Episode 3:
Subscription Marketing: IA in Conversation With Matthew Holman

Scott Cohen: Hello all. Welcome to that inbox army podcast. I’m your host, Scott Cohen. With me as always is my cohost, Garin Hobbs. Hey, Garin.

Garin Hobbs: Great to be here. Good with you, Scott. Excited for today’s topic.

Scott Cohen: Yeah. I’m super excited about our guest that we’re gonna be talking subscriptions today. The world is awash with subscription businesses, whether it’s food delivery, software, fashion. I mean, the boxes that show up at my door for my wife, who knows. Right?

But subscriptions are big business, and they’re largely driven, nurtured, and e emailed and maintained by email, SMS, and for those folks who are app based, pushing in app messages as well. And with that subscription, of course, comes the challenges of establishing initial value and maintaining ongoing value. And when, Garin, you and I were talking about this topic, I was like, there’s one guy I need to talk to, one name that comes to mind, and that is our guest today, Matt Holman. Matt Holman is the founder of Commerce Catalyst and Subscription Prescription. Matt, welcome to the podcast.

Matt Holman: I appreciate that, Scott and Garin. Glad to be here. Glad to be talking about subscriptions with you, especially I I think in my work, my consulting email is often overlooked. And so I’m excited to kinda dive into that with you guys today.

Scott Cohen: Preach, brother. The email is I say it’s the offensive lineman of of marketing because nobody cares about it unless something goes wrong.

Matt Holman: Email is email email is how many times have we heard email is dead, but, you know, long live email?

Scott Cohen: When I first started in email 15 years ago, I believe the New York Times was saying that email was dead. So, you know, long live email. But before we get too deep into subscription, I’d love to dive in a bit about your journey. I love learning about people’s journeys. You know, I I’ve I’m an east coaster who ended up in Utah, and I get the question all the time, why Utah?

And it’s like, it’s a journey. Right? Life’s a journey. Why don’t you, I’d love to hear a bit about how you ended up where you are now and spouting truth about subscriptions.

Matt Holman: Yeah. Absolutely. Yeah. I have a somewhat of an atypical journey. There’s not a lot of people that are active in the space that are vocal about, some of the the past and background, and, you know, I’m actually formally incarcerated.

That’s one of the things that I think, the last couple of years I’ve been trying to be a little bit more, I wouldn’t say necessarily vocal about, but trying to share the fact that there are normal people that have been incarcerated that have made pretty bad mistakes and tried to, you know, change their life and and do better by them. So that’s definitely part of my story. So I was out here in Utah. I grew up in California. I was out here in Utah and, was incarcerated for quite a while, actually for almost 15 years.

So for me, my professional career didn’t really start until I was 37, and that was when I was released. I went back to school. I had some I picked up some training and and, signs and printing when I was incarcerated. So that’s a lot of the work I did for the 1st couple years. And kind of my first gig was running, some marketing and ecommerce stuff for a small local well, it was small at the time.

It’s grown considerably since I was there, called Ehub in the ecommerce space, doing ecommerce shipping, so logistics and and rates for ecommerce companies. And very much of, like, my journey, I I I joke that I identify with kids that are just getting out of college or or, you know, people that are having to restart their career, whether they’ve just got out of the military or, you know, out of a maybe a a bad relationship or something like that because I’m very much still, like, just trying to figure out who I am in the world in the sense of, like, a professional career. But for me, I’ve I’ve cared deeply about education and empowerment for a really long time. It’s something that’s helped my life. And and while I was incarcerated, saw it change the lives of of, you know, hundreds of people around me.

And so for me, that’s very been a big deal. That’s how Commerce Catalyst got started. It was wanting a group where people could come together and ask questions and get resources related for marketing and ecom. And then once I was at Ehub, I wanted to kind of go continue to spread my wings and went the entrepreneur route. I was cofounder of a subscription app called Qpilot.

My partner there, David Bradley, had first started the company, when we got to know each other and learn my story, just really embraced my drive and passion, and is has been an incredible supporter of me. And and we started subscription prescription while I was there because we wanted to create a newsletter and an information resource that was a little bit different than what you might get from Qpilot. So the idea is, like, nobody wants to go subscribe to Qpilot’s newsletter, but maybe you wanna go subscribe to subscription prescriptions newsletter, which really was based off of all of our learnings from our couple hundred of customers. And then over the last few years, I’ve had so many deep insights and dives into different programs, data systems, what works, what doesn’t, and there’s a long list of all of those things. There’s never really one thing in any company.

And so subscription prescription is really this kinda like full of my own journey of wanting to step fully into being able to help and and realizing that for me, selling SaaS is great, but where my real passion and talent lies is working directly with someone to help them understand what’s going on, something complex that I understand very, very well. So I have a ton of subscription experience, and I think what makes it a little bit different is my ability to kinda see, like, that whole picture of how it influences different pieces of the business, understanding what a business can offer, but what a customer might actually wanna buy and those because it’s often, hopefully, not too much of a gap, but but sometimes a really big gap. So so that’s it in a nutshell. Again, like, my my background is something we could talk about for maybe too long. I’m talking about life and philosophy and and the the road not taken or or how

Scott Cohen: We get time at the end. We might come back to it. Yeah.

Matt Holman: But, yeah, that’s definitely how I got into it. And yeah. So subscriptions, it’s it’s something, and I’m still continuing to wanna build out a I’m working right now on a subscription operating system that brands will be able to implement, as part of our content and consulting and stuff

Scott Cohen: too. I think there’s a hunger, and we were talking about this before we came on air a little bit. Like, there’s a hunger for the nuts and bolts of of operating. Right? Like, there’s just that hunger there that if you separate it from the SaaS element, people are really keen on.

I I found that when I when I started writing about email when I was brand new into the space, I was brand side. And so having a brand side, how do I do this tomorrow with what I have on hand? Right. People loved versus, oh, here’s how you do it in x platforms. Like, no.

No. No. No. I just want, like, the it’s more conceptual. It’s more nuts that nuts and bolts pieces like I said.

