Chris George is the Co-Founder and Chairman of SUBTA, the Subscription Trade Association. SUBTA supports thousands of ecommerce brands helping them add and scale a subscription or membership offering on their ecommerce stores.
Gartner Research predicts that by 2023, 75% of all DTC brands will have a subscription membership offering. So if you're not already thinking about subscriptions, it might be time to start!
Subscriptions aren't just for coffee and shampoo refills anymore! We're seeing brands in just about every vertical (Clothing, Beauty, Consumer Electronics, Wellness etc) launch some form of membership offering. Whether it's membership for exclusive access, VIP pricing, access to content, etc.
Chris was also the founder of a successful subscription company, Gentleman's Box, which he had a successful exit from a couple years ago. So he's been on both sides of the field!
Chris George is a co-founder and chairman of the Subscription Trade Association (SUBTA), and a serial entrepreneur who has successfully launched and managed seven businesses and sold two. As one of the creators of the wildly popular and recently acquired Gentleman’s Box, Chris has spoken to aspiring entrepreneurs and established industry professionals at events like Digital Summit, SubSummit, and several academic institutions. His strong business acumen and understanding of the role of marketing and branding solidifies him as a burgeoning force in the realm of entrepreneurs.
Jay: Chris welcome to the show. Thank you so much for your time coming on today, I really appreciate it.
Chris: Of course, thanks so much for having me.
Jay: Well, why don’t we start for those who maybe don’t know who you are, what’s your story and why do you care so much about subscriptions?
Jay: Chris welcome to the show. Thank you so much for your time coming on today, I really appreciate it.
Chris: Of course, thanks so much for having me.
Jay: Well, why don’t we start for those who maybe don’t know who you are, what’s your story and why do you care so much about subscriptions?
Chris: Yeah, so I’m the former co-founder and CEO of Gentleman’s Box, it was a business that first got me in the subscription industry. It was a subscription box for men delivering men’s accessories to your door for $29 a month or a hundred dollars a quarter. I’m the co-founder and chairman of SUBTA, which is a subscription trade organization. At SUBTA, what we do is we help business professionals find profitability through subscriptions. Our goal is to be the leading voice in direct to consumer subscriptions, and we are fortunate to have the largest community of direct to consumer subscription brands.
Jay: Because that was going to be one of my questions, it’s about SUBTA obviously. You were part of forming the SUBTA, when was that?
Chris: We did things a little bit backwards, so typically you would start in trade organization and then we would have events for the members, right? And we did the opposite, we actually started with an event called Sub Summit, which we hosted our first event September of 2016, and then it wasn’t until 2017 that we started SUBTA. And we started SUBTA because our event was really good and it was bringing people together once a year. And what started as a 200 person event, has now become an event with more than a thousand people at it. We needed to do something that was going to keep the community engaged all throughout the year and that’s when we started SUBTA. So sometimes in 2017, but the idea of bringing this community together started in 2016.
Jay: So if someone is a member of SUBTA, what does that mean?
Chris: A big part of it being part of this fast growing community. And what we’re trying to do at SUBTA is to come up with as much content, as many tools, tips, and tricks and networking, that can allow you to grow your business. And we are true to our heart that we love seeing entrepreneurs grow. And we feel like it’s our duty and we wake up every morning thinking how can we help a business find profitability through subscriptions? How can we encourage more brands to pivot to the subscription model, as that’s the future of ecommerce right? That’s the future of consumer buying behavior. Those who have joined SUBTA, that’s their opportunity to really build on their business, engage with leaders in the space, and contribute to the community as a whole.
Jay: So why is it that needs to exist for subscriptions versus regular ecommerce, like why is it different?
Chris: Subscription is a different animal. It’s obvious because big brands struggle with pivoting to the model. Ecommerce is transactional, subscription is about building relationships and that’s very important. Today’s consumer is about brand values, and you build that through subscriptions and building a relationship with the consumer. And we’re just not ready for it. And there’s a lot of brands that do it really, really, really well. But it’s no different than in 2000 when you had a retail storefront and you weren’t thinking about going dot com. If you didn’t do that for 10 years, you are behind, now if you’re dot com, you need to be thinking about subscription.
Jay: I would say, at Bold, we have a subscription software and one of the big mistakes we see as we see ecommerce brands that sell one time, just think they can turn on subscriptions and they’re going to have a successful subscription business. And it’s kind of like slap a bandaid, subscribe and save on, and it’s never the case. I mean, sure you’ll sell some subscriptions, you have to, I think change the way you think as an organization. You touched on it, it’s a relationship, not a transaction.
Chris: Yeah, It’s not a transactional business, everything’s about the experience. You’re giving the consumers an experience they can’t get on the retail level. And the truth is for example, if Gentlemen’s Box was a website that just sold ties and dress socks and tie clips, well consumers would go to Amazon, get it cheaper, get it faster, but no, we book an experience around it. Well, another really, really good example is what chewy.com did. We all know Chewy sold for 3.5 billion to PetSmart or Petco, but what was so special about them initially? The idea was let’s sell premium dog food and treats for dogs. Well, come on, let’s go to Amazon and buy that but what’s the difference? Their customer service reps were so well-trained, that you could call them and say you have a seven-year-old Husky that has stomach issues and they’re going to tell you what food to give them. If you call a rep at Amazon, or you call somebody at Target, or you call somebody at Walmart,and you ask them that question, they’re not going to have the answer for you. And so now they build this relationship with the consumer. And I think it was in 2018, 18 or 17, I was at Shop Talk and one of the C-level execs from chewy.com was there. And they said that they hand wrote like 3 million letters on Christmas to the customers. Like that means a lot, like there’s a reason they asked you for your dog’s birthday, because they want to send them a happy birthday. This is building an experience so that I don’t buy my dog food or dog treats from anywhere else. I click subscribe and save and that stuff’s delivered to me monthly.
