What can I do more for them? What would they like more of for me because they're the ones that are spending money with me? - Welcome to Honest Ecommerce, a podcast dedicated to cutting through the BS and finding actionable advice for online store owners. I'm your host, Chase Clymer, and I believe running a direct-to-consumer brand does not have to be complicated or a guessing game. On this podcast, we interview founders and experts who are putting in the work and creating real results. I also share my own insights from running our top Shopify consultancy, Electric Eye. We cut the fluff in favor of facts to help you grow your Ecommerce business. Let's get on with the show. Hey everybody, welcome back to another episode of Honest Ecommerce. Today, I'm welcoming to the show, Matthew Holman, the subscription doc. How are you doing today, Matthew? - I'm doing great, Chase, how are you? - I'm doing good, awesome. So let's kind of dive in here. For those that are unaware, just tell us quickly, like, what is the subscription doc? What kind of content or what are you doing on the internet these days? - Absolutely, so subscription doc or subscription prescription started about a little over two years ago. My partner and I basically were kind of looking at the subscription space. I was running growth for a subscription management platform called Qpilot, and kind of seeing the space thinking, there's a lack of like knowledge or thought leadership. There wasn't really much in the sense of like newsletters podcast focusing on subscriptions. So we kind of started that as partially lead gen for Qpilot at the time, but also seeing this big opportunity. And the more we've done it, we've found more and more people just really resonating with getting help, getting expert advice on how to build subscription programs. - That's amazing. So take me back in time. Kind of what was your career journey working towards? You just saying like, you know what, we're gonna go all in on subscriptions, everything else is boring, not boring, but it makes the most sense to play in this part of the pond. Well, it's funny you say boring or everything else is boring. What I was doing before subscriptions is shipping. So I was running marketing for a SaaS company that was selling shipping rates and shipping technology to e-commerce brands. And the irony here, or I guess the fun story is, is my boss's sister started working at the company. You know, he fell in love, started, well, we started dating fell in love. And so for my own like health of that relationship decided I needed to get a different career going, or at least move out to another company. And also wanted to dip my toe into the entrepreneur water. So I had the opportunity to, I got introduced to David, the founder of QPilot. We hit it off really well because QPilot is very like logistics and shipping focused as a subscription platform and my shipping background. And honestly, if I can write blogs that make priority cubic mail shipping sound like even mildly interesting, like, you know, I've got to be a good content marketer. So that kind of was the start of that relationship. And the more and more I got into subscriptions, it just really resonated with me. There's a lot of math, there's a lot of customer experience, there's a lot of things that I'm, I just kind of like resonate with. And the more I talk and help people with it, it's just something that I think for me also, it's about like less about marketing sass now and more about consulting and helping people solve problems. And that part, it's just works a lot better for me personally and professionally. - Gotcha. So what are like the types of clients that you're typically working with? Is it mostly in the merchants with some sort of subscription element or are you still on the other side of the coin as well, helping these sass companies better articulate what they're doing? - Yeah, mostly it's on the DDC side. I mean, I still help out a little bit on the B2B front when I can, but most of the time, the work is related to like, you know, a physical good company that's selling pet food, or CBD, or supplement devices, beauty devices, you know, like head shavers, toothbrush, things like that, aren't been a lot of my clients recently. So it's usually a physical good, something in the customer's hands. But it's funny, there's a big overlap between the experience that you see on like apps and sass side. 'Cause I think a lot of apps are really good at like trying to drive adoption, trying to deliver value. And I think subscription brands can learn a lot about that kind of experience, trying to like onboard people, educate them, teach them, getting them to use the product in order to improve attention. - Yeah, that is a huge component of retention for you. If you have been lucky enough to get a customer to actually subscribe to your subscription product, understanding how to keep them around is crucial. And it, you know, there's a million reasons why people churn, but they'll tell you usually, and you can usually try to solve that to keep them around a little bit longer, which is only going to increase the health of your business. Now, I don't know if that's a rabbit hole that you wanna go down right now, but I know it was just, that's what you made me think of just then. - Yeah, absolutely. I think, I mean, what's interesting is the subscription space has really been like kind of formed by a lot of the apps, right? Like the recharges and bolds were kind of like the front of some of the front runners. And then now you have like stay and skew, smarter and loot that have been coming on and building things. And so the interesting part though, is that subscription apps really, I mean, they're trying to touch