So love it. That’s exactly

Matt Holman: what we found is with the newsletter when we started it, we we were getting, like, initially, we thought, oh, we’re gonna create this newsletter as a lead gen source and stuff, which is what a lot of people do. But we kept getting questions from people that were not interested in switching their platform. And then it was kind of like you have to take a step back and realize, okay. Well, I can keep creating something of value, but it’s not gonna be to get them to buy QPilot. It’s gonna be you know, if there’s a the right use case, it’ll be obvious Yep.

Because of that education. But, otherwise, we just wanna try to educate and empower and help people figure out, like, regardless of what platform you’re using, how can you build a better experience that’s gonna make you more money?

Scott Cohen: And welcome to why we do the podcast. Exactly. Well, let’s dive right into subscriptions. You know, I as I’ve mentioned in the in the intro, it’s like you could throw a rock and hit 3 subscription businesses these days. When we were we were talking about the questions to put together, Garin and I, we were discussing this is really kind of two sides to the subscription model coin.

There’s sort of the active subscription model and the passive subscription model. What are your thoughts on that and sort of the inherent challenges of each?

Matt Holman: Yeah. So when we’re talking, like, and I guess maybe just to clarify a little bit, when you say active versus passive, are you talking about one where people are just like something that goes on in the background they don’t ever think about versus one that’s, like, regular engagement? Is that kind of how you’re breaking it down? Or what how would you define active or passive?

Garin Hobbs: Here’s a great example. So when I think of passive subscriptions, to your point, I think of things, that just sort of happen or happen on a regular basis. A subscription box, for example, that’s rather passive. It comes to you every month, and, hopefully, I enjoy the other products that are in this month’s box. When I think of an active subscription, I’m thinking more of those that depend entirely upon my interaction.

Right? Strava, Runkeeper, or Strava’s Runkeeper, you know, maybe Calm would be another good one or something like new where the real value was contingent entirely upon my input and my regular interaction with the with the subscription.

Matt Holman: Yeah. Absolutely. So I I think it really comes down to, like, understanding the difference between, like, the I think, like, if we we we think back to, like, the, you know, you think about business school, the the quality wheel, like, the idea of, like, you can either have a a low price, You can either have it really right away or you can have it low quality. Like, you can pick 2, but you can never have 3 between between those three things. And so when we’re talking to subscriptions, this is the way I’ve been I’ve been thinking about it a

Garin Hobbs: lot lately as well when

Matt Holman: you think about that. It’s like you you’re trying to think of through, like, what which pieces of this am I getting? So, like, the the Strava one is a great example because I recently had Strava. Like, I saw the renewal notice and realized I haven’t used the app in, like, 2 months. Right?

Because I was using it when I was riding a bike, but I don’t use it when I run. I use my just use the workout app on my watch when I do that or Nike run on on when I do that. And so I I go and cancel it. Right? As opposed to, like, you know, a really great passive example is, well, both active and passive is probably Amazon Prime.

So you think about it, like, the pa the passive piece is you’ve you kind of forget that you’re getting, like, the the shipping options, like, the same day, next day delivery. You’re getting some of that priority stuff. But then when you access, like, say, like, the catalog of, like, content and media, like, that’s a lot lot more engaged in the sense of. Or if we’re talking about SaaS subscriptions. Right?

Like, you know, you’re you’re recording on StreamYard. StreamYard uses, has a has an active subscription piece. They’re gonna keep charging you whether you use the features or not, but it’s but it behooves you to be able to use that. And from Streamyard’s perspective, and this is kind of where I’m kind of getting all of that is, they’re trying to create a system where they can get you using the platform. But then depending on who you are, they can lock a couple of features at higher tiers to try to get more money out of you.

And when I talk about subscriptions, I think sometimes we we get lost in the weeds of, like, thinking, oh, I just wanna build a recurring revenue. I just like, how great would that be if I can just predict and plan and I you know, I’m making 50,000 a month up to subscribers so I can now, you know, do financial modeling, and all my performance are gonna be accurate, like, and and reliable. That’s why everybody likes the idea of doing them, but the the disconnect is, like, how do you how do you drive value for somebody? So, like, the subscription box is a good example. It’s surprising to life.

They’re completely and totally reliant on making you feel like when you open that box, it’s amazing. And then when you think about the fact that you’re gonna get billed again, you’re gonna think that it’s worth it. But they’re totally reliant on that single touch point. So, like, we have a CrunchLab subscription box. And so when that box comes, my 10 year old is, like, freaking out.

We don’t when when Christmas came around, he’s like, hey. Because he got Crunch Labs as a present for the previous year. I don’t have to have that as a present again. I can keep getting it. Right?

Like, he’s very much interested in it. Right? But so the problem though is, like, you come down to a very, very single touch like, a very narrow touch window touch point of where people are evaluating the worth of the subscription. Is this moment or the stuff that I’m getting like, Battle Box is a great example. They’re an amazing subscription box.

They’re sending all this outdoor gear. You know, you might get 3, $400 worth of gear for your 100 or $150 box. Is that worth it to you to keep doing? The difference is something like Strava or StreamYard or something that maybe is a little bit more active is you often don’t have to win as often. It’s more about, like, this is a tool.

This has utility. You might only use it once a month. Like, if you only use Strava on the once on the weekends and you were riding 4 times a month, it still might be worth the $10 a month to be able to track and share rides with your friends and things like that. So it’s much more like and and so it does come down to, like, understanding, like, where your value is. And I would say as I’m just kinda, like, rambling on and on about all this, is the trick for any great subscription business is trying to unpack the fact that this is the value I give to the average subscriber.

But what kind of experience or tier or offering can I put that’s gonna be elite for a smaller subset of my subscribers that are gonna be willing to pay me more, engage with me more? They’re the one it’s that Pareto 80 20 world. They’re the ones that are gonna be driving 80% of your revenue, 80% of your product development. That’s kind of should be always the mission we’re thinking subscription is. What value can I offer?

And once I’m offering that value out of that group, how can I get more value from the people that need it the most?

Garin Hobbs: It’s a great, lead in to sort of the next question here. Right? Subscription brings this concept of the ongoing or perpetual transaction, which is great to the point you sort of alluded to a lot of the business advantages of the commercial advantages of that. The opposite side of that is that it’s also the continual sale, right, with the customer always having their finger on that trigger of cancellation. Right?

