I talk to many people in this space, and it’s fair to say some brands have found 2024 very tough so far.
This will heavily depend on your niche and your location, but for some brands, things have been more challenging than usual.
In this episode of Subscription Box Answers, I share my current thoughts on the subscription box industry and give some advice about what I would do for the rest of 2024.
This advice will help you thrive and have a very strong end to 2024.
If you have a question you want answered on the show, head over to www.SubscriptionBoxResources.com, join the free Facebook group, and post it there.
I talk to many people in this space, and it’s fair to say some brands have found 2024 very tough so far.
This will heavily depend on your niche and your location, but for some brands, things have been more challenging than usual.
In this episode of Subscription Box Answers, I share my current thoughts on the subscription box industry and give some advice about what I would do for the rest of 2024.
This advice will help you thrive and have a very strong end to 2024.
If you have a question you want answered on the show, head over to www.SubscriptionBoxResources.com, join the free Facebook group, and post it 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 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 and I hope things are going well in your business. Before we jump into today's episode, I just want to remind everybody. Well, I can't even actually remember if I've spoken about this recently on the podcast, but anyway, sub Summit is taking place next month, june 17th to June 19th, in Dallas, texas. If you don't know what SubSummit is, let me explain. Subsummit is the biggest conference in the subscription industry and if you're looking to grow a successful subscription box business, it's going to be very relevant and it's definitely going to help you.
Speaker 2:I've attended the last two years and this is my third year. You can obviously tell I think very highly of the conference because I'm traveling quite some distance to attend. It's not like texas is around the corner from ireland. If you're on the fence and you're debating if you should go or not, I recommend going. You'll definitely enjoy it and you'll definitely get value from it, and you can still grab tickets, I believe, over on their website. Now, I'm not a affiliate or anything like that. This is just a conference that I really enjoy. Now, there's great information shared by the speakers. I attended some really good talks, but my favorite thing about the conference is having the opportunity to meet so many people in this space, face-to-face People you may have worked with or talked to for a long time online. You get to finally meet them face to face and I think that is brilliant. There's not many other opportunities to do that now. If you are attending sub summers I will be doing on june 18th at five past 12, and the topic of my presentation is seven secrets to high converting meta ads. I've just finished putting the presentation together and if you're looking to grow your business, you're definitely going to get a lot of value from that presentation. So if you're there, by all means, you're more than welcome to come and attend the presentation. I'd love to meet as many people as possible face to face.
Speaker 2:The other thing I'm doing which I'm really excited about is I'm recording a live episode of this podcast and that is happening on june 18th at half four. I'll be bringing on low from passion and growth. I'm really looking forward to that. So if you're there, by all means come and see the podcast live. Again, I want to meet as many people as possible face to face. I love connecting with people in this space and I'm sure one of the nights I'll arrange drinks as well, um, and I'll keep you informed about that. I'll send out an email and I'll announce it on this podcast closer at the time. But, yeah, if you're on the fence, I highly recommend coming to sub summit.
Speaker 2:Okay, on today's episode, we are talking about the current state of things in the subscription box industry, because I've seen a lot of talk about this recently and, yeah, I decided to record this podcast to hopefully share my perspective and help people. So I talk to a lot of people in this space and obviously, I'm running BusterBox as well. I think it's fair to say, right, some brands have found 2024 to be very tough so far. Now, this isn't everybody and it will heavily depend on your niche and your location, but for some brands, things have been more challenging than usual. Now, I decided to record this because, yeah, like I said, I want to share my perspective and help people by sharing some advice about what I would do and what we're actually doing in BusterBox at the moment.
Speaker 2:Let's be honest, right, for the vast majority of subscription boxes, it was a lot easier to get traction in the past, not only for subscription boxes, but for a lot of online businesses, and this was down to a couple of different factors. The first factor the economic situation. Now look a few years ago, the economic climate was way more favourable. Consumers had more disposable income and they were willing to spend more on non-essential products. Number two the impact of the pandemic. Number two the impact of the pandemic. The average person was sitting at home with extra cash and randomly buying everything on the internet out of boredom. This sent ongoing sales through the roof and everybody with a subscription box business benefited.
Speaker 2:Nowadays, consumer behavior has started to refer back to how things were before the first lockdown, and the economic situation has changed as well. Now, truthfully, for most brands, they are pretty much back at baseline and probably close to where they will be without the lockdown boost. They would be without the lockdown boost. Inflation has been driving up the cost of everything, so consumers have less cash than normal to spend on discretionary products. That's a big thing, big big thing. And for us business owners, obviously, a lot of expenses have gone up, including cardboard, raw material, shipping costs, blah, blah, blah, and none of this is helping. Now I recorded a podcast actually two podcasts last year about the correct way to raise your prices, and if you are thinking about raising your prices or you've come to the conclusion that you have to raise your prices to maintain your margin, I highly recommend listening to both of those podcasts because they're definitely going to help you.
