What Iwant to talk to you today is the culmination of the last few years of running asuccessful subscription box business that has generated hundreds of thousandsof dollars as well as helping others to do the same. I’ll be sharing a few keyinsights and then breakdown the 4 “pillars” as I’ve been calling them, intoactionable elements that you can use to help grow your subscription boxbusiness.
What I have identified
One ofthe great things about helping other Sub-Boxes with their business have beenthe ability to take a look under the hood and find out what makes them tick.
I’ve beenable to see how they are making some amazing decisions for their business butalso where they need to improve before they go out and try to scale their box.
It’s thesubscription box business that focus on having systems and processes for everypart of their business that are getting the most success. From the before theylaunched their subscription box they have continued to build standard operatingprocesses (SOPs) or Plans for everything.
Fromcustomer acquisition and support to shipping and packaging. Everything isplanned, measured and tested with only the best processes making the cut.
One thingthat has struck me through my research and work with other business owners hasbeen just how simple and straightforward it is to break down the steps neededto really excel in each part of your business. So, this post is going to be theculmination of my journey to date and I want to share that with thhe widerworld. I’ve broken the work I have done in Marketing and Operations for otherbusiness PLUS how I have personally hhandled growth and retention in my own SubBox – The Whisky Order.
It’s allneatly packaged into four main “plans” that will help you to setup andmanage your business with clarity.
Enough ofme crapping on, let’s have a look at them
1. The Launch Plan
2. The Marketing Plan
3. The Retention Plan
4. The Growth Plan
Independently,each one of these plans form a powerful document or action plan that you canuse in your business. But where they really shine is how interconnected theyare and just how significantly they can complement each other. It’s like whenyou move from working alone when you are packing boxes to when you work with ateam. You don’t just double your productivity but it triples or even quadruplesyour performance.
The samething applies here.
In thisnext section I’m going to break down these 4 pillars for you and help you tocreate action plans of your own.
Your Launch Plan
Thelaunch plan is the foundation document that will set the tone for yourbusiness. I find that its best to split this plan into two main parts:
- Part1: Is the detailed information about your subscription box.
- Part2: Is the detailed plan on your launch activities
Part 1: Sub Box Information Plan
This partof the document is very tactical. It’s where you are going to write down andget clarity for your business idea/pre-launch phase.
Becausethis part will vary from business to business I’m going to gloss over a lothere. But don’t worry, as you keep reading you will find that your MarketingPlan, Retention Plan and Growth Plan will fill in any gaps you may have ANDbuild on what you develop in here.
What goes in your Info Plan?
- Whoyou are (business name)
- Whatyou offer
- Whoyou offer it to
- Whydo you sell this product to them?
- WebsiteGo-Live date
This isall about having clarity and specificity about the type of customers you wantto attract, what you are going to offer them and why they want what you have.It’s specific, measurable and forces you to really go deep into the mind ofyour target market. It’s this depth that really helps set you up long term inyour marketing message.
Key Focus Areas:
Thebiggest mistake you can make when pricing your box is pricing it too low. Thereare a lot of factors that will influence your pricing structure and if you getthis wrong it will have serious consequences as your business grows.
- Notbeing able to hire staff
- Notbeing able to afford to acquire customers
- Notmaking enough for YOU! Or worse…
- Notmaking enough to pay your taxes
How doyou deal with this? Well first make a list of every single cost that goes intomaking a box.
- Items(average the cost with the highest possible number)
- Labelfor shipping
- PrinterInk/Toner costs
- Anythingnot listed that is relevant to getting that parcel to a customer
Now, oncethose costs are added up – add 20-40% for your profit margin. That should giveyou plenty of buffer in your pricing so you can offer discounts and specialoffers.
One thing to note: Your pricing can always change. Don’t feellike it’s set in stone. Test pricing increases with your customers after a fewmonths. Profit = power.
Pick adate and keep it. Simple. Don’t overthink it. Just do it.