What are some thoughts about creating and driving proactive value rather than necessarily leaving it upon the customer to discern that for themselves. Here’s a couple of great examples. You already gave the great one with regards to the things like Strava, but, let’s say one of these clothing subscription boxes. Right? I pay for the subscription.

They curate, sort of a a a outfit or an ensemble for me that month. They send it to me, and, either like it or I don’t. If I don’t like it and I choose not to buy the clothes and return them, what was the value for me in that particular month? Right? How do we keep that perception of value high proactively?

Matt Holman: Yeah. Absolutely. And a great example is, Fresh Clean Teas has a subscription box. So they sell, and they but what’s interesting is, like, they’ve identified there’s 2 kind of core users. So if you could imagine, they’re just selling a t shirt subscription.

That’s it. It’s not that complicated, not that sophisticated. The difference though is they’ve got 2 types of customers. They got the the guy or or girl that just wants to wear black t shirts all the time, and so they run through them and they fade out. And so they just wanna make sure they’re getting new t shirts every month or every couple of months.

They just swap them out. And then there’s the others person who’s like, I just wanna get different colors. You know? I I you know, this blue looked cool. I’m gonna keep wearing these, and I get some new ones and they’re different colors, and I want variety.

Right? So their whole thing is the value prop they’re trying to get into is, like, we people need t shirts. So we’re selling to some people that want convenience as in they’re getting the same color over and over again, and we have some other people that have a little bit more value around variety. K? So that’s a very, very simple example.

But as we build on we can build on that as an example. Right? Like, can I make the convenience side that much more convenient where instead of, like, the shipment comes every 6 weeks, I’m emailing you or sending you a text message every 3 weeks to see if you need to get your order sooner or not because I know you value convenience? But the person that wants the variety, I don’t wanna message them that much because they might just get reminded the fact that maybe they don’t really need them. Maybe I catch them on a bad day.

They’re like, you know what? I I could buy those at at Target. I don’t need that or something like that. It should be more about, like, hey. When it comes time for your order to renew, like, here’s all the new colors and go and pick the 6 you like the most.

And so, like, that way you’re, like, delivering a little bit more on the value of variety than you are just I curate it for you and send it to you. Right? So so so it’s like, that’s kind of like what happens in the subscription spaces is you can try to find ways if you understand what people value from you. You keep building it. And so a great another great example is Dollar Shave Club.

For anybody who’s not watching the video, I am bald. I have a doll I’ve had a Dollar Shave Club subscription since, like, 7 years now since, basically since I got out of prison. So and and I should add that my 10 year old in case anybody’s doing the math at home is my stepson. So in case anybody’s trying to do the timeline of how I’ve been around it. But, Dollar Shave Club, I is a 100% convenience, and I like the quality for the price.

I have never bought an upsell. I have never like, they send me samples. I’ve literally never tried any of their samples about anything. When they update their razor and they, like, sent me a new thing, it shocked me because I had no idea because I’m not paying any attention to that. But the thing that I love is that anytime I wanna manage the frequency or cadence that I’m getting at it, it’s super customizable.

It could be, like, every 5th Tuesday. It could be every 7 weeks. I could get you know? So that’s what I’ve done. I love it.

They’ve they’ve had me for almost 7 years now as a subscriber. But there’s plenty of other people that love the other side of it, which is I’m a total we’re a total, like, grooming resource. You’ve got your beard trimmer and your razor and your aftershave and your lotion and a mirror and a dating guide and all the you know, like like, I’m I’m I’m joking on that other thing, but but they’re leaning into that. So that so, ultimately, that kinda comes out, like, understanding, like, what kind of value do I wanna build for somebody? Is it like a set and forget?

Like, my subscribers just like knowing I give them what they want when they want it, and that’s it. So I’m just gonna keep trying to make sure that’s smooth. Or if it’s I want the more more things out of it. Like, again, StreamYard is a great example is if you’re a podcaster to deliver value on that subscription, they’re gonna have to stay on top of product development, the quality of recordings. Maybe there’s a new feature where it’s it’s like the you know, an auto emoji or, like, being able like, other apps platforms are are rolling out, like clipping and AI editing and things like that.

Trying to make your life easier so they can offer more value so the subscription means more, but also so they can try to get you to a higher tier.

Scott Cohen: So, I mean, that constant value, then you that’s how you reduce churn. Right? So what goes into

Matt Holman: the first I wouldn’t say constant. I wouldn’t say it’s constant. It should be more

Scott Cohen: consistent with value. Yeah. So understanding value, understanding churn, what goes into understanding churn?

Matt Holman: I mean, that’s ultimately what it comes down to is, like, okay. Yeah. You know, what does somebody need or or right? So, like, if you were to cancel your StreamYard subscription, a couple of common reasons might be, I no longer have a podcast, I found a better tool, or I found a tool that does the same thing at a at a cheaper price. Right?

That’s that’s gonna be the top three reasons for their cancellations without looking at their date. Like Yeah. And that’s how it is for most subscriptions. It’s gonna be I either have too much of it, I don’t need it anymore, or I don’t see as much value as I used to. And so you can’t really, like, tackle all of those things all at once.

But the idea is if you instead, like, this comes back to this whole core value idea is StreamYard could probably survive if they got rid of everybody off their lower tier if they could get, like, 10% of them to upgrade to the highest tier. It’s like the same amount probably the same amount of prep depending on their user base. So you you try to start to wanna start to understand, like, what people are getting out of it, what they what they see about it. Like, I think the other thing with subscriptions is, like, understanding expectation, and I harp on this all the time. It’s like, if you had a gym if you were a owner of a gym and you were selling gym memberships and you started marketing that your gym membership would, like, cause people to lose more weight than they could at any other gym, but then people came in and that didn’t happen because there’s nothing you’re doing other than offering equipment like what everybody else is doing, people are gonna leave because you’ve essentially lied to them.

But that seems like a really extreme scenario, but that’s actually what happens. It’s like, hey. This is the cleanest shave you’re gonna get. This is like the the the the the cleanest dog food. Like, your dog’s gonna start growing hair back.

