Subscription Box Answers

Balancing Subscription Box Growth & Profitability (With Art Raifi)

January 29, 2024 Liam Brennan
Balancing Subscription Box Growth & Profitability (With Art Raifi)
Subscription Box Answers
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Subscription Box Answers
Balancing Subscription Box Growth & Profitability (With Art Raifi)
Jan 29, 2024
Liam Brennan

In today’s episode of Subscription Box Answers, I'm sitting down with Art Raifi, the CEO of BlackBird Marketing, to unpack the balancing act between growth and profitability—plus a whole lot more on marketing.

It's crucial to recognize when it's time to aggressively grow your customer base and when it's wiser to hold steady and maintain. There are times throughout the year when acquiring customers becomes more cost-effective, and seizing those opportunities is key to expanding your subscriber base without sacrificing profit margins.

Understanding these patterns simplifies the challenge of growing while staying in the black.

We also chat about marketing and share some very helpful tips and strategies which will help you grow your Subscription Box in 2024.

Got a question you want answered on the show? Visit www.SubscriptionBoxResources.com, join our FREE Facebook group, and post your queries there.

And if you're looking to connect with Art, reach out at https://blackbird.marketing/.

You can book me at the Subbly Experts Bar At SubSummit On June 18th From 9AM - 1030 AM. Click Here To Book

Show Notes Transcript Chapter Markers

In today’s episode of Subscription Box Answers, I'm sitting down with Art Raifi, the CEO of BlackBird Marketing, to unpack the balancing act between growth and profitability—plus a whole lot more on marketing.

It's crucial to recognize when it's time to aggressively grow your customer base and when it's wiser to hold steady and maintain. There are times throughout the year when acquiring customers becomes more cost-effective, and seizing those opportunities is key to expanding your subscriber base without sacrificing profit margins.

Understanding these patterns simplifies the challenge of growing while staying in the black.

We also chat about marketing and share some very helpful tips and strategies which will help you grow your Subscription Box in 2024.

Got a question you want answered on the show? Visit www.SubscriptionBoxResources.com, join our FREE Facebook group, and post your queries there.

And if you're looking to connect with Art, reach out at https://blackbird.marketing/.

You can book me at the Subbly Experts Bar At SubSummit On June 18th From 9AM - 1030 AM. Click Here To Book

Speaker 1:

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 3:

Welcome back to a brand new episode of Subscription Box Answers. I hope your day is going very well. On today's episode, we are very excited to welcome back Art Rafi, who is the CEO of Blackbird Marketing. Art appeared on the podcast last year and it was actually one of the most popular episodes. We had to bring him back to get some more information from him. Welcome back, and here are you.

Speaker 2:

Hi, liam, it's a pleasure to be back. Thank you for having me again. Last episode was really fun to do and the insight I shared. It's good to hear that people love listening to the podcast. I think that there's a lot of good insight there that we both shared from our experience working with Bosterbox and the industry in general. Yeah, happy to be back here.

Speaker 3:

Great, great stuff. If you don't know who Art is like, I previously mentioned he's the CEO of Blackbird Marketing and he does a lot of work with direct-to-consumer subscription companies. He helps them grow. His agency is really really good. They know the game pretty much inside out and how to acquire customers. Email marketing offers all that good stuff, so I'm pretty sure he'll share some really valuable information here. So, first of all, right across all your clients and what you're seeing in the industry, where would you say 2024 has started and what should people be doing to get the most out of this year?

Speaker 2:

So far, kind of going back into my experience, it's almost three years that I've been working in the subscription box space. It's been a fun and challenging experience overall, but a very, very insightful period as well. I've had the opportunity to learn throughout the years Most of my clients that I had in the beginning. They are still present and they work with me to this day. There's very few that are not there, but generally speaking, throughout the years I've learned that there's a pattern across most subscription box businesses and this does not apply to all, because every business is different and every industry and niche is different. But generally speaking, every year follows a certain pattern to how it flows and January so far has been very similar to most years.

Speaker 2:

January tends to be a fluctuating month. Some years is very good, some years it's more challenging. This year, for some accounts, has been a little bit more challenging than others, but for others it has been a great month. There's not particularly one pattern that I've noticed come through in January particularly. I've noticed that as you go towards the end of January, for most performance does tend to improve and for those that did well it just doesn't change. It has continued to do well from the beginning, but going into kind of 2024 and getting ready for the entire year of 2024, I have some insight that I would love to share with the listeners of this podcast and kind of this is my general insight that I've gathered, not taken note of and I share with my own accounts regularly.

