Subscription Box Answers

Do These 2 Things Now to Make Your Subscription Box a Success

• Liam Brennan

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In this episode of Subscription Box Answers, I cover 2 things you need to do right now to make your subscription box a success. If you are stuck or you are very serious about pushing your business on. I highly recommend checking this out.

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 questions, you ask the questions, 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. As always, I hope you're having a really good week. On today's episode, I want to cover two things you should do in your subscription box business immediately if you want to push things forward and get to the next level. And this episode is especially for people who may be running a while and you feel like you've hit a certain subscriber number and you're stuck Now, no matter where you are in your journey, you will find value in this episode, but I'm specifically talking to those people. This episode is going to help those people, and I've been thinking about this for a while, right, and I've been thinking why some subscription box companies manage to scale up and the founders end up having great businesses that fuel a great life for them.

Speaker 2:

And then, on the other hand, there's other subscription box businesses that get stuck at a relatively low number of subscribers and the business doesn't really serve them at all because all the work still needs to be done. All the work still needs to be done source and products, operations, customer service all that stuff still needs to be done, no matter what size you get to, but if you get big enough, you can actually pay yourself and you can hire people to help and the business actually serves you. But if you don't get big enough, you can end up going around in circles for a very long time. Now I know there are many different reasons why somebody can get stuck. It can be down to niche, the market size, their skills in general when it comes to business and marketing. There's so many different reasons why somebody can get stuck and sometimes it's completely crazy, because I obviously come across a lot of subscription box founders and different types of businesses and sometimes you can come across two or three very similar subscription box businesses, but the outcomes are massively different. Some of them end up going to big numbers and the founders really have a great life fueled from their business and, on the other hand, some of them don't really end up going anywhere. They get stuck on a relatively small number and, like I mentioned previously, the founders running around for a long time in circles trying to grow the business and trying to make everything work, but, for whatever reason, they just can't really push on ever. So on today's episode, I want to help those people. I want to simplify this and I want to help those people push things on to the next level, because sometimes you get stuck, because you just simply don't know what the next step is.

Speaker 2:

Okay, let's jump into it. The first thing you should do if you're stuck in your subscription box business okay and I've said this so many times, but it's so important you need to understand your metrics. Okay, now, I'm taking it for granted that everybody listening is doing a good job with their box, you are sending out good products, you have a good customer experience and your box has been sent out at a price that works for you and your customer. Okay, I'm taking that for granted. If you have all those things in place and you've been running a while, you really need to understand your metrics. And the reason why you need to understand your metrics is, in the simplest way possible, right? You need to know how much each customer is worth to you, how much profit, on average, each customer generates, and you need to know that because you literally can't go anywhere without that information. Okay, if you don't know how much each customer is worth to you on average, you don't know how much you can spend to acquire a customer, and that is a piece of information that stops so many people in this industry pushing forward. Okay, think about it. How can you run ads? How can you hire influencers? How can you do any kind of marketing Whatever? How can you hire influencers, how can you do any kind of marketing whatever if you don't know how much you can spend to acquire a customer and still remain profitable?

Speaker 2:

And I've seen this from two different sides. Okay, I've come across businesses that don't understand this information and they underestimate how much they can spend to sign up a customer and they end up stuck and they're scared of marketing and they're scared of trying to push forward because they just don't understand their metrics. And on the other side, I've come across businesses that are marketing, okay, and they are acquiring customers, but every customer is losing them money. Okay, I came across a business a few years back where they were only keeping people signed up for I think it was three months on average and they were earning something like $3 per box average and they were earning something like three dollars per box. So three dollars multiplied by three months is nine dollars, and they were spending something like 35 dollars to get somebody signed up on average. So they were burning a lot of money on every customer and they couldn't figure out why the business wasn't working. So it's really important you know this information. Now, I mention these tools quite frequently, and I do it for good reason.

