049: Subscription Box Predictions with Paul Chambers

Are you wondering how the subscription box industry did in 2021, or maybe even what to expect for 2022? On this episode, I'm joined by Paul Chambers, President and Co-Founder of Septa, to break down industry stats, best practices, and what to look forward to in the next year. Come listen.

Welcome to the Launch Your Box podcast with weekly tips, tricks, and strategies to start, launch, and grow your subscription box. Now here's your host, Sarah Williams.

Welcome back to the Launch Your Box podcast. I'm excited today because I have Paul Chambers here, the founder, co-founder, and CEO of— am I— wait a minute, am I saying that right, Paul?

Yeah, you nailed it. Co-founder and CEO.

Okay, I'm gonna start over.

You want— you can even keep this going.

We can just, uh, let's just keep going then.

We can make up some fun titles too along the way. Like, I'm the janitor, sometimes I'm the Like yesterday I was the network guy. I was trying to fix something in our networking room and I bumped a cable, successfully killed the wireless internet in the entire office and started freaking everybody out and canceled like an hour's worth of work for everybody. So lots of roles.

I think that everyone listening can totally relate because we're the shipper, we're the designer, we're the maker. We're like, we're all the things in our businesses, especially when we first start out. So some days we don't even know what our role is going to be until we get there and we start going with it. But We're here. I'm excited. I'm always excited to talk to you, Paul, but I'm excited to kind of talk through the year about subscription box industry as a whole. Um, but let's talk a little bit about, I know you had a subscription box called the Gentleman Box and it's, it's an amazing box and you sold that off. I would love for you to just give us a little bit of the backstory of maybe how that got started and your growth, and then what happened when you sold it.

Yeah, sure. So oddly enough, I figured this out the other day. I've got 20+ years in subscription in some way. When I first started my business, I was 16 years old in high school. I was trying to build an internet service provider company, failed miserably at that, started building websites and started doing website hosting for people. Totally different than subscription boxes, but what I loved about website hosting is it was something that people really needed. It was hard for them to leave. So really, really sticky in that way. But also, it was a great little service business. So anyway, fast forward to where The Gentleman in the Box came from. I was running that same web development company that I started when I was 16. My good friend Chris George came to me with his cousin-in-law, John Hagee, and they said, "We have this idea." John said, "I work in automotive." I can never get out and go shopping. I see an opportunity to ship accessories to men to make them dress up and feel good about themselves. The guys that just don't have time to go shopping. I said, "I love that idea." We talked about it a lot more. We expanded on it a little bit. I said, "I love the idea. Here's what I'll do. I've got this website development company. I'll help you build a website in exchange for an equity stake in the company." After a small amount of negotiating back and forth, we figured out something that worked for everybody and the rest was history from there. I became a partner in the company and even though I had a smaller equity stake, I put everything into it just like I was an equal partner with those guys and fell in love with the business and continued to grow it for about 6 years until we exited it in 2020.

It's crazy. I love the concept of it because it's a mixture of socks and ties and pins and the things that are accessories to your suits, right? Like, that's really what it's for, for that really sharp dressed man that is probably in business, probably going through a lot of meetings and maybe traveling a lot and just doesn't have time for themselves, right?

Yeah. And we certainly learned a lot of lessons along the way. We started, we started with the monthly subscription box, and we eventually added on a premium quarterly box and You know, as you know, and your audience knows, anytime you're building a business, you have a lot of different, like, should it be this? Should it be that? What about our price point? What about including things inside? And I remember a really, really critical point. We first launched, the idea was we partnered with GQ magazine and we put a GQ magazine inside. And it was great because the idea was you could, you'd get the box, you'd open up the magazine, you'd read about the accessories, all the stuff inside. And then you'd use the stuff inside to style yourselves. So it was like a perfect fit. But we realized the magazine was really heavy. It was adding a lot of weight to it.

Mm-hmm.

And so it was causing our, our shipping prices to go up. So then we, we couldn't put as much in the box. We couldn't make the box as cool because we were spending so much more on shipping. We would pay for the cost of the GQ.

Mm-hmm.

So we made the decision to take the GQ out of the box, which at the time amongst our team was really unpopular. They're like, you know, my designer and our, our website developer, everybody at my agency that helped build it, they're like, This is terrible. This is a terrible idea. You guys are just making a big mistake and it ruins the essence of the box. We're like, guys, you need to understand the economics of this and why we're doing this and here's what we're going to do instead. It ended up being one of the best things that we did for the subscription box at the time. We still shipped the magazine to everybody. It came separate, but we found different ways to enhance that experience. And so it's this ongoing adventure all the time and you're always working hard to just make it better and solving problems too.

It's that fluid ongoing thing. It's never a one and done. It's always the next box, the next box, the next thing, the next idea, the next curation, right? It's never, it's never done. And I think that's what makes it really fun and exciting too.

Yeah, absolutely. And it, you know, it's, it has its moments where you're like, why am I doing this every day, you know? But it— there's way more of those moments where it's like, this is so cool. You know, we get these emails and people saying, you know, that you changed my life. I, I ordered the Gentleman's Box because I wanted to dress for the job that I wanted, and I started dressing the part. I went out, I interviewed with confidence, and I got that job, and it dramatically changed my life. Those are the days you're like, this is why I do this, and I'm never stopping, you know?

Yeah, exactly. So tell me where SubTech comes in. So SubTech is the Subscription Trade Association. And so how many years ago did you— so you were in the midst of Gentleman's Box when you created Zepta, right? So tell us, tell anybody that's listening that doesn't know what Zepta is, what it is, and then let's go on that journey of creating Zepta.

Yeah, so we, uh, launched on Gentleman's Box in 2014, November of 2014, just in time for the holiday season. Remember that pressure building up to it? And, um, about 2016. Yeah. Summer of 2016, we were looking, trying to find like a conference to attend to meet other subscription box owners. Because at the time there really wasn't a big community. Cratejoy was just getting started. Liz Kadiman was just launching MSA and there weren't a lot of like outlets for conversation and community out there. Not as many great spaces as like what you have right now. We wish you were around back then, Sarah, but, um, you're here now. And so, uh, We're like, we need to find a way to meet other people. We should find a subscription box conference. And Google, Google, Google didn't exist. We're like, all right, we're crazy entrepreneurs. Let's start a subscription box conference. And we did just that. We gave ourselves— we knew we wanted to hold it in Detroit because it's close to home, which is where we are. And then we knew we wanted to do it sooner than later. And it was about June when we started fleshing out this idea. We're like, okay, We got to do it in September. Fall in Detroit is still nice enough. People will come down, they'll get around. And we set our dates of September 29th, I think it was somewhere around there. 26, 27, somewhere in that range is around my birthday, which is the 28th of September, if you're keeping track of it.