Speaker 3:

That would be really good. And just going back to January, so with you agree. I know it can depend on me there's many different factors I play but for us January 2023 was a lot more difficult and slower than this year. This time last year it was all the cost of living crisis in the UK and I know people it's still going on, but it seemed to be getting a bigger push in the media around then and it was slower. It was harder to get people to sign up. Now this year, thankfully, we've started the year very strong and performance has been way better than last year. Do you think the economy could be switching around and we're slowly getting back to normal?

Speaker 2:

I think funnily enough that you share this, because yesterday I talked to one of my accounts who is in the US and operates in the US and she has a network of people who are inside of this niche, who also operate in the US, and they're sharing kind of your 2023 version of January story, where it's a lot more of a more difficult economic situation for the people in the US. People are a lot more stingy in the way they spend the money, they are a lot more cautious and for this reason, for some businesses in the US I operate with a lot of kid-based education subscription boxes and I've noticed that for that particular niche there has been fluctuations. For some it does well, especially for those that, for example, have a curriculum kind of business model. What that means is that from January up until December, there's a plan on how those subscription boxes will develop and the start of the year just makes a lot of sense to enroll in one of those subscription boxes.

Speaker 2:

For those that don't have that kind of methodology, I've seen kind of ads and all sales efforts be a little bit more difficult to work. Obviously, it's not terrible by any means. It's still something that for the majority of the businesses is profitable, but it's not necessarily scalable, if you know what I mean, because there's a difference between being profitable and scalable, and it all boils down to how much cash you can afford to pay for each customer that you get in through the door. That's kind of my take In this. It's different. For the US it seems to be a little bit more difficult, whereas for the UK for us at Busterbox it seems to have recovered pretty well and we're seeing a major shift in the outlook for the year especially. I hope so at least.

Speaker 3:

Yeah, in regards to people getting the most out of 2024, what are your insights? What should people be doing to set themselves up to have a successful year?

Speaker 2:

We at Busterbox we discussed this I believe it was last week or two weeks ago, but I kind of have observed this over the years. The idea behind maximizing growth and consolidating should be something that everybody takes very seriously. What I mean by this is that you have to know when, historically looking back, when were those time periods that you grew affordably and grew profitably? What are those months? Identifying the months and trying to make sense of what those months are specifically. Then also trying to identify what the not so good months are or the slower scaling months are, and trying to consolidate during those months. In my experience, generally speaking, this is obviously by no means 100% accurate, but something that everybody can take some insight of is that Q1, I see as the second best quarter of the year In my eyes. Q1, if the business is experiencing decent customer acquisition costs and good conversion rates, then it's a great month to try and maximize or squeeze out as much as you can out of the market, because come Q2, you will start to experience more difficulties. Especially in the beginning of Q3, those symptoms of the market tend to be felt the most. Again, it's different. There's other subscription market businesses that perform very well across the summer, we being one case. We have developed some very cool offers that make Q2 and Q3 to some degree scalable and growing months, but for others that it's more difficult than consolidation is something that needs to be considered very seriously, starting into Q2 and Q3.

Speaker 2:

What I mean by consolidation is that you may want to consider lowering ad spend potentially and thinking about creative ways to maintain your audience and instead think about creative ways as well as growing your email list or your SMS list.

Speaker 2:

Alternative channels at these times are not necessarily very effective, but growing those lists is significantly more affordable than chasing customers. Again, this depends on the customer acquisition cost. I keep mentioning it, but I want to make sure that everybody understands that it depends from case to case. But targeting and figuring out what those months are, where to spend the money, how to spend the money, when to grow, when to consolidate are very important concepts that every subscription box owner needs to understand. We at Busterbox have been seriously talking about this. As you know, you make adjustments to the ad every other day, if it's needed, every weekend if it's needed. This is more advanced level consolidation tactics, like saving budgets over the weekend, because we know the weekends are in great, or saving the money across February or March. If February or March you're not great, these kinds of things that seem like very little, but in the long run they impact profitability of the business significantly, as well as scale.

