If you have big plans for growing your subscription box business in 2024, then you need to get very good at crafting irresistible offers.
The most effective way to blow up your box and lower your Customer Acquisition Cost (CAC) is by getting very creative with your introductory offers.
In today's episode of 'Subscription Box Answers,' I'll be discussing this in detail.
I'll also read a chapter from my book, 'The Subscription Box Blueprint,' which explains the components of a high-converting offer.
We've invested a lot of time in this at BusterBox, and it has paid off significantly. I strongly recommend taking this seriously and applying the same strategies in your business.
If you have a question you'd like answered on the show, please visit www.SubscriptionBoxResources.com, join our free Facebook group, and post your question there."
If you have big plans for growing your subscription box business in 2024, then you need to get very good at crafting irresistible offers.
The most effective way to blow up your box and lower your Customer Acquisition Cost (CAC) is by getting very creative with your introductory offers.
In today's episode of 'Subscription Box Answers,' I'll be discussing this in detail.
I'll also read a chapter from my book, 'The Subscription Box Blueprint,' which explains the components of a high-converting offer.
We've invested a lot of time in this at BusterBox, and it has paid off significantly. I strongly recommend taking this seriously and applying the same strategies in your business.
If you have a question you'd like answered on the show, please visit www.SubscriptionBoxResources.com, join our free Facebook group, and post your question 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:Welcome back to a brand new episode of Subscription Box Answers. On today's episode, we are discussing marketing, growth, but offers, subscription box offers. Now, if you've been following me for any amount of time, you know I will always bang on about the offer. And the reason why I always bang on about the offer is it's actually that important. Having a really appealing offer can be the difference between scaling up and completely changing your life and really struggling to get any traction whatsoever. It's actually that important. Now I'll give you an example.
Speaker 2:If you look into it, you will see there are so many different dog subscription box companies in loads of different countries throughout the world, and I obviously run a dog subscription box company myself with BusterBox. Now there's obviously some success stories, some companies that have scaled up and done really well Backbox, putbox, bullymake ourselves, a few others but the vast majority actually don't go anywhere. They actually get stuck at a relatively small number of subscribers and they just can't kick on, and the reason why they can't kick on is usually purely down to marketing. Now, obviously there's going to be some different products going to different companies boxes some companies have better boxes, some companies have better customer service, and that's really true, right? But just imagine all of that was equal. Well, the only thing that would separate the companies would be marketing ability, and a lot of that comes down to the offer. It's actually that important, and if you go through all the different subscription box niches, you will find so many different examples of similar boxes, and one of them has thousands of subscribers and the other one, which is basically the same, is struggling to get any traction whatsoever, and a lot of that comes down to marketing ability and the offer.
Speaker 2:Now, we recognised pretty early into our journey with Busterbox that offers will be key to scaling up the company, so we put a lot of time and resources into coming up with different offers, and it really pays off, thank you, and in today's episode, I'm going to share offers with you in detail, because it's something that so many people overlook in this industry. They focus on their ads, they focus on their website, they're focusing on all this stuff and they're actually gone nowhere, and the reason why they can never get their ads converting or their influencers converting is their offer simply isn't good enough. When you have a winning offer and you put it in front of your target customer, you will know it's a winning offer, because people will literally be pulling out their credit card and they'll want to sign up on the spot. One of the main rules of direct response marketing is there will always be an offer, and if you want to scale up a subscription box business, usually the quickest, cheapest and most effective way to do that is through direct response marketing. Now, over the next few weeks, we're going to cover offers in detail on this podcast, but on today's episode I want to make sure everybody's on the same page and you understand exactly what I mean when I'm talking about an offer. This is really important and it could be the difference between you building a really really successful business or struggling. I'm going to read out a chapter from my book, the Subscription Box Blueprint, that came out last year, where I cover offers in detail. Now, if you already bought a copy of that book and you've read it, I still recommend listening to this, because it's actually that important and you may pick up something new from hearing it again. It's creating the perfect subscription box offer. Your ability to come up with irresistible offers and present them correctly through your marketing will play a big part in determining how successful your subscription box is, once you understand this and you get your offer right, it will make your customer acquisition much easier and you will be able to attract floods of new subscribers. This topic deserves its own chapter because it's the most important rule when it comes to direct response and it's also one of the biggest reasons why we have managed to sell millions of dollars of subscription boxes in both their box. When somebody joins my subscription box experts program, it is usually because they need help growing their business and they want to use my proven system to scale.
