inserts. At first it was around 300 pounds to acquire customer, which was incredibly expensive. But we run around about 50 different AB tests over a sort of three month period very condensed period and we managed to get the acquisition cost all the way down to about 10 pounds on rollout. So it's pretty, pretty significant decrease. I gave a presentation on this a few years ago but ultimately the way, the way that we approached it was, we optimized the introductory offers. We used inserts actually quite a nice and clean media to run like AB testing.
Speaker 3:So because it, you know, it lands in the consumer's hand so it's more difficult to share than, let's say, if you're doing like digital AB testing on certain ad platforms. Or, you know, let's say, a matter of something where it walked to master the best performing creative on an insert. You got like a proper like sort of 50 50 split test and so we did a lot of offer testing. So things like, you know, monetary or percentage or bundles or free gift or different combinations of free gift or free delivery, no free delivery, certain types of beers within the box. We did lots of testing to work out you know which, which offer gave the best response rate without giving away too much product. And then we then tested, tested the creative as well, so different formats of creative, different types of inserts, like the E5 versus the DL, shaped versus thicker paper versus less, premium paper versus booklet. And then we tested the various different types of media as well. So we tested, like direct product dispatch, we against magazine, against newsstand, to work out you know what the difference in response rates was. And then we did things like we mapped out redemption periods so we could know we can say, like, okay, product dispatch. The redemption curve is, let's say, for example, you get and I'm just making this up, but we know we've got all this for individual brands is, let's say, you get 80% of the response within two, three weeks and then you get the other 20% in the next, like three to six weeks. So we sort of mapped out redemption periods and that's kind of how we we approached.
Speaker 3:We approached the channel From a commercial perspective. It was like two ways to approach it. One is like paid media, and so this is where you can like pay for access to certain product dispatch, like certain brands will sell space in their box, magazines or kitchens will sell space, etc. And the other way to approach it which has become very popular over the past few years is called insert swaps or reciprocal swaps. Sometimes it's known as and this is where you know.
Speaker 3:Let's say, for example, like my, you know, if I'm 30,000 boxes per month, I would typically partner with another brand who has a similar target audience to me and I would put you know an insert in their shipments. And they're putting insert in my shipments and the objective here is like, because there is no media cost, which is the biggest cost of events are externally is just a print cost and an insertion cost into the box Generally works incredibly well. So we drive very low cost of acquisition and you would just simply measure the response rates. So you know, if I sent 30,000. And you know, and I got 3,000 sign ups, that's a 10% response rate which is, you know, unreasonably high. But that's sort of how it works and you work out the a sort of frequency that you can do it.
Speaker 3:So if you're doing product dispatch inside a brand that is like growing really fast, then you can go into their boxes like quite often before you get wear out, because a lot of the every time you go in the box there's new consumers to them or seeing your ad for the first time, whereas if it's more of a mature business and you have the same customer base and it doesn't change much from month to month, you probably want to repeat it. You know, a couple of times per year sort of thing, before you see the response rates start to sort of tail off and diminish. And there are some brands that will say, let's say they're a bigger brand than your brand or you're bigger than them, and you know, quite a lot of people will swap. So you know, if one brand's got 30,000 and another brand's got 60,000, you know, sometimes the bigger brand will say, well, okay, happy to swap. All you have to do is like put my inserts out, you know twice, like do it just now and then do it in three months. So there's quite a collaborative approach, like within, I would say, a lot of the E-com DTC brands in terms of this channel. So that's kind of yeah, that's kind of the approach of how we got inserts to work for us.
Speaker 3:Obviously, throughout, like the pandemic COVID era, newsstand sort of fell away because consumers like going to supermarkets and sort of other news agents and that sort of thing.
