Why This Subscription Loses 75% of Buyers — Transcript

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1. 0:00I sell a monthly meat subscription box
2. 0:02to chronically ill and health-conscious
3. 0:03people and we launched 5 months ago and
4. 0:07we are currently doing like 33k per
5. 0:10month in revenue.
6. 0:11>> So this is a brand new thing that you
7. 0:12just started.
8. 0:14>> Yes, that's right. And my question is
9. 0:16about churn.
10. 0:17>> Okay.
11. 0:18>> Because customers who stay past the
12. 0:20first couple of months tend to stick.
13. 0:22For example, our very first group of
14. 0:24customers from 5 months ago,
15. 0:26they just placed their fourth order and
16. 0:28churn from last month to this month was
17. 0:31only 16%.
18. 0:33>> I mean
19. 0:34>> But new customers churn a lot after
20. 0:37their first month.
21. 0:38>> Uh-huh.
22. 0:39>> From the group that bought for the first
23. 0:41time last month, 75% did not buy a
24. 0:44second box.
25. 0:45>> Okay.
26. 0:47>> So the question is what should I do to
27. 0:48specifically reduce the churn between
28. 0:50the first and second month of the
29. 0:52subscription?
30. 0:55>> What do you want to do with this
31. 0:56business?
32. 0:59>> Well, this was the first business that I
33. 1:01wanted to do something that would
34. 1:02compound because before I was
35. 1:05in social education,
36. 1:07one course that I would have to promote
37. 1:09all over
38. 1:10over again.
39. 1:11>> Yeah, yeah, I got you.
40. 1:13All right. Um
41. 1:16>> And I'm sorry, just a little reminder, I
42. 1:18hear myself double in the phone.
43. 1:21>> Good to know. Sorry about that. Can you
44. 1:22hear me without hearing the double?
45. 1:25>> Yeah, I hear you perfectly.
46. 1:26>> so I'll just I'll do more of the
47. 1:28talking. How about that?
48. 1:29Um
49. 1:30>> [laughter]
50. 1:31>> Okay. So here's the deal.
51. 1:34You're sell you're selling like wellness
52. 1:36boxes to people who are sick, right?
53. 1:39>> Yes.
54. 1:39>> Okay, got it.
55. 1:41Um
56. 1:44Is it a changing thing every month like
57. 1:46what's inside of it?
58. 1:48>> Yeah, they they actually have to place
59. 1:50the order each month again.
60. 1:54>> They have to manually place it again?
61. 1:57>> Yes.
62. 1:57>> Oh, well, I mean that's I mean that's
63. 1:59thing number one. I mean it has to be
64. 2:00automatic. No one's going to want to do
65. 2:01that every month.
66. 2:04>> Yeah.
67. 2:05>> So, I would just say like have a default
68. 2:06box and they can choose to edit it if
69. 2:08they want to, but like you send a
70. 2:09default box to everybody.
71. 2:11Even if it's new. Does that make sense?
72. 2:12>> Okay.
73. 2:14>> So, that's thing number one.
74. 2:15Um but what I The reason I asked like
75. 2:16what do you want to have happen with
76. 2:17this business is this all drop shipped
77. 2:19or is this like you have a warehouse
78. 2:20full of like goodies?
79. 2:23>> Uh
80. 2:24we have we have uh rented a warehouse
81. 2:26and we have farmers
82. 2:29who who sell the sheep who sell the meat
83. 2:31to us.
84. 2:33>> Okay, so it's meat.
85. 2:37>> I'm sorry. I just hear Yeah, good.
86. 2:39>> It's meat?
87. 2:39>> There's this beeping sound.
88. 2:41>> Ah, got it. Okay, so this These are meat
89. 2:43boxes. This is like Butcher Box.
90. 2:45>> Yeah, yeah, it's exactly like Butcher
91. 2:47Box.
92. 2:48>> Got [laughter] it. Okay, understood.
93. 2:50Um
94. 2:51avatar selection seem to be really
95. 2:52important, number one. Number two, so
96. 2:55it's like if you go to poor people, they
97. 2:57will turn out because they basically
98. 2:59bought you for a one-time discounted
99. 3:00like steak or whatever.
100. 3:02Um you want to be positioning against
101. 3:04groceries and like their source of food.
102. 3:07Um
103. 3:08and you'll probably need a mix of
104. 3:12different meats. It is very elastic from
105. 3:14a pricing perspective, which I don't
106. 3:15love. Um I'm pretty sure like actually I
107. 3:19don't know if I'm under NDA.
108. 3:21Well, I've seen very big ones of these
109. 3:22and they run paper thin margins.
110. 3:26>> Mhm.
111. 3:27>> So, I don't know if this like I'm being
112. 3:28like really real with you. I don't know
113. 3:29if this is like hey, I want to just have
114. 3:31like
115. 3:33it's tough because people's people's
116. 3:34flavors change, their palace change.