Jay: Well, as of this recording, Chewy’s stock yesterday was at an all-time high. And I think for like the last three days in a row — I own some chewy stock, so I actually coincidentally check it quite often. I think what you’re touching on is this version of subscriptions that I think when you have subscribers and members, you have data on the customers, you who know the customer is, you’re able to better serve them. And think about like Amazon on the one time product side definitely can’t do it. But like what they know with their Prime membership, for example, what they know about the subscriber, what they watch, how they buy membership brands can now understand that customer so much better. If you’re a brand, not doing that, you’re basically missing what the model is all about, I think. I heard something interesting yesterday. SAS, which is software as a surface is a term, we’ve kind of gotten used to. So at Bold we are a SAS company, our products are software as a service. What do you think about, essentially, almost everything being as a service? Like, do you think that’s where we’re going, like clothing as a service, food as a service.
Chris: Yeah, I mean, look, consumer buying behavior in general, consumers, especially going into Gen Z, like they’re about usage over ownership, they want to use the product as they need, have it for how long they need and they want to stop you. People are renting more than ever; cars are being leased more than ever. And for that matter, they’re not even, like less people are driving, like imagine if Uber had $400 a month, 20 rides a month, like up to 10 miles. Like that could happen and all of a sudden, I’m like, there’s no car and nobody has a car anymore. And so I always talk about this example, I’ve probably said it a hundred times in a hundred different talks and a hundred different conversations. It hits well and it makes the most sense. Look at Microsoft office five years ago. If you wanted Microsoft office, you paid $500 for the software or I joke and say, you would lie and say you were a student and you’d get it for $150. Now you pay $12 a month, or whatever the amount is, you have the software, you get the most updated one. You don’t get a desk, you don’t have to upgrade it, you have to call your friend and say, do you have the newest version? You just have it as you want it, you use it. That’s where they pivoted their model, this is where consumers are going, everything is as a service. And you wonder what happens in 10 years, if you sit back and think, like you probably have 15 to 25 subscriptions, add your iTunes, add your apps, add your cell phone bill, that’s what they are. And so people start to say, well, I’m going to start this subscription because it doesn’t exist, the truth is you still have to consider the consumer share of wallet. How much are they willing to spend a month on these things? And what are you going to take place of it for that capacity? So it’s not just about coming up with the next best toothbrush subscription. It’s like, what is that experience going to be like, because I need to get that share of wallet and I need to provide value and I need to provide an experience that they can’t get anywhere else.
Jay: And how much more value can they add too right, than just the toothbrush, the toothpaste every month.
Chris: It’s an experience.
Jay: As you were talking there I thought to myself, it’s just the way that our economy started this concept of ownership. There’s no reason we need to own things, like if you actually, not to get philosophical, but like why do we need to own things? Like I thought the other day I would love an Apple subscription. And it sounds stupid, but like, even if it’s like $300 a month, if you think how much you pay for your Mac book, your iPhone, two iPad, I got to watch, what else do I have? Oh, my AirPods. They get outdated fast, and you’ve got to buy a new one, so like $300 bucks a month, or maybe you pick a hundred dollars a month, the $300 or the $600 and you get the Mac Pro. And honestly, like, I actually don’t know why Apple doesn’t go to this model because their strength is their ecosystem of products. And I don’t really care if I have an Android phone or an Apple phone, I have all my devices Apple because they work well together. So their pricing actually doesn’t match what their value is, as it’s all together. They recently launched Apple1 with their Apple TV, Apple Music, Apple Fitness. For their digital services, they now have a unified package, I think this should extend to hardware.
Chris: That’s a large build-out, they think about the returns, the refurbishments of it. Like I don’t disagree. I think you’re right. Apple should call us to help them do it. But I think you’re going to see it in pretty much every part of your life. Like I pay that monthly fee for Instacart, which is a grocery delivery and they deliver groceries to my house. I don’t know the last time I’ve gone out to get much, like it’s all coming to me and that’s the way things are going when you put somebody in a subscription. I don’t want to think about it, I want to know that I have it monthly coming. And like, very important with these digital services, I was thinking about this the other day, you’ve got Netflix, you’ve got Disney Plus, you’ve got Peacock, you got HBO Max. The ones that are going to survive are the ones that have these flagship series. Like I literally sign up for Disney Plus because of Mandalorian. Today is the last episode, but I won’t cancel for the whole year. I sign up for Netflix because I like Ozark and I like Stranger things. Like they have flagship series that are making me sign up for them. It’s very, very important, all types of services need to have that.
Jay: Well, okay so speaking of this, I guess one of the things I want to make sure I get out of your brain while I have you here for our listeners. You’re the chairman of SUBTA, but you’ve also had hands-on experience building a subscription company. You were the CEO of Gentleman’s Box, which I just found out recently was acquired. But so you built that since 2014, you launched it.
Chris: Yeah, perfect you got it.
Jay: Did a little bit of research, but I missed the sale part obviously. For subscription brands listening, I think what would you say are, I had on my notes here to ask you three important things, but it could be one, it could be more, but a few things that a subscription brand needs to get right? Like these are the things that they can’t screw up on for their subscription business.