more, but they mostly touch the retention side of things, right? So they mostly touch the fact like how people manage their order. So there's a lot of really cool tools and innovation coming on that. But the problem is, is that a lot of work, growth and change in customer experience comes from, is actually in many ways independent of those apps, but a lot of brands feel like, stay should come in and like transform my entire experience. It's like, well, now Clavio is still gonna be your number one resource for communicating with subscribers, right? So thinking through like how you're bringing people on. So like when we're talking about how we actually improve retention, yes, you use those apps to make those changes, to make things better, but you have to be looking at, how am I talking to people from an email standpoint? What does my unboxing look like? What type of offers I'm bringing in? So that's one of those fun things about when we again, we think about an app that you download. I think it's like, just think of the last time maybe you download an app to help you with sleep or exercise or something like that. You download it, starts asking you questions, it starts trying to get more information about what you need, what you want. And then tries to give you an experience that matches that. And if you're selling say like protein powder as a supplement for your brand and you're not thinking that same way, you're missing out, like how do I get more information for what this person needs this product for, what they're doing? Then how do I start to personalize that experience for them? And so yes, you use the subscription apps to do some of that, but again, a lot of that is using tools like no commerce and Clavio to try to collect information and deliver those experiences. - Yeah, I mean, we've dropped a bunch of app names in this episode and I am familiar with and have used almost all of them. And the one thing that they all have in common is this kind of even goes back to Shopify is guilty of this, is painting this picture that everything is easy and that it's all plug and play and you're going to be a millionaire after the fact, right? It's kind of, it's almost a less sleazy version of the get rich quick drop shipping. Now you have a Ferrari stuff you used to see all over the internet a few years back. It's like, no, it's building a business, even though these apps are so well integrated, an app doesn't solve an underlying business problem without a strategy, it's not going to do anything for you. And so what, on our side, on the agency side of things, when we're working with brands that have a subscription element, like one of the first foundational struggles that they have is like, they're like, "Hey, we want to watch a subscription." And we go, "Cool, how, what is the subscription?" 'Cause they are, I don't know, Matt, how many different ways have you seen people build out subscriptions? It's almost, the limit doesn't exist. - Yeah, I'm not sure. There's always some kind of tweak or permutation and I've seen a lot, they're the fun ones. - Fun, interesting is always good, but as long as you test it at first and fundamentally make sure that your customers want it, but that's like one of the biggest hurdles, I think, for people that are trying to adopt a subscription program, is they haven't sat down and thought about it. - Yeah, and that's the absolute truth of it. You have to spend time figuring out what's the value problem. So a question I get asked by agency owners, SaaS companies, others, how do I start potentially looking at offering a subscription model podcast? Podcasting, right, is another option, like I have a friend who does podcast consulting. So the answer for them is the same for any brand. It's like thinking through what service or need is being underserved that you think you can deliver more value for and why. And then again, I think we have a hard time as founders sometimes of getting on the other side of the table and thinking like, okay, well, I've got this amazing product, I'm gonna discount it 15%. I should have people flocking in droves to subscribe. Well, would that be enough for you to subscribe? Like, we'll know. Okay, well, what extra things can we do? And a lot of it, again, like a lot of what I do from a consulting standpoint is like trying to help brands get better at gathering information and understanding the problem. So I've mentioned like no commerce, but I talk a lot about quizzes, right, pop ups, things you can do before purchase to try to get more information, to start like trying to understand like the use case, the desires, the goals, the dreams of the people that are coming to your site and what they're looking for, because then you can actually start to offer that for them. - This is actually very top of mind for our agency. We're doing a lot of work with landing pages. And that's a very, there's almost a direct correlation between like a quiz style landing page and then selling them the thing that they want. So obviously there's the 800 pound gorilla in the quiz space to obtain AI. Are there any upstarts in the ecosystem that you've also been exploring? - Yeah, I wouldn't call them an upstart, but I really love Digio. They've actually come from like outside of the D2C space and like some memberships and some other companies that have come to Shopify. They're doing a ton with how they're able to like onboarding and how dynamic their quizzes are doing. And they're also like leaning a little bit harder in some of the personalization, personalization side where you can show people different quizzes once you identify who they are. So it's kind of like if you took retention.com and combined it with like Octan AI, you could start