Writing it down.

Yep. Perfect. Put it on your calendar. And so we, we decided to push forward and we were so fortunate to get Katya Beecham, CEO at the time of Birchbox, to come in and speak. Michael Brokamp, co-CEO of FabFitFun, uh, Liz Kedmon from MSA at the time, uh, came out and pulled together an amazing lineup of people and brought 200 awesome people into the room and held our first event. And it was from there forward that we realized— I remember Michael Berkham from FabFitFun sitting with us at night and going, you guys, you're building something bigger here than Gentleman's Box. Like, this is— these people in this room helping each other right now, this community, like keep this going. This is really cool. And, you know, we're so, so fortunate to be kind of in the right place at the right time and just bring these awesome people together. And so we've continued that. We launched in 2017 to go along with the conference. We launched the Subscription Trade Association. So we had this amazing group of people. We'd meet once a year for this conference and then it would be done. And we was like, we said, how do we continue that? How do we represent this space for everybody? And so that's when we built out the Subscription Trade Association. And that brings us to today as we continue to, to keep this awesome, amazing people together and help as many ways as we can.

I think back to 2016, like for me as a business owner, it was kind of that you saw these subscription businesses starting to emerge and they weren't necessarily all these big brands, like, you know, like the FabFitFunds and the, and the IPSYs and stuff, but you saw these smaller subscriptions start to emerge in that timeframe. And that's really when I started to get the itch for doing a subscription. I was seeing these smaller businesses do them, and I was seeing them being successful at it. And so I launched mine in 2017. So it was right kind of in that, in that height of where the industry started to really blossom and really open up a lot of doors for other businesses. And that kind of brings us to our conversation today. I really wanted to talk about what we saw for 2021. It really, it's really been like the past couple of years, but what we saw as for an industry as a whole in subscription, And then what do we see for 2022? Like, where are we going? So do you want to kind of talk through what you guys saw in 2021 for the subscription box industry?

Yeah, you know, first of all, it's amazing to me that 2021 is over already.

Doesn't it feel like we just finished 2020 and now, like, it feels very much the same? Unfortunately, it feels like it, it feels like we just went through lightning speed of a year. And I can't even tell you what happened this year. It was so amazing.

Yeah, like, I don't know what happened. I blacked out.

Yes.

So there's a lot of, a lot of crazy things happening in '21. We saw in particular as Subta, first of all, like for the first time in history, saw a record amount of like roll-up and consolidation happening. Um, BattleBox and Carnivore Club were acquired. Uh, Daily High Club was acquired. Kitnit Box, uh, just had dinner with Jordan Salvitt from Kitnit Box this week and we were talking about it, you know, great exit, they were acquired into a larger company. And we see this trend happening in the D2C space with these medium-sized subscription and D2C brands that are becoming part of larger roll-ups out there happening in the D2C space. Companies like Thrashio, Open Store, MicroAcquire that are coming in and saying, you know, great ways to bring a couple brands together with economies of scale efficiencies out there. So if anybody in your audience is that, you know, in that growing and scaling and maybe they're ready to exit, there's some great opportunities out there for them to find a happy home for this great business that they've grown. We're continuing to see that going into 2022 as well. So looking at that and revenue numbers vary, right? Some that are doing 6, you know, several hundred thousand all the way up to some that are doing a million. You don't need to have a massive business to exit it. You can, or even merging together two businesses that complement each other. And so never before, like previously, the subscription box space was a little bit, you know, it's, it's not as investable. There isn't as much acquisition happening. Totally throw that all out the window in '21. And going into '22, we saw a complete shift in that.

That's really amazing, because I think sometimes when we build something, and then we see it starting to scale, and maybe we're not capable, or we don't have the capacity to bring it to further scale, and we wonder, am I stuck? I'm stuck here, or what do I do? And so that's really awesome to hear you say that more kind of medium-sized businesses are being acquired by the bigger brands. I love that. I love that. Let's talk about the growth in the industry as a whole. So I have your annual report in front of me, which is really comprehensive and amazing, by the way. But I see on here that you say 27% of consumers use auto-replenishment in the second quarter of 2021. So I know in 2020, we're all trapped in our houses, we are consuming more things online than ever before. We saw it in digital education, we saw it in consumables. I mean, Amazon was, was our go-to, right? And so we saw this really rise of e-commerce in 2020, because we didn't have a lot of other options. And so We saw that pickup. We also continued to see that in 2021, even as stores were opening back up, people were getting back out and getting back to normal somewhat. Can you talk through some of the things that you saw in the industry that way?

Yeah, so what happened— you're exactly right— what happened in 2020 was people were— they didn't have many other options, right? You saw you couldn't get toilet paper anywhere, so all of a sudden you're trying to buy it from Amazon, all these different places. Like, oh my gosh, there's toilet paper subscription companies, who gives a crap, and Bippy, right? Uh, the first one being a very funny name. And same thing with food, right? We can't get food at the grocery stores, but let's sign up for HelloFresh and let's sign up for Blue Apron or any of these other great snack companies out there. Let's explore these spaces a little bit. And so what happened where it was created habits, it exposed people to new areas and new opportunity that they didn't realize maybe existed before. Or we saw a lot of pets that became part of families in 2020. And just like, I think one of your, your members of your community, uh, GPigBox, right? They have all these guinea pigs that are coming out there and now they need fun toys for them and different things like that. What a great opportunity to build a business around that. And so going into '21, those habits were formed. Now we did see some attrition, right? People, you know, as they were able to get back out, maybe they peeled back. But a lot of it was like people were pausing and maybe taking a break for a minute And our approach on that as Subta is like, that's okay. It's okay if somebody's going to pause or they're going to leave. If you've built a strong enough relationship with that consumer, they're going to come back. They're going to come back and be part of your, of your community and what you have. And just because they canceled doesn't mean they hate you, right? You're a bad person. And because I remember feeling that way with Gentleman's Box, we'd see early on, we'd see the cancellations and like, man, you know, what do we do wrong?