Chris: Wow, that’s a lot there. I think one important thing is the experience, it’s not transactional. You cannot be a subscription company that when the consumer makes a purchase, you deliver them the product and then that’s it. You’ve got to provide more value, whether that’s through content, whether that’s through tips and tricks. You have to be continuously communicating with that subscriber and understand that the experience isn’t the product only. The experience starts from the time they see one of your ads to the moment they hit your website, the checkout flow, the checkout, the post-purchase experience and then the delivery. All of these are very important and that’s where I think some of them miss on it. Number two is building a community within your brand. The brands are the biggest communities. Built communities with the brands have the most success look at like FatFitFun. They’ve got members that have FatFitFun unboxing parties. Like subscribers are getting together to open their box together, like, come on. That’s an event that was created as part of your lifestyle. It’s like, I can imagine the subscribers are like, there’s a group of 10 women that are like on the 15th at six o’clock we’re going to Jenny’s house and we’ll have wine and we’ll have our bike. Like this is an event in their life now.
Jay: You know why that is such a good community is because I’m willing to bet there isn’t a FatFitFun representative, there’s no employee from FatFitFun there. That’s community, when you have customers grouping together and it’s not an event organized by the brand, you truly have a community.
Chris: Yeah, and that’s why we’re having so much success.
Jay: Yeah, that could be a whole conversation on building that because that is something that you can’t just, and I’m by no means an expert on this, but you can’t force that, like to have that type of a following. Like, it’s you look at brands like Harley Davidson.
Chris: It has to happen organically, but it comes from the brand and the way they’re communicating with their subscribers. For example, you have to have somebody that’s controlling social, meaning when somebody posts a picture of them holding your box, somebody from your team has to go comment on that. Like you need to search your hashtags and you need to say, like, so glad you loved it. Like simple, and you have to do that fast because an Instagram post is up for 24 hours, right. And so if I see a consumer post a picture of their Loot Crate, and then right below it Loot Crate responds and says like so glad you love it. I’m like, holy, like this company is engaged, like what is this? I want to check it out. And like those types of things are so important in building a community.
Jay: And that’s so easy to do. One of my pet peeves about brands and how they use social media is they think it’s like them standing with a megaphone and everyone wants to listen to them. But if you think about social media, as you’re in a room, it’s a cocktail party and you’re with a bunch of people, are you going to stand in the corner and yell? No, you’re going to listen to people, you’re going to react to them, you’re going to engage with them. You’re going to say things and I remember saying to our guy that runs our social media at one time. I said like, well, what if like for a day, a week, or just block out calendar time and just like search for people that launched new shops. We’re in the ecommerce space, so like they launched new shops, you can search for certain things like Shop Now Live. Just like looked at it and it’s a great shop, love how you did this or someone who just like SUBTA. You could be like, every time someone’s like just launched my new subscription shop. If SUBTA swoops in there and be like, love it. Like, don’t even say like, hey, you should join SUBTA.
Chris: You just hit the nail on the head and I love the analogy you gave about the event of a room. If you’re in a room and you want to make an impact in that room. What are you going to do? You’re going to go shake everybody’s hand, you’re going to go say hi, and you’re going to introduce yourself, right? With social media, you can reach 10 times the people, because you’re just saying hi, you’re just letting them know you’re there. And you’re right, exactly about how you do it, it’s like, I love your new website, layout. All this is awesome and it’s like, nothing more than that, it’s not try out our new subscription product. It’s love this and that’s like, it could be a thumbs up for all you know. And like you’re doing something and getting somebody’s attention.
Jay: It’s honestly easier to do then crafting social media. Did you see what Burger King did a few weeks ago?
Chris: No, what did they do?
Jay: I love it, they started going through Twitter and finding tweets about like a Whopper from like six years ago. So like, if you tweeted six years ago, like, oh, this Whopper is the best or whatever. And then Burger King would comment so glad you loved it, sorry about the late reply. But like literally someone tweeted in like 2012, they tweeted about like a Burger King Whopper and then Burger King official account commented on it or retweeted it, it started going viral. Because people were like, holy cow Burger King just like found a tweet from 2012.
Jay: Amazing and super simple to do. Like, and here we are talking about it.
Chris: So smart.
Jay: What would you say are some of the mistakes brands make than?
Chris: I see them, one price their product wrong. I’m a big advocate of making sure you price it right from the beginning. There’s a lot of data that shows something priced at $25 sells just as good at $27 and $29. Like I forgot what school they did, they did this analysis, the product was the same product at three different price points. At $49 it sold just as much as it did at $45, that’s leaving a lot of money on the table. The other thing is being over ambitious, especially for early startups, meaning like they think they’re going to ship out 500 boxes in their second month. Like sell out, inventory holds up cashflow, and the last thing you want to do is be stuck with a lot of inventory. I remember three or four years ago, I walked into my warehouse and I saw like $150,000 worth of inventory on the shelves. And I was like, holy crap, like we’re barely making payroll and I got $150 grand sitting on the shelf. Like we’ve got to do something about this, we got to look at the data. I’m going to make like legitimate, really good predictable decisions on how much inventory to buy. And understand it is okay to sell out sometimes, get people on a waiting list. Sometimes it works in the reverse, meaning people will want it even more. So that’s a big mistake and I think too another thing might be like, again, not focusing on that community, customer service. Like somebody wants to return the product, take the return. Like everybody gets caught up in the one customer that says they didn’t get it and it shows it’s delivered. And like accept the return, it’s going to be okay, you know what I mean? You don’t want to get caught up in that, especially for early stage startups.
