In last week's episode of Subscription Box Answers, I discussed subscription box offers in detail. If you plan to scale up your business, you need to become very proficient at creating compelling offers.
In this week's episode, I am breaking down the positives and negatives of various offers to help you decide which is best for your business.
Different offers can be used to achieve different business goals, and it's crucial that you understand this before diving in.
We are consistently testing offers at BusterBox, and I have learned a great deal from this. I am now going to share these insights to assist you.
If you have a question you want answered on the show, make sure you visit www.subscriptionboxresources.com. Join the free Facebook group and post your question there.
In last week's episode of Subscription Box Answers, I discussed subscription box offers in detail. If you plan to scale up your business, you need to become very proficient at creating compelling offers.
In this week's episode, I am breaking down the positives and negatives of various offers to help you decide which is best for your business.
Different offers can be used to achieve different business goals, and it's crucial that you understand this before diving in.
We are consistently testing offers at BusterBox, and I have learned a great deal from this. I am now going to share these insights to assist you.
If you have a question you want answered on the show, make sure you visit www.subscriptionboxresources.com. Join the 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 Now. On last week's episode, we discussed subscription box offers and I read a chapter of my book, the Subscription Box Blueprint, which explained the offers in detail and basically gave you a full breakdown of why you need to run offers to get your marketing to work Normally with a subscription box business. If you want to scale up, you will have to take your offers very seriously. Now, if you never listened to last week's episode, or you missed it for whatever reason, I definitely recommend going back and listening because it's 100% going to help you. On today's episode, we are continuing with offers because I want to help you decide what's the right offer for your subscription box business and I'm going to cover three offers in detail and I'm going to explain the benefits and the negatives of each offer because, unfortunately, with all offers, there normally are benefits and there normally are negatives, and you need to be aware of those when you're actually running them and you need to have the correct expectations, and the type of offer you're going to run will depend on your business goals. Some offers are better for growth, some offers are better for profitability. It all depends on what you want to achieve in your business. Now, we spend an enormous amount of time on this and both the box. We're changing the offer so many times, we're testing so many different things, and I would credit that to where we are in the business. Honestly, that's why we've been able to scale up and sell millions of dollars worth of boxes, because we take our market in extremely seriously, and that all revolves around the intro offer. That's how important it actually is. So, like I said on today's episode, I'm going to help you figure out what is the right offer you should run for your business by sharing three quick offers and explaining the negatives and the benefits of each of them so you can make up your own mind. Now the first offer you either love it or you hate it, but I have to bring it up Free box plus shipping. Now, I discussed this in a previous episode of the podcast and if you're really curious about this offer, I definitely recommend checking out that episode.
Speaker 2:Okay, so you can drive really high volume with this. Why? Because everybody loves something for free. It's the easiest thing to sell by a mile, but it attracts some bad quality customers. And why is that? Well, it's because everybody wants something for free. What are the benefits? Well, you can grow at a really quick speed. Your customer acquisition cost gets really really cheap if you do this right. But the churn is going to be a lot higher compared to any other offer, and that's the trade off you have to accept with this. The tip is to track your subscription cohorts to understand the full picture. More than likely, the first month churn will be high as you get rid of all of the freebie hunters who came in looking for something for nothing. But then over time the churn usually drops and the quality of customer that remains is a lot higher, because you're basically filtering out all the really poor quality customers in the first month or two.
Speaker 2:Now, should you do this? Well, it's completely up to you. It won't work for everybody and if you get it wrong it can cost you a lot of money. So if you're thinking about doing this, don't just jump in. You should test it first and be very careful with it. Run an experiment and get a small group of people signed up and then watch what happens with the subscription cohort over time to see if it's actually profitable. If it is profitable, you can do it again and get a bit more people signed up and watch what happens.