Yeah, it's just because they had too many pairs of socks for a minute.

But you know what, the socks eventually wore holes in them and they came back.

Yeah. So I think that we also saw this new convenience factor in our lives. So it was more out of need in the beginning. We started buying online, we started getting these subscription boxes, and then we also realized the convenience that we were creating for people who didn't have to go shop for, you know, things that they normally would have to spend hours a week to go do out of their everyday lives. They want to be home more, and they were home more or now they're having to go back to work or they're back in their daily lives and they liked being home. And so they don't want to spend so much time out and about doing all the things. So we created this huge sense of convenience. Hey, every month this box is going to show up. It's going to land on your doorstep. You don't have to go to the mall. You don't have to go to the grocery store. You don't have to go to the pet store. We're just going to keep bringing it to you. And we were bringing like fun, different things that maybe they wouldn't have bought for themselves. So they were experiencing new things. They were trying new things. Um, and they really enjoyed it. So it, You're right, it became a habit for them. Well, I don't want to give this up. This is convenient for me. This is a luxury item for me. This, whatever it was for them, they continued to keep it going into 2021.

Yeah, and it's fun too, because there are a couple segments that we saw that really grew in 2020 and continue to grow in '21. And we're really seeing that too, still going into '22. Food and beverage still is a fast-growing segment. We're continuing to see, because it's not just, you know, a meal kit or, Snacks in a box, there's some fun, unique angles that people take on that too. Snacks from different countries or snacks of different diets. And even exploring that space of food boxes, there's wine clubs and beer clubs and all sorts of stuff there. And even Jeremy King from Attest at our last Sub Summit gave a talk about the emerging opportunity in the marijuana shipment space, right? Really interesting to look at. And so there's lots of stuff emerging there. And the other one that I find fascinating too that really grew well in '21 and we're seeing continuing trend is beauty and personal care. And what I find interesting about that is that's one that you look at and be like, well, that's been done, right? You know, Birchbox has been around forever, Ipsy's just dominating. But I remember at our very first sub-summit in 2016, Joseph Martin sat on our stage and he had just really was in the early stages of BoxyCharm. He's talking about going up against Ipsy and what they were doing with it. Just this past year, they were acquired by Ipsy. They bought the biggest competitor out there. It's like, wow. He built and scaled this business in the short amount of time to be acquired by one of the biggest in the space because he did such a good job of recognizing opportunity there. Even so, we're still seeing more opportunity in that space. I love stuff like that because Even myself, like oftentimes I'm discouraged. I'm like, oh man, somebody's already done that, you know? But no, the answer is like, it can be done even better, or there's other different ways to look at it, or a different way.

And I think that's something that we experience in our community a lot, is like, oh, how many t-shirts can somebody have? How many dog boxes can there be? How many of something can there be? And the answer is, it's different for different people. You're building an audience that's different than someone else's audience. And so to see those two go head to head, you know, BoxyCharm and Ipsy, they were for basically the same person, but they provided a completely different experience. And I think it's awesome the way that they, you know, came together, um, this year. And it just proves that everyone needs stuff. Everyone. You, I, Ipsy, BoxyCharm, whoever they are. Cannot fulfill to everyone that exists, right? Somebody needs to fulfill to them. They don't have all the customers in the world. And what you provide could be, could be that much different to make somebody want to purchase from you than somebody else.

Yeah, yeah. And it's, and it's fun, because there's so many different things to look at. I remember from our very first sub summit, one of the ones that we're just fascinated by was a gentleman running a Sponge of the Month Club, a kitchen sponge. And, you know, just sit, sit at your sink and use it every day. And You, every— when it gets really, really, really, really gross, that's when you go to replace it. And he's like, why should we have to wait until that point? And he started a subscription. Every month you get a new kitchen sponge. I'm like, that's brilliant. And he's crushing it. And he had some other little, little subscriptions that he ran, one called Ear Fleek that sends some cheapy little earrings out and stuff like that. And they were, they were great. But one of the interesting things is a data point that's in our annual report is parents, 75% purchase household items through subscription. And so you take something like that, that you might look at and be like, oh man, you know, what are, what are the things I use every day around my house? What are the things that people are using? One of my other favorite home subscriptions is DecoCrate. They send, they send themed gifts. And then one of your members, or is she on your site? One of the ones that I see around every so often, Year Cheer. Do you know Year Cheer? They were at Sub Summit and I was, I was talking to them about it, you know, like just fun, like cool stuff, you know, that you're seeing in your house every once in a while, you're putting out for holiday decorations and stuff like that. It's just, it's just cool. You know, there's so many fun opportunities.

It's really amazing. I think that people just need to get out of their heads thinking that there's too many competitors out there and just really narrow on down what lights them up, what they're passionate about, and what they can create in their boxes every single month. Now, We've talked a little bit about what we saw in 2021, but I'm curious about your thoughts for what's going to happen in 2022. You know, people have asked in our community, like, are we expecting a slowdown as, you know, people are out doing their things? Um, you know, is it expected to slow down? We saw— did we, did we hit the peak and are we coming back down, or are we going to continue to see growth again this year?

So I think, you know, I think we're going to continue to see growth because like we talked about earlier, we created these new habits. We showed people that things are— there's convenience, there's accessibility. That's part of stuff. And so I definitely think we're going to continue to see growth in the space where there's, where there's opportunity. This is also going to be an interesting year for new trends and new things happening from a technology standpoint. There's a lot of talk about Apple releasing some VR/AR glasses. There's a lot of talk about Facebook with the rebranding of Meta Platforms. That stuff on the surface can seem really scary and intimidating. When we talk about that from— I would look at that and say, "Gosh, I don't have a bajillion dollars. I don't know how I would incorporate tech like that into my subscription box. But what's going to happen is you're going to see these companies— remember back in the day, all of a sudden Cratejoy came to be, right? All of a sudden Shopify came to be with Recharge. I mean, Shopify started because they were running an e-commerce store themselves and they saw a need to create a better experience. So they built Shopify out of that. So what we're going to see is companies start to come up that give small business owners the opportunity to create virtual experiences with what they're doing. So I'm encouraging people just to keep an eye out for stuff like that. Find different ways as tech emerges, as new things are happening, how you can, how you can expand these experiences and do different stuff. Uh, again, it seems intimidating from the surface, but just, just think about it and look and listen that, you know, seeing what's ahead.

