April 7, 2020
Ep. 50 – Diversifying Lead Sources, Subscription Boxes, and Battling Customer Churn with John Roman

Ep. 50 – Diversifying Lead Sources, Subscription Boxes, and Battling Customer Churn with John Roman

But the experience phase is very important,
too in creating a community for each brand and just engage superfan customers. Treating
them as if their family. And that’s our mantra and how we view our customers. Welcome to Honest eCommerce, where we’re dedicated
to cutting through the BS and finding actionable advice for online store owners. I’m your host Chase Clymer, and I believe
running an online business does not have to be complicated or a guessing game. If you’re struggling with scaling your sales,
Electric Eye is here to help. To apply to work with us visit electriceye.io/connect
to learn more. Now let’s get on with the show. Welcome back to honest eCommerce. I am Chase
Clymer, coming to you from Columbus, Ohio. And today’s guest on the podcast is John Roman.
He is a serial entrepreneur. John is the CMO and co-founder Battlbox along
with being the managing partner at Carnivore Club and six other brands in the eCommerce
space. I feel like he’s going to have a lot to share with us today. Welcome to the show,
john. Hey, Chase. Glad to be here. Awesome. Where are you calling in from? Metro Atlanta. The suburbs. Oh, nice. I will actually be down there shortly
for a wedding. Okay. When? About two weeks from now. Oh, nice. Okay. So the weather will still
be really good. It’ll be a lot better than Columbus, that’s
for sure. (laughs) Awesome, awesome. So you’re managing and you
have your hands and almost eight brands. What led you there? What’s your background? How
did you end up in this in this position? Completely by accident. Not quite. But…
So, my background is business to business sale. Sales leadership. Typically, telecommunication,
software as a service companies. And I was doing that. And in 2015, we had a company that we had
some shares in –that I was working for– publicly traded. It was purchased. I got a
decent little payday and I was trying to find some investments and really just try to –in
a very, I guess, non-scary way– try to build something outside of working for big companies
so that I could eventually not have to do that. And a friend that I went to college with,
Daniel Dabbs, we had linked up. I have a Christmas party every year and he came to that. We’re
talking. He ran a company at the time that was kind of t-shirt, swag-like marketing material
stuff –logos and stuff– for companies. And they were actually just individual. They had
a couple of locations outside of universities. So the slow time for him was December. He was chatting with me about, “I want to
do something else.” We threw a bunch of ideas around, none of which were Battlbox. It was
more (about) consulting ideas. And then fast forward in February of the next year, 2015,
he comes up with this idea. His wife was getting a Birchbox subscription box in the mail and
he was watching her excitement level (when she was) unboxing it each month. Went to find a box for him. He wanted to experience
this. And he wanted outdoor camping gear, survival gear, couldn’t find one. Three weeks
after that, he had launched a website and was ready to go and that’s… I came in as
an investment. Offering my assistance from like a business
side on a very, very small scale. We saw exponential growth. And about a year later, I quit my
job and jumped in this full-time. And now we’re just continuing to try to grow and diversify.
I’ve fallen in love with eCommerce. It’s just such an enjoyable industry. I can agree completely. There’s just something…
I think it’s the tangibility of the numbers. And if you have any… If that appeals to
you at all, you can see where your efforts are helping or you can quickly see if you’ve
made a mistake. You failed fast, so you gotta move on from it. 100% and I’m kind of a data nerd. So I can
just completely geek out on the analytics and come up with business plans based on that.
It’s just… It’s a lot of fun. It plays a lot of my strengths, too. Which just makes
it even more enjoyable. Absolutely. So let’s go back to the first
one. So, Battlbox. Where did you guys find your initial growth? What was working for
you back then? So, none of us really had any eCommerce background
at all. Daniel had this great idea. We open up a website and we had gathered from the
masses. You run an ad on Facebook and people are going to come to buy if they like it.