Speaker 2:Now here's a big tip when you're doing this, make the shipping charge at least £5. If you go with £1, it will be a complete bloodbath. You'll get a serious amount of people signed up for a really cheap price, but your churn will be absolutely out of control. If the shipping charge is at least £5, it tends to filter out a lot of those really really poor quality customers. Now, if you're in the US, you can probably charge a bit higher for shipping, but you should only do this on a six or a 12-month subscription.
Speaker 2:If you do this on a rolling one-month subscription, the churn will be really, really high. The six or the 12-month commitment helps you filter out really poor quality customers. Now it is possible to do it on a rolling one-month, but you normally need to have a lot of cash in the bank and you really need to be on top of your subscription cohorts. It usually means when you do it on a rolling one-month, you've planned out for really high churn, but you know you're going to be able to get to a really big scale and you've basically worked out all the forecasting and you know when you get to that size you can turn everything profitable and you have a really big company, it can work, but I definitely don't recommend doing that. I recommend only doing it on a six or a 12-month subscription.
Speaker 2:Something else to be aware of is if there's a big jump from the shipping charge to the full price renewal, it's more likely to drive up the churn. In Buster Rocks we're going from five-pound shipping to $22.99 in the first renewal, so it's not that high. If you're going from like five-pound to 50-pound, that's really high. That's a big jump for the customer and that will probably drive up your churn, but you're probably earning more money and if you're earning more money you can probably deal with higher churn. Something to bear in mind If you get this right, you can grow really quickly with this like really really quickly, much quicker than any other offer. I know many people in this industry who only run this offer and they have really big and profitable companies and they're doing great and they will tell you themselves that without this offer they probably wouldn't be in the position they're in now. It can work, but it's not right for everybody and you need to be careful when doing it.
Speaker 2:The next offer some kind of discount, like a 20% discount, a 25% discount, a 50% discount, whatever. This can work. But when you include any kind of discount in your intro offer, you're always going to have a higher churn rate. The bigger the discount, the bigger the churn. On the flip side, the bigger the discount, the cheaper the customer acquisition cost Not always, but a lot of the time. So, similar to the free box offer. If you're running this, you need to test it. You need to test what happens with different discount amounts and identify the ideal one for your box which is going to drive the most volume but also give you the highest lifetime value.
Speaker 2:Now, the good thing about this offer is it's really straightforward to run. Same with the free box offer as well. If you're unsubly, you can automatically apply a discount code to the checkout and that's it. That's all you need to do. And the marketing is really simple as well. Your ads just basically have to say what the discount is. That's all you need to do. It's much easier to plan than some of the other offers I'm going to cover now.
Speaker 2:Next offer double your first box. How does this work? Well, you just double the first items in the first box. You can even send two boxes if you want. Obviously it depends on the shipping cost. This is a great offer because it helps you clear stock if you have stock to clear. If you don't have stock to clear and you need to order stuff in to run this offer, just be careful and make sure you get your forecast and write and you know you can actually drive some volume on this before you do that, because the worst thing that can happen is you go out, you order all this stock. The offer doesn't work, you're stuck with it. I think your cash flow is a complete mess in your business as you try to get rid of the stock.
Speaker 2:It's a good offer. We've ran it time and time again in Busterbox. But the only issue with it is the CAC is usually a lot higher compared to a deep discount or a free box offer. Not all the time I have seen in certain niches the CAC's actually okay but it can be a lot higher. But on the flip side, the lifetime value is really high with this offer and the turn is really really low. The quality of customer it attracts is so much higher than any kind of free box or deep discount. Why? Because the customer needs to pay in full to get the offer. Then when they receive the first box there's so many different items in the box they're usually so impressed they don't churn out and you keep them signed up for a really long time. But it's harder to grow with this offer because you don't get the same volume that you get from a free box. So what can work really great with this is if you scale up, using a more aggressive offer if that works for you and then flipping to a double box offer to maintain where you are and grow a bit and unlock maximum profitability in your business. But yeah, it's a good offer and if you're looking to test something in 2024, definitely give it a go.