Like, we make the businesses are making promises, or even if you’re not making a promise, there’s an implied or assumed promise that a customer has coming in. So some of the things I recommend to all my clients and everybody in my content is, like, do more surveys for when people are coming in to understand Yeah. Not just where they came from and why they bought, but what are they expecting? What are they hoping for? What has them excited?

Because if you can understand that, and then you start marrying that with, like, what’s going wrong, then you can build a better product or onboard them better or, like, communicate the value in a different way. So so the and and that can have both and so you look at churn to understand, like, what’s going wrong or what could I do better? So, like, again, coming back to StreamYard. If StreamYard is saying, like, hey, we’re leaving to this other, We found a better solution. Well, hopefully, there’s a little dialogue box that pops up that says it’s okay.

Well, where are you going? Or what what what was the feature that that pulled you away? Now StreamYard’s getting feedback for, oh, we should build that feature. We’re gonna combat churn if we have that feature available. And that is the should be the mindset of, like, I’m trying to figure out why people like it and why people don’t like it at both the buying and the cancellation process so that I could try to understand what’s happening, like, throughout and and and market and once you know that, it it it becomes in many ways, like, really, really simple.

And, like, I don’t know if you want me to keep going this, but I have a really great really great example of that is, yeah.

Scott Cohen: I was just about to say stream StreamYard’s getting some great free strategy on what Garrett and I like to call free strategy Friday. So, yeah, go on.

Matt Holman: So so Mixers is a Utah company. They’re an amazing company that’s selling, a variety of things, but their their their flagship product is her time. It’s a hormonal supplement for for women to help them manage, like, their their their period and things like that.

Garin Hobbs: So Yeah.

Matt Holman: They like a typical subscription process, you sign up, you get this product in a subscription, and most products, you know, the first couple of months, you have high rates of churn you go through. And they were trying to figure out how do we get people to stick around longer. And a really common approach in almost every subscription on the planet is, like, we’re gonna give you a discount or a gift or something. K? It’s very common.

It makes sense from a business standpoint, like, why you might try that. But we had a we just had a this is just from an hour strategy session, is understanding what was going on throughout the whole subscription. And the more that I dug into what they were saying and they were telling me was the reason that a lot of women were canceling is because they were either skeptical. They were skeptical about the product because it’s new ish. They got a friend that tried it or they listened to the podcast or saw an ad, but they’ve never taken a supplement for their for the to help manage hormones before.

And, or they and they just didn’t know. They so they’re skeptical that would work or they had like, how long does it take to to work? Should I feel something today? Should I feel something next month? And so once you kinda lay it out there on the whiteboard, it it’s just I wish I could have just, like, filmed that moment.

I was like, okay. Well, why would you wanna give somebody a discount then? Why would you wanna give them a gift if they’re not using the product? Yeah. So why not just invest a little bit in, like, educating people on how it’s gonna make them feel, how long it takes to see changes?

And so they implemented just like UGC inserts and some other things, and their churn dropped. Their month over month churn dropped 40%. Wow. Inside of just a few months. Just because they start.

And and again, I like to joke that a lot of my work is just helping people connect the dots. Like, I’m not, like, you know, revolutionizing. I mean, I’m trying to revolutionize, I guess, in a small way, so I should say that. But but the idea is, like, it’s once you understand that, oh, really? A lot of our and and they were telling me this.

It’s not like I was, like, reading the the data. I was just asking them questions. They’re like, oh, yeah. We have a lot of women who don’t think it’s gonna work. They’re skeptical of it.

Well, how is a little swizzle stick or, like, a gift card gonna make them feel like the product’s gonna work? It’s not. Oh, okay. Well, why don’t we try this? And then that and that’s what ends up happening is the more you understand what’s going on and you can take a little bit of a step back, you’ll be able to craft an experience that works for your subscribers.

Garin Hobbs: Yeah. I know I mentioned Calm a short while ago. I feel like they’ve done a really great job at that. Right? When you’re onboarding, they’re asking you specifically, what are the reasons you’re looking to meditate?

And then the alerts that they send out rather than just saying, hey. It’s time to meditate. Don’t you wanna meditate? Take 5 minutes to meditate. They’re tapping it into that specific reason.

Maybe it’s to get a better night’s sleep. Maybe it’s to reduce stress. And now so the alerts become, be sure to get your best night’s sleep tonight by taking 5 minutes to meditate. They’re tapping into that inherent intrinsic motivation rather than trying to drive folks to what otherwise might feel like an unnatural emotion by kind of keeping them focused on the

Matt Holman: That is what and that is what I’m pushing the email community inside subscriptions to do more is if you can collect a post purchase survey of the top reason why you bought this product, you can segment them on an upcoming order to say, hey. You bought this for weight loss. Hey. Here’s your weight loss your weight loss miracle’s on the way. Oh, you you bought this because you’re training for a marathon?

Like, hey. Your training buddy is on the way. Like, it’s so simple and yet so fundamental, like, understanding the value people have, and being able to remind them why they bought it in the first place. So I I I’m gonna have to check, call them out because I haven’t subscribed to that before, but I really, really like that, and I’ve been trying to get do more research into those kind of digital subscriptions. Because for me, the ideal scenario would be one where you can marry some of that kind of communication and engagement with a physical product so that there’s, like, a regular consumption.

Right? Like, if you wanted to do a weight loss app that had a physical supplement kind of thing. Right? There’s some that are out there doing it, but I haven’t seen one that marries both of them together really well.

Garin Hobbs: Yeah. It’s a great point. I regularly encourage all of my email clients as well-to-do the same thing. Whether they’re a subscription based, whether they’re just standard retail ecommerce, folks are hungry to self identify. Ask them why they’re driving, and then let’s put everything into the context of that, reflect that back.

Absolutely. That this is an email marketing podcast. Let’s shift things over to email. And more broadly, I guess the marketing channel mix, right, mobile app, etcetera, etcetera, that’s typically involved in maintaining, and nurturing these subscriptions. So, Matt, in terms of channel mix, where do you see the greatest success?

All businesses are different. Some folks have apps, some don’t. But on average, what does that most successful channel or optimal channel mix really look like?