to identify who might be anonymous to your site, but they recognize it and that can show a different quiz experience. And then also, I'm loving to see like some of the stuff with like what Alia Learn and Form Toro are doing from a pop-up standpoint. Both of them are like trying to lean much harder and that this zero party data concept where you can actually, in order to get a discount and not just capturing an email, you're actually capturing more information or you're doing a little bit of storytelling yourself. That's one of the things I think makes Alia Learn really cool. So it's like, if you want to learn more about a pet owner and you can ask more questions around their pet and what they care about, what's important to them in order to give them the discount. - I would guess if you got their animals name and you were addressing the animal in your emails through your, like whatever email software you were using, you would see a tangible uptick in sales. - Absolutely, absolutely. - Yeah, if someone's like, "Hey, Bella needs more dog food." And I'm like, "You're absolutely right, boom." - Well, then just if you know the what breed Bella is, if you knew what age Bella is, you know, a birth day. - Those just extra, yeah, right. Then you have a couple of, you know, you have the name, birthday, you can use those, but then it's like, "Hey, I know at dogs of this size "or this breed, like here's common problems "or things that people like owners like that." Like if you have a little teacup poodle as opposed to like a big German shepherd, like maybe that says something about the type of dog owner you are and maybe how you would market them differently as well, right? Like I'm not gonna send, make sure your dog is healthy enough to run on the trails with you to a teacup poodle or whatever I'm sending that to the German Shepherd owner, right kind of thing. So yeah, like just being able to gather all of that before the point of purchase means you can deliver a better experience, but then it also makes that subscription experience that much more impactful, right? I know now what's gonna be more motivating that owner, what's gonna do better on a retention, understanding their problems that can sell it to them and speak to them the right way. - Okay, so I just kind of wanna walk through some of the things we've talked about so far. So we talked about one of the foundational things that brands need to do is they really need to think about their subscription offering and what that is going to be before they start looking at technology solutions because sometimes these solutions have quirks to them to where what you wanna do that you didn't need to find the right technology to do it. And that comes up all the time when we're consulting on this stuff, but when we were talking about that you alluded to, you know, people were doing some fun stuff. So what are some ways that brands are kind of innovating in subscription? - Yeah, I think how some of them are leveraging membership models is really exciting, right? So I think if I have a friend here in Utah, they run a couple of different brands where they're actually charging a membership fee in order to like access the site to get wholesale pricing. So instead of it's like, yeah, so it's like, they're charging you, hey, it's like, it's similar to like the FabLetics model, which is like, hey, you pay us the subscription and then you get access to all these products at a discount kind of thing, right? So they're basically charging like a $12, $13 subscription monthly to get 50% off all of like their goods. And so they have a few different brands with a few different angles. And so basically they're charging people for access to their site, right? So the idea that you're actually paying them a flat fee every month in order to buy product from them is kind of, that's why what I think of when I think of fun. It's like, that's the ultimate game is I'm charging you for access to my stuff to spend money with me, right? It's like somebody paying money to get into a carnival to waste a ton more money with you. And so there's that-- - The Costco model. - Yeah, yeah it is. Yeah, no exactly. And that's, I mean, Costco's a great example of one. But you're seeing brands like carnivore snacks, ex-endurance that are leveraging like memberships as a means of like offering a higher level of tier or service to people. When I think what's really exciting is when you have brands say like Pura that are doing, you know, fragrances sense in your home and now they're leveraging heavily technology and app, allowing you to see how much sense is left in the dispensers like being able to reorder from that experience. And so as soon as I see a brand start to add an extra like communication touch point, whether that's like, you know, an app experience, whether that's, whether that's like a tap cart, Shopify type app or whether it's their own custom app, whether they're tearing, pairing something with like content, right? Like instead of just buying protein powder, you're, you know, buying access to, you know, a workout course or series that has products with it. So to me, that's where things get really kind of fun and interesting. Like people are adding an extra layer to the subscription that not only enhances it, but also makes them more interesting. - That's definitely something that I wanted to talk about today, which, and you alluded to it a bit ago too, is like, I've got a product, it's a great product. We've got a real business here in its cells, right? And me as a founder, I assume if I just give you this product every month for 15% off or whatever, that you as a consumer would be happy with that. And that is enough value. And I argue, you know, probably not