Speaker 2:The next offer free gift with your first box. Now, when I say free gift with your first box, it has to be a gift that the customer actually wants. We have tested so many free gifts over the years and both the box, from cameras to beds, to earphones, to coats, to Freddy Krueger, costumes around Halloween, you name it. We have tested it. Doorbells, gps trackers so many different gifts and they all produce way different results.
Speaker 2:If your idea of running a free gift is going down to your warehouse and picking out some crap that's been sitting there for three years that you can't get rid of and you think that's going to be good enough to entice people to sign up. You're probably wrong. Okay, it has to be something they really want, something unique which you can source for a good price, which has really high perceived value when you present it to your customers. Now, for instance, off the top of my head, our bed offers worked great, our camera offers worked great, our GPS worked pretty good, but free earphones they did not perform too well, and the reason why they never performed too well was everybody has earphones at this stage and we obviously couldn't give out like AirPods or anything like that. They were good quality earphones, but they were nowhere near the quality that a lot of people are probably using at this moment. Even though we position that as if you sign up, you'll get new earphones that you can listen to when you're walking your dog.
Speaker 2:The market and angle fitted with the box. They just never performed, and I'd see this all the time. People reach out to me and they're like look, we tried a free gift and it doesn't work. And I'm like, okay, you can't try another rule, because we're literally testing free gifts all the time in Busterbox and, like I said, they can perform way different depending on what the gift is, so you may have to try a few different ones to get this right, but it's definitely worth it when you do, because when you get it right, you can get so many new subscribers signed up to your box. Now, the acquisition cost is obviously nowhere near the same as a free box offer, but it's not as expensive as double your first box. When you actually get the gift right and the churn is really really good on these people, mainly because they have to pay full price to actually get the box, which obviously helps, and they're usually so impressed with the free gift they stick around for a long time, so it's a great offer. If you can get this working, it's a really, really good offer.
Speaker 2:Now, things that you need to be aware of Don't jump in and order hundreds or thousands of free gifts without actually testing the offer first. That's really important, and I'd actually recommend just running a small test and testing the response and then, if it works for you, we all means, go out and order more of those gifts. I'll give you an example we were running a free robotic hillover with our first box and the way we positioned. It was if you sawing up, your dog is going to get his free personal cleaning buddy and dogs love this because the robotic hillover was going around the house. It cleaned up after them and the dog went crazy chasing it around. Really good offer. But we weren't sure if it would work or not, so we ran some emails. We saw that the response was really really high, and then we went out and we ordered a good amount of these hillovers so we could continue to run this offer, and you should do the exact same.
Speaker 2:Now I get a lot of questions about how you can actually run different offers depending on your platform. Now we use Subly and it's great for running offers because you can simply change the plans that you've live on your website and obviously put a code on the end of them so you can identify what the offer is, and then Subly plugs into Chartmogle so you can track the performance of the offers in Chartmogle. You can filter by different plans, you can see the subscription cohorts and you can see what the customer lifetime value is, and you can also tag orders in Subly as well, which makes the offer process a lot easier. Now some platforms don't really make it easy to test different offers. They make it a bit more difficult, but you should be able to figure out a way on your platform to do this. Reach out to their support if you're unsure. But yeah, if you're on Subly, it's pretty straightforward.
Speaker 2:I hope you enjoyed this episode and you understand better now the negatives and the positives of each offer, and hopefully I've helped you identify what the right offer to run in your subscription box business. Can I ask you a big favor? If you enjoyed this episode and you've got some value from it, and you've been listening for a while and you've learned some things which have helped you improve your business, would you please give me a review, either on Spotify or Apple or wherever you listen to your podcasts? It just helps me get this show out to more people. We'll be back next week at the exact same time and, as always, if you have a question you want answered on the show, just head over to subscriptionboxresourcescom, join the free Facebook group and post it there. We'll be back next week at the exact same time. Chat to you there. Bye-bye.