Speaker 3:

Yeah, 100% is a really good point. I think in the past, mistakes we probably made will be trying to force it when the customers simply weren't there. Instead of accepting, we should basically lower the ad spend and sit back for a month, commit what you offer and then go again. We forced it at certain points when probably it would have been better not to do that. I think we've definitely got a lot better at realizing that if the customers are there and you can acquire them for a good CPA, go for it, put the foot down and get them, get as many of them as you can. Then, yeah, like you said, when they're not there and it's a bit slower, hold back and don't just spend money for basically no reason. Trade some customers for a really high CPA.

Speaker 2:

Really good point, really really good point and one final thing to add to that that I mentioned is that if you are going to spend money, spend money.

Speaker 2:

As I said on lead gen and SMS, try to figure out ways that you can generate quality leads throughout the process, whether it's driving traffic to your website and just using your sign up flow to collect the leads, or building out special quizzes, or building out special lead magnets. Whatever the cases, Think about creative ways that you can utilize Q2 and Q3 to build those lists and then come Q4, which everybody knows is like the Hail Mary for subscription box business. Start spending, be aggressive, grow, utilize that time of the year to grow your business to the next level and then repeat it year after year and you will grow the subscription box and you will grow it profitably. And that's because if you're not acquiring funding or if you're not kind of, if you're bootstrapping the business, then I believe profitable growth is the best alternative you have moving forward, unless, obviously, you pursue funding. And if you do pursue funding, then the mathematics kind of change significantly and you follow different approaches.

Speaker 3:

Then yeah, and just just in regards to that lead generation, would you agree that all leads aren't equal? So it's very easy to like run some form of I don't know so like a competition where you're going to get like everybody entering but the lead quality overall is going to be pretty terrible and unless you can drive significant volume with that, it's probably not going to move the needle too much, whereas you could do something like wait, I don't know selling a plow or some other form of lead generation. It quays possibly where it's going to be more expensive but the lead quality is going to be better. Would you agree with that?

Speaker 2:

Yes, yes, certainly. The sign up law, I would say, is at the top of the list as being the one that generates high intent, because everybody who comes to your site, they're going to be browsing that homepage, they're going to be looking at the landing pages that you have on the site and, ultimately, they're going to be redirected to the sign up flow. At that point, anybody who's read all that content at that point is very well informed, and they've taken an additional step towards that kind of funnel, and for that reason you can consider them as high quality prospects Quizzes. On the other hand, I have one particular case. I can mention that as an example. There's one particular business they also operate in Ireland and we've created a very emotional quiz which ties down to the idea of heritage and culture, and you fill out the quiz. It's a seven to eight question quiz and at the end you're prompted to with a result which ties you in or ties your personality to that result that you get. So I see a lot of people kind of going in and completing the quiz. So before they get the result, though, the key is that we collect the email and we gather that email, we put it on a database and we start nurturing them through a specific automation and email sequence that is designed for that category of people. At the end it is important, is very, very important, that you try and track the number of conversions that come through email through that specific segment, way down against the ad spend that you've put in on the quiz, and see if it's worth doing that thing. If it's not worth doing that thing, come up with iterations and change up the quiz and figure out ways. I have done it for that particular business. It works. It is not significant amounts of volume that they get out of it, but at the end when you look at the numbers, it is a profitable effort. The cat from the quiz in relation to the ad spend is very good.

Speaker 2:

The other alternative that you can choose is called the lead magnet, and this is also something that I've been starting to try with another group of people. It's a landing page which gives out a free resource. You give the email out or actually ask for the email, and they get the free resource In the process. While they're getting the resource, you build a number of upsells where you try to make up the ad spend for that particular lead magnet that you're doing. They give out their email. When they hit submit, they get sent to a different page where they have a certain product to buy and that product, if it's purchased X amount of times, it will pay for the ad spend to generate those leads. Then you have those leads sitting there which you can nurture three different kinds of emails to acquire more and more sales. These are three examples signup flow, quiz and lead magnets, all of which are really powerful tools to build a list, but also pay for the ad spend that you're using to build those lists, for Q2 and Q3 especially.

Speaker 3:

Yeah, very, very good tips there. Thanks for sharing them, especially the one around the quiz. I really like that the heritage quiz and then, obviously, you're presented with the opportunity at the end to actually get the subscription. That makes a lot of sense and I'm sure people can take some inspiration from that and hopefully find a way to apply it to their own business. Traffic what's it looking like? Facebook, Google, TikTok what are you saying and what kind of tips do you have for people?