Part 2: Your Launch Activity Plan
- LandingPage setup
- FirstShipping Date
- TargetEmail Sign Ups
- TargetSubscription Sign Ups
- LaunchOffer (Discount etc)
- Howwill you advertise
- Yourmarketing budgets
Part 2 isall about acting with clarity and purpose. You setup KPI’s, budgets and alsodraw that proverbial line in the sand that will help you launch.
Thebiggest problem I see is that most, if not all Sub-Box wannabe’s willprocrastinate in this space for far too long. This procrastination leads toself-doubt, and this self-doubt can cause you to start self-sabotaging orworse… to become paralyzed and do nothing.
YourKPI’s are of your choosing, your budget is your own budget. You get to decidewhat you feel are right for this measure but having it clearly written out anddecided forces you to take the next step on your launch journey.
My advice for those stuck in the pre-launch phase:
Startcreating your launch plan now. Break it down into the two phases and write downthe exact steps you are going to take. Put your launch date in your calendarand get to work.
Thebiggest goal for you in the Pre-Launch phase is really to get email subscribersand people committed to buying your first round of subscriptions. So yourmindset is about: How can I advertise my pre-launch in a way that hits themarket I Identified in Step 1?
For ideason pre-launch marketing tactics – check out my post here. It’s got over 25ideas for you.
Get clearabout everything at the start. Write it down like the examples I have shown youeven if it feels a little overwhelming. It’s worth it in the long run!
- Seta clear date - and keep it
- Geta landing page setup - Dont overthink it
- Setupyour pricing - Get the sums right
- Thinkof your pre-launch offer - make it an event!
Your Marketing Plan
You havelaunched! Congratulations!! I hate to say it, but it’s not over yet. In factthe fun is only beginning.
Once youhave your business off the ground you need to start testing, measuring andfinding your very best subscribers.
Creatinga Marketing Plan is VITAL. It will be the fuel that feeds your business, helpprotect you against shiny thing syndrome, which is something that is very realfor business owners and provide you with the clarity you need to stay thecourse on your marketing decisions (and when to bail).
MarketingPlan’s will generally be an individual thing, because unlike the horse shitthat is being shovelled down the Internet Marketing pipeline these days, thereis no one size fit’s all approach to getting customers. In fact you shouldalways strive to find the path that works for you even if it’s contrary togeneral marketing convention.
There AREa few consistent elements though that will help you to get the most out of yourtraffic sources and these elements follow on from your Pre-Launch Plan.
Just likein your launch plan I like to break these elements down into two parts
Part 1: Your Message
- Yourwebsite MUST pass the grunt test
- Yourwebsite NEEDS to tell the customer what to do
- Youneed to KNOW your customers
- Don’tfocus on building a subscriber base - build an email list
Part 2: Master Your Traffic Sources
- PPCdoesn’t always have to be profitable
- Don’tever rely on one traffic source
- YOUare responsible for getting eyeballs on your site
- Measure,Test and Optimise
Time tobreak that down.
But first a quick note. I want to point out that I didn’t include anyspecific traffic sources in that outline. The reason being is that there is notone traffic source that is going to fit all. The dickhead marketers out thereare going to try and ram some secret sauce like Facebook Ads down your throatbut to be honest, it’s not really that complicated to find a traffic sourcethat works for you. What makes it work is if you have clarity of your marketingmessage and you know your audience very well you are not going to struggle tofind ways of nudging them in the direction of subscribing.
Mastering your message.
What do I mean by “mastering your message”? Mastering your message means thatyou are able to succinctly articulate to people and potential customers whatyour business does, who it serves and how someone can take the nextsteps.
In thestart-up world, this is generally called an elevator pitch.
It givessomeone the short spiel that they need to accurately understand if your productis for them and make the decision to find out more or subscribe.
Thereason that this is so important to get right before you start spending yourmarketing budget is because it helps make you extremely clear about who youwant looking at your ads or posts and helps them to understand what you aretrying to sell them.
We areinundated now with more advertising and marketing than every before, if you arenot very clear about who you want to target with what message you willgenerally get lost in the weeds. People just switch off and are numb toadvertising these days.
You mightfind that your message evolves over time, and that’s ok. In fact I would besurprised if it doesn’t. As you gain more market awareness you will get aclearer picture about the types of customers you serve.