Matt Holman: Yeah. Apps is, I I think, in many ways, is the ideal place to go if you if you’re close to that. If you’re in the, like, you know, the Shopify ecosystem, you need to be using, like, Tapcart or Shop 2 app to try to create, like, a mobile app experience for your for your customers. But if you’re building something like, you know, a gym membership or, you know, a meditation app or something like that, like, it makes a lot of sense because that’s where you can have some of the strongest, like, retention and engagement and and an ability to deliver value. But, really, it’s still email.

I think, you know, we are joking about, you know, email is dead and, you know, long live email. I I think that I remember SMS when it was first coming not first coming out, but, like, you know, first being adopted more heavily, like, 4 or 5 years ago, very much into the, the especially the ecommerce ecosystem, and everybody’s like, this is the future. And it’s much tight for a variety of reasons, it has not supplanted it. It’s works well in tandem. But for subscriptions, a lot of brands have pulled back on email marketing or sorry.

SMS marketing, Click here to cancel or click here to make a change, and then people go and do it. Whereas and and that again, part of the problem is is SMS is so limited in what you can put in, like, a text and how many links. Whereas opposed to an email, you can put all kinds of customization and storytelling and show them what’s in their order and remind them why they bought it. And here’s some upsells and, like, here’s some quick links. Instead of trying to get you to go over the portal, if you wanna skip an order, here’s a click link inside the email.

So it, like, very, very, like, simplifies the customer experience. So I would say, like, the email has to be a part of it. SMS should supplement it in more of a way of, like, letting people know about special offers or new product drops, something like that, at least as far as subscribers go. And then the app experience, there’s some really cool things that are happening where people are like, the ability to control, your subscription or see your loyalty points and redeem them within the app, that kind of thing. Unless unless you’re actually building, like, an app like experience where you have to you know, the value is in the app itself, not a physical product.

So that’s kinda how I would think about it. You should be email needs to be a 100%. If you could do SMS or the app stuff, then that’s good too, but it has you have to have email going. And most of the brands I talk to are there’s a lot still a lot of opportunity there. There’s a problem in ecommerce where a lot of brands will they’ll separate their subscribers, and they won’t email blast them.

They’ll only email blast onetime purchasers or people on their list. They leave subscribers alone because they’re worried about sparking churn instead of trying to and so a lot of what my education is is take a take a step back from that. Why don’t you just craft an offer that works for the subscribers first? They’re the ones buying from you already. They trust you the most.

Then make a version of that for the one time purchasers and then make your opt in option for people that haven’t bought from you anymore because it’s it it’s not really happening a lot. As well as opportunities around, like, onboarding, that’s a massive opportunity that a lot of brands are missing where you bought something new. You know? I think SaaS platforms are really good at this. Like, I’m sure Calm has an amazing onboarding sequence of emails you get that shows value or something like that.

I could probably safely assume that. And And a lot of SaaS companies, like you sign up for Streamyard, you’re gonna get, for probably 2 or 3 weeks, podcasting tips and how to activate this and how to in invite guests and how to market your pop like, all those things. But then if you order, like, a physical product, like like, you know, a life changing supplement, Your order’s on its way. That’s it. Yeah.

Scott Cohen: I think there is that fear piece. Right? I mean, I’ve I’ve worked with clients where they go, we don’t wanna remind people that they have a subscription because they they wanna be because real I mean, you you hear about it all the time that gyms don’t actually want people showing up. They just want people paying $10 a month and not using the service because that’s where they make their money. And Right.

It’s cynical, unfortunately effective. But it that’s where they go. But but I think to your point of of getting that offer for the subscribers, like, there’s nothing worse than cell phone companies who give their best offers to new customers and not to the people who’ve been with them for 10, 15 years. Right. Like, you should be courting me to keep me.

Right? And they don’t do that unless you start yelling and and screaming. I mean, how many times have you called the cable company and been like, I’m leaving. Okay. We’ll give you half off for 3 months.

Why aren’t you just leading with that? I’ve been around forever. So I just don’t yeah. Anyway alright. You mentioned a few of these already, but who’s doing subscriptions right these days?

Who are your favorites? And you can toot your own horny horn if you want.

Matt Holman: I mean, I think they’re they’re they’re an awful lot. I did mention, like, Battle Box early on. I think one thing I love about them is they did a retention program for their, like, 100th box where they had a like, a kind of, like, golden ticket scenario where, they picked 5 or 6 winners to come out to Texas and shoot tanks as like a prize. But the thing that I really loved about it was they didn’t use it as a marketing tool. They actually secretly made a cutoff for anybody who’s a subscriber from this point on is entered into the contest, and then they let all those people know.

So that was like a great retention play, and they’re always trying to find value and source products. They have amazing content. I think, Athletic Greens is another really good one. They just do a great way of, like, from product and understanding what consumers want and communicating and demonstrating value. Really, really powerful.

There’s lots of, like, meal delivery companies. I think that, you know, Amazon Prime and Netflix are often looked as a great example, but I think that’s hard to kinda, like, relate to. But I think, like, thinking from, like, an app or membership standpoint, like, there’s a lot of I think I think software is farther ahead in, like, understanding subscription engagement than it is from, like, other typical, direct to consumer businesses. So you could look at quite a few of those. HubSpot is is probably like, that’s a software that I really love.

And although I’m annoyed sometimes at all the different pricing tiers, like, they’re very, very good at, like, understanding, like, the one feature you need that you’re gonna pay another $100 a month for that I would look at. And I gotta check out Calm from from Karen’s example, but those would be some, Crunch Labs is a subscription box. So I I most of my work is with, like, supplements and stuff like that, so it’s not like box boxes. But I really love Crunch Labs as well because what they do and what Battlebox is doing and what I think the best subscription brands are doing is they’re leveraging content in a big way. CrunchyLab started as content, from their founder and then they launched a box through it, but they’re still always trying to think through, like, what more can I make of this?

What more can I make of this? What more can I offer? And so that’s another, like, thing to think about. Like, if you’re selling, like, you know, if your membership is a dog walking service, for example, just the most simple of things, like and you’re trying to get people to subscribe your dog walking service. Like, okay.