Speaker 2:Now, even though a subscription box provides added value to consumers and convenience, I think it's fair to say the vast majority of them are classed as discretionary, as they're not actually needed for everyday survival. Now, I know you can argue for certain products that they would be. It really depends what niche you're in, but I'm talking about the vast majority of boxes. Look, if you're sending items that 100 need to be replaced every month, then you could argue that it is needed for everyday survival, like dog food, razor blades, stuff like that. But that's not everybody and because of those reasons, some brands are struggling. Now, if you look into the public markets, you're going to see that many big direct-to-consumer brands have taken a beat down over the last few years. Seriously, there are many big subscription boxes and direct-to-consumer brands that are under immense pressure and some have recently filed for bankruptcy. Now, I'm definitely not naming anybody and I'm not getting into this, but this is all out in the public domain and if you search, you'll be able to see for yourself.
Speaker 2:This is not a doom and gloom podcast, though. This is just the truth, right, and despite all of these challenges, do I think this subscription box business model is dead or a bad business? No, definitely not. Far from it. There are still many subscription boxes that are doing extremely well and the owners are making a lot of money. Like I said earlier in the podcast, many of the challenges come down to niche and location. Some niches and some countries are doing a lot better than others. Also, the current economic climate is definitely not unique to subscription boxes. There are many industries which are finding things more challenging at the moment.
Speaker 2:If you are struggling, please don't panic. I promise you that things will get better. These things come in cycles, and the economic situation already looks like it's drastically improving, and hopefully, everything should be back to normal very soon. I'll give you an example like look at the crypto market. For a long time, it looked like that was absolutely dead. Then, out of nowhere, boom, it was back. There are so many different examples of situations like this. Even though it may feel bad now, trust me, things go round in cycles. Things will improve. For now, though.
Speaker 2:I'm going to share some advice that will help you straight away. Number one in times like this, you need to be willing to do things others won't do. Now this topic deserves its own podcast very soon because it's been so effective for us in BusterBox, and I will do that. But we have been picking up the phone and spending a lot of time calling our customers. Now, the great thing about Subli and commitment terms is that you are notified when somebody is going to cancel and the exact reason why they're going to cancel. Now, think about that. That's really, really powerful. You know, after a certain number of payments, somebody's going to cancel and you have the data around the exact reason why they're going to cancel. So, using that data, you can seriously reduce your churn rate by picking up the phone and calling those customers, because once you solve the issue, you have a excellent chance of saving them. It's a really powerful way of reducing your churn rate now. We've been doing this in buster box and we have saved a lot of people.
Speaker 2:Now take a look at these potential metrics to see how powerful this is and how much extra profit it can unlock for you. Now we're currently putting a team on the phone, but we estimate that we can save 400 subscribers per month. 400 people multiplied by an average revenue per user of 27 euro is 10,800 euro in monthly revenue revenue saved. Then you add in how much it costs to actually acquire 400 people. So say a cac at 25 euro. Multiply that by 400, that's an extra 10 000 saved in replacing 400 customers. Doing this, the company has potentially unlocked an extra $20,800. Now, this is only for one month. If you run it over a few months, it will compound and make you a lot of extra money. This is only an example, but you can see very, very quickly the difference it can make by picking up the phone and saving people. Everything comes down to your churn rate. The difference in the profitability your business can produce is crazy. If you even improve your churn rate by a few percent, it really makes that much of a difference. Now, like I said, this topic deserves its own podcast and I will create that soon.
Speaker 2:The phone can also be used to sell more products, upgrade to more premium subscriptions and reduce failed payments. It's a very powerful tool, but barely anybody wants to use it. If this is you, I highly recommend changing your opinion. If you're willing to do things others won't, you will get results others will never achieve. Also, you do not need to be a big company to test this. Myself and the two other founders have spent the last month making phone calls and perfecting this. We wanted to do this before, wasting time and money hiring people if it didn't perform that well, but we now know what works, and we're in the middle of putting a team on the phone. You can do the same, or use your customer service staff. Trust me, when you do it right, it will make a massive difference.
Speaker 2:Point two Dug in in place for failed payments. I've noticed that many people mention their failed payments have gone up. This is because consumers have less money in their bank accounts. We've noticed the same in BusterBox, but with a proper dunning sequence in place and multiple retries, the majority eventually end up paying. Why? Because they get paid again and have money in their account. Now you may think somebody is trying to rob you, but in most cases, this isn't the case. They simply don't have any money in their bank account, but will renew and pay you when they get paid again, but will renew and pay you when they get paid again. The secret, though, is having an effective donning sequence in place to capture as many failed payments as possible.