Speaker 2:The first thing which I always look at is their offer. If the offer isn't correct, it doesn't make a difference how good the other parts of the marketing are, because I know it's going to be a struggle to get a consistent stream of new subscribers signed up. So because of that, we always fix the offer first. I have witnessed struggling subscription boxes turn it all around and suddenly find themselves in a situation where they are acquiring more subscribers than they ever thought possible, and that comes down to wanting the power of an irresistible offer. Once you get the offer right, all of the other parts of your marketing will fall into price. It does not make a difference if you're advertising on Facebook, TikTok, youtube, direct mail, video, tv or any other channel. If the offer isn't good enough, you will struggle to get volume and your customer acquisition cost will probably not be sustainable.
Speaker 2:The reason why the offer is so important is that without one, it can be very difficult to get people to commit to a long term subscription. This is because people absolutely hate the thought of signing up for another monthly bail. No matter how good your product and service are, there will always be a certain level of resistance from customers, simply because it is another monthly bail. You can break down this resistance and get a lot of people signed up by making your offer so good they would feel foolish to turn it down. Then, once they sign up and they see how much they enjoy getting their box every month, they are unlikely to cancel and hopefully you will keep them as a subscriber for a very long time.
Speaker 2:Your irresistible offer is also another way that can be used to beat all competition in your niche. Imagine four different kids craft boxes, all advertising and design market with similar products, similar reviews and similar service. The one who is able to come up with the most irresistible offer is the one that is going to stand out from the rest. Take off like a rocket and leave the other three companies in the dust. Your product is very important, and that goes without saying. You have to send out a great box every month, provide world-class customer service and blow your customers away every chance you get. Otherwise you will have high churn and your business will fail. But none of that will make a difference if you don't get your marketing right, because if you can't acquire customers, you don't have much of a business in the first place. The offer is one of the main reasons why some subscription box owners are able to blow up their business to millions in sales and why others struggle to get a few hundred subscribers. It is that critical.
Speaker 2:So what is a subscription box offer? To break it down, a subscription box offer is what you give a consumer in exchange for selling up to your box. An offer doesn't only have to involve discounting prices. You can also bundle things together to entice the consumer to take action and purchase your box. Your success with customer acquisition will come down to how good you are at understanding your customers. So you have the ability to come up with irresistible offers which will make them pull out their credit cards and sign up to your box. The current offer that you're running is going to be the focal point of the majority of your marketing material. That means it is going to take centre stage in your ads and any direct communication you have with your prospects.
Speaker 2:The mistake a lot of subscription box owners make is they don't take the time to learn how to put together a really good offer, or they don't want to learn how to present it in a way that makes people want to sign up for their box. The default offer everybody seems to jump to is a minor discount like 5-10% off, and unfortunately, this doesn't achieve anything. Put yourself in your customer shoes. If you saw a 5% discount appearing on your news feed, would it make you want to take out your credit card and commit for 6 months? Now, I don't think so. The ideal offer from the subscription box owner side. Now, before we start going through some example offers, I want to explain what a ideal offer will look like from the subscription box owner side. I think one of the reasons people are afraid to get creative with their offers is they don't know for certain how much they can give without losing money. The main piece of advice I can give you in regards to this is you have to know your numbers. This means you need to understand exactly what your customer lifetime value is for all of your subscription plans. Once you understand this piece of information, you will understand how much you can pay to actually acquire a customer.