And this is circa 2015 so we’re acquiring customers for $4 and $5, which is… It was the heyday. At that time, acquiring
customers for that was insane. So that was our focus. It was 100% Facebook. Acquiring
customers for $4 or $5, running ads… That was the sole focus because out of pure naivety,
we didn’t know any better. It worked and if it works, why would we not just do that? Absolutely. And we’ll get into what happens
when it doesn’t work here in a bit. I have a few more questions. (laughs) So what’s your first website? What was it
built on? So we initially launched on Cratejoy which
is a niche, subscription box-centric platform. Mm-hmm. And it was great. It allowed… Daniel had
a website up using their template within a couple days and it made a lot of the business
aspect of it from the digital side a lot easier to onboard and get honestly, what could be
considered less than even proof-of-concept, up and selling. So it was really… We’re not with them anymore
for a multitude of reasons, but at the time, it was great. We had a site up and running
taking orders within a couple of weeks total. Yeah. I mean, you have got to find out whether
or not your product had any legs. Finding that product-market fit. I think that’s…
I remember Cratejoy. I believe it’s still around. They are. Yeah. But I remember when the whole subscription
model got super popular and a lot of things we’re launching on Cratejoy. And I think, “Yeah, that could test product-market
fit real quickly.” And then just going to today, I can see parallels. Because Cratejoy
also almost had a marketplace element to it, did it not? No, they did. They did. Yeah. That was a big thing. They were pushing them
because they were getting a reoccurring percentage of the revenue from each box. So it was a
potential great revenue source for them. So they were really, really, really pushing that. Yeah, so I think that’s cool. So these days,
if you’re thinking about starting a business subscription, Cratejoy might be a good idea.
Or just to see if your product has legs, throw it up on Amazon. Do you know what I mean? And if you’re seeing the sales there, it means
that you are onto something. And then it might be worthwhile to invest in an actual website
and building an actual brand. Right. 100%. Before you dump your savings
or a large sum of money, yeah. Test it. You’ll find out pretty quickly. Absolutely. So, after Cratejoy, I’m assuming
you jumped over to Shopify? We did. So, we were with Cratejoy for 2 and
a half years. We had a combination of a semi-falling out with them, semi we really couldn’t…
We’ve kind of outgrown them and a lot of the things we wanted to offer our customers we
just weren’t able to. So yeah. So we moved over to Shopify Plus and then we went with
ReCharge for the subscription billing piece. Hey, you answered my next question. Yeah. We love ReCharge. Those guys are great.
They feel like… When we’re working with them, –and I have a couple of calls monthly
with our account manager– it’s like he’s part of our business. (He) asks questions
like he cares, and gets strategy and plans with us to really, really try to grow the
business They’re my number one recommendation for subscription,
as long as it’s pretty straightforward. The further you get away from the traditional
subscription model, you might be trying to fit a square peg in a round hole. Oh. Yeah. We broke some things for sure when
we went over to them but I think, as long as you can bring resolution when you break
things… But the most important things… Things are going to break everywhere. Things break on Cratejoy, things break on
Shopify, it’s (about) how quickly do you respond and how quickly do you get resolution. And
what you get from those guys, I haven’t seen anything like it. Oh absolutely. They jump right on it. Awesome. So let’s go back though. You were
saying, you guys were in the heyday, the wild west of Facebook ads. You guys are acquiring
customers for ridiculous numbers. So you went all-in on that strategy. Yeah, I mean, it was great. I wish I knew
what I know today because I would have… My partners, Daniel and Patrick, we would
have taken every single credit card, every dollar we had and thrown it to grow the business
in 2015 at $4 and $5 acquisition costs. For us, it’s gone significantly higher. But
everything was great. Rocking and rolling, throwing up Facebook ads. And thoughts throwing
up Facebook ads at the time, so this is the first time we’ve done this. We’re probably
not thinking like experts in that space with proper audience segmentation and true multivariate
testing. We’re setting up ads and they’re working.
So we did that. Everything was going great. And we threw some new ones up. Friday, Labor
Day weekend. So we’re several months into the business. Everything is just going perfect. New promotions, all these deals, we’re gonna
blow Labor Day out. So excited about it. Get done with the ads halfway through the day
and they all go active 3:00 or 4:00 Eastern Time. We’re excited. At this point, we’re
still in Google Analytics live. Watching people come to the site, seeing what
they’re doing, then all of our ads turned off. And shortly after that, we get another
notification that our Facebook account has been shut down. And this is –at this point–
6:00 or 7:00 PM on a Friday. So we went from tons of traffic to our site
to literally no traffic unless someone was coming back because they had not purchased
previously. So all of a sudden, we had no business. so it was kind of like an aha moment
of “what do we do?” Can you translate that to dollars and cents?
