by My company BusterBox recently acquired a dog portrait business called Furry Paintings.
In this article, I will break down exactly why we did it and share some valuable insights that you should be thinking about in your own Subscription Box Business.
There are a few key reasons why we purchased this business, and the first one is pretty obvious. We run a dog subscription box, and we want more products to sell to our customers and leads.
It doesn’t take a rocket scientist to work out that having the option to sell dog portraits to a database of passionate dog lovers is a good business idea.
These people are crazy about their dogs and love spoiling them, so there is a perfect audience match when it comes to selling them wacky and crazy dog portraits.
Now the other reasons why we purchased the business are mainly down to improving the economics around our subscription box and growing it further (and this is where you can learn something that you can apply to your own business)
Let me break down the reasons below
1. A new front end for collecting leads
One of the best things about this business is that it has a perfect audience match with BusterBox. E.g. the same type of customers who will sign up for our box is the same type of customers who will purchase a dog portrait.
This is extremely powerful for us because the amount you can earn from a dog portrait is a lot higher than you could on the sale of the first subscription box.
When you are aggressively growing any kind of Subscription Business, you are going to run into something called a payback period. This is the amount of time it takes on average for a customer to be profitable when they sign up for your box.
When you are scaling and investing in ads, it is highly unlikely that a customer is going to be profitable as soon as they sign up for your box.
It usually takes between 3 – 4 months until they are in profit, and this is perfectly normal.
Then if you have low churn and a high customer lifetime value, you are still going to be able to build a highly profitable business because all the reaming months a customer stays signed up is profit.
Now the only issue with this is cash flow.
If it takes a number of months for a customer to be profitable, then it can be hard to scale aggressively unless you raise money from investors, have plenty of cash yourself or find a way of reducing that payback period.
With Furry Paintings, we have a way of reducing the payback period because a customer will be profitable immediately when they purchase a dog portrait.
Then we can upsell them to a BusterBox subscription on the backend, and there will be no Payback period. The customer will be in profit as soon as they sign up.
This puts us in a position where we can grow the business much more aggressively.
A by-product of this is that we will also collect a lot of new leads through this exercise, and even if they don’t purchase a portrait, we still have the opportunity to put our BusterBox offers in front of them (Which we know convert very well)
2. The ability to expand BusterBox into different countries
We currently only serve the Irish and UK markets, but we plan to expand into other European countries. The problem with launching BusterBox in other European countries is that it is expensive, time-consuming and risky.
We could spend a lot of time setting up fulfilment, sourcing products etc, and it may completely flop, and we only end up with a small number of subscribers. Other European countries are completely different compared to the US market, and subscription boxes don’t always work well.
The way Furry Paintings fulfilment is set up, though, allows us to quickly launch in any country we want. We can then test what the market response is like and build up a list of dog owners in that country.
Then once we have a solid list of leads, we can warm them up to the idea of BusterBox and only launch it when we know the response will be good. This is very powerful as it essentially allows us to have a customer base already built before we do anything. It removes a lot of the risk around launching the Subscription Box in a country where it simply wouldn’t be worth it.
3. Use different dog portraits as offers on our main BusterBox site.
Now that we have the ability to offer so many different dog portraits, we can turn that into an opportunity to create loads of new intro offers for BusterBox.
For example, we could offer a customer a special portrait if they decide to sign up for 6 or 12 months.
We have hundreds of different portraits we can offer, so this will give us a massive selection to put as an intro offer, and we could switch it depending on the time of year. E.g. In December, do a Christmas portrait and in October, do a Halloween portrait. The options are endless when it comes to this.
4. It makes our entire company more valuable if we ever sell it.
If we ever decide to sell BusterBox in the future, this will make the entire company more valuable. We plan to use this new revenue stream to help us go from a 7 figure subscription box business into an 8 figure company.
Not only will Furry Paintings allow us to sell more products and increase revenue it will also help us liquidate some of our ad spend, which will help us increase the profits in our Subscription Box.
The entire strategy will improve our EBITDA, which will help us get a bigger multiple if we ever decide to sell the whole business.
Why did you buy this and not start your own?
One of the most common questions I keep getting from people is why did we buy this, and why didn’t we just go out and start our own pet portrait company? The reason we decided to buy one was because of time.
We could have easily gone out and created a new business from scratch, but that would have drained a lot more of our resources.
We would have had to spend a considerable amount of time and effort figuring out how the business model works, from fulfilment to ads to everything in between.
Buying one, bought us speed and instantly gave us a foundation to launch this without getting bogged down for months trying to figure things out.
What can you learn from this for your Subscription Box?
I am not sharing this story to inspire you to go out and buy a new business. (Even though can be a very good idea in some scenarios) I am sharing it because I am hoping it flicks a light switch in your head to the opportunities around you.
We all know the Subscription Box business model is great and can provide you with a fantastic life, but we also know some of the challenges that we face when it comes to it. That payback period can be difficult to manage when you are only getting started, and you don’t have the revenue to help.
Sometimes, there are other ways of bringing customers through the front door that isn’t so expensive compared to selling the subscription on the front end.
There may be a digital product you can develop which is used strictly to liquidate some of the ad spend. There may be a physical product you can sell that does the same thing, or maybe you can launch or buy a business that will help you solve that problem.
No matter what niche you are in, I would bet there are other products that you can sell and position in a certain way in your sales funnel, which will help you free up more profit in your subscription box.
We came across the dog portraits idea with just a bit of research; we suddenly identified this would be the perfect product which could help us solve a lot of the challenges of our core subscription business.
We are now on the lookout for more opportunities, and if anything else comes up which can be turned into some kind of front-end offer, we will deffo consider it.
I hope this article helps you look at your marketing strategy a bit differently and gives you some ideas as to the kind of things which are possible. If you have any questions about this or anything else related to your subscription box business, please post them below. Have a great day.