Speaker 3:We've seen the response rates drop off again, with magazines descriptions less effective than they had been, but product dispatch volume like significantly increased and the response rates like really increased, like throughout the pandemic. So you know, more consumers buying online and buying more online. That was a really good channel throughout the pandemic. So I think yeah, I think it's a good. It's a good channel and it's certainly dependent on your brand and what stage you're at. It's certainly a channel that if you're doing like reciprocal swaps, it's very, very low cost in the early days to get generate some traction and generate some new customers. If you're a larger brand, you know at Silicon and you've raised funding, or perhaps if you've got budget to invest, it's certainly a channel that if you can get the creative and the offer right and the partner mix right, that it can generate like a good, a good and repeatable amount of customer acquisition amongst your target, your target customer base. I hope that makes sense. I appreciate it's quite, maybe quite, heavy conversation for you know, this time in a Tuesday afternoon.
Speaker 2:Thanks very much for sharing that. That's really a in-depth explanation of exactly how it works and I know, for somebody who's probably not used to this channel, it takes you a bit of time to wrap your head around it and you may not even, especially if you're in the US because, like I said, I know it's not as common in the US and we have the good bits in Busterbox. But now we're near what you were doing flavorfully. But just to give people the example of how big this channel can potentially be, roughly how many customers, would you say, you acquired in flavorfully through this channel?
Speaker 3:Yeah, so I'd have to go back and double check, but I think it's probably in the region of I would say certainly in the region of up to over the years, probably up to 100,000 customers, between 15 and 100,000, I'd have to get an exact number but it's significant like meaningful numbers of customers and at like, a very controllable sort of acquisition cost as well in terms of, like, the volume you know, within the marketplace. So you're talking potentially, you know there's certainly there's a number of agencies that you could work with or partner with. In the UK there's a lot of very specialist media agencies who trade in insert volume and there are certain brands that you can deal with direct. But there is, you know, potentially millions, if not tens of millions of, let's say, like, inventory available per month. So for the right brands, like or, if you've got the budget and if you've got the level acquisition cost and the patients to get it right, like you can recruit huge amounts of consumers through this channel.
Speaker 3:My, just before we jumped onto the podcast, like, my understanding was that in the early days of, let's say, naked wines, they used Amazon, you know, to put inserts into Amazon shipments, and so that was, if you can imagine, like, how many shipments like Amazon would have had, even back, you know, even back, even 10 years ago. That's a significant channel. So, yeah, so it's a really it's an enormous channel with like huge amounts of scale. The response rates will vary significantly depending on whether you are focused on the subscription product or a, let's say, a page-a-go product, and how strong your introductory offer is, how strong your brand is. Seasonality will come into it. So there's a whole number of factors of you know, how easy you make it for the consumer to redeem the code like is there, let's say, a QR code or is there a URL that they have to type in that sort of thing? So there's a lot of variables, but there's certainly, you know, lots of guides around best practice of how to sort of get the most out of the channel on day one. But for me, it's still a fabulous channel to be able to test and get right clean sort of A-B testing.
Speaker 3:The one thing to really think about and look out for is it is a channel that does have to be planned ahead, so, unlike, you know, let's say, more responsive digital channels, like you do have to design artwork, you do have to, you know, put codes on, et cetera. You do have to send it to print. You do have to get it delivered to, you know, your warehouse or a third party logistics provider. They do have to go into the box. They do have to be dispatched to the consumer. The consumer does then have to unbox, you know, and then you've got the redemption card thereafter. So there is a bit of lag. In general you would have to book it out and organize it in advance, but that's, you know, just part and parcel of sort of offline media.
Speaker 2:Yeah, that was always something that it took us time to wrap our head around, and I think a lot of people may be similar, because they're so used to loading up ads manager and Facebook or TikTok or even Google, and it's just instant, whereas this isn't instant, it takes a bit of planning, but the returns can be literally true to roof. I'm always talking about offers and we lean heavily into direct response as well, but we don't do as much true offline media. It's more online media and we, like we're testing so many different offers free gifts, deep discounts, bundles, things like that and it makes a massive difference to the customer acquisition cost. What would you say is the best offer for something like this? Would it be like a free box, put shape in, or what do you think?