I’ll giveyou an example from my own experience.
When Ifirst started The Whisky Order I made the hypothesis that I would be servingMen aged 35-50, who lived in major metro areas. I figured they would be suavesingle guys who look for sophistication. After running ads for a few months andnot really getting much traction, I decided to have a better look at the data.
Low andbehold I was off in my targeting!
It turnedout my single biggest customer base was… wait for it… Females – 25-35 all overAustralia who were purchasing subscriptions for their partners – not gifts butsubscriptions!
Thismeant that while I was getting traction, it was more by luck that by design.Once I changed the messaging to focus on that core customer base I instantlysaw a greater ROI from my marketing.
But thischange didn’t just happen overnight. Nor did I change just my ads andtargeting. No, It also applies to how I setup my website. So for that lets findout why….
Messaging is not just about ads
Imentioned a little thing called “the grunt test”. Now I’ve shamelessly stolenthis from one of my favorite marketers of all time: Donald Miller ofStory Brand.
The Grunttest is the ability of your website to make sense to a user in the first 3seconds. If it doesn’t you have lost that customer. I guarantee it.
Think ofa caveman. If he was your spokesman and you wanted him to articulate in thequickest way possible what your website does how would he say it.
“*grunt* - We send you new whisky every month”
Ok, thatwas a poor caveman impression, but you get the point.
It’ssimple, to the point and it makes it damn clear to my users what I do for them.So when you are thinking about the title messages for your site, make sure itpasses the grunt test.
Why focusing on new subscribers is the WRONG choicefor marketing
Something that has taken me a long time to learn is that putting all mymarketing efforts into getting more subscribers is the wrong idea. You should onlybe focusing on one thing to begin with – building your email list &relationships with prospective customers.
It soundscounter-intuitive, so bear with me hear while I explain.
When mostpeople think of marketing they are generally focused on spending money and thengetting a result in the form of sales from it. This is known as getting an ROIfrom your advertising.
There isnothing wrong with this, in fact it makes sense, but where most people will getit wrong is they think marketing is a simple two-step process.
1 – Ilaunch an Ad
2 –People pay me money
But thiscouldn’t be further from the truth. As we talked about earlier, we are sooverexposed to marketing messages and ads these days that customers aregenerally quite numb to them. This leads to high costs for marketers andbusiness owners AND it leads to the fear that certain marketing channels justdon’t work.
I’m notable to count the number of times I’ve heard things like “Facebook Ads don’twork” from business owners.
What I havefound is that, just like in real life, you need to focus on building arelationship with your target market before you start asking for the sale. Youneed to earn trust. The businesses that do this effectively will reap the longterm rewards in the form of cheaper customer acquisition costs, better customerretention and a stronger brand.
Ok so that’s all good and well, but what does this look like in reallife?
We don’tneed to make this hugely complicated. In fact it can be as simple as this:
- Videoor Content related to your Sub Box
- Retargetwith some content showing off your Box and its amazing value
- Retargetingpeople who view the content with a coupon offer in exchange for an emailaddress
- Emaildrip sequences where you can really connect deeper, show off your amazingbox in depth and build trust.
- Onetime offer using PPC ads + email.
That’s adecent sequence and one that I suggest you try. Another example could be:
- FacebookLead Ad – Discount offer to try your box
- Retargetwith a video showing off box + call to action
- Emaildrip sequence reminding of offer and benefits
- FacebookAd retargeting email list close to sign up cut off.
Those twosequences are straightforward and focus on nurturing the relationship beforeasking for the sale. You are treating the customer as a human and not askingthem to marry them on the first date.
A bigbenefit of doing it this way is that you are building out your email listfirst, which is an asset you can keep forever (or until someone unsubscribes),so even if they don’t sign up as a subscriber initially, you still have theability to convert them as you continue to market to them ongoing.
Implementing your Marketing Plan
Your marketing plan should evolve with your business. It will start with anidea and then end with you testing that idea and making adjustments.
- YourMessage – Does it pass the grunt test
- Yourtraffic sources – what works and where?