Yeah. Um, I think it's, it's smart to keep looking at technology to help help automate your business, help, help make things easier for you and help you grow from that standpoint. I know something that we really worked on this year in 2021 for my business was the expansion revenue piece. So we built a really solid subscription box following subscriber base, but what were we leaving on the table? And for us, that was, that was more of what we already do. And it, and it's one of those things that you wonder if I give them more, Do they still want the subscription box, or what can I give them that complements the subscription box? And so we call that expansion revenue because we're expanding on the revenue that we're building with our subscription box. And I would love to just talk to you about that, or talk to you about— maybe someone's listening and they only have a subscription box, they don't sell anything else. What ways can they build expansion revenue into their businesses?

This is one of my favorite stories from the Gentleman's Box day of how we stumbled into the quarterly box. We were running our monthly subscription only at the time. And we said, you know, we should build like an ultra premium box, like a one-off purchase. We call it the limited edition box. And we're going to do it once a year. We're like, okay, let's, let's see what we could put together. And, and we, the way we did this, we did a little, little sneakily, but we didn't have a ton of, we were bootstrapped, right? We didn't raise any money for this. We hustled it out. We figured it out. We said, how can we do this without buying a ton of really expensive inventory? Because we wanted to make it "$100 price point." So our monthly subscription box was $25 at the time. So we want to make it a more premium luxury thing. I said, "John," who is our partner, curated everything. "Why don't you curate the box? Let's send out an email and tell people limited edition. It's going to ship in 30 days. Pre-order now. And let's see what we get." And what we did is we identified suppliers who said, "Hey, we're going to want to—" We said, "We'll sell 250 of these. We're going to want 250 of these. Do you have them in stock?" They're like, "Yeah, we We have them. Okay, cool. We earmarked those. I want 250 of this. So we got a whole bunch of stuff lined up, sent out the email, and it all sold out in 24 hours. Wow. And we're like, what just happened? So then we're like, we need to sell more because it just sold out like crazy. And what if we just upped this to 500? So we went out to all the suppliers. You have 500, you have 500, you have 500. And we knew we had to stop it there. We couldn't get too greedy and too crazy, but we wanted to see where we go. And 24 hours later, again, sold out of the next 250. And so we found a unique way to continue to serve our market with what, you know, that expansion revenue, this limited edition, one time a year premium box. We built that out, we did it again a year later. And what we found as we continue to do this is there is appetite for more, not just more stuff, but more great things, great ways to engage with our community, engage our members and give them more of what they were looking for and what they wanted. In this premium product. And that's when we said we should do a quarterly premium subscription and, and built out a whole other segment of the business from there.

I love it. And I think that, um, we, you know, I teach something similar to our community to do a holiday box, um, and even to do a holiday box before you even get your subscription box started. Like, this could be your test point, this could be your proof of concept that what you have is going to work and it's going to sell. And we saw thousands, tens of thousands, maybe hundreds of thousands of holiday boxes being sold this year in our community. And not only does it put more revenue in our pocket as we have to build out our businesses for 2022, because we know right now we need to buy earlier because of our, our product, our product pipeline right now. So it's been a struggle, you know, cash flow can be a struggle for these businesses, especially if they're growing, to constantly buy and buy and buy and then to say, okay, I need to buy 3 months now at a time. And so having that extra revenue in at different times of year is super important. It helps just fluff that cash flow as we build out these product-based businesses. So I love, I love the idea of those one-off boxes and I love the way that you guys did that. I'm also loving complementary pieces to your boxes. So maybe you have a subscription box of 3 or 4 items and then you have a 5th item that's in your store and they can add it to their box. We've seen I've seen several people do this with their subscription boxes, send out an email, click here, and we'll add this to your box. And they're getting additional sales periodically. And just keep adding to that. So different ways that you can, you can definitely expand on your revenue outside of just your box. Yeah, yeah.

And, you know, another thing, there's another trend that I'm going to, I'm going to come back to here in a second around personalization. But and I know you're, you're awesome at that. And so I want to come back to that. But one other thing too, I don't want to forget about is we're wildly successful with mystery boxes as an add-on. And I'm sure if you talked about this with your, your members before—

yeah, we've talked about this. And I actually, um, they're— our blog is going to come out before this episode airs, so they're going to have my blog about doing a mystery box. And I love doing those right after the holiday, kind of like a clearance sale, but a way for us to just turn that inventory again, putting those— that capital back in our pockets so that we can buy new and fresh inventory too. Tell me about your experience with those mystery boxes.

Similar experience. We are at this point where there are a couple of months we over-ordered on inventory and then it would start to stack up. And it's that fine balance in this world. You don't want to not be able to sell, but you don't want to have too much. And so every month we just a little more, a little more, a little more build up. And we were like, man, we need to find a way to move this. And we said, what if we did a mystery box? And it wouldn't be the same. We'd mix and match different things. And the other thing we were conscious of is Okay, this is a new subscriber. If they got a mystery box, it wouldn't be a repeat of something they bought before. And so we'd also try and track that. And we would see our conversion rate on mystery boxes was so great. It was phenomenal. And there were good margins still because we weren't doing deep discount and stuff. We were doing a fair price. There was some discounting to it. But it was fun. People love mystery. People love excitement. I mean, like you see how good Five Surprises and all these different things are doing for kids. Adults are the same way. We're just grown-up kids. You know, we love surprises and mystery. And so yeah, we saw great success with mystery box. Encourage everybody to do it.