Speaker 3:Yeah, I think it depends on the objective or the definition of best offer sort of best for who. So best for the brand is going to be the offer that generates the highest customer lifetime value. When I say that customer lifetime value I mean lifetime gross profit contribution. But in terms of the offer that will generate the best response rate and the highest volume and lowest acquisition cost, it's generally always the most aggressive offer. So let's say, for example, like for us, offering the customers like a free box, just pay postage, had the lowest acquisition cost, had the highest volume but also had a much more retention rate of retention and so lower for us. We tried it and trialled it. We had a much more lifetime gross profit from that cohort of customers. That's not to say like we could have got it to work if we had implemented more like retention tactics you know perhaps like a call center or call to cancel, or you know some additional offers, that sort of thing. But certainly the more aggressive the offer, the better the response rate and lower the cost of acquisition.
Speaker 3:One thing we did learn so we did like a lot of deep dive into customer lifetime value analysis and we looked at probably over 15 different metrics and variables, and one of the most consistent themes of like predictor of high LTV was, for us, the closer consumer paid to full price on order. Number one was, like the highest predictor of like high LTV. And so I mean that in itself it brings a channel because, yeah, I'm sure you're sitting thinking to yourself, well duh, like you know, of course, if they're paying full price they're going to be a good customer. But that's what we found. And so the challenge is then how do you, how do you cost effectively generate as much volume from that type of customer as possible which sort of leads you into, like you know, a potential, a bit more brand performance type activity.
Speaker 3:So certainly I'd say, like the spec, there is a spectrum and what you do like depends on your objectives, you know, for the business, and depends, like whether you're a season, you know seasonality depends on your cross margin structure. So if you've got like there's certain brands that got like a really good strong cross margin structure and you know if they give away like a free box on order one, then that's totally fine because they can still generate like a really high, very significant, meaningful lifetime gross profit and so for them, the trade off of like having a little bit less gross profit but but unlocking like, let's say, three to five times the acquisition volume because it's a free trial and you've massively de-risked it for the consumer, that's like a worthwhile trade for them, whereas you know there are obviously other brands which have got tighter allowable position cost or, you know, smaller lifetime gross profit and you have to be a lot more careful with the types of activity that they can do.
Speaker 2:Yeah, I think there's. I think you hit it right on the head there and that's the same for us, even if you take it to like online channels, facebook or whatever. There's kind of a trade off. If you can draw in volume with people paying full price, obviously it's going to be way better. But usually, unless you come up with a really great free gift, it's harder to draw in volume and the cake is usually higher, whereas if you go really aggressive with your offer, obviously you're going to, you're going to get that little cake. A lot of people sign the old book. They may not be the best quality customer, so it's kind of trying to find the middle ground between both things.
Speaker 3:Yeah and like. The other thing it's, I guess, worth well discussing is that when it comes to like the offer, so they're more aggressive the offer, the generally, the better the response rate. But that can have an impact on retention In terms of like making the offer more aggressive or better. I like to think of it in terms of like value to the consumer. And so there's, I guess, two ways to do it. One is like to reduce the price, or the other way is to like increase the value or perceived value, so you can increase the value, perceived value, like through adding, like gifts or additional extras in. And so for us the sweet spot was like a blend somewhere in between. So it wasn't just, you know, crashing the price down massively and it wasn't just putting lots of lots and lots of gifts.
Speaker 3:So it was a bit of a sweet spot where you know there was a price, a bit of a price discount, but then there was, I'd probably say like it was try to look 50 50, like reduce the price a bit but then actually add in some extra. So we included, like magazine, the snack, you know, a couple of tasting glasses, you know free delivery, and you know we pulled together a textbook, craft beer textbook, and that's certain. We tested all the, we tested all the elements. So you know, for us, like adding two glasses, we're just to cost per acquisition by significantly more than the cost to purchase and insert two extra glasses in the box, offering fleet free delivery on acquisition. The reduction in cost per acquisition was significantly more than the revenue we would lose from offering free delivery, and so that's the kind of like. Those are the tests that we run to optimize our introductory offer.
