Subscription Box Answers

10 Lessons I’ve Learned from Running a Subscription Box for Over 9 Years

• Liam Brennan

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What I’ve Learned After Nearly 10 Years Running a Subscription Box

On today’s episode, I’m sharing 10 lessons I’ve learned from nearly a decade in the subscription box world.

From marketing and operations to retention and everything in between — these are the insights that helped me grow a multi-million dollar box.

Learn from somebody who’s been doing this a very long time.

Take a listen.

To get your question answered on the show, head over to www.SubscriptionBoxResources.com and join the free facebook group

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. I hope you're having a really good day. On today's episode, I'm going to share 10 things I've learned from running a subscription box business for over nine years. We're coming up to our 10 year anniversary, which is absolutely insane when you think about it. I've been running this subscription box longer than I've done anything else in my life Longer than I've worked any other job or anything and I've obviously learned quite a bit from doing it literally around the clock and from helping so many other subscription box owners. From writing my book, my program, my membership, connecting with so many different boxes over the years, seeing what works and what doesn't work, I've learned a lot. So the point of this episode is to share 10 things I've learned which should hopefully help those who are a bit further back in their subscription box journey. If you've been listening to this podcast for any amount of time, you know I tell it exactly how it is. If something is working, I'll share that. If something doesn't work, I'll also share that. I never try and dress up this business model. It's a great business model when you get it right, but, like anything worth doing, it's not easy sometimes. If it was easy, everybody would be doing it and there would be no opportunity, okay, but anyway, yeah, let's jump into it. I'm going to share 10 things I've learned from running a subscription box business for over nine years. Let's jump into it.

Speaker 2:

Number one churn follows the box. Okay, so you're obviously sending boxes out pretty regularly, okay, every month, every two months, whatever. Okay, you can send out five boxes in a row that people really, really enjoy, and then the sixth box you send out, for whatever reason, people don't like it, or a percentage of people don't like it, or it gets delayed because of things outside your control you will see a spike in your churn. Okay, you will see a spike in your churn. Churn follows the box. And, on the flip side, if you send out a box people really like okay, something they really really enjoy, that can have a massive positive impact and your churn rate can drop. So you always have to do your best to deliver a great box, and you should be doing that anyway. Okay, but you always need to push yourself to come up with a really, really good box that people are really going to love. And this is especially true if you're sending out a discovery box every month, similar to BusterBox. Now, if you're sending out like a one thing of the month club, like, say, a razor or dog food or something where the product doesn't change, well, that's completely different because people know what they're getting and this isn't as true when it comes to that. But, yeah, if you're sending out a discovery box, churn follows the box, something to really be aware of.

Speaker 2:

Okay, number two seasonal for the majority of subscription boxes, not them all. Okay, I'm not going to say them all because that simply would not be true and there is always some kind of exception. But for the majority of subscription boxes, the start of the year is usually slower and I think that's the same for a lot of retail. Same for a lot of retail. You obviously make the majority of your money and see the majority of your growth in q4 because people are in buying mode. Okay, people are in buying mode and and if you have your marketing set up correctly, you can really take advantage of that and you can get a lot of growth in your business. But when January comes around said it many times on this podcast and it's 100% true for the majority of subscription brands people are in a different mindset. They're like okay, I spent a lot of money on the build-up to Christmas. I've come back, I need to cut back a bit. I need to sort out my finances. What am I going to cancel? And a lot of the time, a subscription box will be one of the main things. They will cancel. Things usually calm down and get back to normal around March.

Speaker 2:

Now some brands say that the summer can be slow for them as well, and you can obviously see why. That's because people aren't on their computers. They're on social media less, so they're not seeing your ads, they're out and about and, yeah, the main thing is they want to spend their money on experiences. They're on holidays, they're going out doing things and they're not really thinking about signing up to stuff. Now we have found a way to combat that. Some of our busiest times is actually the summer, believe it or not, and how we managed to make that happen is our intro offer is highly tailored to the summer. So I'll give you a example.

Speaker 2:

A few years back, things were pretty slow for us, but we came out with a new offer. It was a dog sprinkler, okay, and it was a dog splash pad, and obviously the weather was really, really warm and we gave this away for free when somebody signed up for six or twelve months and we shipped it out really quickly as well, so people weren't waiting a long time, and that literally sent our sales through the roof. And because everybody else was having a relatively slow summer well, well, not everybody, but a lot of people were having a slow summer. They weren't spending as much on advertising, so the competition wasn't as intense. We had cheaper CPMs and we ended up getting a lot of people signed up for a really small customer acquisition cost. It was really great.