Jay: Yeah, those are good. Two things I’ll just add to that one with the return is, I think it’s really important that subscription brands know what the lifetime value is of their customer. And they know how much it costs to acquire and there’s been reports on this, but, like, industry average is around 178% better than a one-time customer. The subscription brands that are doing even better, it might be like 300% better than one time. But if you know how valuable a customer is, then when that customer is asking to return a product that you know is $20, you don’t think of them as a $20 customer. You think of them while my average LTV of a customer is $827 and 13 cents, like you need to know that number because that’s how you make decisions. Anyways, I liked your comment on pricing, because I think that’s something that subscription brands get wrong a lot too. Pricing can play into conversion optimization too, so like converting a subscription is not easy. So like giving away a free month or a reduced price for the first month to get them in. But something I think about, and I want to get your thoughts on this, is I think about what I try to tell brands to get an idea on value, their customers perceive. So your Gentlemen’s box you had like, if a customer perceived the value, like, I don’t know what would be in it. There could be like a tie, there could be a belt clip, tie clip, or different things.
Chris: Hundred dollar in value for $49 bucks.
Jay: So that’s about my ratio, my ratio I say is three to one. I tell people, so like the perceived value should be roughly three to one or more.
Chris: It depends on the product though, too. Right? It depends on the product category you’re going into. If you’ve a Discover Delight subscription, Gentleman’s Box would fund it 100%. But if you’re a replenishment the value is not going to be there, I’ve been there, but it’s okay. Because you’re a depleting product and people like the value doesn’t need to be three to one on that. But you’re providing them convenience, you’re replenishing something that they need every single month. So I think it depends on the product and service because those replenishment products have a higher LTV anyways. So you’re going to see them at a lower price point, like look at Quip, like look at Dollar Shave Club, look at Harry’s. Subscription box for sure, like it’s got to be perceived value or it’s got to be unique as ever, meaning you can’t get it anywhere else.
Jay: Well, I think with the replenishment ones, you’re bang on, like the product would be perceived, but you could layer in whether that’s access. Like we see replenishment brands, if they are a subscriber to the coffee every month. They get 10% off everything else on the website, as long as they’re a member or they get the monthly offer half off one bag once a month, but only while they’re a member. So there’s other value they layer in as well too.
Chris: Yeah, for sure.
Jay: I want to talk about churn a little bit. That’s the word that every subscription brand hates. It’s inevitable. Well, maybe not, I don’t know what would you say are some of the big reasons customers churn and how can brands maybe prevent it a little bit?
Chris: Yeah, I think one thing that’s absolutely important and not every brand is doing this. But we need to ask why they’re leaving before they leave, so we get some data. Customers are typically churning for one of three reasons; one they can’t afford it; two, they’ve got product fatigue, meaning they’ve got too much; or three, they don’t like it. It’s one of these three things, they didn’t like, it costs too much money or they got product fatigue. And so what we need to do is have recourse or options for them when they click, depending on which option they click. So if they click it costs too much, let’s put them in a lower tier or let’s give them the option to pause. Let’s give them an option to move to a quarterly or a bi-monthly model. Same thing with the products, like I’ve got too many products, like let’s move you to quarterly. And so now you have a solution for two of the three. Now the one that they don’t like, they didn’t like the product, right? We need to find out what they didn’t like, but what you have to do to prevent that from even getting to that point is surveying the customer every month when the products get delivered. Having them rate the box, having them rate all the items in there, or rate the service and anybody that chooses so-so and not happy, triggers the customer service team to reach out to them immediately. Like you’re getting ahead of the game and you’re being proactive, talking to them before they think to go to cancel. That’s another thing people are failing to do. So they click the sad face, boom, customer service notification, hey, we reach out. Hey Jay, I’m so sorry to hear you don’t like the box this month. Like what can we do to make it better? Or you don’t like the items, like let me send you some new ones and now you’re choosing them not to cancel because they didn’t like it. And you’re giving this exceptional customer experience. They’re going to tell somebody else about it, like across the board, is great.
Jay: I think you’re building too emotional equity with the brand. So like if someone, I always think once you’ve spoken to someone at a company. Then when you go to either complain, leave a negative review, cancel, do something else. There’s a more likely chance they’ll reach out and talk to someone. So like, if I was a subscriber of Gentlemen’s box and like I said, I didn’t like it and someone reached out and I talked to someone sort of things out. And then six months later, if I want to cancel it, they be like, oh, you know what? There’s real people over there and they’re cool and they’ll talk to you, and like I would reach out.
Chris: You might have not even have to email them.
Jay: Yeah, exactly. So then to flip that, so that’s churn. What can subscription brands do to increase conversion? Conversion on subscriptions is much lower than one-time products. It’s a bigger commitment, it’s harder to get people to convert any suggestions around conversion?
Chris: I mean, you could do a whole session on this probably with like website optimization. But I think what’s important is, I mean, you’ve talked about this before actually, but there’s something to do with like, micro-commitments also like a little bit of personalization on the first box. So what we want to do is we want to gather some info around the consumer. That’s about to subscribe, like depending on what your product is like, do they like this or do they like that? And we’re like guiding them down a path to a certain sub box if we’ve got options. But also when you start to get the consumer to make micro-commitments, you’re getting them like sort of engrained in the brand and they’re getting excited. So if you’re on makeup subscription, you might ask them like, what’s your skin tone, are you interested in like more eyeliner lipstick or like face creams? Like you can start to like to put them down a path, and now you’re involved, you’re excited. Oh, they want to know my name and like, how tall am I, like people like it, right? Like they’re filling out a profile, now you’re like getting all this data and you get their email. And if they don’t convert, you get to put them into like a drip series where you can convert them later on. So I love this idea of micro-commitments, typically what, three, four years ago, what did they want to do, Jay? They wanted to fly them through the checkout process, but how do we get them to one click out. Now it’s like, we don’t want that, we want to gather data.