What other things could I add a value? Should I add, like, grooming? Should I add, like, okay. Not dog walking, but I’m just gonna play with your dog for 20 minutes and throw a ball around or something like that. Like, you know, there’s, like, thinking of, like, all the different ways you can engage or can I create content, like, a little video around, like, the, like, the do’s and don’ts of dog walking, and so people understand more about your dog?

Like, this is why your dog is doing this. You know? Like, content, like, scales incredibly well. And so being able to build out content as an offering because, again, it always comes back to there’s a founder somewhere who’s an incredible expert and that showed that drove them to make the decision to launch this app or product. I’d love to learn more about what they know and why and include that as an offering, because, again, it’s like a really cheap way.

So if you think about, like, instead of 10% off, don’t give the 10% off. Get anybody that subscribes gets access to the content. And that’s a great way to, like, get more value back from customers and something you can do at scale.

Scott Cohen: Yeah. One of my favorite examples, it it was a service I used for probably 2 years was Universal Yums where they would every it was a monthly box where it was a selection of snacks from a different country around the world. Yeah. And so and it was really, really cool. And my kid and and you talked about content.

Like, they had a booklet that was, like, here’s all the snacks, and there’s, like, history of the country, a little thing of a passport, and, like, which snacks did you like, which snacks did you not like. And the only reason I gave it up is at some point, like, we get excited for the 1st day, and then I would be stuck eating all the snacks because I don’t like things to go to waste. And my kids are like, alright. And they they move on. So Yeah.

Matt Holman: It’s hard with the present delight if people don’t use it all all the time.

Scott Cohen: Right. But what they did do, you you talked a little bit about product extension as well as they started just as the boxes, and I’m sitting there going at some point they gotta sell these because there’s some of these snacks that are really, really good, and I don’t know where to find them. And then eventually they started a shop where they go, oh, if you wanna buy what’s in the box on its own, so I’d have these huge boxes with, like, 50 bags of some crazy potato chip or something because it was so good. I’m like, this is brilliant. So That’s brilliant.

There you go.

Matt Holman: That’s perfect.

Garin Hobbs: Those are some great examples. Let’s take the converse of that. Right? Aside from the biggest or most established brands, most of the subscription services or products that we see tend to be these emerging businesses or start ups. I have to imagine their customer acquisition cost is incredibly high.

It’s a crowded landscape out there. It’s becoming increasingly expensive to sort of project your voice into that. And the only way you can really sort of combat that on a on a balance sheet is to drive folks to retention and that longer lifetime customer value. What are some of the biggest mistakes? Without calling anyone out maybe specifically, but what are some of the biggest common mistakes you see some of these subscription businesses making with regard to their marketing, their setup, their delivery, etcetera?

Matt Holman: Yeah. I’ll call out gym memberships to start because it’s incredibly difficult to cancel a gym. Right? But their whole model is based off of the fact they’re trying to get you in there and forget like Scott was bringing up. So that’s that’s definitely a no no.

I think anytime you’re worried about somebody I would say anybody’s running a subscription business and there’s a touch point where you’re worried about somebody canceling, that is actually an opportunity to engage with them in a way that actually could drive retention and and bottom line revenue in a in a in a a very, like, profitable way. Right? So so just think of that as a like a mindset. I I think the other thing is is the problem is is there’s often an assumption that if I just get somebody onto a subscription, they’ll be there for 6, 7 months. So I see a lot of brands that are banking on that higher like, the the higher lifetime value that comes as a subscription to offset their acquisition costs, and they have not modeled it.

They have not explored, like, additional ways to try to get at that. So, like and and and as an example, that I mean is, like, say you’re gonna sell, a coffee subscription and the coffee is $25. You get a big bag of coffee every month for $25, but your customer acquisition costs are, like, you know, 50. It’s not really 2 orders to get that money back. It might be 3 or or 3a half because of, you know, the cost of the product and shipping and a lot of other factors.

And so so that’s one mistake. Because, like, not, like, thinking through, like, modeling that, like, can I do art? Because there are a lot of things you could do to get as close to profitability or more profitable on the first order, which I’m gonna come back to. The second big mistake is just keeping it very, very simple. Like, you know, so, like, say you’re selling protein powder and the subscription offers, like, 10% off.

And so that and that’s it. And so the the the problem is is you get a lot of people who just wanna take the discount, and then they cancel right away. They they aren’t seeing any additional value. And so what I always harp on is, like, I call it the offer. Right?

So this is, like, why somebody buys, but it’s also what they get when they buy. Offers both of those things. And so one of the biggest mistakes I see across the board are brands not testing different types of offers. So if I’m selling, like, protein powder and I’ve been driving traffic, can I use a quiz or some other kind of opt in to gather information from my paid traffic sources? Like, I would wanna know if I’m selling protein powder.

Is this a weight loss? Is this meal supplement? Is this weight training? Is this endurance training? Is this doctor recommend like, what is the what are the reasons for that?

And if I start to notice out of my paid traffic that there’s a really high, like, dependence on, like, meal supplement and weight loss, then I’m gonna craft that product page to speak more strongly to that value proposition. And then I’m gonna come up with other things I could include. I’m gonna, like, test, like, a a fun little drink mix that tastes like you’re you’re full, but it but it’s 0 calorie. I’m gonna include, like, a diet guide, like, you know you know what I mean? Like, I’m gonna build an offer around that because that’s gonna be a lot more effective than 10% off the protein powder.

You’re speaking to somebody. You’re driving tons of more value than what they think they’re getting for the price. So so testing around the offer, testing about what you give, and and so, like, if we wanna go back to the gym membership, it’s the same examples. Like, what other things could I do to enhance that? So they have other services things there, but, like, you know, maybe you wanted to host a basketball league or something like that.

So you’re getting people to come in other other ways. So you can start, like, trying to brainstorm other other ideas and values.

Garin Hobbs: Yeah. You got to have to. Right? Oh, sorry. Go ahead, Matt.

Matt Holman: No. Yeah. Yeah. I was gonna say the final thing is just thinking through, like, there’s a lot of different ways to sell. So, most people think, like, I want a monthly subscription.