117. 3:36This isn't me trying to tell you not to
118. 3:37do this business, but like this is going
119. 3:39to be a hard business that will eat
120. 3:40capital for a long time.
121. 3:44>> We actually didn't have to invest
122. 3:46anything into that.
123. 3:47>> Uh-huh.
124. 3:51>> We have like third-party logistics we
125. 3:53just
126. 3:53Yeah. People people pay to us and then
127. 3:55we go buy the meat.
128. 3:56>> Yeah. Yeah. Yeah.
129. 3:57Now I get it.
130. 3:59Um okay, so number one is that you have
131. 4:01to give them a sample box every month
132. 4:03and just have them uh agree to the this
133. 4:05the mix of meats. That'll be much easier
134. 4:07for you and make everybody do the
135. 4:09default there. Um I'm assuming the next
136. 4:12issue is that people will basically feel
137. 4:14like they already have enough meat
138. 4:17so they don't need more. And so before
139. 4:19they do their subscription, you need to
140. 4:20text them and tell them like they have
141. 4:22the option of skipping
142. 4:24uh skipping a month and so it can go
143. 4:25every other month
144. 4:27um or like they can change their order
145. 4:29via text if they want to just like cut
146. 4:31the cut the portions down in half. Both
147. 4:33of those are viable and they have to be
148. 4:34able to do that conveniently.
149. 4:36Um but I think the biggest thing though
150. 4:38is going to be how they're being sold.
151. 4:41If it's sold only based on like
152. 4:44Is it Is it Is it mostly sold on the
153. 4:46discount, the fact that it's cheaper to
154. 4:47buy it this way?
155. 4:49>> No, no, no. Quite opposite, actually.
156. 4:51>> Okay.
157. 4:52>> We We called it better meat.
158. 4:54>> Okay.
159. 4:55>> And we just sell at a premium.
160. 4:58>> Okay.
161. 4:58>> those from the farmers, pasture-raised,
162. 5:01and everything.
163. 5:01>> Cool. Then what was the number one
164. 5:02reason that people canceled?
165. 5:04Or did they just not reorder?
166. 5:08>> We We just did a survey and
167. 5:11there were two reasons. First one was
168. 5:13that they were not able to curate their
169. 5:15box and second was price.
170. 5:21>> Got it. Okay.
171. 5:23So I would sell on the meat being
172. 5:25superior as obviously the strong angle,
173. 5:27which you already have, which is good.
174. 5:29Um
175. 5:31from the customization, I think you have
176. 5:33to make it easier. So it's like you will
177. 5:34get the default box and you can edit it
178. 5:36via text. No one wants to like log in
179. 5:38and do it. I'm just telling you right
180. 5:39now. So I think you could just have an
181. 5:41agent that receives it and then and then
182. 5:43edits the orders in the back. It's super
183. 5:45for now.
184. 5:46Um there's that. I think editing the the
185. 5:49system flow. In terms of the pricing,
186. 5:51normally I ignore people who say price
187. 5:53stuff, but when it comes to food, it is
188. 5:55so elastic um, in terms of pricing. So,
189. 5:58it may be like a are you pricing it by
190. 6:00pound?
191. 6:03>> No, we just price it per per box.
192. 6:06>> Yeah.
193. 6:07I would the nice thing that you can do
194. 6:08is you can probably because it's not
195. 6:10going to because you're you're just
196. 6:10getting started with this new business.
197. 6:12Um, I would consider price testing like
198. 6:15do this first stuff first, right? Add in
199. 6:18add in the the the like a default box
200. 6:21that they can change whenever they want.
201. 6:22Add the text in ahead of time so they
202. 6:23can skip, they can cut the portions in
203. 6:25half or add it all in that one flow.
204. 6:27That's the first thing that I would do.
205. 6:30Beyond that,
206. 6:31um,
207. 6:32I would test
208. 6:33funnels that are like maybe like
209. 6:36quarterly shipments cuz that'll also
210. 6:38help you offset CAC cuz you'll be able
211. 6:39to get more cash up front and it'll be
212. 6:41less frequent. So, that's another
213. 6:43option. That'd probably be like test
214. 6:45number two that will allow you to scale
215. 6:47more that will probably allow you to
216. 6:48scale faster.
217. 6:50Um, and um,
218. 6:54number cuz you could also basically
219. 6:56think about this way is like you could
220. 6:57have the subscription
221. 6:59renew on a different cadence than the
222. 7:01boxes are being shipped. Does that make
223. 7:03sense?
224. 7:05>> Yes.
225. 7:05>> So, that that's probably like I know I'm
226. 7:08giving you to but like you have one
227. 7:09clear thing which is meat. So, a lot of
228. 7:11the a lot of the tests are going to be
229. 7:12like kind of like pricing and offer
230. 7:14driven. Um, but these are the things
231. 7:16that I'd be looking at.