Jay: That’s such an important thing for anyone listening to take away this mindset that you don’t have to get your customers through your shop as fast as possible. It doesn’t have to be one click. What you’re selling is a tailored, curated subscription. You can probably name a lot of brands, but one that comes to mind that we work with that does this really well is Kong Box. They don’t ask you your email right away, it’s what do you have a dog or a cat or how big is your dog? What’s your dog’s name, what’s your dog’s breed, what’s your dog’s birthday, what’s your email? I think email actually comes a little bit sooner, I think it’s like seven or eight questions. They’re all one click on but by the time you get to the end, they may only have eight different subscription options, but it makes you feel like there’s a ton of them and you’re getting tailored.
Chris: What Kong does really well too, one of the first questions is what’s your dog’s name? And so my dog’s name is King, the next question is what’s King’s birthday. Like they then took his name and they put it in a question. Like now I’m in there, like do that’s such a good thought, it’s such a nice touch. It gets you like, oh they care about my dog. Like it’s cool, they do a really good job of that.
Jay: I was looking at a new Macbook the other day, and if you go on Apple’s website and you click Macbook to buy and say, you pick the 13 inch, there’s two options off the bat. It shows the one that has 256 gigs of memory and one that has 512. No matter which one you pick, you’re actually picking the same exact laptop because if you pick the 256 on the next screen, it asks you how much memory do you want? Do you want 256, 512, one terabyte, two terabyte, what ram, what graphics card? Like they could have just made it, so you clicked I want a laptop and then have all the options on one page. It’s a completely useless step, anyone listening, go do it, click Macbook. It’s like, I’ve identified as a five gig memory user, but then I clicked it and then I changed it to two terabyte. But like, why do they do that? It has to be, you’re making a commitment, you’re one step further. You’re more likely to buy, like there’s no reason Apple would add a completely useless page when all those options are on the next page anyway.
Chris: Yeah, I think part of it though, is like, you probably think about a laptop differently than the general consumer. Like, so they’re probably filling in most of that, I bet you most people don’t know what half of those things do like they just want a Macbook. They’re like choosing like you know the difference in having more ram and more gigs, so I’m wondering if that’s part of it.
Jay: It could be, but I think your point of micro-commitments, I think is a really, really good one. And to any brands listening, who even don’t think this applies to them, I have seen this done. If you take your menu item and you have like six items, like, let’s just say, let’s stick with the, it could be coffee, it could be cosmetics, it can be anything. Instead of having a menu item where you pick, like let’s say men’s, let’s say cosmetics men’s, women’s, or I’m like a certain age, or I’m a certain whatever. Turn that into questions and a step through wizard instead of a big mega menu where it’s like overwhelming. And it’s the exact same thing, you’ve got a category page at the end where you’re left with, well, here’s 10 products of like my men’s 40-year-old skincare, whatever it is. But it feels much more tailored when you pick, I’m a man, I’m this age, I’m this, whatever, this is my skin tone or whatever. You can apply this to anything, all it is a different form of a menu on the most simple aspect. Or you can go full blown, like a Kong Box did. I could go on a rant about this too because I love it a hundred percent.
Jay: Yeah, that’s great.
Jay: One other thing you touched on that I don’t want to skip by was frequencies. Do you have any thoughts around that? Do you give the customer the full gab that they can pick anything, is it better to just have monthly or do you see quarterly versus monthly?
Chris: Anybody that follows me on social, like, I love quarterly especially for discovery/delight. The quarterly model makes more sense in my opinion. It’s not a revenue loss, because you generally charge more for a quarterly model. You start to take away the, I can’t afford this, because you’re generally getting a higher quality consumer in terms of income level, because they’re paying a little bit more on the first purchase. You’re also taking away the product fatigue because they’re not getting it every month, they’re getting it every quarter. And then also think about this as an entrepreneur and a business owner, you have to make four boxes a year, not 12, like, that changes, you have three months to sell out not one month. You’re creating content around four boxes per year, not 12, again, I’ll go back to FabFitFun, quarterly dominating this industry, right? Now replenishment, Ipsy, make-up monthly, it makes sense. But Gentlemen’s box started as a monthly, they sell the classic, we pivoted to a premium quarterly, because we saw that the market was telling us that’s what they wanted. Our LTV on the premium quarterly was four times as much as the LTV on the monthly class, so a big deal.
Jay: Four times the LTV on quarterly versus, so that means their churn must be four times less too.
Chris: $29 a month or $99 a quarter is the same amount of money at the end of the year. But yeah, churn is way less.
Jay: I have theories around this and I haven’t tested it with data, but everything that I’m subscribed to annually, I almost never cancel. And part of it’s because I just completely forget about it, it comes up after the annual. I see it on my credit card and I go, oh geez, I forgot, I was even subscribed. Well, you know what? I’ll start using it again or I feel like the things that I see on my credit card all the time, every month, it’s a reminder ah, you know what, I didn’t use it this month. This one month, I should probably cancel it but if it’s annual. I don’t know maybe that’s just me, but it’s that charge in my face every month reminding me.
Chris: It’s also a big reminder when you get hit with a $400, like hit an annual payment, people are like woah. Listen, I bet for you it’s dependent on the product too, right? Like if you never use it, you’re going to call them and say like cancel this. But you never want to be afraid to remind the consumer that they’re like having to renew because I remember seeing with some brands that the annuals had more like, what do you call it? Chargebacks or customer service like, oh, I didn’t know I was renewing for the year. You know what I’m saying? I think you see a lot more of that.