Your Retention Plan
Alrighty. We have nailed our launch, gotten really specific with our messagingand gotten our first customers and email subscribers. But What Next?
This isthe big one: Customer Retention
As withall things in life: if we fail to plan then we are planning to fail.
So why dowe put so much effort into getting new customers and not the same amount ofeffort into keeping the ones we have. After all, if we treat them right – theykeep paying us money…automatically!
Putting aclear and effective customer retention plan in place is what will take yourbusiness from a side hustle to a professional Sub Box that is significantlymore profitable.
I wouldlike to point out that customer cancellations or churn is just a fact of lifein the subscription economy. Its normal, its healthy and it’s perfectly ok tohave customers cancelling. Reducing the number of cancellations is the aimthough and that is what I want to arm you with today.
So let’sget a plan in place to help get you to that next level. Of course, I’ve brokenit down into two main parts for you
Part 1: Active Retention
Activeretention is really about putting in place software and automation that kicksin when a customer wants to cancel or just cancels their subscription.
Activeretention should probably be called re-active retention. But I call it activebecause it’s active mechanisms within your business that get engaged whensomeone wants to cancel a subscription.
One thingto consider with active retention is how aggressive you are and when you wouldlike these mechanisms to start from. I suggest testing them out to see how theywork for your customer base.
Adiscount offer which is presented to customers who are about to cancel – Somesubscription software will have this built in (such as Recurring Billing byBold) however you can use something as simple as a popup on the customeraccount cancellation page which offers them a one time/ongoing discount orbonus for staying as a member.
Nothaving the ability for customers to self-cancel and forcing customers to emailyou first.
I don’tagree with this tactic however I understand the logic behind it. The logic saysyou should be able to save a percentage of your customers from cancelling. Ihave personally tested this with my own store and found that it really makes nostatistical difference in churn rate. In fact all it did was increase myadministrative burden.
Email Win-back sequence
Thistactic WORKS. Most people who make the decision to cancel will have made uptheir mind to leave well before they click the “cancel subscription button”.Pestering them with clever tactics and technology at the moment they decide tochurn really doesn’t make a huge difference.
However…something that will happen is remorse.
Thisbasic human emotion will start to kick in after 30-60 days of not being a partof your community (providing you have given them a great experience). You cancapitalize on this by creating an email sequence that is sent to your customersafter 30-60 days after cancellation. During this sequence its aboutreconnecting the relationship and maybe giving them an irresistible offer tocome back – like a lifetime discount or a bonus.
Implementinga survey into your cancellation flow not only helps you gather valuablecustomer data but can also provide a better solution to cancelling for yourdie-hard fans who are maybe having a bit of financial difficulty.
Using asurvey you might be able to direct a subscriber to a lower cost subscription,something that keeps them in the loop but also keeps them a paying customer.
Find outwhy your subscribers are cancelled and actually implement changes where you seea trend forming.
Part 2: Passive Retention
Passiveretention is a lot murkier. There are fewer tactics to implement in this phaseand it’s more about the structure and flow of your sales process plus ongoingcustomer support. I genuinely believe that putting effort into this spaceis where you will see the bigger long-term wins for your business and where youshould start building your retention plan from.
To reduceyour customer cancellations using passive retention strategies we are going tofocus on one main thing: Fear and Desire.
Fear anddesire are the to biggest impulses that control us humans from the day we areborn. Fear of missing out, desire for pleasure, fear of being left outside,desire to be warm.
These arethe most important elements of sales psychology – remove the pain, increase thepleasure and we can use this as the foundation for our passive retentionstrategy.
Let’shave a look about how we can implement these impulses into our business.
The mainreason someone cancels any subscription box is Fear and this fear willgenerally manifest itself in the following cancellation reasons:
- It’stoo expensive
- Idon’t like it
- Notenough value.
Knowingthis is extremely powerful though. Most sub box owners will have some form orsurvey at the end of a cancellation workflow. They collect the responses andthink “oh – too expensive, that’s because you don’t see all the amazing thingsI am doing behind the scenes!” Or we get a little bit defensive and don’treally do anything with that info other than feel bad about ourselves.