Speaker 2:I'm going to dedicate a chapter to subscription metrics later in the book. Make sure you study this and understand everything I'd say. It will help you scale and maximize the profits of your company. As a general rule of running the subscription business, your lifetime value to CAC ratio should be a three to one minimum. This means you want to earn back three times the amount you spent to sign up the customer in crowd's profit during the lifetime of the subscription. The offer you make at the start of the subscription should also be included in this calculation. So if you're losing money on the first box due to a free gift or discount, you still need to ensure the ratio is working out as three to one on average. The reason you want to hit this ratio is that you will probably run into cash flow problems otherwise as you scale up. Now that I've made this clear, I'm going to highlight four key points that you should aim to hit with any offer you create. If you manage to hit all four points, you will be able to blow up your subscription box rapidly.
Speaker 2:Number one volume. The offer needs to have the potential to generate a lot of new subscribers. Once your ideal customer sees it, they shouldn't be able to resist it. If you have done everything right and your ads are going out to your ideal customer and the sales are slow, the offer is probably wrong. Number two tree to four month payback period. The maximum number of months it will take on average to get a customer into profit will be three to four months. This is after the advertising cost and whatever else you had to fulfill for the offer. If the offer pushes the payback period out further, it will be very difficult to scale up without a considerable amount of investment into the business. Obviously, you want to get the payback period as low as possible so you get your marketing investment back quickly, so you can be profitable and reinvest some of it back into customer acquisition. If you can get it to lower than three to four months, that is fantastic, but three to four months should be the maximum for a direct to consumer subscription in the majority of cases.
Speaker 2:Number three fulfillment. You have the capability to fulfill, whatever the offer is, without it becoming a serious struggle for your business. If it is a discount, obviously this is easy to fulfill as it will be automatically applied to the account. But things like free gifts, teams and double boxes take planning and if you don't do it right and forecast correctly, you can be left holding stock which can put the straying on your catch well.
Speaker 2:Number four profitability. This is critical and also pretty obvious. There is no point in running the offer and selling up thousands of customers which will never be profitable. That's why you need to pay close attention to your numbers and follow the three to one LTV to cac ratio or discussed above. A new subscription box owner can tend to get excited when they discover the power of an irresistible offer and suddenly they start getting more new subscribers in a day than they used to in a week. This makes them bury their head in the sand when it comes to subscription metrics and financial sense. Then it all comes crashing down when they realize the offer was never profitable in the first place. Don't let this happen to you. Offer examples. I'm now going to go through some example offers so you can get some ideas of what you can test in your subscription box.
Speaker 2:Business Number one deep discount. A deep discount can work well, but if you are going with this approach, make sure you only offer it on the longer plans 6 to 12 months. If you go with the deep discount on a rolling monthly plan, it will probably be a bloodbath of chur. The more aggressive you get with the discount, the higher the churn you must also accept. When you are doing a deep discount, you will attract a percentage of poor quality customers who will not be the right fit for your box. No matter what you do, you won't be able to keep these customers happy, as they only came for the discount, and they will end up cancelling quickly or their card will fail when you attempt to charge them. This doesn't mean the offer can't be profitable, though, because after the first month, when all the discount chasers leave, the churn usually drops and the remaining customers generate a good lifetime value. You just have to have the correct expectations and make sure you are monitoring your metrics and cash balance. The only time you should consider doing a deep discount on a monthly brand is when you have a funnel set up in such a way that you can have high churn but recoup a lot of the ad spend through post purchase upsets.
Speaker 2:The good thing about a deep discount is it's pretty straight forward to set up. You don't need to manage any extra stock or anything. You simply apply an automatic coupon code to your checkout process and that's it, and don't correctly. A deep discount can grow your business pretty quickly. This is because the majority of people love a good discount, which in turn, sends your sales volume through the roof. Usually, when you run this offer, you will notice the marketing cost to acquire customers moves from ad spend to product costs. This is because the CPA decreases as the offer is so attractive, but you can end up losing money on the product cost to fail the first box. It can work, but just be careful when doing this. We ran a very aggressive offer in Busterbox in the past where the customer just paid £5 for the first box. We positioned it though that the first box was free but the customer had to pay £5 shipping, and this offer blew up and we got thousands of new subscribers. We had to pay lots of attention to our numbers, though, through the lifetime of the offer to ensure it remained profitable, which it did.