enough value. That's like table stakes in this, in the new, in this kind of age of commerce. But also, do you actually need to discount? Or you, can you be more creative about how you're adding value into this subscription? - Right. - And those value ads I've seen done so creatively. For example, what you just said, I see a lot of brands that sell, you know, protein powders or supplements in general. When you purchase them on subscription, you can then get access to all of their, you know, their private database of all of this content about dieting and exercise, et cetera. And it's usually very nuanced to the goals of that purchase. Like, and that is such a, you don't even have to discount, but you know, you get on subscription, you also have access to this valuable database. Like, that's not, all that is is increasing your work up front to build that kind of, that library of information. Like, that's a perfect example of ways that you can be creative about, think like, what's the value add to make sure that someone wants to get on subscription? You know, I think other ways to think about it is like free gift with purchase. Obviously discount is something that people consider. But there's a lot of ways to do it without degrading. - Yeah, well, I mean, I was literally doing this, and I've run this conversation with a big beauty brand here in Utah yesterday. And I raised this question to them, and I'll raise this question here to everybody. It's like, okay, if I'm selling a $50 product, and I'm discounting that 20% to get somebody onto a subscription, right? So that's $10, essentially, I'm marking off that product. Okay, if I look in the rest of the catalog, what's my landed cost for my average product? Well, a lot of theirs is, that's under $5 is their landed cost, okay. So would you be better off discounting that heavily, or maybe giving a 5% or 10% discount, or no discount, and then giving a free product? Okay, well, from a margin standpoint, I'd rather give away more product because that means I'm gonna protect more margin. It's gonna be cheaper to me than just discounting it by 10 or 20%, but then you start walking down like what customer experience and psychology looks like. We're talking about a premium beauty brand that's heavily discounting goods to get people onto a subscription, as opposed to, would you rather have somebody who's coming in and they're really incentivized by that discount, or would you rather get somebody who's really incentivized by the combo of the products you're offering them? Yeah, you wanna do the value because that's the derivative of the offer. Right, and so that's like, okay, if as a buyer, if I find the product combo more compelling, I'm most likely to be using both of those products. And it's more sticky. Which makes me stickier from a retention standpoint, and then I'm gonna be more open to buying other products from the skincare line as opposed to the discount approach. If I don't see big discounts, you're not gonna motivate me to make more purchases. And then if I don't think your serum is on par with, or if I think your serum is just as good as a brand where I can get half off on Amazon, then I'm gonna go to that one, right? So two different types of buyers of experience. And we can talk about this, like whether it's pet food, with treats, whether it's supplements, and protein powder with creatine or pre-workout. Like there's a lot of different opportunities to be able to do that when you have a diverse sku catalog. It's a little bit harder when you have a hero product, but then with a hero product, it's more about what more information can I get from people why they're buying my hero product? Because now if I don't have those products available, I can go develop those, right? And that's where your opportunity is. I've got this one big product that 90% of people buy. Well, now I'm gonna start looking at ways that can enhance that develop product for that. And I'll just finish that by saying like, ex-endurance on my podcast told me that they're one of their co-founders said, they literally develop new products just to introduce them to their membership program. So it's like, here's a perk. We're trying to roll out another set of SKUs of stuff because we know our members would like it and they're willing to pay for it and they get access to those. And so it's like that mindset of like, oh, we're just gonna keep developing stuff that they're gonna buy from us. Yeah, now I just a quick little sidebar on discounting in general from a consumer psychology perspective. If your customers are used to you discounting, they will probably wait to buy from you in general. So you're creating this weird relationship with your customers, but also statistically, not the best customer compared to a customer that buys because they believe in the brand's value, right? So those are a lot of, you usually run into those types of issues when you're dealing with more discount, budget, value, commoditized offerings, not as much as you go a little more towards premium and up market stuff, but it is worth mentioning, there is a reason to not discount outside of the margin. It's customer service. Those types of buyers are often a little more demanding. I don't know. I agree. I mean, again, it just makes me think, my wife for a while will subscribe to Prose, which is this personalized shampoo and conditioner. Like they formulate it personally for you, right? So that offer, like she's willing to pay a premium price for that as opposed to just buying discount shampoo or shampoo that like, you know, she had to be motivated by a discount to be able to buy, right? So like there's a lot of things out there that are like really creative with how people are developing