Right? And so, like and and you get stuck in this mindset of, like, I have a hard enough time getting somebody to opt into this sub say the subscription’s $50 a month. I have a hard enough time getting somebody to pick the subscription option instead of a one time option. So I’m really gonna struggle to get them to, like, prepay for a year or pay for 3 months upfront kind of thing. But the truth is is that those types of, like, approaches can greatly offset the cost of higher customer acquisition costs.

So, like, the protein powder is an example. You could sell a bundle of 3 at, like, 20% off or 30% off if you subscribe to, like, a quarterly subscription. So now instead of, like, selling one bag of protein at $50, you’re selling 3 bags of protein at, like, a 120, including the discount. That’s more revenue upfront for you. And then then it renews every 3 months.

Right? So so there’s just different approaches to think through, like prepaid bundles, upsells is another really, like, missed opportunity. Some brands do it, and there’s plenty that don’t where you buy the protein powder and then you offer, like, you know, let’s say that drink supplement I mentioned or, like, another supplement or something that goes well with that for the intended outcome. Like, you wanna include that upsell option. And that’s what gyms do as well.

Right? It’s like you buy, here’s this tier. Now we’re gonna try to get you to opt in to, like, our fitness trainer. Hey. We’re running this special, like, get a free training session because we’re we’re trying to get you to buy more.

Right? So thinking through, like, upsells and what other value add, like, somebody like StreamYard’s probably, like, running some kind of, like, mentorship or some kind of group or community where if you wanna learn more about podcasting, like, you can pay to have access to this extra stuff in addition to your subscription.

Scott Cohen: Yep. You hear that, Streamyard?

Garin Hobbs: Yeah. No. It it really makes a lot of sense. I mean, especially, it’s it’s fine to discount for to acquire, but you really have to back that up with value. Right?

You never want price to be the reason that, people stay with you. I think we see a lot of that with regard to some of these meal prep subscriptions. Right? They sort of 40 to 60% off your first box, and then when you lose that on the next one, the value proposition quickly seems upside down. It’s hard to compete with some of the prices in grocery stores compared to the prices of some of these, meal preps.

So it makes sense.

Scott Cohen: Well, and I think that’s long term short term, long term view. Right? Like, if you’re Right. Doing a 3 month thing or, like, I signed I did I’m actually actively with, it’s an AI exercise app I’ve been trying, and I signed up for 6 months because it was 40% off. So it’ll be, like, based on what you do, we’ll recommend exercises, and you can say this is this is the equipment.

I have a home gym in my garage. I’m like, this is the equipment I have, and I’ll go, okay. Cool. Use this. Absolutely.

It’s actually really cool. I’m like, I’ll pay for 6 months because it’ll take me 6 months to get a rhythm going because I’m terrible at exercise.

Matt Holman: Well, why don’t you ask for a month? Yeah. Exactly. That’s the other thing is, like, if you have a subscription that has some kind of, like, life changing element to it, like, being able to show somebody what their life might be like at 6 months, like, then they’re gonna well, of course, I’m gonna use it for 6 months. Right?

Like, for me, if I’m picking between the annual and monthly option, it’s always comes down to, am I sure I’m gonna use this? Because if I’m not sure I’m gonna pick the monthly, I don’t care that it’s more. But if I know I’m gonna be using it in a year, then why wouldn’t I buy the annual option? It just makes

Garin Hobbs: it just makes more sense. Yeah. Yeah. In those in those instances, I find it’s really critical to keep people focused on the desired outcome rather than the necessity of input. It’s not about exercising.

It’s about what you want on the other side of that. Right? Right. This is why one of the reasons I feel like people give up their new year’s resolutions so quickly. It’s they lose sight of the of the impact of the outcome, and they’re really focusing on the seemingly burdensome task of having to exercise every single day.

Right? And Right. You mentioned, Dollar Shave Club. It’s kind of the same thing. I’m more of a hairy scrunny man myself, but, hey.

But, you know, you also see the as the aspect of people canceling subscriptions because they have too much product on hand. Right? And so it becomes, sort of, again, driving that regular behavior, getting them, to take that program adherence that not only delivers value to them, but keeps them primed for the next sort of delivery that’s coming down the pipe pretty shortly.

Matt Holman: And and also selling to people based on what they wanna use. Like, the the too much product is, like, the one of the top reasons, and sometimes it’s because, you know, they’re on the a bad cadence. They’re they’re they’re getting 2 bags of coffee every month. They really only need 2 bags of coffee every 3 months. So, like, there’s an element of, like, marketing.

That’s where email can be so helpful as, like, trying to communicate with them to say, like, hey. Do you have enough? Do you have too much? Like, here’s how you make a change. Trying to understand that.

There was some data recently, like Recharge as one of the is the largest subscription app on Shopify, and they released a report around, like, the status subscriptions every year. And one of the interesting facts on that was, like, enterprise level brands have a lower average order quality lower average order value and less frequent shipments, which is hard to do when you’re early on because you’re trying to get as much value and get people to buy as much as possible. But the idea is there you mature into the system where you’re trying to get everybody on there just to be happy. Like like me as a Dollar Shave Club guy. I don’t know if I’m an ideal customer because of, like, I’m not buying a lot of stuff, but I’m sure from an LTV perspective, I’m I’m pretty far up there.

Because even if I’m only buying every 2 or 3 months, I’ve been doing that for 7 years. Right? So, like, that stuff can add up. So, like, thinking through, like, that relationship, like, I I would add too. It’s like it it does come down to sales funnels and, like, understanding, like, where you’re gonna position that offer.

A lot of people are trying to get the subscription offer right away, but sometimes you wanna enable some kind of free trial or, like, hey. We’re gonna we’re gonna sell a onetime, like, a brand I was talking to yesterday, Obvi. They sell collagen. Like, their CMO was saying, I’m only focused on the initial purchase and making that profitable. And then I use email marketing and organic to to do the subscription piece.

And so there there’s a lot of different ways to approach it depending on how you wanna build your business and how people are trying it, and you have to model all that out to understand, like, conversion rates and and how many people are opting into things. But it doesn’t always have to default to the subscription right away. There’s different ways to engage and and enable people so that they like it, but it is nice to get somebody on a subscription right away. It is.