Speaker 2:Number 2, free gift. The free gift can work very well once it is actually a gift that your prospect is interested in. If it's some old stock down in your warehouse that you want to get rid of, performance will be terrible. That's why you need to offer something really, really cool which will grab attention and make people want to sign up for your subscription box on the spot. A tip will be to Troy and store stuff that has a high perceived retail value but can be picked up for relatively cheap. Then laying on the value of the free gift in your marketing. This can make a big difference to the customer's perception and massively improve the conversion rate.
Speaker 2:A great way to verify the demand for your free gift will be to head over to Amazon and check how many reviews it has. If it looks like a popular product in your niche, you can tell it will probably work well as a gift with your box. An example of this will be when we were considering a GPS tracker for dogs as a free gift. We headed over to Amazon and could see the brand we were going to use had thousands of reviews and looked really popular. We knew then it had the potential to work very well as a free gift. We were right. We launched the offer and it sold out within a few days. Another way to verify demand would be to check Google keywords and see how many people are roughly searching for the product. If a lot of people are searching for it each month, well then it has a chance of working very well as a free gift.
Speaker 2:The crazy thing is not every item you think will be a hit works well. We have launched the offers in the past that looked very promising, even after lots of research, and they still flopped. When you get it right, though, the effect is pretty insane. Here's an example. We launched a free dog cooling mat for new subscribers right in the middle of summer. The sales completely blew up. The demand was crazy. We got the timing perfect because it was right in the middle of a heat wave and everybody wanted to keep their dog cool. It also looked like a pretty phone product.
Speaker 2:Don't treat. Fill your first box for free. This offer can help to generate a lot of new subscribers once it's presented correctly. All you need to do is double the amount of stuff the customer gets in the first box. This is a very enticing offer for most consumers and also leaves a very good impression after the first delivery. Once you get this right, it can help a lot to improve your retention rate. The customers are so impressed with all of the stuff they receive and the value you have provided they are not interested in cancelling. When we run this offer, the churn is always really low. The only bad thing about the offer is it can cost a lot of money upfront to get all the stock in. So if you do decide to do it, make sure you keep on top of your cash flow so you don't end up running into any issues. The offer can also be a great way to clear excess stock, though. If you have stuff building up in your warehouse, run this offer to clear it all out and get a lot of new customers in the process.
Speaker 2:Number 4.
Speaker 2:Team-based Offers. If you do monthly teams for your box, team-based offers can work very well. You can reveal your team ahead of time and base all your marketing material around the month's team. You can also add one of the offers I mentioned above to improve your conversion rate even more. So imagine you are sending out a Safari box next month. All your marketing material will be around this Safari box. But then, to make things even better, the first box has a deep discount, is double the amount of stuff, or has a really cool Safari-based gift that fits the monthly team, for example. Imagine during Christmas you have a Christmas-based team with Christmas-based marketing. On top of that, new customers can also double the first box as well. This is a very powerful offer that would sell out very quickly.
Speaker 2:Over time, you will learn what your customers respond to by testing different offers and then tracking your metrics to make sure they are profitable. You will learn what works and then you can make things a lot more interesting by adding different things and positioning them in different ways. If you can find a way to add digital products and other benefits that don't cost you a lot, this can also make a big difference. This is because it raises the perceived value for the customer. So I think it's pretty clear what a subscription box offer is now. I do cover this in more detail in the book, and if you want to check that out, head over to Amazon and search for the subscription box blueprint and you'll be able to pick up a copy.
Speaker 2:But on today's episode, I just wanted to make sure everybody is on the same page when it comes to offers, and I wanted to give you an example of some general-based offer. So you're clear, I will be back next week at the exact same time. I hope this podcast has helped you and it's given you some ideas you can implement in your own business. We're going to do more on offers in the coming weeks, so I'll chat to you next week and, as always, if you have any questions, head over to subscriptionboxresourcescom, join the free Facebook group and post it there. And if this episode brought you any value and you enjoyed it, or you've been listening for a while and you've learned a lot, do you mind doing me a big favour? Would you just give me a review on Spotify or Apple or wherever you listen to your podcast? It just really helps me get the show out to more people. Thanks very much and chat to you next week. Bye, bye.