products, the quality of products. And so, and often if you get that right, you don't need to discount to get that. But for the most brands, you have to figure out some way or some lever or you're trying to get somebody across that finish line. And discounts are usually the easiest way to do that. But when you lead with a discount, you lose your best last second lever, right? So it's like, again, if you think Black Friday or I'm sitting on the fence about this purchase, right? I've got to add it to my cart and I've been thinking about it for two days and I finally get that, you know, here's an extra 10% off. You go make the purchase now, boom. But that works best for people that are already in the strong consideration stage. If it's like the only reason somebody's coming in to that funnel is because of the discount, then you have a problem. You have a lot of problem. - So I would say, you know, speaking of problems and mistakes, what are some of the common mistakes that you see subscription brands making so we can try to help anyone thinking about it to avoid them? - Yeah, I would say the biggest one is like from a philosophical standpoint and, you know, think about strategy high level. Again, I've looked at literally like hundreds of subscription brands from my time at QPilot and as the subscription doc. And one of the biggest things I notice time and time again is that there's a little bit of this like siloed approach for how subscriptions work. Like you have your growth team that's like trying to drive down CAC in order to acquire subscribers at the cheapest price and then you have a retention team that's trying to like work really hard to give them discounts or surprise and delight or some other kind of element to get somebody to like stay on this subscription longer. And so I would say like, again, one of the biggest mistakes is having those things siloed, right? So if you're driving down CAC because of how you're forming a big bundle and how you're discounting it in order to get somebody to buy but you're incentivizing somebody from a discount standpoint, like we just mentioned, then that's gonna make it harder to retain somebody because retention now is losing out on the option to like maybe discount or give away something to make that happen. So anything you can do to step back and just look at, okay, who's coming in? Why are they coming in? Why are they buying? That's how we can work with them on retention. So just something as simple as like coffee, right? If we're selling like, you know, the perfect at home brewed coffee, right? Well, we can look at the types of people that are coming in. Is it people that are new to brewed coffee or people and they've heard about it and they have a friend who does it or is it people that are old pros at brewed coffee? And so they're looking for a better brewed coffee experience or a better flavor or something. So just even understanding that like difference in the type of like potential buyer, changes how you might speak to somebody on the product page and the confirmation emails in the welcome series, right? One's more about educating about how to get started and what a great cup of brewed coffee is and you often wanna oversimplify that for them. As opposed to somebody who's a pro, you're gonna wanna spend a lot of time differentiating yourself between other brewed coffee brands. So everything you can do to try to like unify what that looks like from the growth and retention standpoint is honestly one of the biggest opportunities for brands to grow. - If the subscription element of your business is a major chunk of it, everything Matthew's really talking about here is basically conversion rate optimization, but you're looking at some other KPIs. Like on the front end, you obviously wanna get, you know, subscriptions, you wanna get signups or your actual subscription thing and you can do all the traditional CRO stuff, heat maps, scroll maps, user testing, customer interviews, like you can find out how people are getting there and what are those decisions that they're making to purchase the subscription or not purchase the subscription. That's all traditional CRO and then but from there, you can do the same style of ideation and testing on the churn stuff, you start to interview the people that are churning and asking why and you're gonna learn a whole bunch of information and sometimes it's not what you think it is. - Right. - Matthew, you shared a story on my podcast the other day about a churn problem with, was it, I think it was pet food sizes, you wanna elaborate? - My heart dogs, yeah, my heart dogs is, yeah. And just before David and I, 'cause what you're saying on the CRO stuff is absolutely true and I'd be curious to hear from you of when you're running CRO tests with subscriptions, are you paying attention to like 90-day LTV, right? Because a 90-day, you need to put some kind of time frame because while you might do better initially, like I'd be willing to take a lower conversion rate if it meant I was acquiring customers that would stay around like 50% longer, right? That kind of thing. So like that, and that's the mindset is you have to start thinking about it. It's not just about the point of sale and conversion in my cat, it's about what's affecting my contribution margin of around those customers, yeah. - Oh, I can double your conversion rate right now, just cut your price in half. - Yeah, yeah, yeah, exactly. But yeah, the example you mentioned is one that, I love a big shout out to Ivan Rodriguez at iHeartDogs as a good friend of mine has worked there for a long time and the experiment, they were running subscriptions for a while, like a lot of brands and just collecting data, they weren't spending a ton