Speaker 2:

There are metrics tools out there that can help you understand this information. Okay, there's Chat mogul. That's what we use in buster box. It plugs directly into subly and it's a really powerful tool. It helps you see your lifetime value. You can filter by plan and see the churn rate per plan, per offer. It gives you really detailed information around your business. There's also bear metrics and profit well, and there's some other ones, um as well. If you search online, you will figure out which one will actually plug into your platform. If you're using subly, I believe chart mogul is the only one that will actually plug in. Now, the point of this tool is to understand with a hundred percent certainty what your average churn rate is and what your lifetime value is. Okay, and I'm going to give you a tip when you're calculating your churn rate and your lifetime value because it's all linked together okay, if you have a lower churn rate, you're going to keep people signed up for longer, which will increase your lifetime value.

Speaker 2:

But when you're calculating this information, okay, using one of these tools, make sure you're including your failed payments in your churn. Okay, this is so important. The way we have it set up in buster box is if somebody hasn't paid for 50 days, they are calculated as churn. Okay, it's simply not real if you don't include these. I've come across so many different companies and they're like we have a two percent churn rate, we have a three percent churn rate and you actually look into it in more detail and you're like okay, you have thousands of people in past due that haven't made a payment for literally months and you haven't cancelled them, so they're not included in your churn rate. That is simply not real. Now you can do this to make yourself feel better, but it's just not real.

Speaker 2:

At one point a few years back, we were actually speaking to another business similar to ours and there was talks at the time that maybe we might try and acquire this business and they sent over their information and they said they had all these subscribers. But when you looked at the monthly revenue it wasn't matching up. Okay, and the churn was like really, really low. They were saying the churn was really, really low. And then we looked into it deeper and we found out this person never cancelled failed payments and they literally had a big buildup of failed payments dating back years, and they were trying to say the business had all these subscribers when in reality they only had a fraction of those subscribers. And if we applied the same logic to our business, we would have a way bigger business and our churn rate would be tiny. But guess what? Those numbers aren't real. It simply isn't real to say we have all these subscribers when we're not billing them every month okay. It's simply just not true and that's a mistake a lot of subscription box owners make. And it's actually pretty dangerous because if you're going off information that isn't accurate and you think you have this gigantic lifetime value, you can end up overpaying to acquire customers and you can end up burning a lot of money. So it's really important you have accurate information and you're actually running off it.

Speaker 2:

Now, the great thing about chart mogul is you can set it up in Subly that you keep people signed up forever okay, if they're a failed payment. I know some companies like to do that, but you can change the setting in chart mogul to work out when they're counted as a turned customer, okay, when a failed payment should be triggered as a turned customer, so it doesn't have to do anything to how you're running your platform. And then, if they do come back at some point in the future, they'll be calculated as a reactivation. Okay, so that's really important. You have to understand your metrics. Now, if you do understand your metrics, let's move forward to the next thing and the most important thing you have to do. You have to figure this out.

Speaker 2:

If you want to go anywhere with your subscription box business and this actually applies to any kind of business, not just a subscription box business if you came to me with a fan removal company, okay, where you were going around and you were helping people clean out their houses and move to a new house, I would tell you the exact same thing. Okay, no matter what kind of business you have, you have to have this thing in place spoken about it before, and it's absolutely vital. It's the number one reason why some subscription box companies succeed and some struggle for a very long time. If you want to go anywhere, you have to be able to acquire customers in a repeatable, profitable and scalable way. If you can't do that, you really are going to struggle, and the reason why you're going to struggle is you're dependent on hope. Okay, you're hoping your business will grow. You're hoping your social media posts will get a batch of customers signed up. It never really works that way. Though You're hoping some of your customers will tell their friends about your box and you'll get a new batch of customers signed up in a reliable manner, your whole marketing strategy is based on hope. Now, I can tell you for a fact anybody that has achieved a lot of success with their subscription box business depending on hope is a massive outlier.

Speaker 2:

Okay, the majority of people that have gone anywhere and I would literally say like 99.9 percent of people that have gone anywhere and have achieved a good amount of success with their business do not rely on hope. They have a system or a process in place to acquire customers in a repeatable, profitable and scalable way. You have to have this in place way. You have to have this in place now.