But ifyou put it into perspective, its actually a really great opportunity to findout even more about our customers.
“It’s too expensive”
This willbe the #1 reason you get cancellations. I Guarantee it. No matter how cleverlyyou price your product you will always get people who cancel for purelyfinancial reasons.
Howeverthe first thing to look at when someone cancels on price is did I actuallycommunicate the true value of the box? And I’m not just saying you shouldinclude the RRP on the insert in the packaging. I mean – Did I actuallycommunication how this box speaks to their inner desires.
Thisdesire can manifest itself in a few ways:
- Accessto high value items, or
- Improvementin someone’s standing within a community.
Once youidentify their main desires you will notice that price stops being an importantfactor for the majority of subscribers especially if you can constantly play onthis throughout their subscription.
Our July Sexy Body Box features a total value of $89.95 for the low-low costof $19.99 (inc shipping!). Sign up today and get your box before they all sellout!
This July, Sexy Body Box memberswill be the first to get their hands on this amazing anti-aging serum (worthover $60!) before it’s official public release in November. This is our way tosay thank you to our amazing members!
Which oneis more appealing to you? Both examples communicate the value but the secondexample highlights the exclusive nature of the included product and plays onthe inner desire.
Thisstyle of messaging can be used on your advertising AND reinforced on theinternal communication you are sending to your customers.
Communication Tactics for Retention
Beingtactical with you communication can make an amazing difference to your ongoingretention with your customers. This has been proven time and time again innearly every subscription business I have worked with.
The No #1area most people will fail in their communication will be the moment that acustomer signs up. That person has just opened up their wallet, taken out theircredit card and trusted some stranger on the Internet to deliver their goodies.The customer is at a very vulnerable position right now; they might be excited,fearful or impatient but most of all – they don’t know what is going to happennext. This starts the tiny little seed of doubt. Your first job as asubscription business is to ensure this seed can never take root. This doubt issimply fear trickling into their brains and it is a major reason you get a lotof month 1 cancellations.
So how to you deal with this?
Make sureyour communication is perfect from Day #1. There are a couple of ideas on howyou can achieve this.
Option 1: Thank You Page Perfection
Be veryclear from the moment your customer hits a thank you page, exactly what theycan expect. You, don’t need to go overboard with this either! Just make sure theyknow the important details.
- Whenthey can expect the first shipment
- Whenthey will be rebilled
- Whoto contact if they have a question
- Wherecan they get access to your community or social channels
If yourshopping cart allows it – try and include a video introducing yourself andexplaining all this to your customers.
It helpsto put a human face on the brand, makes you approachable and it’s just greatcustomer service!
Option 2: Email Sequence
When acustomer signs up for your subscription, using an email drip sequence is agreat way of doing two things:
- Providingclarity about the subscription, and
- Buildinganticipation for the upcoming shipment.
A goodexample of a sequence is this:
Thank you email
Welcomeyour new subscriber, let them know what to expect and when. If you have acommunity that you want them to join, this is the perfect time to let themknow.
Show offyour past boxes and your happy customers testimonials. If you have a hashtagthat you get your customers to share, make sure this is included.
Areminder that your shipment will be there soon. Show off a bit of the behindthe scenes action so they can get to know you a bit better. Start buildinganticipation for the impending arrival!
Shipping Confirmation Email
Make it aparty! Yay – it’s coming. Tell them how they can share the experience by takinga selfie with your hashtag.
Your mainaim here it to make someone feel confident and comfortable in the knowledgethat they are being looked after and something cool is coming. You are buildingit up, making it an event.
How to implement
Now thatI have spilled my guts, its time for you to implement what we have talkedabout. What I want you to do next is to breakdown the steps that you will takein your business that cover the following areas:
Createclear activities that you will perform and start taking note of your churn fromDay 1.
- Whatwill your active retention plan look like?
- Howwill you implement passive retention?
- YourDay #1 Communication is vital, what will your email sequence or thank youpage contain to make sure you remove that seed of doubt?