Jay: Yeah, for sure.
Chris: Well, with quarterly, it works so well.
Jay: I like quarterly too.
Chris: To build that model.
Jay: That’s a good, happy medium. What would you say as subscription brands, North Star Metric should be in and what I mean by that is like. If you want to rally your whole company around a single metric that like your customer support cares about your marketing cares about, your leadership cares about, like, what does that metric for? I want to say like besides revenue maybe.
Chris: Man, you know what? It’s so interesting, I’m so glad you asked this question actually, because like the North Star for me for entrepreneurs is like this happiness or like something meaningful. That’s a North star, right? If the brand has something around, like what it’s doing for its consumers, like what’s the effect that it’s having on its consumers. And that can be the metric, right? So let’s think of a brand in some cases it’s hard. But the brands that had that meaning to me like you even, like, if you look at like BarkBox, who’s going public by the way, they just announced that. Their North Star might be, we want to donate 10 million toys to shelters for the year. Now how does that happen, like every time a new subscriber comes on, they donate five toys. Again, I’m making up these metrics, but like that’s a North Star, or even better, like we want to pay the adoption fees for like 10,000 dogs this year. Like, I feel like when you have an impact like that, people get behind the brand, right? I’ll tell you, like in my personal life, this is a story I like start to talk more about. I started becoming an entrepreneur when I was 21, I’m 36. So from 21 to 34, all I cared about was making money, that was my North star. What could I buy for less than full, but for more, I used to come in the office. How many new subscribers would we get? What’s the revenue look like? When I owned a collection agency, it was how much bills did we collect this month? When I was flipping stuff online, what could I buy for less and sell for more? How much money, everything.
And then it wasn’t until I was like 34, I don’t know the exact day. But with when we were building SUBTA summit, when I started to see that I was helping people build their own business and the excitement that it was giving me, because people were like, I would give them a tip and it would work. Like I had a great friend, John Roman who wrote an article, I didn’t even know he wrote it. It said how a five minute conversation with Chris George netted me six figures in 45 days, that wakes me up, like that drives me. And when we were building SUBTA, our North star was how many different brands and entrepreneurs and people can we affect through our events and through the content we provide. It wasn’t in revenue. We actually started Sub Summit, not even thinking it was something that was going to make us money. Selfishly. We started it because I wanted the contact information of all the great leaders in the space. So that I could ask them questions if I had questions, it turned out to being the most valued business I built in my whole life. And the North star had never been revenue. I believe in this thing of like trying to find happiness and like everything you’re doing, because I’ve had the money. Like I went from no money to having a life where, I don’t mean to digress, but this goes to like the values of your company, because I think it means a ton when you get people behind this. So I went from having no money to, I could probably buy anything I wanted besides a $10 million yacht. Like, you know what I mean? I’m saying in reason, like I’m so grateful and privileged and when I go to the store, if something’s on the shelf and I want it I buy it. Like I’m grateful, I worked for it, I’m so good, I’m not any happier.
Jay: Money is no longer motivating you when you get to a certain point, you need a deeper motivation to do what you do. It’s Maslow’s hierarchy of needs, right?
Chris: I want to have an effect in as many lives as possible. And here’s the truth, like, don’t get it twisted if you do a business that you want to effect on a hundred million lives, I promise you, you will be very rich, like you can do that. Like the money is coming, your North Star should be that. And I was also thinking about this on a deeper level the other day, because I’ve always preached this like happiness over money lately. And then I have conversations with people and I started to realize like, wait a minute, it doesn’t work for some people because they’re in a situation where they can’t do what they love every day. So then I said, okay, fine if you can do something you love like me and you are doing right. We’re happy, we’re doing what you love every single day, really a luxury we get to do that. Not everybody gets that luxury. So then it comes down to like do something meaningful. Now, if the owner gets everybody around what the brand is doing, that’s so meaningful. Like that’s a metric that if we can measure is going to lead to success. When your troops are gathered around the meaning behind your business and doing something meaningful, the level of like success is just going to go through the roof, everybody rallies around that. Here’s a good example, some businesses have salespeople. Salesperson comes in you say, well, why are your numbers down? Like your numbers need to get better, your numbers need to get better. How does that employee feel like my numbers don’t get up, I’m going to lose my job. Simon Sinek actually talks about this very well and people should watch them versus, hey, I noticed your numbers are down there something going on? Like is there something in your personal life, how can I help you? because they’re down. I want to get you to back to where you were. Like, those are two very different conversations that leave the employee, leaving the office with two very different mindsets. One is fear and one is like, my founder has my back.
Jay: Well, and which one is that salesperson going to do their best work at right? They’re going to do it where they feel safe. Well, that was not the answer I was expecting, but that’s a great answer, I was expecting LTV or churn or something like that. But no, I think you’re right, it does go to a bigger thing. It’s like Microsoft years ago, they were a value driven business, their goal was a computer on every desk in the world for every person or something along those lines. And I think it’s admirable and that’s what motivates, the two are aligned. Like when you’re — one of my favorite quotes by Zig Ziglar is, “Always provide more value than you take and you’ll never be poor a day in your life.” If you’re doing good and helping people, the revenue will take care of itself. But when you put that first, the rest doesn’t take care of itself. So I love it, that’s good. Couple more quick questions here before we get into our lightning round. I’d love to hear your thoughts on the future of subscriptions, I feel like we’re kind of at an interesting point because 10 years ago ecommerce subscriptions maybe wasn’t that big of a thing. Then it became a thing, now it’s a big thing, it seems like I can subscribe to anything I want right now. And there’s a box for pretty much everything, so where’s it going?