I also love, you know, you talked about having this extra product every month and, you know, we do the same thing because again, our stuff is personalized. And so we overorder because we know we're going to have some personalization errors in, in the process of monogramming everything. So we overorder just to give ourselves some breathing room, but then that stuff starts to stack up. One thing that we've done that we found super successful is to build those old boxes into a new subscriber funnel. So when they sign up to, to start their subscription box with us, their second email is going to get hit with some of our past boxes because we know they don't have them. They're kind of, they're exclusive. So it's an opportunity that they can go ahead and grab a box and they don't have to wait for the next mail out to go. And then we know they don't have that. So it's new, fresh, and fun for them. And we're able to really sell through any past boxes that we have as well.

Yeah, yeah. And that's, that's an awesome, that's an awesome way to do it. I mean, so it's about that additional revenue, great ways, again, like you said, to put money back in your pockets and help grow your business and help continue to invest in it. Yeah, I want to come back to the personalization thing because you definitely do it in a unique way that, you know, when I talk about personalization, I think about like individual products, right? So whether it be a t-shirt size or it be, you know, you would you like this item or this item or that item or that item? You do a very cool, unique approach of making it feel like a personal experience. And one thing that I love about that, and we're seeing this, this trend, is you really create this amazing relationship with your customers. Yeah, you know, they feel, they feel part of you, part of your community, they feel more, you know, part of the business. And personalization of any kind can really create that experience. That's one of the things we're focused on our upcoming sub-summit next year in '22. Is our theme is shift and discover. Shift the way you look at your business, shift the way you look at how you build out your subscription box and discover so many different great opportunities to continue to grow. And that personalization is a big part of it. We see that as a big trend up and coming. FabFitFun, one of the biggest ones in the world, they allow you to pick and personalize within there because it creates that engagement and that community behind it all.

And it feels like that box is made just for you. Even though you've made thousands of them, it feels like that box is just for you. Whether you were able to pick the items that are going in your box like FabFitFun, or whether I've personalized it, you know, with your monogram on it, and, and then it is for you. Nobody else can wear that sweatshirt. It has your initials on it. It feels something that's very personal. I picked those items out. I— that's my initials. However that you are able to customize or personalize your experience, it feels more like an experience and less like stuff when it comes in the mail. And so, I mean, I see that like with any industry, you know, I want— if you had a pet box, I want X amount of treats and, and one toy, or my dogs really like the toys, so let me do two toys and one treat, or, you know, being able to have those variables is really, really cool. Yeah, yeah.

One of the cool things, uh, Kong Box was, was good at this, where, you know, they Uh, ask your dog's name. Our dog at our house is Piper. And, you know, they, they say, hey, some— here's some treats Piper would love. Even that little small thing inside there, you know, of like, hey Piper, you know, this is your box, it came for you, was neat. One other thing they did cool that I want to make note for your community is they studied really well where their customers would, would fall off, and they knew like where they'd see typical box burnout or the attrition or churn on there. And what they do just before you got to that point, they would include an extra item inside and say, hey, from here forward in your— as part of your KongBox subscription, we're going to give you an extra item inside the box. That's really good. And what they saw would happen is people stay on longer because they saw increased value or they felt more value on it. Two different ways to look at that. One, you could start off with a little bit higher margin in your box in the beginning, and then when you get to that point, you're reducing your margin down to what your target or ideal margin might be. Or you just know that investing a little bit more in the box for that customer keeps them on longer, and you don't have to pay to acquire a new customer in their place. Yeah, you know, so it's a really neat thing to look at and find ways to enhance your subscription box.

Yeah, I want to talk through some of your best practices that you guys have put together in your annual report, because so many of them are just really great. And I would love to talk through them with you, because I think they're important for us to keep upleveling, to keep working on new marketing. A lot of these are marketing tips, and so we can't get stale with that. We got to keep adjusting and adapting to the marketing efforts. And the first thing you have on here is add an opt-in text message as part of your customer journey.

Let's talk about that. Yeah, there's a couple different ways to do that. One, you can do it on the front side, right? Get— we see some marketing campaigns where you can sign up for discount You know, now it's no longer just like enter your email, send your email, then your text message, and then your cell phone number, and then you'll get this, this discount. I go back and forth on that one personally. Like, I'm always a little hesitant to put in my cell phone number to get offers, but boy, it works. I mean, a lot of times when I really want that discount and then the brands communicate with me and it becomes part of that SMS, people respond so much faster. They read text messages so much faster than emails. There's far less clutter. I love text messaging when done right. The other half of that, though, is shipping updates. And we see a lot of people signing up for shipping updates via text message. It saves your customer service time. A lot of questions. If you can put that plugin in there that, you know, hey, text to get updates on your shipping status, they get that immediate notification. They know when it's coming. So we see great ways to do that. I just like to be a little bit more careful when messaging people. Via text. It's a little bit more sensitive still than email, but a great opportunity to reach them in so many different ways.

We're seeing just a huge interaction via text. So we use a two-way text app for our business, and so it builds this kind of know, like, and trust factor in a way that there's— it's not one-sided, it's not just a general broadcast. It's, hey, have you got your box? Send me a selfie with you in your box, and they can just immediately text me back and they know that they're texting me. And so they're sending it back and then we're able to share that on social media. We've got tons of social proof, it's in our stories. But it's a, it's a great way to create this two-way communication. And then you can also use it for customer service. Like how easy is it to just text when you've got an issue or you need to check on something versus finding an email, you know, sending an email. Yes, it's, it's a simple way, but some people just prefer text. Text. So we're in the age of let's meet people with where they're at, right? So no, you're not going to get out and type a letter and mail it to me anymore. You're going to text me, and it's going to be super easy. And honestly, I prefer a text over phone call any day.

It's so easy. Absolutely. And that's what everybody does. And everybody's at work, they're juggling the kids, they don't have time to jump on the phone and then time to find an email address. And, and that's what I'm talking about when doing it right, you know, when being conscious of the communication you have with somebody and being thoughtful and meaningful with it, because then it's not to overdo it, right?