Your Growth Plan
It’s timeto get Big, and no I’m not talking about those magic pills that those spammersemail you about. I’m talking about growing your subscription business past yourfirst few dozen subscribers well into your first hundred or even thousand plussubscribers.
This iswhere the rubber meets the road for a lot of new subscription businesses; theyget that nice momentum during initial launch but don’t quite capitalize thatinto meaningful ongoing traction. If this is hitting home for you, then takenote of what I am about to say.
Your keyto success is in knowing your numbers.
Yourability to measure and track every part of your business is vital to yourability to grow safely and sustainably.
What numbers do I track and what do they mean?
Churn, aswe discussed in retention is the number of subscribers who actively cancel eachmonth in relation to the new customers acquired. To put it simply: You wantmore customers coming in, than going out.
LifetimeValue (LTV) is the dollar amount that your average customer will spend while asubscriber. This is calculated by averaging the length of time your subscribersare members x your revenue per subscriber.
Averagelength of time = 3.5 months
Averagerevenue per box = $19.95
= LTV of$69.82
CACstands for Customer Acquisition Cost. This is the amount of money you arespending to bring on a new customer. If you are using PPC like Facebook Ads,this would be the average conversion cost for your campaigns.
LifetimeProfit (LTP) is a similar calculation to LTV, but instead of calculating therevenue of each customer, you are calculating the profit for each customer.
So ifyour average profit per box = $5 and your average subscription duration is 3.5months. Your LTP would be: $17.50
Average Subscription Duration
This ispretty self explanatory – this is the base figure we have used to calculate theLTP and LTV.
There area bunch of other metrics we can look at, but they are not as important as theabove.
Why are these numbers so important?
One of the great things about running a subscription business is that we get tomake money form our customers time and time again, each month, for the durationof their subscription with us. We differ ourselves from ‘normal’ eCommercestores by focusing on the ongoing relationship and transaction, rather than bytrying to squeeze the maximum profit from our marketing campaigns.
If youcan track and measure your average profit, subscription duration and churnnumbers, you are going to have a massive advantage on the marketingbattlefield.
To helpillustrate this I will give you a look inside my own numbers
- Thecost of my subscription is $59.95 per month.
- Ihave an average profit of 54% ($32.37 per month) before shipping costs
- Myaverage subscription duration is 5 months. This means I have a totalprofit per customer (averaged) of $161.86 less shipping.
- Ihave excluded shipping as I break this down between domestic andinternational rates
Thismeans that I know I can spend about $120 to get each customer and I know I’llbreak even overall for the year. The figure is less because I like to includethe shipping costs in my calculations, and like I mentioned earlier, they varybased on subscriber location.
This. Is. Powerful.
Itdoesn’t mean I’ll go and blow all my money on new Facebook Ads of AdWords orInfluencers, but it helps me to identify that I can actually spend a decentamount on those channels should I desire.
I maydecide to spend more money on developing amazing content. I might spend moremoney on improving customer experience; I can focus on areas on my businessthat need attention (like my inability to sort my filling lol).
Knowingthe intimate detail of your numbers will help you plan and make better businessdecisions long term.
Now, thewanky marketing dickheads out there are going to say something like “why don’tyou just go and blow all your money on FB ads bro – go scale”
Frankly,because I don’t want to. I’ve hit a level in my business that is verycomfortable for me and I don’t really see the need to. I tend to use The WhiskyOrder as a testing ground for new theories, implementing new campaigns and anexcuse to enjoy great whisky on a regular basis. It pays the bills, isprofitable and keeps me comfortable.
Thisbrings me to my next point
Grow for you
Your ownperspective on growth is going to dictate what happens after you know yournumbers.
Do youwant a massive empire? Great! You know the numbers and can decide where youwant to invest your next marketing dollars on creating 6 figure PPC campaigns.
Want anice lifestyle business where you only work a few days a month? Awesome – usethe numbers to help you plan and plot your business so that it becomesprofitable and sustainable for you.
Yourclear understanding of these numbers will help you decide on the next steps youwant to take in your business. In my opinion, you should start looking at thefollowing (in order) as you start to grow:
- Fulfillment& Storage
Fulfillment and Storage.