Chris: You are going to see more and more brands pivot to the model data showing us, this was data that we came out with in 2019. That 75% of all ecommerce brands were going to have a subscription arm. I think that might be accelerated a little bit because of Covid, you’re going to see more services become a subscription. They’re going to see more membership, you’re going to see more and more brands pivoting than the model and I’m talking big brands. I think it’s going to be everywhere. I think you’re going to find subscription in every piece of your life, your home, your car, the food that you eat, the TV that you watch, the clothes that come to your home. You literally could outfit your home to the furniture on a subscription, so there’s not a lot of things that can’t be built into a subscription. When I do these talks at these universities, I have the students challenge me and say like, what do you do? Like I’ll build a subscription out of it, somebody one time was like, an oil change, I was like, great put them on a quarterly subscription that includes an oil change and includes the air filter you can say 10% off fuel flush, like whatever these like services are. Like, what does that do now? I will not stop at another place to get my oil change. I’m going to this place now for the next year. So it can happen in almost anything, a restaurant, build a membership that gives them preferential seating for reservations. Walk in the front door and it’s like, hey Chris, like so great to see like, it’s bougie, but people like it. You know what I mean? Like there’s seats reserved at the bar, you know what if I have that and the level of experience is immaculate, what am I going to do? Business meetings are going to be held there, me and my wife, I’m not married, but me and my wife are going to go there regularly. Like those things work, and it’s the level of experience that they can provide that will make it work.
Jay: Yeah, I have a friend that has a restaurant and you can buy a subscription and a membership. I think it’s like $300 bucks a month that includes as many meals as you want and two drinks, each meal. And you’re right, like there’s probably some months where you don’t use it at all, but he does the math and you’re going to go out of your way. As you were saying that I would love to see someone turn their whole life into a subscription. My hypothesis is it probably wouldn’t be any more expensive, but it would be a much more enjoyable, flexible — was it Pivot Furniture? There’s actually a local furniture company that does exactly what you just said. It’s furniture rentals, you pick, you can outfit your whole living room. You could probably outfit your whole house for like $90 bucks a month. Like the coach’s $7 a month, bed is like $9 a month and then after two years you can have a different coach, or have a different bed, or have a different. Like if you’re leasing a car, buying a car, paying $300 a month, most people do that, they have a car loan for five years paying for the car. And as soon as they paid it off, they start thinking, oh, I should probably sell this car. It’s got a hundred thousand miles on it and I should probably get a new one. Why don’t they just pay $300 a month and then drive any vehicle they want? Like, I’d like to subscribe to whatever, subscribe to Ford, subscribe to GM, and then swap out like this week, I need a truck, next week I want a car. I want a convertible next weekend to do like.
Chris: Including insurance, includes like all the maintenance and you don’t have to worry about it. I mean, it gets a little pricier, those types of things become a luxury. I think that there’s like this fine line between like luxury subscriptions and like basic.
Jay: But I’m talking like, I’d love to see a human test subject of like put everything, your food, your meals, like nothing owned.
Chris: We should start a series and call it Nothing Owned and get somebody in there to do that.
Jay: That would be fun. And then, quality of life and total cost of living, how much different is it versus owning. Because when you own things, they wear out, things aren’t built to last anymore. So does ownership make sense?
Chris: A hundred percent.
Jay: So if someone’s listening who doesn’t do subscriptions right now. There’s probably a lot of our listeners are running subscriptions and this has been great for some tactical advice. If someone’s not doing subscriptions, how important or why should they consider it?
Chris: I mean you’re going to get left behind, you’ve got to build a relationship with the consumer. People are about brand and brand values, I mean, you’re not going to beat Amazon. The only way you’re going to be an Amazon is through experience. So you can close a t-shirt line or a hoodie line and it could work, but you want to have brand relationships. That’s the biggest reason you want to build the relationship with the consumer, so they’re only buying from you and not anybody else.
Jay: The one other thing I forgot to mention I thought about was there’s two ways people feel a member. Loyalty, what brands have done for 50 years is introduced these loyalty programs, loyalty coins. The average American is a member of 29 loyalty programs, maybe more now, that’s a stat from a couple of years ago, but it doesn’t work like they thought. Like do you go to a specific grocery store, or like, do you buy stuff somewhere because they have a loyalty program. Like there might be for some, to your point, I’m a member of just about every hotel loyalty program. I get points wherever I stay, but if I bought a membership at Hyatt for a thousand dollars a year, stay as much as you want, anywhere you go, any city, I’m never going to go to another hotel again. Like that changes the game, we just recently heard we’re in Canada, Air Canada, which is our biggest airline up here is introducing a subscription service. You can fly anywhere, you pay a monthly fee, fly anywhere you want as much as you want, standard seats and everything.
Chris: What they do, the hotel or the airline, is they look at on average, how much money do we get from the consumer? Our average consumer spends three grand a year with us, well, why don’t we do this, why don’t we introduce a program that is $900 a month. Our average is now going to go to $8,000 a year, it’s really easy right, for them to identify this number. And maybe that’s extreme, maybe it goes from three grand a month to $500 a month. But think about that, if you spent about three grand a year with them, and there was a $500 a month program, now you’re spending six grand a year. You might fly a couple more times, but you’re not flying double, but the perception is like, I’m flying. Like I’m going to fly a little bit more, well you’re probably not flying double, there’s more that comes to it, right?