of time on that. But when they decided to start to dive in, they found like a lot of their complaints for people canceling was too much product, which again, it's common across the board, too much product. But they started out, you just go a little bit deeper like why do you have too much product? And so what they found was a lot of feedback from people was that they didn't know what to order because dogs come in so many different sizes that people weren't sure how much they should order for their pet. So once they started to realize that it was a really common theme, they went back to their product page and they redesigned it so that you picked the size of your dog and based on the size of your dog that you picked, it basically defaulted to a different amount, right? And so just making that change, so understanding what was happening on retention, so they improve the conversion experience or the purchase experience. So conversions go up by like 30% because they've started to speak to the customer better and then retention goes up 40% because they've addressed the number one problem why people are turning and having too much product. And so that's a great example of like how making a design change on the experience based off of feedback from retention influences positively both acquisitions and retention. - You're just setting up these segues so well. So talking about things that improve the experience, like what are some other ways that can improve the subscription retention? - Yeah, I think really like looking at email series is another big one. I mean, I know every brand out there is worried about not sent doesn't want to send too many emails to subscribers because it sparks cancellations, which I get. But if you look like that first week, that first seven to 10 days, that's when people are like most excited about what they bought, that's your biggest opportunity to educate them too. And when I say educate, I mean like, okay, using that brew coffee experience, like it could be something as simple as explaining like how you set up that, how you do that, right? Like in case you've never done it before, here's the best way to do it. Then I'm gonna spend time explaining to them why a brew cup of coffee, why it tastes differently than, you know, instant or something you might get at like, you know, Starbucks or something like that. I'm gonna share them like where those coffee beans come from. I'm gonna talk about my founder story of like why I was motivated to create this company and how we're changing the world one cup of coffee. You know what I mean? So it's like thinking about those experiences. So a better welcome series around how you're like bringing people onto the subscription. And then also with the subscription, like the upcoming order notification email that everybody, I mean, should be sending out, I mean, legally, but a lot of brands still aren't doing that, is like beefing that up a little bit too, making that feel more personal, like demonstrating value, leading of the email, just please don't make it just, pay your orders about the process, click here to make changes. So those are two big ones. And then anytime I can, I also will stress like collecting more data, looking at your cancellation surveys and looking at your post purchase surveys and then periodically serving your best customers. Because again, a lot of the mindset is, I wanna try to fix what's wrong with retention and not, I wanna find out more about what's right. So I've got, yes, I might be losing 20, 30% of my subscribers in the first month or two, but I have 30, 40% that are making it to a year. Okay, well, what are they liking and loving and what makes them different than the people that are leaving? So like spending more time thinking and what can I do more for them? What would they like more of for me because they're the ones that are spending money with me? - Absolutely, that's amazing stuff. Now, can you remind the people that have been listening? And obviously you've been sharing all of these insights about subscriptions. What are you, how are you helping people do this? And what are the ways that they can either get information from you, learn more from you or potentially work from you? What should they do? - Yeah, absolutely. So you can reach out to me on LinkedIn, Matthew Holm on the subscription doc or take a look at my website, thesubscriptiondoc.com. Basically newsletter, podcast and then consulting. I'm happy to do conversations. We do a paid or a free audit depending on your size and what you're looking for. And then, yeah, I have a lot of clients paying me monthly retainers to help them optimize their subscription program. - Awesome. Matthew, thank you so much for coming on the show and sharing all those subscription insights. It was a blast. - Absolutely, thanks man. - We can't thank our guests enough for coming on the show and sharing their knowledge and journey with us. We've got a lot to think about and potentially add into our own businesses. You can find all the links of the show notes. You can subscribe to the newsletter at honestycomers.co to get each episode delivered right into your inbox. If you're enjoying this content, consider leaving a review on iTunes that really helps us out. Lastly, if you're a store owner looking for an amazing partner to help you get your Shopify store to the next level, reach out to electriceye@electriceye.io/connect. Until next time.
On this bonus episode of Honest Ecommerce, we have Matthew Holman. Matthew is one of the leading subscription experts in Ecommerce.
We talk about supporting merchants with subscription products, redefining value in subscription offerings, understanding customer types for better retention, and so much more!