Speaker 2:

Last time when we spoke about this topic, we were talking a lot about TikTok as a channel. Since then, I feel like TikTok as a popular channel hasn't been spoken about too much. I still believe that the platform is not significantly better or close enough to what Facebook has by any means. It still obviously depends on the target demographic, but from my customers and for the BusterBoxes case, in the majority of the cases Facebook tends to be a lot more affordable than both Google as well as TikTok itself. Google, on the other hand, a great way to generate brand awareness, but cold, traffic-wise, generating sales. The CPM is very volatile In the US, however, I've noticed Google be a pretty equal contestant to Facebook or to Metta, which includes Facebook and Instagram, but I still believe that the undisputed king to this day is Facebook.

Speaker 2:

However, this may change as we go towards the end of the year and we see TikTok start to develop its platform and to start generating better quality customers as traffic to the site and then eventually becoming better of a platform. I have a small prediction that eventually it will happen, but for now, I've not seen it do so well, in my experience, at least, with the ads. The content strategy behind TikTok is a whole different world. It's a lot more challenging and difficult and the ones doing these kinds of content pieces or the agencies or the content agencies that do these things, are pretty expensive in the services that they offer to produce these creatives and these iterations around those creatives to make it work. It's a pretty big investment in general.

Speaker 3:

So for a newer brand, would you still recommend then an older, or some of your different user cases here and some of your countries and nations? All this, but for the vast majority, facebook still is the place where you want to be put in your money.

Speaker 2:

Facebook. For small businesses looking to gather up the first few hundred customers, facebook is, in my opinion, the best bet you've got in terms of generating some momentum. And eventually, as you scale, then you can look into diversifying, starting to do emails, starting to do SMS, then potentially moving into Google branded and then moving into affiliates, and on and on and on. Then there's a whole philosophy to scaling, to mass scaling, that businesses need to be aware of.

Speaker 3:

In regards to because I think this team do a lot of design work for us in Busterbox as far as, like, ad design and email design, website design, do you have any quick tips for people To basically drive up conversions?

Speaker 2:

Keep it simple. There's not necessarily a lot of design, as there is creative strategy and research that you have to do behind the creative to come up with the best possible creatives. For many accounts, I've noticed recently a trend which has been working like the Note app on your iOS or Apple. What people are doing is they're making a heading inside, like they're using the graphics or the UI of the Note app and they're writing inside of it messaging to basically target their target audience. Say, for instance, you have, let's say, for Busterbox there is a question there that says my dog has been ripping all the toys that we've been buying on the store. Then below it, these are my ideas for solutions to this particular problem. Then they use the checkbox feature within the Note app to highlight a couple of ideas Inside those ideas the brand would fall in. So BusterBox would come up as an idea and it would have a checkbox or a checkmark as something that does work and you can take that creative and make many, many, many, many different variations of it and I've seen it do some wonders in terms of click through rate. For ads. Specifically, there's random kind of UGC that you can grab online and we've seen this multiple times. We're using some interesting UGC from the past that has been doing wonders for the ads. It's very different for every different business.

Speaker 2:

Dig into your creative portfolio.

Speaker 2:

Try to see what there is something that resonates or you believe will resonate, and grab 10, 20 creatives and start testing them.

Speaker 2:

Start testing them and look at these three metrics that I'm highlighting right now CPM, sell, the cost reaching people, cpc and CTR. There are some extras that you can look into, but those are not relevant for starters. Pay attention to these three when you're testing and comparing creatives so CTR, cpm and CPC and make sure that you're filtering out, like general clicks and just look at link clicks. You have specific features. If you go to the any ads management platform, you will be able to filter between general CPC and CPC with link clicks, those that dominate these three metrics. Those are winners that you should take and build a separate advantage plus campaign, potentially or interest-based campaign, and try to scale it. If people don't know what these terminologies are, go to whoever is managing your ads or consult with, potentially, me or Liam and try to understand this basic, basic concept because it's key to anything that you do on the creative strategy, on the PPC strategy and on your overall growth strategy.

Speaker 3:

Is there anything else you want to share for people who are looking to really kick on this year, any crazy things you've come across or just any general advice that you share with people?