Jay: This goes to that perceived value thing and this is like, if you said to me, Jay, you can buy for a thousand bucks a month, fly anywhere you want as much as you want. I start to think, holy cow, that’s a good deal because I could fly anywhere, but I’m not going to, I’m not going to use it all. It’s like all you can eat, it’s like $39.99, all you can eat ribs. You’re still going to eat the same amount of ribs and that restaurant just made more. But it seems like such a good deal that people are willing to pay. So like, you’re right, you could probably charge 50% more than they’re paying on average, but whether or not they use it, it’s still a really good deal. Like to have that in your pocket to say, I can fly anywhere and guaranteed, I mean, this is why, in 2011, I remember when Adobe announced that they were switching from ownership. like you buy Photoshop to their Creative Cloud. Their stock took a massive dip, massive. Every year I would buy the new Photoshop version and it was like $1,500 and every year I’d reevaluate if I need it or not. And then they switched to Adobe Cloud and I’ve been a Cloud user ever since, I’ve probably paid much more than I would. I use a fuller suite of their products and the Adobe stock has like skyrocketed since then. And now like everyone else is trying to copy, like the Microsoft’s and everything else.
Chris: What a great entry to getting their product? I couldn’t afford the three grand one-time payment, but like I can afford $50 bucks a month or whatever the case is.
Jay: Yeah, alright I want to fire some quick questions at you.
Chris: I’m ready.
Jay: Before we run out of time here, this has been really good. So I don’t know if you had a chance to read some of these or not but these are few quick questions I kind of ask everyone when they are on the show. So what’s the biggest mistake in ecommerce you’ve made?
Chris: Priced our product wrong.
Jay: Too low, too high, or just completely not aligned.
Chris: We’ve priced it at $25 because we just thought that was a number that made sense. And when we increased it three years later to $29, we saw no dip in acquisition and no churn, not like not at large. And over the course of three years, thousands of people renewing, like we cost ourselves millions of dollars.
Jay: Do you have a pet peeve when you shop online?
Chris: Pet peeve yes, when they don’t have one click checkout, when you’re lying in bed and you’re looking at a website and you want to buy. I don’t want to go and find my wallet to get my credit card. I want to click pay with Paypal, enter my password and it’s got my shipping address. It’s a no brainer but if you’re in ecommerce.
Jay: Don’t you have your credit card; you don’t have it saved in your browser or in your Apple wallet.
Chris: Yeah, there is one in my wallet, but think about like just entering a password and like, boom my shipping address is there, I hit confirm, I don’t have to type in anything it’s done. It’s one click checkout, big deal.
Jay: Well, I think that goes for everything, like I’m not a PayPal. I have a PayPal account, but I don’t actively use it, but like there’s Apple pay. My browser has my credit card saved in it.
Chris: It’s still charging your credit card, it’s just an easier checkout.
Jay: Yeah, I agree. I’ve gotten to the point to where on some sites they don’t have any of the wallet pays and I’m exactly the same my wallet’s down in my jacket and that’s where people shop. They shop in their bed before, before they fall asleep. I guarantee you that’s probably where I do half of my shopping. So yeah, what’s your favorite thing about your job?
Chris: Helping entrepreneurs grow, I love it.
Jay: What is your favorite online store to shop at?
Chris: I saw this question and I remember thinking — I don’t think I have one.
Jay: Last place you bought something online.
Chris: Bought something from chewy.com, donated a bunch of dog food and treats anonymously to a place that needed it.
Jay: Oh, nice, what’s the number one thing you think stores could be doing right now to grow sales, but they’re not?
Chris: Putting out more content.
Jay: The lines between media companies and ecommerce is getting more and more blurred. And I think ecommerce brands need to think of themselves as a content media brand as well too. So a lot of our listeners are obviously business owners and run their own companies. Are there any quotes or business advice or inspirational things that have meant a lot to you over the years?
Chris: I want to join depths a little bit earlier, but yeah, it’s finding meaning, find happiness, give without any expectation is a big deal. And I also posted a quote on my Instagram, I guess I should remember it. Oh, this is the quote that I love that I saw recently, “Don’t be afraid to fail, you only have to be right once.”
Jay: So good.
Chris: If you’ve never failed, you’ve never tried doing anything that you’ve never done before. You’re going to fail on top of that, you’re probably going to fail at doing things you don’t like doing. So why not try something you do like doing and like fail at that, right? Like I don’t care what you’re doing for a living, you’re going to fail at parts of it. So yeah, find meaning, don’t be afraid to fail, again you only have to be right once.
Jay: Chris it’s been a pleasure, man. Really thank you so much for coming on and moving around schedules, I know it wasn’t easy. Where would you like me to send people?
Chris: SUBTA.com has got some great content, you can join SUBTA for free. But also our YouTube channel, SUBTA studios, so many great sessions on there and speakers and we’re just putting out a lot of content. For myself, it’s LinkedIn and Instagram is @ChrisGCares, which we’re starting to change that brand into a no excuses with Chris G, because I’m a little bit more tougher than the Chris G Cares. But truth is I do care about helping people grow, I’m not afraid to be straightforward. But I put on some good content there and some good clips and I’ll probably get some things from this. And we also go on live every Friday, which you’ve been on and me and you had a really good session on that. So I go live every Friday on Facebook and LinkedIn just shooting out great content. I’m truly about trying to help as many entrepreneurs grow and build amazing businesses and find meaning in what they do.
Jay: Yeah, awesome. I’ll just second for anyone listening, follow Chris on LinkedIn and whatever channel you can find him. I don’t know how you find time to do it all, but every time I go on LinkedIn, there’s a new video from you or a new Live, it’s really good, you put out a lot of really good content. And that’s not easy and takes a lot of time. I would encourage anyone to follow you on all your channels.
Chris: I appreciate it Jay.