Yeah, the minute you start to overdo it, it becomes spammy, right? And we never want to be seen as a spammy marketer. We want to be seen as genuine, authentic, personal. And I think if you can include that in your text messaging, it's just a— you're just meeting people with where they're at. They're on their phones, they're on their phones. You're meeting them where they're at, and they're going to respond to that. You can see it amazing uptick. Even if you say like, okay, you know, I run a closed subscription model. So you can say we're opening our waitlist tomorrow, text me the word waitlist and you'll be the first to know. You get the text, you're able to send it out and you see immediate signups from that one text. You don't have to wait for people to get on their computer or check their email or whatever, because most people avoid that all day long. They check it at certain times because it's a, it's a whole thing. It's a whole process to just clear out your inbox, right? Yes. And so, but when you get a text, You might be standing at the line in the grocery store and you get the text, you're like, oh, I'm grabbing me a box right now. And so just to meet them where they're at. I love that. Um, your second, um, best practice here on your list is to take advantage of TikTok's popularity to market your subscription. We've just seen e-commerce businesses explode on TikTok this year. Um, that short video We see it with Instagram Reels. We're seeing it now with Facebook Reels. Let's talk a little bit about that.

Yeah. I mean, look at these platforms favor those approaches right now. They, they favor when you're Instagram Reels and like you said, the Facebook Reels, because that's what they want to promote. And that's where they want their audience to be because they don't want to lose, you know, especially Facebook via Instagram and Facebook itself. They don't want to lose the audience to TikTok. Like, like it has been. On the flip side, you have this whole new platform now of reaching out to people. And even from an advertising standpoint, uh, I've seen a lot of really creative ads on TikTok that to me felt like I was just on another— scrolling through another TikTok. I was like, oh wow, this is actually an ad. Yeah, but it felt like it was fun, it was engaging. And you know, there's so many different creative ways to use these platforms to, to reach your audience It doesn't need to be salesy. It can be fun. Show your personality. And you don't have to dance.

Like you don't have to dance to do a TikTok. They can be informative. They can be informational. You could be teaching something. You could be doing a quick unboxing. People's attention spans are quick. And we need to, again, we need to meet people where they're at. So that's their attention span. If they saw a 30-second box opening for me versus a 30-minute live that I did on my Facebook page, they're consuming that. They may never consume a 30-minute live, never. But there are people that will consume a 30-second TikTok or a 30-second Reel with the same information that I'm doing in a 30-minute live. So it's how can we take the content that we're already doing in our normal everyday marketing and put it in short video form? And I think that's going to be really important as we go into 2022 as well.

Yeah, and people love behind the scenes. They love seeing the personality of something, you know, showing you packing your subscription boxes up for the month, showing you loading them into the the truck out there, uh, showing all the different things, you know, introducing yourself and your brand, showing your family. I mean, I have this video of my daughters when they were super young. Gosh, I don't know how old they were, like probably like 5 or 6, and they were packing subscription boxes. And we put that on Facebook one day on the Gentleman's Box page, and people loved it. I mean, this was years ago. And so if something like that would— could do really well and have fun, you know, uh, build a, a tower of subscription boxes and boxes and bust through it for, you know, show different stuff. You know, so, and this— the thing that I like to, to look at, like, content, you never know what's gonna work, and it's okay to try things, and it's okay to fail, and just keep pushing through and keep trying stuff to what fits to you, to what fits your audience. I mean, MrBeast, who's the most— one of the most popular YouTubers out there, has amassed millions of followers, millions, and he's, you know, very wealthy now from this. For years, just kept trying different things across his YouTube channel. And, and finally one day it just clicked. He found what resonated with him, with his audience. And from there forward, it just continued to grow for him. So just, you know, it's, it's okay to try and experiment and try stuff.

And it's okay if you get, you know, 100 views on something, don't give up, don't throw it out, don't burn it down, try something else. And we were talking about this in the group the other day about, you know, I see when I go through my Instagram Reels, I look at what's been most viewed and I can see that it's the behind the scenes. People are curious. Curious. People want to know how it works, how it operates, how your business works. And so those, those videos of us in the warehouse working, folding, you know, a couple thousand shirts, you know, they want to see that. It's intriguing to them. It's different than what they know. And so if you look at your videos, do, do some videos, get, get about 15, 20, 30 videos up there and then see what's the most watched and then lean into that. Just do what's working and quit doing all the stuff that's not working, but lean into what is working. And that takes data. So you have to get something out there You have to analyze the data and then you have to keep, keep doing the same thing. Just do more of what works.

Yeah. Yeah. You know, sometimes you get lucky and catch fire right at the right time. You catch the right time, use the right hashtag. And then, but most times it's, I mean, the way the algorithm works is how long people linger on that video for. And so if you've got something and it intrigues people and they stop scrolling and they watch it and all of a sudden, like, people are staying on it longer and then it's being served up to more people. That's what— there's, there's interest in all that. That's why I love the behind the scenes stuff. I'm fascinated by that. Me too.

I want to know how other things work, right?

Wow, she has that many subscription boxes she's building, and holy cow, that's so cool, you know? And I wouldn't imagine it's done this way.

And there's a, there's a couple more on this list that I want to, I want to touch on, but, um, optimizing your content creation is on this list. Can you talk through what you mean by that?

Yeah, so that one feels overwhelming for me sometimes. You know, content is a big word. It's a small word with a lot of weight to it, maybe is a better way, because there's so many different spaces. And a lot of that leans into what we were just talking about, right? Optimizing it. And, you know, okay, we find what works here and let's expand on that. Let's, let's find ways to, to— okay, let's, let's keep doing these things that are working here. And then sometimes too, from like, um, an SEO standpoint, Is there something in there where we should be writing content that will serve a greater purpose for finding our audience out there? And so optimizing that and being smart about what you're doing. We talked about this the other day when we were talking about some of our subject videos. We were putting some content out there as a trade association. It wasn't getting the right views and it was— we're spending a lot of time on that. So we're refocusing some of our energy and saying, okay, Are we doing the right things for our audience and meeting them out there? So that's, you know, there's a lot of different ways to look at that from an SEO standpoint, but mainly leaning into doing what really works well for reaching your audience.