Scott Cohen: What I’m hearing is don’t be afraid to contact and ask questions.

Matt Holman: That’s a 100%.

Scott Cohen: That’s that’s what I’m hearing. I mean, I I’ve worked at 1 800 contacts for a while, and you talked about usage. Right? You know, hey. You bought a 12 month supply of contacts.

Are you are you gonna make it last 18 months? Are you gonna stretch them? Are you gonna be a part time wearer? Are you gonna be a part time coffee drinker in in your example? Right?

So don’t be afraid. People I know

Matt Holman: there’s there’s too much email.

Scott Cohen: There’s too much email. It’s like, yeah. There’s not enough email. There’s not enough email. There there there thank you.

There’s I’m gonna put that on a sign. Matt Holman says

Matt Holman: there’s no I like breaking I like breaking up for people like this is, okay. How many emails do you actually open? Like, from a brand, do you open all the emails? Because if you went through and filtered by a brand that you like, you’re gonna see, like, maybe a lot of them. You do you miss tons of them.

So if you think about it, like, on a typical open rate, a good open rate is gonna be, like, 30 or 40%. Like, maybe it’s better on newsletters and stuff, but a brand that it gets 30 for 40% open rates is probably doing pretty well. Okay. So 1 in 3 of your list is opening that email. Out of that 1 in 3, how many are actually reading the email?

That’s a lot less. They quick read, scan, they’re done. So you’re talking about maybe you’re getting 10 to 20% of your list to look at each email. Maybe. So that means you could send 10 times as many emails.

So if you wanna try to get everybody to see it.

Scott Cohen: Well and in my and in my view, I I come from a background where I looked at it and 40% of revenue came from people who didn’t even open the email. Yeah. They just saw the email in the inbox and went, oh, let me go do that right now.

Matt Holman: That’s amazing.

Scott Cohen: So it’s you gotta look at that data. Yeah. I did a whole presentation on why you should look at that data a couple years ago because it’s it’s that branding value that, hey, your bill is due. You may not open the email, but you’ll go pay your bill. Email worked.

Matt Holman: That’s a good point. I like that one too because that does get that’s gotten me sometimes. It’s like, you know, I have a recent doctor’s visit, and it’s like, I get an an email from him. I’m like, oh, yeah. Crap.

Go log in to the portal.

Scott Cohen: Yeah. Exactly. Like, whatever. Did the did the email work? Yeah.

It worked.

Matt Holman: Work that in email to open open it. Cool.

Scott Cohen: Oh, man. Well, we could go on for another hour, but I think this is a good stopping point. I think, man, I think you and I officially met, like, I don’t know, 9 months ago. You know, we’ve been back and forth chatting for a long time. I got introduced that you mentioned a little earlier, the commerce catalyst community.

I believe it’s based here, but I think it’s It is. I mean, it’s expanded quite a bit even outside of the state of Utah. I’m a big believer in community. So why don’t you tell the those folks listening and watching a bit more about what Commerce Catalyst is?

Matt Holman: Yeah. Absolutely. I mean, Commerce Catalyst started out as I was a solo marketer at at at QPilot, small company. And sometimes I just get tired or frustrated of if I need to evaluate a tool, I’m going on Google or YouTube, and that is so much, like, SEO based. It’s not necessarily, like, the real tool.

So, like, being able to sit in a room with other people that, you know, if I ask, like, hey, what’s a good CRM tool? What’s a good what’s a good landing page builder? Like, what do you guys use to scrape LinkedIn profiles? And then you get immediate feedback. Good pros and cons.

And so that’s that’s, like, the whole genesis of, like, what started. And so originally, it was called, like, marketers unite, and then for a while, it was part of ShareHouse. And then now CommerceCast kind of on its own. It’s very much like, you know, if you’re in our Slack, our Slack is close to 900 members, and, you know, people are asking questions around, hey. Does anybody know somebody who can help with, like, cross border, like, fulfillment?

Does anybody have a contractor for landing page sign? Like, hey. My niece just graduated from college. Just, You know? Or people posting about jobs or looking for jobs.

And so it’s very much like that’s the whole spirit of the community is, like, people go there, ask questions. So it’s a very engaged Slack group. We get anywhere from at least a couple of posts, if not 10 to 20 a day, different things. So and then we do events. We do lunch and learn stuff here in Utah.

Last September, you Scott, you were at our Catalyst 23 event, and I’ve started planning our Catalyst 24 event. It’s gonna be downtown this year as well in September. Just really trying to I mean, that’s how I’ve learned. And so, like, when we run events, like, it’s very much we try to go into the weeds as much possible. The last thing I want somebody to say on a panel is like, oh, just go start an email list.

It’s like, no. No. Explain to me the lead magnet you used, what automation tool we’re using. Break down the offers. Okay.

Did that work? What worked and what didn’t work? Right? That’s the kind of content that I I want and I need because the last thing you need is, like, to hear from the head of Google how they leverage, like, their, you know, machine learning AI algorithm and their $10,000,000,000 in ad budget to, like, to launch a new product. Like, cool.

How do

Scott Cohen: Good job with DeepHogits, man.

Matt Holman: Good job with all the expertise and the top minds in the world. Like, I’m not that guy. I’m I’m me and 2 other people or it’s just me or something like that. So it’s very much like what Commerce Catalyst is trying to enable.

Scott Cohen: And where can people find out more about you and subscription prescription?

Matt Holman: Yeah. Absolutely. So you can go to the subscription doc.com. You can go to ccatalyst.co, or you can just look me up on LinkedIn, Matthew Holman, subscription, and I’ll come right up. I’ve got links to both the community, my newsletter, and everything in there as well.

Pod newsletter, podcast, consulting. I’m working on course right now and all kinds of stuff. Just trying to create more content, but also that will make money, you know, like we

Scott Cohen: all are. Busy guy. Busy guy. Well, thanks so much for joining us, Matt. And thanks to you, our listeners and watchers, for tuning in.

If you’d like to learn more about Inbox Army, check us out, inboxarmydot com. Until next time, be safe and be well.

Matt Holman: Absolutely. Thanks, guys.
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