How did that affect your bottom line? Yeah, I mean, so we were expecting to have
$30,000-$40,000 weekend and that’s just with first time boxes. Obviously, these guys are
going to love the product and stay with us for a multitude of months, or some years. So it was kind of a, “Oh crap! We’ve ordered
stuff. If we can’t figure out advertising at this point, we’re going to have our first
major hurdle trouble. Because we’ve ordered all this product to put in these boxes and
now we can’t advertise and we were off Facebook. We couldn’t get…” I don’t know if you ever
tried to call and get someone on the phone from over there, it’s a little difficult… Mm-hmm. …at times. So, sending multiple messages,
using every feature they have tried to appeal this. We got super lucky. And we had a Battlbox
customer –that was in our forum– that actually worked for Facebook and was, I don’t know,
a couple offices or cubicles or close by the manual auditing team that was responsible
for killing ads. (laughs) And he said, “Do you want me to go over there
and get it fixed for you?” And we said, “Yes, please.” And I kid you not, an hour later
we were back in business and back on Facebook, as if nothing ever happened. But we were very scared for a solid five,
six days because we went from the top of the world to we’re not getting any sales. Mm-hmm. Support for today’s podcast comes from our
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trial at simplr.ai/hones. So let’s break this down to the lesson learned.
You were putting all your eggs in that one basket and… 100%. …then the basket disappeared. (laughs) Yeah. And then… We were putting all the
eggs in the basket and they took their basket with our eggs in it. It was absolutely brutal.
But you’re right. There was a huge lesson learned. And it was one that in retrospect,
in hindsight, is a common practice for us now for any brand, anything we’re involved
in. But at the time, just due to naivety, we didn’t
know any better. And that’s just diversification of your resources. You have to have multiple
lead sources. You can’t be dependent on one because things happen. And if your business
is dependent on someone else and exclusively depend on that one other entity or person,
that can be problematic. Absolutely. So what’s the second lead source
that you went into? So the next one we went into was Google Ads
or I guess, Google Adwords at the time. Absolutely. And you started splitting it up
the traffic sources and… Yeah, so we tried that. Honestly, when this
happened, it was Google Ads. But then right away (we’re like), “Okay. Let’s try Twitter.
Let’s try Reddit. Let’s try Pinterest. Let’s try everything.” And we knew some stuff wasn’t
going to resonate and it wasn’t gonna work for the right demographic retargeting, but
we know. “Let’s try everything. Let’s find as many
different lead sources that are profitable, that give us either the return on ad spend
or the customer acquisition costs we’re comfortable with that’s profitable and let’s keep it diversified.” And we still keep it diversified. We typically
have between five and six lead sources now at all times active. And none of them are…
There are ebbs and flows when we hit an amazing ad we’re able to scale it. But for the most
part, we try to keep them all pretty equal in their results and performance. Awesome. And so what was the leap from going
from focusing on Battlbox to bringing some other brands under the umbrella? Sure. So, when I made the initial investment
to be a part of Battlbox, it was in the agreement/in the contract that I wanted to better understand
the business model of the subscription box piece. And if it was successful, we wanted
to stamp it out and replicate it a couple of times. So that was the next step. We launched in December and January, –December
’15-January 2016– we launched first BBQ Box, which was a monthly subscription box for barbecue
source: sauces, seasonings, rubs and recipes. And then the next month we launched Spartan
Carton, which was a fitness-centric workout gear: workouts, supplements, protein bars,
stuff like that. So we launched both of those pretty quickly just to try to test “Hey, is
this business model more than just kind of the subscription, Battlbox business model?” But really, our roadmap and our strategy of
how to launch one of these, was it correct? So we out we launched both of those in short
order and had them until June of last year when we sold both of those businesses. So, in managing multiple eCommerce brands
at once, I’m sure that There was a lot of lessons learned, especially with the different
types of audiences and the way that you were acquiring them with paid advertising. (I’m) pretty sure there’s no better way to
learn the ins and outs of marketing than running your own business. Yeah, no. I feel like in these past 4 and
a half years, I feel like I’ve gotten the equivalent almost of a master’s (degree) in
marketing. I’ve just went from knowing really nothing to forced learning. But it’s crazy
when it’s (your) business, when it is your livelihood, when you’ve got to figure it out,
and it’s interesting, and engaging, and you’re enjoying it, it’s crazy how fast you can even
sponge everything and just learn. And we’re still learning. I try to learn something new
pretty regularly when I do. So with the business growing over time and
the brands’ growing over time, when did you guys take your feet off the gas and start
bringing in consultants? What phase of the business where you guys
are like, “Alright. Well, we know this works. We need other people to run this so I can
focus on either building a new brand or trusting a new model.” When did that happen? How big
were you? What was going on? So right when we hit… For Battlebox, when
we were projecting… So our first year, I think we did $4.5 million. The second year,
2016, launching the other brands about halfway through the year, we were projecting an eight-figure
gross revenue number that year. And we were all burning the midnight oil but there was
so much oil to burn. We were spreading ourselves too thin. So yeah. We had to identify, “What’s something
that we’re comfortable finding experts on? And what do we think that we’re doing okay,
that maybe someone else can do better? Someone smarter and can do a better job?” So the first thing we started doing was, was
outsourcing some of our marketing. So we took paid advertising, 80% of our social content
and then some tech at the time, just like connections and integrations and setting up
some automation. So we outsourced all that to an agency. The agency was doing everything. Absolutely. And that allowed you to focus
on the things that you were uniquely qualified to do, I guess. Correct. Yeah. It’s (like), “Let’s focus on
the things we’re really good at.” So we did that. (We’re) no longer using the agency.