And I think another way to really optimize that is optimizing the time that you're building the content. So if you have, and I always talk in product language, right? So if you have, you know, a new t-shirt or a new bag or something like that, instead of taking a couple pictures to throw into your website and let people purchase it. Let's take multiples. Let's build a blog about how to use this item, how to style this item. And then you've got 5 pictures of the same t-shirt because I've showed you 5 different ways. Now I've got a blog on 5 ways to style the same t-shirt. Now I have 5 different Pinterest pins that I can upload into Pinterest. And, you know, there's different ways I have— I can continue to talk about the shirt, but it's not the same image all the time. I can do some short videos of me styling again, behind the scenes, how I pick items to style with that shirt. We can do photos of stacks of the shirts folded on the shelf. People love that. We can do photos of packing the shirts in the subscription bags. Like there's so many pieces of content for one item, one thing that you're doing in your business. And if you can just capture that, make yourself a checklist of the things that you need to grab during that one thing, and then you can use it all month long or all quarter long or however long that lives in your shop. You can continue to use that. And you don't have to stop and go get another image. You don't have to stop and go take another video. You're creating all that content in a short period of time that will live on forever. And you're just, you're just really being strategic about your time that way. And then it doesn't feel so heavy. It doesn't feel like a lot because you did it all at once. And then it's just about putting it together and then getting it all over the place, all over the place. So everyone can see all of that content where again, it's about what they're going to consume. There are people that are never going to watch your live. There are people that are never going to read your blog. There are people that will never be on TikTok. So if you get yourself all over the place, you're going to be seen by most people in your audience somewhere.

And the one thing that I say this a lot, and if you're a designer and you're listening, just cover your ears and maybe mute this for a second. It's okay if it's a little bit ugly. Sometimes I have to tell my designer to like, oh no, Bradley over here is mad at me.

It's too pretty.

No, no, you know, it's like, Sometimes I tell Tyler, and I guess I'm offending Bradley too when I say this, is just make it a little bit ugly for me, you know? And it doesn't— and what I mean in that is it doesn't need to be pixel picture perfect because it's so— our content's consumed so quickly nowadays. Like, let's get it. And if we think this is really good, then it's okay. Yeah. You know, like, oh man, the shadow is off just a little bit. Like, move on, like put it, ship it. I'm very much like a ship it type attitude sometimes. And I'm not saying like it needs to be like, it's okay putting hideous stuff out there that looks like, you know, make it, make it look good, but it's okay. It doesn't need to be perfect is my point. Yeah.

It doesn't need to be overproduced and it doesn't need to be, it doesn't need to be perfect because that makes you real. And that makes people see it as, as more real than this perfect thing. That's not real. Right. Like it's not overly produced over. Overly photographed, overly whatever. It's just, hey, we're real people running these businesses and this is what we do. And yeah, yeah.

And sometimes some of the like ugliest landing pages convert the best too, which is really— I still don't understand that, but it just actually does.

There's, um, the last thing I wanted to talk about on these best practices that you guys published was focus on retaining your current subscribers. It costs less than acquiring new customers and helps increase your lifetime value. And I think that we just need to say that again for the people in the back. Focus on retention. We put so much of our focus on, I need more subscribers, I need new subscribers, I need, I need to fill the top of the funnel. But we're just letting them out of the bottom funnel too easily. Like, we're not loving on them, we're not taking care of them, we're not appreciating them, and we're not keeping them. And it takes very little to keep someone versus a whole lot to get someone. And so let's just, let's break that down just a little bit.

Yeah. So like I gave the earlier example in the Kong Box strategy, right, that small investment in box number 4 or 5 could keep somebody for maybe let's say 4 or 5 more subscription boxes, maybe even longer than that, because that investment you made in them and then realizing like, wow, this is cool, I'm getting more for my money now. And they, they recognize this relationship I've built with them, you know, nurturing those customers, just exactly what it says. It's so much less to retain a customer than to acquire a new one. And the root of that is investing in that relationship as a brand with the consumer. The customer is coming to you because they have something that they really admire and they're excited to receive. And keeping that excitement going and keeping that going is really important. Because again, they're there, you're building this relationship with them. This direct-to-consumer model that exists today is a whole new world of opportunity. That's what we talk about, looking at the upsell opportunities, the cross-sells, how can you continue to engage with them and not doing it just for the sake of getting some additional revenue, doing it because you want to give them more, you want to share more with them and you want to create and build a stronger relationship with them.

Yeah, it is. It's so important, and I think we underestimate the importance of it. Um, you know, having that customer service focused business, um, is really underestimated. Like, I, I know we get tired of the same questions. I know we kind of get a little snarky when people ask me if can I have my tracking number one more time, but you know what, we need to give it to them. We need to help them. We need to let them know that, hey, we're watching that tracking number too, you know, like We just need to, we need to meet people where they're at. I feel like I've said that like 10 times on this podcast episode, but it's just really true. We've been through a lot the last couple of years, and all that we want to do as consumers is buy from brands that, that give a darn, right? That care. And so we got to show them that we care.

Yeah. And you know, the, the flip side of that is the, um, non-voluntary churn, right? Where there's some tools out there out there that can help, you know, if you're not already utilizing them. Where do you see most of your, most of your members? What platform are they on? Again, I'm trying to remember.

Most of my members are on Shopify.

Okay, so Shopify, tons of integrations and tools. Um, you know, ProfitWell makes a really cool tool out there that'll integrate from a churn standpoint and help reduce that. And, and I mean, this is something early on in Gbox, in the early days, we didn't really realize, uh, you know, gosh, When a credit card fails, we should be trying it again and again and again because sometimes for certain customers, there's the right day to run it, there's a right time to run a credit card. And when you're so— especially when you're just getting launched with your subscription box, you don't really realize, wow, this exists and this is a real thing and a real problem. So there's that, there's credit card expiration dates updating. So there's an opportunity. And what we used to actually do with Gentleman's Box as well, we had our customer care team And our customer care team early on was employee number 1, Shane. He came in, or myself and John. And we literally pick up the phone and make calls and say, hey, you know, we noticed your Gentleman's Box subscription expired. I think your credit card failed. Would you be interested in coming on? Like, oh my gosh, thanks so much for calling me. Yeah, here's— I can give you my new credit card number right now. And we were able to keep that customer. And then we were talking to them.