Speaker 2:

Now for you in your business business, I would argue. The same thing is probably true. The summer will be slow if your product isn't tailored for the summer at all and people don't have a reason to buy in the summer. If you can give people a reason to buy in, the have to be slow. Okay, moving on, number three, customer service is the first role you should fill. Customer service is the most time-consuming role in your business. Okay, especially at the start. Now I think it's really important for a new subscription box owner to do their customer service for a while. Okay, you need to figure out what people are saying. You need to come up with processes, but you should document all that stuff, okay, and you should have a folder covering everything to do with customer service and managing and any query that comes in. You should use loom to record quick videos. Then, when the time is right and you hire somebody, you will have all this training stuff and material they can revert back to. But, yeah, customer service should be the first role you should fill, otherwise it can end up taking over your life. Now, customer service is really important, but you will get to the point where you need to be focusing on growing your business and if you're coming in every single day and you're spending like 30 or 40% of your time answering tickets, you're not going to have the time you need to actually grow the company. Okay, number four this is really important and this is something we realized a good few years back.

Speaker 2:

Not all customers are created equal. Different channels and different offers attract different kinds of customers. That's why it's very important to measure this. I'll give you an example, and the easiest example I can pull off the top of my head is A free box. You do a free box. You'll get a lot of people signed up, but they're more than likely going to be poor quality customers. It's true, seriously, it's true. If you give somebody the opportunity to take something for free, you are going to attract people who have no intention of renewing. They just want something for free, you know. Does that mean free boxes are bad? No, they can work. For some brands they can be a useful way of acquiring course customers. But usually somebody who comes in on a free box is going to be completely different than somebody. That's the same for marketing channels.

Speaker 2:

Okay, at the start, when you haven't really cracked paid advertising and you get some people signed up to your box, okay, those are going to be really really high quality customers. Those customers really care about your product. You never had to advertise to them repeatedly to buy. They came to you kind of organically. They're really interested in what you're doing. I've seen this so many times. The churn on those people is more than likely going to be completely different than any other customer you sign up to your box. It will be a lot lower. So if you're trying to base projections off those customers, there's a good chance it won't be right. Now you're probably thinking well, why don't we just build a whole business with those customers? And that's amazing if you can do that, but the problem with it is you usually can't scale a company like that. You usually hit a wall and if you want to scale up, you have to bring in other kinds of marketing. Okay, other marketing channels, and those marketing channels can obviously be very profitable as well, but the customer quality is usually a lot different compared to that first batch of customers who come in organically.

Speaker 2:

The next point some marketing channels just aren't worth your time. Okay, I'll give you a example. A few years back we were going all out to get set up on pinterest and they were really good at the time, pinterest. They had really good customer service. They helped us set up our tracking. They were calling us up, giving us feedback. I think they gave us some credit really really good and support to try and get set up on that channel. And we are putting a lot of time and effort into it and eventually we came to the realization that this marketing channel just isn't worth our time.

Speaker 2:

Now it wasn't worth our time in BusterBox. I'm not saying it won't be worth your time. It really depends on your location and your niche but we just figured out it just wasn't worth our time. We are putting all this effort into it and the maximum number of customers we could get on a monthly basis just wasn't worth it. It would have been more beneficial to put our time and energy and marketing budget into one of our other channels which produces a thousand times more customers in a month. And the same can be said for low quality channels. You may come across some low quality channels that can get you a lot of customers. There are some like partnerships and affiliate stuff where they'll promote free boxes for you and you can get massive blasts of customers, but it's time consuming and it's expensive. When you work out how many free boxes you have to give out and you may be tempted by it, but when you look at the metrics after a while you figure out it's just not worth your time because they're really poor quality customers, they're taking up a lot of customer service time, they're a drain on resources and it's just not worth it.

Speaker 2:

I'll give you an example Groupon or Voucher. Back in the day, we used to do a lot with Groupon and Voucher and Pigsback as well. This was a Irish version and we were really excited at the time. We're like this is a great way of acquiring customers. Well, we quickly figured out. Yeah, this is a great way of acquiring customers. Well, we quickly figured out. Yeah, you can acquire a lot of customers on sites like this. But, seriously, what is the point? They're coming in the front door and they're just going straight out the back door. They're not staying. It's just not worth it. And on the flip flip side, when you do find channels that are worth your time and you get good quality customers from them and you can scale them, that's where you need to be putting your time and energy. I'm the exact same. You feel like, okay, we have this channel working to some degree. Let's try a million different channels and it is important to diversify. But my advice would really be when you find a channel that works, milk it okay, because it's not guaranteed to be like that forever.

Speaker 2:

Okay, um, number six the box opening experience and how you make people feel is critical. Back a few years ago, you could get away with just putting random products in a box, putting an insert in it and sending it out to people. This was because the subscription box concept was still new. It was still fresh in people's minds. We went through COVID shortly after People were sitting at home looking for things to spend their money on. All this stuff played a big factor. That doesn't work anymore. That doesn't work anymore.

Speaker 2:

Okay, it's really important that you deliver a world-class experience, okay, and what I mean by that is make them excited about receiving the box and, when they open it, make sure it's social media worthy, okay. Aka make sure if they take a picture of it and they share it, you will be proud of that, okay, and you'll be able to use that as marketing material. And a lot of that comes down to the presentation and the teams. Okay, teams are really, really important. When we started our business originally, we never did teams. We've been running for a good amount of time now and we create teams. Okay. We create our own products, our own toys, we have some of our own treats.