Speaker 2:

I think there's not one magic trick which is going to make your business grow. I think that in my experience with all of my accounts, what I've seen work is continuous iteration and note keeping. What I mean by note keeping is reporting everything reporting website performance how many people are coming to your landing page, how many people are going to your secondary target page, whatever it may be. How many people are going to the checkout, how many people are purchasing, and calculate the percentage. Look at that flow. Try to identify where the problem is CPC, ctm, ctr. Keep note of all the different ad metrics email open rates, email click-through rates. Take note whether it's a seven-day period, 14-day period, 21-day period and a 31-day period, which is basically the entire month. Make sure to note everything down and build a record, because that's what's going to inform you for future references that, oh, q1 of 2023 wasn't to grade.

Speaker 2:

Now, coming into 2024, I know that it might not be to grade, so I think that I might need to consolidate and focus on lead gen. That way, you're not burning money, you're saving money and you're using that money that you're saving to future invest in months that you know did well, because you did all that note keeping, basically speaking, by doing this. I do this with all of my accounts. I keep note of everything, all the data, and I talk with them every week to figure out different ways and different tests, to iterate and to come up with better results, even if it's a slow month. Every decision we make today is going to inform the decision that we make today next year. In my opinion, by doing this, you will gain so much insight as we have done in BustBox over the last two years and three years, and you will be able to grow the business profitably and be happy with what you're doing every single day, because it just makes sense and you know how your business works, how your metrics works and everything around it as well.

Speaker 3:

Yeah, it's some very valid points there.

Speaker 3:

These people, they don't, they don't know any of these metrics and like safe, it's a case where they're dependent on email to Drive volume for them or to drive some sort of sales for them.

Speaker 3:

If they even increase their open, if they find a way to increase their open rates on their email, like one metric there, if they're Keeping tabs on it and they're like, if we can even increase this by a spot, a small amount, it can do wonders for the amount of people you actually get signed up. And then it'd be a case like how can we improve the open rates? Okay, let's test some new subject lines. If we can come up with some new subject lines that will drive higher percentage of open rates, more people will sign up. And that's really what we do in Busterbox, isn't it like we have all the metrics and we know, if we can even improve one or some of them by just a small amount, there will be a much improved performance in the business and everybody really should be doing that 100%, and it's Scary when you first hear about all these things because they sound complex and they sound difficult.

Speaker 2:

But I'm telling you, I have all sorts of demographics as my accounts and Everybody loves and loves to hear all these kinds of little details. Say, for example, how many people ended on the homepage and how many people went to the flow. Oh my god, that rate is so low. What are we gonna do to fix it? Right? Because the smaller improvement in the rate of people because everybody goes to the homepage if you're advertising to go to the homepage and so the volume there any percentage fix on that point makes a massive, massive difference on the number of people that go To the flow, go to check out and eventually purchase. So the customer, or, in my case, the account, becomes very obsessed with the issue and every week they're coming to me and saying can I see what, what, what has changed? As we did, whatever changed the website last week, and so it's. It sounds scary, but with right people by your side, which you absolutely, absolutely need, you will be able to Figure your business out very, very well. I am a hundred percent confident when I say that.

Speaker 3:

Yeah, it's all this information needs to be taken very seriously and you need to be tracking it. If you have aspirations of actually growing and a big and sustainable business which can give you a great life, well, look at thanks. Thanks very much for coming on. Always great chatting to you. If people want to reach you, what? Where can they go?

Speaker 2:

You can go to my website. Last time when I skip the website, there was an issue with the form. The form is now fixed, so you can go to blackbird dot marketing. So no dot com, no dot, no dot or just blackbird dot marketing, and you will go to the website where you will have the contact form, which you can fill out with any requests or Inquiry that you may have. Alternatively, if it's easier for you, art at blackbird dot marketing, so just that art. Add to the domain of the website and you will be able to get in contact with me directly and I'll be a be a hundred percent sure to answer within 48 hours any questions that you may have Regarding everything that we discussed today. I am not one of those people who is reserved or holds back in giving Information, as we can see from the podcast, so don't hesitate, reach out and I'll do my best to help anyone that needs help.

Speaker 3:

So thanks again, art, and if anybody has any questions they want answered on the show, as always, head over to the free Facebook group at Subscription box resources dot com. Post your question there and it'll be answered on a future episode. Thanks very much for listening and I hope you have a great day chatting next week. Bye, bye.

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