Yeah, it's that personal touch, right? So same thing here. We send— we have the automations that are running, but we're going to send you a personal email because sometimes those automations will go to spam. But we're also going to send you a personal text because we have to meet you where you're at. You may not be reading your email. I'm guilty of that a lot of times. And so if somebody sends me a text saying, hey, I just need you to update your card for me, did you get a new card? Here's the link to update it. Oh, again, I'm at the grocery store. I can do it right while I'm waiting in line and it's done. And it's just that one step further of that personal, hey, it's Sarah from Framed. I just, I saw that there was an error processing your card. If you need to update it, here's the link. And then it's done. And we're seeing huge retention rates. Yeah, industry, and very low turn because of that personal touch that we put into it.

You're offering convenience, you're meeting where they're at. And it feels like you, you care about them, right? You're reaching out to them through a personal channel and making it easy for them. Yeah, that's like, I get the email in, I gotta go and I gotta remember my username and password, you know, it's just like all these different layers. But if I can create an easy— or like, that's why the phone calls always worked really well. Like, hey, I'm here, I can update it right now.

Give me your card number, let me put it in.

Yeah, plug it in for you, I'll make it easy. And then we'd start the conversation and, and they felt more connected to our company at the time, you know. So it was really cool.

I love it. Well, we've talked a lot about about what we've seen this year, the predictions for 2022. We're doing something big and fun in 2022. And I would love to just chat about that before we get off the podcast today. But we've got Sub Summit coming up, and it's a big deal. And you talked when you first started, Sabta, that it started with that one event, like it started with bringing people together. And you've been doing that every year, whether that's been virtually you know, a little bit. But you've been bringing people together every year, and we're gonna do it again. And what I love is that we get to be a part of SubSummit in a big way. And so tell everybody listening what SubSummit is.

It's a— SubSummit is the largest gathering of direct-to-consumer subscription companies in the world, and we've put together an awesome event over the years that has amazing content and speakers. Uh, we're bringing back in 2022 our startup track, so those that are just getting into the business and just getting started and want to learn and grow and get better. We're— they're going to be hearing from some amazing people that have done that, that are doing that, or in the middle of the process of doing that, that from all across the board of learning about email marketing to paid media to social media. And we have a massive expo hall where you can walk around, you can meet this— the box companies that are there, the shipping companies that are there. We're putting a marketplace in there, those that are selling goods in the space. And then we, we have our pitch competition, our keyword. So it's this awesome 3-day event, June 1st to 3rd. 2022 in Orlando, Florida at the Swan and Dolphin Hotel. And, uh, it's, it's gonna be so much fun. In addition to that, we've got the Launch Your Box Lounge we're going to be putting in place there. And then we also have an exclusive workshop you guys are putting together.

Yeah, so we're going to have an exclusive member-only workshop, um, the morning before we kick off SEV Summit. So we're going to get together and work through, um, some great things together, get to know each other, get to meet each other. A lot of us for the very first first time. The in-person events, there is nothing like them. There is just nothing like them. Getting to connect with each other and especially someone that gets it. Like, you can go have lunch with your friends or talk to your spouse or, but they don't get it. They honestly just don't get it. And they are going to stop inviting you to lunch if you keep talking about your subscription box every time you go have chips and salsa with them. So we get it. And so we get to get together and there are amazing speakers. You get to pick what you want to listen to, you get to pick the track that you want to go to. Lots of vendors, lots of just entertainment and fun and just camaraderie, I think is a great word for it. But we're going to be there, our community is going to be there. And I'm excited to just to bring them out for a sub summit.

Yeah, it's gonna be a lot of fun. We build a lot of networking time in there because that, that's the most important part of it as a community. you know, and, and sharing ideas and, and sharing, you know, the trials and tribulations and the successes and the failures and all those different— you know, we like to encourage people, share as much as you can, go in with an open mind, learn from each other. And the more you can share, the more you'll get back. So we, we create a lot of opportunities, uh, like that as well for everybody. That's part of the event. Like we talked about earlier, the Cube Awards is included in the ticket for everybody that's going to be there. We roll out the red carpet. Literally. Yes, it's so awesome. There's paparazzi there. We interview people on the red carpet. And then we have a delicious dinner together, put on the award ceremony, and then have an afterparty where everybody can hang out and enjoy. Do you want to share the link for the offer in the podcast here?

Yeah, your link. Yes, definitely want to show your link. So tell me what that is. And then we'll put it in the show notes. Yeah, so two different—

I'll give you two different links here. They're first to learn more about Subta and what we're doing and to be part of that awesome community, you can go to subta.com. That's subta.com. Sub for Subscription Trade Association, subta.com. And then the other link for— you can find our events on the website there. Or if you just want to go right to learn about Sub Summit, you can go to subsummit.com. That's subsummit.com. And then for the members of your community that want to get exclusive access, check out your Facebook group, right? Because you're sharing a link for that exclusive access. Yeah.

So if you're a Launcher Box member, go into the announcements in our group and we have an exclusive link, special discount pricing, and for our special workshop too. So you want to get the link from the membership if you are a member of mine. Um, and then Paul, I'm going to wrap up this podcast with a question for you. So what advice would you give to anyone just starting out, just starting their subscription box business? Like, what would you focus on first?

The number one thing I always encourage everybody to do is plan out— first, plan out your first year of boxes. Because once you get running with a monthly subscription, especially, it comes fast and furious. And there's, there's a lot going on there. And then there's just so many great resources out there. Just, just don't be afraid to ask questions. Uh, I remember early on we're just so hesitant to, to reach out to people and, you know, just, just, just— it felt like to us, it felt like a silly question. But when you connect with somebody and you talk to them, be like, oh, this is like— look, I worried about this too. I wondered about this too. Don't be afraid of asking questions to, to learn more and to, to get more and, and get to know as many people as you can, because that community you'll find will be so supportive of you during your most challenging times and during your most triumphant times. Yeah, and it's fun to have those amazing people around you.

It's awesome. Yes, Paul, thank you so much for joining me on the podcast today. Remember, we have all the links in the show notes today if you want to go join Subta or come join us at Sub Summit. But Paul, thank you so much.

Sarah, thank you. I truly appreciate you having me on. I really love being part of this.

Thank you. We love, we love being a part of that too. Catch us back here next week for a brand new episode. Make sure you subscribe to the Launch Your Box podcast. I'd love for you to take a minute to rate and review it. Let me know which episode is your favorite so far. Don't forget to join me next week right here.