Speaker 2:Very interesting. We do very similar things with the free gifts. I don't know if you saw our website. We do like we've so many different things, like a free hill, or we might do like a free bed, a free camera, but we've actually started putting small bit of a discount with that or perceived discount, and yeah, it makes a big, ridiculous difference to the acquisition cost. And so for somebody who is completely new to this and they want to get involved, what advice would you have, like how, what kind of budget would you need to test this? How many inserts would you ideally need to send out?
Speaker 3:For somebody completely new to this market, I think, starting small and collecting some data and then optimizing from there. So what I would probably do if I was like a subscription box or e-commerce brand order is look to do a look to do a number of swaps with other brands or reciprocal swaps. So you know, let's say, maybe half a dozen brands or so. It really depends on your, it depends on your shipment volume. Because when you look at the data and you look at the response rates, like really what you want is you want to get what to put in a volume where there's some sort of statistical significance, or at least themes, clear themes around the response rates, like of what does and doesn't work and what level the response rates at. I would swap. I would start with reciprocal swaps For a couple of reasons. One is it's going to be a lot cheaper and two, you have a bit more control, working directly with the brand and so if you can sort of like, use that to optimize your offer, get you familiar with the process of the channel. So you know, designing a creative, working out what does and doesn't work in terms of like offer, customer journey, to like a landing page, that sort of stuff. I would try and work that out on a swap basis and you know if you can get it to work in the swap basis.
Speaker 3:Let's say, for example, like you work out, the cost of acquisition doing insert swaps is like 10 pounds. And then you say, right, well, if I go to an agency now and if I can maintain like a similar response rate and print costs are similar and you know insertion costs are similar. And if you can factor in, like what the additional media cost going to be, and let's say it takes you to 20 pounds CPA or whatever the number is, you have some, you have some data to then build back testing, build in the cost of media to see, right, well, you know, with additional cost of media this might not be 20 or 25 pounds, and so does that feel like, does that feel like a worthwhile test, or is that with a metal level acquisition cost? It's something that I would like to do.
Speaker 3:One thing I'd probably add is, like when you're testing just my experience like when you're testing the different types of media, like paid media, I find that, like product dispatch is more expensive. However, generally the response rates of product dispatch are significantly better for us and they're. The additional response rate like far outweighs the additional cost of the media. So you know, when you look at the media it can be quite daunting to say well, you know, newsstand is like really cheap and magazines are sort of middle of the road, but some of the product dispatch is really expensive. Generally you'll see a much higher response rate on the on a product dispatch.
Speaker 3:So net net you might get really don't get like, yeah, exactly, you may actually have a lower cost of acquisition because it's better media, although it's more expensive. So certainly start with the start of reciprocal swaps is what I would do. What is the sort of long winded way of saying, yeah, try some swaps?
Speaker 2:Thank you. I think people find that really, really valuable Because this is very new to a lot of people in this industry and like, say, as a test with paid media, like if say, if I gave a partner with a new brand, how many inserts would you send out in their products before you've decided? This is actually like a good partnership or the acquisition will be too high and the response will be too low.
Speaker 3:So this, this is what it depends quite a lot like on your product and A O V. And what one place I would start is, as a sort of baseline metric or comparative metric, I would look at what your cost of acquisition is like on other channels. If you have that data, so you know what does it cost on, let's say, facebook or TikTok or you know whatever other channel that I'm operating on. And that's the sort of starting basis. So I would then. I would then look at so if you're buying media, like through an agency, typically they'll be able to say, right, well, we think that you know, given your A O V, given your type of introductory offer you might get between you know I'm going to say like, let's say, 0.1% and 0.4% response rate, and so I'd model that and say, well, if the media cost this and the design, you know all in, if this is what it's going to cost, if I got 0.1% response rate, you know the CPA would be, I don't know, 80 pounds.
Speaker 3:If I got 0.4 response rate, you know a CPA would be significantly less. You know, is that within my tolerance to be able to test that channel and test a specific partner? That's like that's how I would approach it. You know building the building the sort of like conversion funnel metrics and saying, well, you know, if I'm, if I'm getting a you know 0.4% response rate, then I need to send out, let's say, 10,000 to generate 40 sales. So the media cost of everything send out at 10,000 has got to be less than, let's say, you know, if it's 20, 20 pounds or $20 per customer, you know, expecting 0.4% response rate, it needs to be less than sort of 800 pounds or $800 to get me to my 20 pounds cost of acquisition.