As we have grown, we brought some of those services in-house because we feel that we
can do the best job now. Yup. We still keep advertising out separately.
We actually… We’re planning on bringing it in-house. We had a game plan for that earlier
this year and a good friend of mine –who I’ve known for, actually a few years but never
thought it made sense to use his services– we ended up using his services. A gentleman named Brent and (his) company
Stealth Venture Labs. So we go to them, and they manage all of our ad buying/advertising. Absolutely. So a question about how… You
cut your teeth, you had to learn all this stuff. Do you believe that you’re better off
as a business owner doing it yourself and then hiring someone to do it for you? I think so. And there’s been other aspects
of the business that probably ring a little bit more true to this, but it’s tough to be
able to inspect stuff if you don’t have at least some basic understanding of it. Not that we shouldn’t trust people and just
let the numbers speak for themselves, but sometimes you want to be able to look at the
side of the business. And even if it’s outsourced, you want to be able to make sure that they’re
doing a good job. Yeah. And if you don’t understand that part of the
business or that side of the business, it’s a little bit difficult. You’re a little blind.
And you just have to trust and hope that they’re doing the right things. And that’s not always
the best situation to be in. Absolutely. Let’s be honest today. All of your customers
are going to have questions. What are you doing to manage all those questions?
Do you have a helpdesk for your business? One of our sponsors of today’s episode is
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get your second month free. So now, are all of the businesses under the
umbrella? Or just most of them (are) on the subscription model? So, none of them are under the same umbrella,
which is really interesting. They’re all separate business units for a multitude of reasons,
but we do use shared resources. So a good example would be for Carnivore Club. So, Carnivore Club (is a) monthly artisanal
meats subscription, like charcuterie. We actually acquired them on July 1 of this year. So it
was a Toronto-based company with these shared resources, economies of scale if you will. An example would be on the Carnivore side,
the Toronto side, we have a gentleman named Curtis and he was running Amazon for that
brand. Amazon subscription box piece and then traditional Amazon FBA. So Battlbox at the time was outsourcing that
to an agency, to run our Amazon. And by post-acquisition and shared resources, Curtis now oversees
Amazon for Battlbox as well. And then on the Battlbox side, there are some shared resources
like customer service, some of our content creators, graphic artists. And so for each brand, we have spreadsheets,
where we track time use so that we can allocate (like), “At the end of this month Battlbox
might have to cut a check to Carnivore Club or vice versa.” Just depending on time use
of the resources. By resources I mean, the employees and us. Absolutely. I feel like you could give a crash
course in the economies of scale for eCom. That’s the goal. We were able to. And so we’re
actually in late stages of acquiring a couple more subscription boxes and that’s what we’re
doing now. We look at their P&L, balance sheet and all their accounting docs and we’re able
to see “Okay, so last year this was their EBITDA. But with economies of scale with this model,
we can take…” Maybe, their EBITDA was $400,000 and we can say “Okay. Day one. Just day one
alone, we can get it up to $600,000-$620,000. And then over time, we can get it up to something
else. And at the same level with the shared resources of this feature subscription box,
they might be able to impact the EBITDA of the other brands too.” So again, I think I’m
getting a masters of that, as well, in the past year.” Oh yeah. I’m just learning… Baptism by fire. Such a cool, growth strategy for your business.