Speaker 2:You need to make it so easy for your customers to update their card information if they have to Now. I've said this before, but if your donning requires your customers to log in with a password and navigate to the update card screen, you're going to end up losing a lot of customers, as people simply won't be bothered to do this. There are tools out there like Churnbuster and Stunning, which make it very easy for your customers to update their cards, and also, if you use Subli, customers can update their cards with one click, which makes a massive difference. You simply paste the update card reminder code into the failed payment emails and customers can do this. We do it ourselves in BusterBox and it's helped us a lot. As I mentioned earlier, a phone call can also help massively, and the same can be said with SMS. The only thing about SMS is you need to keep a really tight eye on it, because it can be very expensive if your customers don't take action and update their cards, because you obviously have to pay for each message. So if you scale up and you have a lot of people signed up, it can be expensive. The bottom line is, though In times like this, you really need to take your billing process seriously. Don't just go with your default platform settings. If you go with this approach, more than likely you will probably end up losing a lot more customers To failed payments than you should.
Speaker 2:The next point be accommodating to your customers. There are plenty of great customers out there who are having a tough time at the moment. Like I mentioned above, not everybody is trying to scam or rob your company when their renewal fails. My advice is to show empathy to these people and try your best to accommodate their current situation. That means you should make it as easy as possible for your customers to pause or change frequency if they need to. Don't lock anybody into anything. If you do this, you're going to end up forcing their hand, and they'll either try to cancel or go directly to the bank and stop the subscription. You can't get blood out of a stone. If somebody doesn't have the money, they simply don't have it. Let them pause and continue in the future. Now, this is obviously much better than the alternative, where they cancel.
Speaker 2:Also, customer experience these days is more critical than ever. People want to do business with companies they like, trust and have a connection with. If you have a good relationship with your customers, they are way less likely to have you on the chopping block when looking to do cutbacks. These days, people have multiple subscriptions, so you are likely in competition with other subscription boxes when it comes to cutbacks. Seriously, these days, people selling up for so many different things say if you were, you have a dog subscription box, right, you could be competing with a fitness box, a mail delivery box, a beauty box, whatever. You're likely competing with other boxes outside your niche. For your customers, cash and if things get tight and they need to make some cutbacks, who do you think they're going to cut? They're definitely not going to cut the company who they have a great connection with and who have blown them away with every single interaction they've had with them. It really goes a long way and your support team should be aware of this as well. They need to go above and beyond. With every interaction you really want to impress your customers, it will make a big difference.
Speaker 2:Number four make more money from the people who have it. Look, no matter what niche you're in, there are going to be segments of your customer base who are not affected at all by the current climate. These are the people with more money and these are the people you really need to focus on to sell more products and make more revenue from Now. You may be thinking right okay, this sounds great, but how do you actually identify these people? The easiest way to identify these people is by looking at your subscription cohorts and data. You can filter by the people who have been with you the longest and have given you the most money. Now, once you have identified these customers, you need to figure out what else you can actually sell them. Now.
Speaker 2:I personally think the easiest and most profitable thing to sell is a more premium subscription. Obviously, one-time products can work as well, but you'll probably make more money over time with a more premium subscription. For us, a premium subscription includes extra treats and premium toys. Now, this is very popular and a lot of people go for it, and I actually recommend sitting down and brainstorming what you can offer in yours. No matter what niche you're in, you can always offer something to make your subscription more premium. More than likely, it's just more of what you're already sending them.
Speaker 2:Other things that sell really well are mystery boxes and jumbo mystery boxes. They're brilliant for clearing stock as well. Well now, if you don't know what a jumbo mystery box is, let me explain. It's just a regular mystery box with more products in it so you can charge more. If you're struggling with this and you don't know what to sell, the easiest way around this is sending out a survey to your better quality customers and asking them what they're buying. Then just give it to them. Now, going back to my first point, the phone is a really powerful way of getting existing customers to upgrade their subscription. Here's how you do it call them up, ask for feedback about the last few boxes, then at the end of the call, mention the premium subscription and upsell them. It's a really effective way of driving up your average revenue per user and making more money now.
Speaker 2:I hope you found this podcast helpful. I will do a follow-up to this podcast at some point, because there's so many different things you can be doing to help your current situation. If you're struggling, there's definitely options out there, and I just want people to remember there's also still so much opportunity out there and I know so many different boxes that are still doing really well, but things have definitely been more challenging for some niches. If things are hard. Please don't panic. Everything is temporary and these things go in cycles. I promise things will get better again soon. Now we'll be back next week at the exact same time. If you have any questions you want answered on the show, as always, head over to the free Facebook group at subscriptionboxresourcescom. Join it and post your question there. I'll chat to you next week. Have a great day, bye-bye.