Thebiggest time suck for every subscription business is the fulfillment side.While we have an advantage over eCommerce store in terms of recurring revenueand profitability, the downside is that most of our orders are pretty customand require a high touch to get them out to our customers.
This iswhere having a clear idea on your profitability is going to help you determinehow you handle this big part of your business. As long as you know your numbersyou will be fine.
Thebiggest advantage to having strong profitability in your business is yourability to decide how you are going to handle the actual fulfillment of yourgrowth long term. If you have razor thin margins, you are going to need a LOTof subscribers before you can start doing things like outsourcing tasks orhiring staff, at least without losing money anyway.
This ismy main point about actually understanding your numbers before you go down thepath of growing your business. It informs your choices long term.
Ok. Soyou know your numbers and they look fine. What next?
Youreally have 2 main choices when it comes to fulfillment:
- Keepit in house
- Usea 3rd Party Fulfillment provider
In House Fulfillment
Virtuallyevery Sub-Box is going to start off with In House fulfillment, and I literallymean – in your house. But what happens when it gets too big? You DO actuallyneed things in your home other than boxes, packaging supplies and products.
Here iswhat I call the stepping stone method of in house fulfillment. This assumes youdon’t want to have the expense of a warehouse operation straight away BUT youwant all the crap from your home gone.
1. Hirea storage locker to store and hold every item.
This willcost anywhere from $100 - $200 per month and will hold about 4 Cubic Meters (12ft square). As you grow add more lockers to hold the items.
How this works: Each month you removing all the box items,boxes, filler etc. Bring them back home to pack, then eventually return theremainders back to the locker. While it may sound tedious, it’s actually a lotbetter than having a cluttered house. Just ask my wife…
Onedownside to this is it becomes hard to accept deliveries to the locker and youwill still need everything sent to your home.
2. When you grow
Startpricing a small warehouse early, so you know the estimated monthly cost. Onceyour storage locker fees start to hit close to this number it’s time to moveinto your own premises.
Theadvantage of doing this is you are no longer fulfilling in your home and youhave a secure premises where you can accept now deliveries and manageoperations. By the stage you are ready for this you should also have your coregroup of staff ready to run the operation (more of this in the Hiring Section).
3rd Party Fulfillment
Using a3rd Party Fulfillment Centre (3PL for short), has been a godsend for me. Assomeone who likes to travel and doesn’t want to be tied to the monthlycommitment of fulfilling the boxes I’ve been using a 3PL for quite some time.
But,before I start singing the praises of 3PL’s I wanted to say a few words ofcaution.
Thebiggest danger in using a 3PL is your lack of oversight in the packaging anddistribution of your product. If you have an extremely high standard forpresentation, like to have a lot of customization to your products or evenenjoy doing little things like leaving a personalized note in the box, it’sgoing to cost you.
3PL’swill generally charge “kitting” fee’s for any customization made to boxes ororders. Things like applying stickers, leaving notes etc all add up in fees. Sojust make sure you can afford them before sending your products to a 3PL.
For me, Inegotiated a fixed rate for the pouring, filling, labeling and packing of mywhisky boxes. Obviously this is highly custom and has required a lot ofnegotiation + appropriate licensing but it’s made my life that much easier.
Anadvantage of using a 3PL is that you can have them store all your ongoingsupplies and consumables and give them authority to re-order without needing toconsult with you. Effectively managing your inventory for things like Boxes,tissue paper etc.
Anotheradvantage is that the 3PL may actually have better shipping costs availablethan you. As they ship for a large number of businesses they usually have anegotiated rate with a preferred shipping partner. Look into this as you arenegotiating with a 3PL because you may be able to reduce your shipping costsenough to offset the costs of using a 3PL in the first place.
So: Ifyou are using a 3PL – Know your numbers and make sure you can afford the costsPER BOX to have each item sent out.
One of abig issue I see for budding subscription entrepreneurs is they feel that theyneed to be across everything. From packing and shipping to marketing andcustomer service, we feel like business owners we need to do it all. It’s hardfor us to let go of each little piece of the pie in our business.
