by A while back we surpassed $1 million euro in sales. I have decided to share some of the things I have learned on this journey so you can apply them to your business and hopefully cut down your learning curve. This post is more for the people who have been running a while and are hoping to push things onto the next level. If you follow some of these tips I am 100% sure you will be able to scale your business much smoother and efficiently.
Also, just to clarify at the time of writing this BusterBox is 100% Bootstrapped and we haven’t raised any investor money yet. We started this business out of a bedroom a few years back with only a couple of thousand euro each. That’s the unbelievable thing about the internet. It has given us all an opportunity to change our lives by reaching customers all over the world. I firmly believe that anybody can set up a successful business these days if they have the right model, put insane amounts of work in, educate themselves, have patience and demonstrate unbelievable persistence to keep going no matter what.
Don’t get me wrong. I am not saying the subscription box model is easy. It is actually extremely difficult, but once you get it right. It can be very rewarding. I am now going to cover 5 important things I have learned so far which I hope you will find useful.
- The Offer
This is one of the most important pieces of the puzzle for anybody looking to scale extremely quickly. I have spoken about this before and I will keep going on about it as it is so vital. You will find it so much easier to sell your subscription if you can come up with an unbelievable offer. Your offer should be so good that if you put it in the face of your ideal audience they will sign up straight away. Your offer should be so good your audience will feel like they are missing out on something gigantic if they don’t take action then and there and sign up. This is where I see a lot of sub box owners go wrong. They send out their ads and they don’t bother doing any kind of offer. Or they might offer 10% off the first month. I hate to break it to you but most people hate signing up for recurring subscriptions. So if you can’t come up with a good offer it will mean a few things.
- Your sales will be extremely slow
- Your CPA will be extremely high.
Obviously, every business is different and some people have found success without doing this due to a number of different factors. For the majority of us, though we need to be creative and keep coming up with these unbelievable offers. I am not saying the offers always need to be discount based either. The offer should be amazing for the customer, but it needs to make sense financially for you as well. Depending on your niche you could include something of high perceived value with your subscription that doesn’t cost you much. The main point is to start getting creative and have your potential customers drooling when they come across one of your ads.
2. Find your Marketing Channel and Master It.
You need to find a scalable, repeatable, profitable marketing channel and become a master at it. It doesn’t matter if that channel is Facebook, Instagram, Twitter, Pinterest, Email, Snapchat or Direct Mail. It is your job to do the research and find out where your niche hangs out and where you are going to get the most return from your ad spend. Then you need to become completely obsessed with that marketing channel and master it.
My choice at the start was Facebook. I knew all of our potential customers were on it so I dedicated hundreds of hours of my life learning everything about it. I have written some tips about Facebook advertising on my blog www.Liammichaelbrennan.comif anybody is interested. This might not be the right channel for your business, but the point remains the same. You need to become an expert on the right platform to get results.
(Either that or have the budget to hire an agency to run your ads)
Once you have your unbelievable offer and you have mastered your marketing channel of choice you will find it MUCH easier to sign people up. You will start noticing your sales increase dramatically. For the first few months of BusterBox we used to get 12 people signed up a month. Now we can get over 50 people signed up a day. Nothing complicated will be going on here. All that has happened is you know how to use your chosen platform effectively and you know people are attracted to your offer. So you simply run your ads with a decent budget and repeat the process over and over again and watch your company grow.
(We are now putting steps in place to increase capacity and start getting a few hundred people signed up a day. This is possible once you know what you’re doing)
Once you have mastered your channel then you can start looking at mastering other marketing channels to give your main source of customers some support. This is what we have done and we are seeing great results. It’s very important to master the main channel first. Otherwise, you have ads out everywhere and none of them will really be performing that well.
I see a lot of people focusing on influencer marketing. Don’t get me wrong this can certainly boost your sales but in my opinion, it is more the cherry on top. E.G you have mastered paid advertising and you send a few boxes out each month to influencers to build your brand and get some bonus sales. I certainly wouldn’t be betting the growth of my company on it. We have sent out lots of boxes to some of the biggest influencers in our country the last few years and they have done ok sales-wise but nothing to get you up to thousands of subscribers.
3. Master Your Metrics
Your metrics need to be able to support your growth. If they don’t you will end up losing a lot of money and wasting a lot of time.