Speaker 2:

Every box is a team and obviously we're in the fortunate position where a dog is the best customer. A dog is never going to complain, okay. They're happy with anything like you could literally put a tennis ball in the box and they're going to be delighted. It's going to be the best day of their life. But the dog does not pay the bills. The owner pays the bills. So we have to keep the owner engaged and excited as well, and we do that with teams and the presentation of the box, and you need to do the exact same. It doesn't matter if you have a dog subscription box, a cat subscription box, a cat subscription box, a gym box, whatever. You can't just put random products in a box and expect people to pay for it indefinitely. It doesn't work like that anymore.

Speaker 2:

Okay, number seven no matter what size you are, the work is pretty similar. So you should aim to get bigger so your company can actually pay you and it becomes a vehicle to give you a great life. Okay, when you're small, you still have to source products, deal with admin, all that stuff. Okay, you have to do all the same stuff. When you get bigger, guess what? You still have to do the same stuff. But when you get bigger, you have more money, and when you have more money, you can pay yourself better and you can also hire people to help you to free up your time. I'm not talking about getting gigantic with like 100,000 subscribers. I'm talking about figuring out how big your business needs to be to make it worthwhile for you, because you set up your business to have a great life, so figure out what size it needs to be to achieve that and then go all out to reach there.

Speaker 2:

Number eight market size plays a massive part in how successful your business will be. Your time total addressable market size plays a massive part in how far you can go. You need to understand how big your market is. Okay, you can do research into that and it's really important that you have that information. Okay, because that will allow you to figure out how far you can go and when you've reached a point in your business where you probably can't go any further and you need to optimize to make that point very profitable and worthwhile for you.

Speaker 2:

If you go out with a mass market product, say like a Razer subscription, okay, it's going to be way more competitive, but you can obviously get much bigger because think about the market size okay. On the flip side, if you go with a really, really niche product with a smaller size, time you're obviously not going to be able to grow that as big and that's absolutely fine, okay. But it's just important that you understand that and you have the correct expectations and don't compare your company to other companies that are growing really quickly. You may hear somebody say like oh, they're getting like a thousand people signed up a day. Well, depending on your niche, that may not be possible for your business because the market just isn't big enough, and you need to understand that because it's a very important factor.

Speaker 2:

Okay, number nine platforms we use subly. It's a really good platform, has all the tools you need to grow a very successful subscription box company. Now, if you aren't where you want to be it's very unlikely this is because of your platform. Okay, if you're moving between loads of different platforms and you're not going in the direction you want to grow, like I said, it probably has very little to do with the platform. Okay, I see this quite frequently. People are jumping between platforms and they think when they move to the next platform, it's going to explode their growth. Obviously, some platforms have really powerful tools, like Subli, with commitment terms and things like that, but, to be 100% honest with you, it's very rarely down to the platform. If you aren't going in the direction you want to go, it's more likely something to do with your product, the way you're running your company, the way you're marketing your box, and changing platform probably won't fix that. Okay, sorry, but that is true. Now, obviously, there's other reasons why you change platform and by all means, if you think moving to another platform and it's better for your business, you should a hundred percent do it, okay.

Speaker 2:

Moving on number 10 now, I could literally do uh, 10 000 things. I've learned from running a subscription box for this amount of time. But yeah, we're keeping it to 10 on this podcast. I'll probably come back and revisit this at some point in the future. But number 10 it's 100% worth it and recurring revenue makes such a difference.

Speaker 2:

I've been involved in this for so long that sometimes I forget the benefit of recurring revenue and how powerful it can be for a business. I'm involved in some other things that don't have recurring revenue and it's a completely different ballgame. If you're coming in every month starting from zero, it's a lot tougher. Now, obviously, you can make money in things that don't have recurring revenue If you have a sales process in place, if you can generate leads, if you have all that stuff. But recurring revenue gives you a serious peace of mind. Revenue gives you a serious peace of mind, okay, even if you're having a slower month and you're at a certain size. With all these people signed up for six or twelve months, it gives you such a great peace of mind to know you're able to pay your bills, you're able to pay yourself, you're able to do all the things you need to do to keep your business running, and that's why this business model is 100% worth it. When you crack it. It's 100% worth it because you have that recurring revenue built in and when you have that recurring revenue, it's a lot easier to grow the business. If you know you're going to generate this amount and you only need to acquire this many customers to grow it, or you only need to make this much more money from your existing customers, that's a lot easier than coming in on zero every single month and trying to grow it from there.

Speaker 2:

I hope you enjoyed this episode, as always. We'll be back next week at the exact same time, and if you have a question you want answered on the show, head over to subscriptionboxresourcescom, join the free Facebook group and post your question there. And can I ask you a big favor If you've been listening to this podcast for a while and you're enjoying it and you're finding value in the episodes, would you mind giving me a review on Apple, spotify or wherever you listen to podcasts? It just helps me get this show out to more people. Thanks very much and chat to you next week. Bye-bye.