Speaker 2:Okay, that makes perfect sense and that actually explained it really really well. Thanks very much for coming on to the podcast and I really appreciate it and I know the listeners are going to get a lot of value from this. Now you actually have a course coming out covering a lot of this stuff. If people are interested in that, where, where should they go?
Speaker 3:Yeah, so thanks for the thanks for the shout out. I'm currently currently producing a course in, let's say, performance marketing, growth and performance marketing, and the reason I'm doing it is it's taken me quite a long time and, like you know, around a decade, to learn what I know. And when it comes to like performance marketing just generally, you know across the spectrum of different channels that you can operate and thinking about, like unit economics and structuring offers and creatives and all that sort of thing. Typically there's there's only a few ways to learn. So you can learn by doing yourself and you know, like me, it can take quite a long time to figure out different channels and different partners and different best practice. You quite often learn from agencies. So like, let's say, like agencies who are specialist on one channel, so it might be like a meta agency or maybe like an insert agency or a direct response TV or, let's say, like press, if you want to be in newspapers and typically like they're, you're paying to learn, you're doing, you're working with them, they'll give you guidance. Or you learn from colleagues. So let's say, you've joined a company or what was somebody who's done something before and they can give you a bit of guidance, and so what I'm trying to do is provide a more general understanding of, like, direct response marketing or performance marketing, like N10. So, like here are here's how I'd approach it, you know, as a small company, as as a larger company, depending on budget, depending on your unit economics margin, all that sort of stuff. Here's the different channels that are available and, like here are some of the main things to think about with different channels. One thing I would like to do, time permitting, is to be able to say well, you know, for each of these channels like here's potentially three agencies or three partners you can go and speak to and have get a bit more information from. So, rather than just being purely you know, this is like what you do the next step is you can go and speak to at some actual experts and agencies and practitioners in the market who can actually get you going as a service, if that's, you know, of interest. So I'd probably say the best way to get a hold of is on LinkedIn.
Speaker 3:At the moment I am in the process of building this course, which I will be aiming to launch, probably like Q2 run a bit start of Q2 next year. I'll take in the first like cohort and it's going to be at the moment. It's going to be a cohort based course which will run at least once per year we might look at additional dates depending on how it goes and the feedback that we get, but at least once per year and it'll be sort of like an hour, an hour session per week. So I'm reading a lot of you know live case study sort of thing and in a session where we can sort of chat through it in debrief, and so the format and the actual content is still being shaped. But I'm engaging with, like industry experts in each of the channels just to bring more, just to really improve the content and make sure that it's the best possible course. And so the way I think about it is it's going to sit in between.
Speaker 3:On one side of the spectrum you have like brand and brand courses and learn about how to build brand awareness and position the brand and build equity, and you know all the sort of measurement around there. And then the other other end of the spectrum it's like very, very tactical courses of like how to set a pad manager run, ad manager, run, you know meta, all that sort of thing, and so my, my course sits in between. So it's like in between. Like brands, it's very direct response and performance based, but it doesn't. It won't get into the. It won't get into like how to do the sort of nitty gritty, nuts and bolts of of channels where there's, you know, let's say, many courses available. It will sort of sit in between those and say, right, here's the channels, here's how you approach them, here's what to think about, here's the common themes, that sort of thing.
Speaker 2:Very good. People will find that really, really valuable. I have my course, and it's all mainly digital, because that's mainly what we do in both the box. But for anybody looking to like really get head on with direct response and some of these other channels that you probably haven't thought about, especially if you're looking for new marketing channels next year, I definitely recommend checking that out. You're going to find lots of value in that. So, yeah, thanks very much for jumping on and for anybody listening. If you have a question you want answered on the show, as always, head over to subscriptionboxresourcescom, join the free Facebook group and post it there and it'll be answered in a future episode. Thanks very much and see you next week. Bye, bye.