232. 7:17>> Can I Can I just add
233. 7:19Uh, we tested a pricing because
234. 7:22very first month we calculated poorly
235. 7:24and we had to increase the price and we
236. 7:26did it in AB test and it was like plus
237. 7:2935% and plus 50%.
238. 7:31>> Mhm.
239. 7:32>> And now we see that those with 50% churn
240. 7:35less.
241. 7:36>> Churn less. Okay, so this is good. So,
242. 7:38what it is is basically what So, to be
243. 7:40fair, I don't know. I mean, the day
244. 7:41sample size seems kind of small given
245. 7:43the revenue. So, I don't know if it's
246. 7:44statistically significant. So, I'd
247. 7:46probably just keep running that. But, if
248. 7:48the 50 keeps winning,
249. 7:50then what that would indicate to me is
250. 7:51an avatar thing. So, that means that you
251. 7:53need to lean more in terms of the
252. 7:55creative on the types of people who
253. 7:58resemble the ideal customer more.
254. 8:02>> Mhm.
255. 8:03>> So, it's like we need to target those
256. 8:04people and we need messaging that
257. 8:05resonates more with that person. And so,
258. 8:07it might I mean, you might find that 50
259. 8:09and that 100% boost actually goes even
260. 8:11higher because they just want the best
261. 8:12stuff.
262. 8:14>> Mhm.
263. 8:14>> So, that makes it's like if you become a
264. 8:16straight like I'll tell you a completely
265. 8:17different example, but like in the gym
266. 8:18world, when we had memberships that were
267. 8:21like at $300 a month, it was a price
268. 8:24point that was like a stretch for a
269. 8:27middle-class person, but too cheap for a
270. 8:29rich person. And so, it kind of gets in
271. 8:31this no man's land. And so, you might
272. 8:33find that plus 75 even performs better
273. 8:35than 50. Again, if this data holds.
274. 8:39>> Yeah. It is holding for 2 months already
275. 8:42and we are at the top of the market
276. 8:44right now.
277. 8:44>> Okay. Then, there might be a position
278. 8:46for you to continue to raise the price
279. 8:47so that they can associate with premium
280. 8:49and just say and I would say like in
281. 8:51then if that becomes the position, then
282. 8:53all my copy in the ads is like we are
283. 8:55not the cheapest meat. In fact, we're
284. 8:57the most expensive you can find, but
285. 8:58that's because we're the best. And meat
286. 9:01is probably the most meaty thing that
287. 9:03you're eating as a portion of your diet.
288. 9:05And so, you should probably think about
289. 9:07like every single calorie that you eat
290. 9:08is what your body gets made of. It's
291. 9:10like wouldn't you want to eat the best
292. 9:11stuff?
293. 9:13>> Mhm.
294. 9:14>> So, those are probably the marketing
295. 9:15angles I would take. I would experiment
296. 9:17with the different billing cycles and
297. 9:18for sure I'd add in the AI agent.
298. 9:20There's part of you that's probably
299. 9:21going to be afraid of like texting them
300. 9:23before the billing, but you have to just
301. 9:25get rid of all of that. You want to just
302. 9:27have a product that people want to keep
303. 9:28subscribing, not that they forget about
304. 9:30it.
305. 9:31>> Yeah, yeah, yeah. Yeah, no no, it's okay
306. 9:33because anyway, in Czech Republic, we
307. 9:35have to remind them before before the
308. 9:37chart.
309. 9:38>> Even better. So yeah, that like I would
310. 9:40have the AI agent allow them and then I
311. 9:41would really strongly consider switching
312. 9:43to a quarterly billing cycle
313. 9:45um as a test and then you and you
314. 9:48deliver them weekly or whatever.
315. 9:51>> Yeah.
316. 9:52Makes sense.
317. 9:54Makes sense. And and focus on the avatar
318. 9:57on the higher avatar.
319. 9:58>> 100% that's what it I mean that's what
320. 9:59it's showing very clearly. It's the
321. 10:01richer people who want it so then like
322. 10:03keep honestly I'll keep going until the
323. 10:05they they tell me no.
324. 10:08>> Mhm.
325. 10:08>> So like if if this test concludes
326. 10:10>> you elaborate?
327. 10:12>> So when this test concludes between plus
328. 10:1330 and plus 50 you might have a plus 50
329. 10:16versus a plus 75 and run that test.
330. 10:19>> Yeah.
331. 10:21I understood.
332. 10:22>> Even if it's the same it's like it's a
333. 10:23huge amount of extra profit.
334. 10:26>> Yeah yeah yeah.
335. 10:27>> Cool.
336. 10:27>> It is.
337. 10:30Thank you.
338. 10:31>> Appreciate you man.
339. 10:33>> Thank you very much. See you.
340. 10:34Salutations.
341. 10:35>> Salutations. Salutations.
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