Also, if you don’t understand your metrics you won’t be able to scale anywhere. You won’t be able to scale anywhere because you don’t know what the implications will be for your business. You don’t know how much a customer is worth to you so you don’t even know how much you can spend to acquire one. To get anywhere with this model you need to have a firm understanding of what every metric means in your business. Otherwise, you could literally be losing money on every customer who signs up.
I firmly believe if you are going to be bootstrapping a subscription box company you need to have very good monthly churn. If you have some crazy churn amount you should stop what you are doing straight away and focus on fixing it. Another thing you need to be aware of is the customer payback period. E.G how many months it takes on average to turn a customer profitable. If you don’t have investor money this is extremely important.
The shorter you get it the quicker you will be able to scale. If it is taking you months to get somebody in profit you are going to have cash flow problems as you scale up. There is plenty of tricks you can do to shorten this and I will probably write a full blog article about it in the future, but I am not getting into it here otherwise this article will turn into a novel LOL. Obviously, the profit from the CLTV is still extremely important and you should be looking at ways of maximizing that, but the Payback period also becomes a crucial metric especially when bootstrapping.
You need to spend some time learning about subscription metrics and what they actually mean for you. If you bury your head in the sand, you will find it difficult to get anywhere. Sign up for one of the many tools to get a full break down. E.G ChartMogul, Sublytics, Profitwell, Baremetrics etc…
4. Customer Service.
Guess what happens when you get thousands of people signed up? You get lots of support tickets to go with your new customers haha. That is why it is really important to have good customer support in place. In my opinion, this is one of the first roles you should hire for in your company when the time is right. You will know the time is right when you realise you are spending hours every single day responding to support tickets. You should be working on your business and not working in your business. If you spend all your time working in your business, your growth will slow as you get bogged down by admin and customer service each day. Trust me. Hiring good customer service staff is one of the best things we have done since launching.
I will probably write a separate post about this in the future as there is a lot to cover on the topic. You should spend some time putting the training together and processes in place to help your support staff with their jobs. We use a tool called ZenDesk to run our support channels and it is very effective. We have also spent countless hours putting together FAQs for every support scenario we can think of to reduce the number of tickets we get on a monthly basis.
This really helps, but some customers just want to chat with somebody no matter what. We offer email support, Chat support and phone support to communicate with these people. We have limits in place but for the most part, we tell our support staff to make the right call to ensure our customers are happy.
Good customer service can make a big difference to your monthly churn and when you are looking to scale up you will use every advantage you can to reduce that churn number. You can also use your customer service channels to upsell your customers to other products and more expensive subscriptions but that is for a different article in the future when I have more time.
5. Master Your Cash Flow.
Revenue is vanity, profit is sanity and Cash flow is reality. I remember hearing that saying years ago and little did I know how relevant it would become. When you are bootstrapping a subscription box business without investor money you need to get really good at managing your cash flow. All of us have different billing dates for our subscribers. Some Sub Box owners bill their customers on the day they signed up each month other Sub Box owners bill their subscribers on the first of the month. No matter what billing you picked you better get good at planning your cash and expenses for the month.
Let’s face it growing a subscription box business can be very expensive, so here’s a tip for you. Build up credit terms with your suppliers and shipping company. Try to get 60 days’ credit if possible. Then work your growth around these credit terms. E.G You won’t have to pay for a new customer’s products and shipping until they have made at least 2 full payments to your company.
This will make a big difference to the amount of cash you need on hand to grow your company each month. Obviously, before you even think about doing something like this you need to understand your metrics and see how long people are staying for in general and what their CLTV actually is. Otherwise, you could end up in trouble if everybody cancels after a couple of months and you have big bills to pay. I could write a novel on Cashflow there are so many different tricks you can do to help with it as you scale. I will write a separate post about this in the future.
I hope you find the stuff I covered in the article useful for growing your business. These are 5 important things I have come across so far and I think you will scale your business much easier and smoother if you pay attention to them. There are a million other things I have learned and I will write a part 2 to this article in the future.
We are now going all out to hit €5 million in sales ASAP. I know we will reach this milestone quickly as we now have processes in place that work so we just have to repeat what we have already done on a bigger scale with some small adjustments and we will get there. We are already rapidly approaching our second million euro in sales much quicker than we reached the first million euro. If anybody has any questions about what I just covered or any subscription box questions in general, please let me know and I would be happy to answer them.