And I’m super curious about all that stuff. So I’m sure we’ll try to have you on again,
and we can talk more about scaling your business by acquisition. I don’t think that’s a topic
that I’ve seen touched on in eCommerce. I’ve seen it for other businesses, but that’s not
really the topic of today’s show. Right. I do have one last question for you though.
With most of the businesses being subscription, I think one of the biggest things with subscriptions
is churning. You’re losing customers. People are only there for a couple of months. What
are you guys doing across the board to try to increase the lifetime value and keep people
around? Sure. It’s a great question. I’ll try to give
a shorter answer but that’s actually probably a whole another topic, too. So churn is so
important I think, just probably industry-wide in the subscription box space. Because 2015-2016,
when we were seeing this exponential growth and just this boom of the little sub-industry,
people weren’t focused on churn. They were focused on, “I can get a customer
for $4. I don’t care if they leave.” And obviously, now with the exponential growth, –not really…
There’s still growth, but it’s just not the same anymore.– this little sub-industry,
the market has gone back to a little bit more of reality. You know, paying attention to
churn is huge. So I think, it boils down to a couple of things.
One, –and this is for all of our brands– we’re not just putting items in the box. There’s
so much more to that. It’s about the customer experience. And that’s important. Yeah. Obviously, the products matter and putting
high-quality products that have value in there but the experience phase is very important,
too in creating a community for each brand. Just engage super fan customers, treating
them as if they’re family. And that’s our mantra in how we view our customers for all
brands. So that’s very, very, very, key. The other pieces, the more math side… So,
there’s churn but a chunk of churn is also passive churn. So, you can do everything right
but you lose these people because the credit card on file didn’t work and the automated
email that we sent went to a spam folder and they just don’t even know–and out of sight
out of mind– they forgot about it. So it’s actually been a big focus first, last
quarter and this quarter. So for Battlbox, –I’ll toot my horn in a little bit– we have
our total churn right at 4%. Which typically in the sub box industry, everybody’s around
–the good brands– are typically around 10% to 12% If you’re under 10%, you’re doing something
really, really well. So the way we got down to it was one, making
sure that it wasn’t just a great product but we’re also giving the customers a great experience
and they’re part of this community. But the flip side is, we put some automation in place. I know you chatted with Kristen –earlier
this month– from Churn Busters. We implemented their product. We have certain parts of that
journey with Churn Buster where it kicks that additional ticket off to our customer service
team so they can take a look and see if actual phone call reach out makes sense or a text
or maybe perhaps another email. On the math, breaking it down, there’s the
churn because we did something that made them want to leave and then breaking it off into
the passive churn as well and attacking both of them at the same time was really beneficial
and kind of helped us get the number down like it needed to be. Awesome. That was great advice. And I’m glad
to see that Churn Busters is out there in the world working for people. Yeah, no. We’re very, very pleased with them
so far. Awesome. Well, is there anything else that
you’d like to share with the audience before you go today? Yeah, Chase. It’s one thing that… It’s probably
a takeaway and I think those are very, very important. Going back to… We’re talking
about the diversification of lead sources. So you know, our average demographic for Battlbox
is 24 to 44 (years old) and we don’t… So with that age group the amount of users
that are on Snapchat, for example, are not very high because typically, there’s not a
lot of 30-year-olds and 40-year-olds on there. So when we were trying to find all these lead
sources, we tried everything. We tried Snapchat and it wasn’t performing well. Big surprises.
The age dem is just not there. But what we found was –and Snap is actually part of the
six sources we use right now– but we don’t use it in a traditional prospecting like you
would on Google ads or Facebook. We had the Pixel placed on our site and we
use Snap purely for retargeting. So it’s just another… It’s just part of that multi-platform
touch that gets the customer towards actually purchasing.
So the takeaway is, if you’re not having luck on a certain platform, you can always attempt
that platform maybe just for retargeting and re-prospecting, purely just as another touch
to try to get that, that prospect over the hump and to buy. Awesome, thank you so much for coming on the
show today and sharing all these insights. I, absolutely, will have you back next year. Chase, thanks so much for having me, man.
I really enjoyed it. I cannot thank our guests enough for coming
on the show and sharing their journey and knowledge with us today. We’ve got a lot to
think about and potentially add to our businesses. Links and more information will be available
in the show notes as well. If anything in this podcast resonated with
you and your business, feel free to reach out and learn more at electriceye.io/connect.
Also, make sure you subscribe and leave an amazing review. Thank you!

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