This is alesson I learned during my career as a leader in the Public Service. A truemark of your success is that your team doesn’t need you to operate. To movethis into an entrepreneurial perspective. The true mark of success in abusiness is if it doesn’t need you to function day to day and remainprofitable.
How doyou do this? By implementing hiring the right people, at the right time andslowly removing yourself from the operations within your business.
Where do you start?
The way I suggest you look at it is this way: Where are the biggest time sucksthat DON’T generate revenue for your business? Order them from most timeneeded to least time needed.
Key Hire 1: Fulfillment
I wantyou to start removing yourself from the burden of fulfillment as early aspossible. Either by using a 3PL or just by hiring for the weekends you aredoing the shipments. Providing you have followed the first phase in thisGrowth Plan (knowing your numbers) you should be able to pin point the exacttime you can hire a staff member (even if it’s a family member), and roughlyhow much you can pay them.
Hiring ona casual basis while you are just starting out is an easy way for getting usedto managing staff and also handling the flow of orders.
A bigmental block for Subscription Boxes is the feeling that the more you grow – themore work you are going to have to do. If you have the staff in place to handleyour workload then you wont need to experience this feeling. Get this monkeyoff you back before you start looking to hire anyone else.
Key Hire 2: Customer Support
They nextrole I would be hiring for is Customer Support. I would make sure though thatyou have spent a decent amount of time (3-6 months) managing the customerenquiries so you get a feel for the nature of the role and what your customersare actually contacting you about. This also helps with identifying key issueswith your business such as:
- Unclearor incomplete information on your website
- Unrealisticexpectations on your sales copy
Keep thisperson accountable for timely support and also for providing you with ongoingreports about common issues.
Key Hire 3: Marketing
The lastkey hire I would look at is marketing. We love to think we know it all when itcomes to getting new customers. I’ve been guilty of this myself MANY times,especially when it comes to running Facebook Ads. While I am no stranger torunning successful campaigns, I would rather have someone else pulling all thelevers, managing split tests and generally doing the monkey work while I focuson bigger picture things (like overall strategy).
Shouldyou just hire a Facebook Ads guy? No, I think you should look at gettingsomeone who is across most aspects of digital marketing so that way their workwill be in Synch with the rest of your marketing strategy.
I’ve seentime and time again, clients focus on one message per marketing channel -they forget that there needs to be congruency between what they say on FacebookAND the email marketing they deliver.
How to take action
Get clearon your numbers. Set KPI’s on all metrics and hold yourself accountable forthem. Work on reducing costs as well as increasing your profits + revenue persubscriber.
Keynumbers to track each month:
- AverageSubscription Duration
Grow for you
You needto establish your end goal: do you want an empire? Then go hard and put yourprofits into ongoing marketing and building new business. Do you want alifestyle business? Set a clear goal of subscriber numbers, profits and startworking towards that number. Once you hit it – maintain it!
Get your fulfillment right
Decide how you are going to grow out of the kitchen. Weigh up the pro’s andcons of outsourcing your fulfillment, especially if you want a business with largenumbers. Outsourcing is not always the best option for highly custom boxes oranyone wanting a high touch with their customers.
Hiring the right way
Get rid of the order fulfillment first – you are a business owner – not aFactory Hand. Next start getting your customer service handled by professionals– but don’t lose sight of what is happening. Keep them accountable and getregular reports on common issues. Lastly, get rid of marketing from your plate.Once the other jobs are taken care of you will want to focus on the high-levelaspects of your business. A digital marketing professional will be worth theirweight in gold and able to work over a variety of mediums – not just one stream
That hastaken me far to long to write and I’m sure it was far too long for you to read!Please take action on the information I have provided. I would love to see howyou have gone implementing it and making some positive change in your ownbusiness.
If thiswas all a bit too high level I’ve got something that might help. Over the nextfew weeks I’ll be running a series of video lessons / webinars over the nextfew weeks where I breakdown how all the lessons look within my own business andfrom other Sub-Boxes. I’ll make sure you see an ad on Facebook , or if you wantto sign up to the email list I’ll let you know when they are on in there too.
Take careand have a great day!