Speaker 2:

For me, whenever I'm getting involved with a new business or if I'm giving people advice, this is the number one thing I want to solve asap. Okay, because I know if I can crack this, I can take this business to a really good place, I can make it sustainable and it can grow to a level where it produces enough income to make it worthwhile for everybody involved. Okay, it's really important. Now, how do you do this in your subscription box business? Well, there's many different ways you can do this. Okay, and this is where your marketing needs to become your number one priority. Okay, it can't be something you do at the end of the day for 10 minutes when you feel like you have a bit of time if you want to go anywhere. Your marketing needs to become the most important thing in your business for the foreseeable future, until you at least crack this and you have a system in place to acquire these customers, because you know what your customer acquisition cost is going to be and you can set up a system pretty much where you turn your ads on and you know with a good degree of certainty how many new customers you're going to get signed up.

Speaker 2:

Now, where people fall down is they don't know how to run Facebook ads properly. They're not running an offer, they don't have their campaign set up correctly, their website isn't optimized to convert, they don't collect emails, they don't follow up with their leads properly, and this becomes a problem, okay, and they're like oh, facebook ads don't work, and they jump to the next thing and then they jump to the next thing and then they jump to the next thing. It's really important when you pick a channel, you test it properly, okay, and you have the right things in place, because if you don't have the right things in place, it's not going to work for you. Now other ways people grow tiktok, ads, direct mail, google for some brands, affiliates all of these things can work. Okay, all of them can work, but it depends on your business and your niche and you need to test what works best for your business and you shouldn't stop until you crack it, because only when you crack it will you be able to take your business to the place it needs to be now.

Speaker 2:

There's so much information in previous podcast episodes around marketing. Obviously, I have my book, the subscription box blueprint. We talk about different marketing strategies in there, and I have my program, the Subscription Box Experts Academy, which covers in detail how to actually acquire customers in the way I described. Okay, so there's many different ways you can learn. You don't even need to learn off me. You can learn. You don't even need to learn off me. I'm not saying learn off me, but just figure out how to acquire customers in the way I described.

Speaker 2:

Now I'll give you an example of something I'm trying in one of my businesses. So I have a membership called Subscription Box Founders, which is okay, it's really important. Now, how do you do this in your subscription box business? Well, there's many different ways you can do this. Okay, and this is where your marketing needs to become your number one priority. Okay, it can't be something you do at the end of the day for 10 minutes when you feel like you have a bit of time If you want to go anywhere. Your marketing needs to become the most important thing in your business for the foreseeable future until you at least crack this and you have a system in place to acquire these customers.

Speaker 2:

Now I know for a lot of subscription box businesses, including my own facebook ads and email are the best way to acquire customers because you know what your customer acquisition cost is going to be and you can set up a system pretty much business owners how to add recurring revenue to their business with a subscription box. It will be a four or five day challenge and then at the end of it, we will give people the opportunity to continue working with us and learning from us in the membership. Now, the reason why we're doing a challenge is I have learned when it comes to selling info products, it's really important to build up trust and show people that you know what you're talking about and you can actually help them. And we're going to give them so much value in this challenge that by the end of it, a lot of people will hopefully want to continue working with us. Now, I'm sharing that because I want you to see.

Speaker 2:

I'm sharing that because I want you to see, when it comes to acquiring customers in a repeatable, profitable and scalable way, you may need to do something a bit different. Now I wouldn't personally recommend the challenge for the majority of subscription boxes, but for a membership or an info product, a challenge can work really well. So the idea will be that we'll get this challenge converting for a customer acquisition cost. That makes sense and then we will run it pretty regularly and we will grow the membership that way. And that's how we plan to solve that challenge in that business, because with the people we do have in subscription box founders, we can see the churn rate is pretty low and people are sticking around for a long time. People are finding a lot of value in the membership. They're finding value in the live calls and we know, if we just figure out how to acquire customers in a profitable, repeatable and scalable way, we will have a really good business there. Now, if you do want to attend that challenge, it will be completely for free and I will have more information on that soon, so stay tuned to this podcast.

Speaker 2:

But yeah, I hope you found this episode helpful. I wanted to simplify exactly what you need to do if you want to push forward in your business. Figure out what your metrics look like and figure out if you actually have sound business fundamentals and then, once you know you do, you need to figure out how to acquire customers in a profitable, repeatable and scalable way, and if you can do that, you're going to build a really, really good business. Now 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, make sure you head over to subscriptionboxresourcescom, join the free Facebook group and post your question there. Chat to you next week. Bye-bye.