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Reducing Subscription Box Churn and Getting a TV Show on Netflix.

Reducing Subscription Box Churn and Getting a TV Show on Netflix.

by lucas walker

A year ago

Reducing passive churn
- Make sure your payment processor has auto card updater
- Walk through Churnbuster flow
- Once Churnbuster completes it’s campaign, our CS team takes over and make attempts from their end
Getting a show on Netflix
- We have always lead with Content and Community as two of our main pillars. Content first lead to us amassing a following and eyes of a production studio.
Selling your business
- Go ahead and make sure your finances are in order
- Your TTM tells us a good story
- If you are a certain size, you are going to need audited books

Transcript from video:

welcome back to technically speaking
joining me is a good friend at this
point we've known each other for what
feels like a decade when you throw in
those coveted years we got together well
during my time at gorgeous excited to be
back and reconnected with john roman
he's the co-founder and ceo of battlebox
and carnivore club they're bad ass
subscription boxes i've got a brisket on
the smoker right now if you know me i
love my meats but we're not talking
about that today although we might talk
a little bit about netflix because they
did have a show on netflix and how they
were able to handle all that traffic but
we're going to be talking really about
reducing your churn and there's a few
different kinds of trends if you have a
subscription box you're on a platform
like recharge make sure you tune in to
the full episode you're going to just
pick up some stuff that's just going to
save you a ton of money and at the end
of the day that's free margin as cost of
goods sold keep going up
i don't know i like it i'd listen to the
episode hope you will too john welcome
to technically speaking

thanks for having me good to see you
likewise always a pleasure and we talked
about this a little bit a while ago and
it's reducing passive churn and just the
numbers you told me
are just so mind-blowing and it's really
quite easy both on the automated side
and a few technical integration then
also on the human side and training your
cx team how to have those conversations
of updating cards et cetera so
i'm going to turn it over to you next
i'm doing a lot of talking but why don't
you tell us what passive churn is and
especially for
not just subscription boxes but any sort
of membership type products so if you
sell anything on with a reoccurring
charge you've got to watch out for your
passive return
sure so so yeah everybody talks about
churn you you have to break it out
there's two different types right
there's traditional trend and there's
passive churn passive churn being when
the customer client consumer doesn't
actually make the decision
through action to cancel their
subscription or service so it's going to
be credit card on file is incorrect so
there's a billing issue some something
goes awry so if you're looking at
subscriptions in general and when they
renew they typically there's about a 10
on average fail rate with that initial
batch and those are the potentially
passive passively churned customers
right and then you have to somehow
through your dunning process
communication etc you've got to get
those guys back on and and a lot of
companies they there's that initial fail
or maybe they're done in process is two
three attempts
and then there's those guys passively
turning ads up right if you're losing
ten percent
of of your base every month just a
passive charge that's a problem right
yeah you're you're done by the end of
the year if you don't replenish it yeah
if you're not adding you're just in
passive turn alone and that doesn't
include people that actually want to
cancel your service and and actually
take the action to cancel it so yeah so
passive churn we've talked about it i
think like maybe a year ago but it's
always been not always but for the past
three years it's been like such a focus
for us just because of how important it
is and if you can change that it's a lot
easier to keep a customer than you
didn't get a new one right it is like
in a ios world that stat was on the
but it's a true business that is that it
is five to ten times easier
to keep a customer than than to go and
get a new one and the way that i always
look at that is if you have a hundred
dollar cost to acquire a customer and
you're excited about that then you
should be thrilled to acquire a customer
for five to ten dollars that's literally
pennies on the dollar yeah so that's a
really great way to lay up what the
what passive churn is what are some of
the strategies to
i guess a prevent it first of all
because if you you can prevent it that's
all that's always better but also to to
fix it and cure it how do you prevent
and fix it
sure so there's a few different things
we do in our process so we use braintree
for our processing if you're using one
of the major processors you're going to
have this but if you're using maybe a
smaller processor it's something just
you want to confirm that it exists and
it's having that feature of auto card
updater so you have the consumer has
their debit card or credit card and
they've had it for a few years so it's
going to expire eventually and the bank
sends the new one if you have an auto
card updater it's gonna it's gonna
automatically get that new card
information from the financial
institution so you don't have to worry
about the consumer having to log in and
add it so you definitely want to make
sure your processor does that if you're
with the major one it's doing it
depending on which one you might have to
pay for it but it's something that 100
you want to have besides that for our
during our dunning process we use
turnbuster we've used turnbuster where
we've used profitwell in the past
there's a couple other options too churn
buster to us is the best option by far
when you're looking at actual results so
we use turnbuster during the dunning
process and so our dunning process for
battlebox is 12 days long
and during that process we have six
touch points that we execute through
turnbuster so it's a total of five
emails and one sms message
it's two emails an sms and then the
three follow-up emails they're not like
horrible boring repetitive same type of
message that you sometimes see where
it's or your card didn't work please
update and you get that identical email
and you don't even know what what it is
it's okay is this netflix like yeah
should be fine and especially if your
card expires and you're getting it from
a bunch of different services they're
all going to blend in and look the same
which i think is just to take a little
side road and a detour it's important to
be empathetic of what your customers are
going through if they're getting this
from you they're probably getting it
from a bunch of other people and his
odds are you're not your customer's
priority but for at least 80
you're not yeah no you're right you look
at the if there's the needs and wants
graph and and you're wondering where
you've fallen it if someone's having a
issue with their card there could be
personal circumstances right there could
be a plethora of reasons and you might
not be where you wish that you were on
the need want scale i know some camping
gear is probably not
not up there either right yeah like i
love my salami but if i my car doesn't
go through and i don't get my sony box
on time at my carnivore club i'll
survive yeah you'll be okay i have
alternatives but yeah so so because of
that you're right you have to be
empathetic so all of the messages
in this series are in in the voice of
battlebox they're very personable one
comes from luke who is is the head of
our cs department it's personable is
making sure everything's okay is there
anything we do to help but another one's
from brandon curran he's the face of our
brand he's in all of our videos and it's
him just touching baits saying hey is
everything all right
your card's not working you can update
it here or just reply to this email like
we want to make sure you get the next
box and there's empathy in all these
messages but also a call to action to to
resolve the issue same with the sms text
that comes after two of the emails but
it's it's all in a personable voice it's
not big business corporate automation
it's real right and so and what we've
seen is so many of the responses are
it's the consumer responding to that
individual hey luke thanks for reaching
out man can you try it again on friday
that's my payday yeah and i know as a
consumer or even just as a human being
when i get an email and it's a really
shitty pitch hey does rolled up need
more leads i make podcasts i've got
bigger fish to fry did you even do two
seconds you're asking me for money and
you couldn't even do two seconds of
research and call yourself professional
yeah now you're 100 right it's maddening
so yeah so we have this process through
termbuster two emails text three more
emails at the end of that we've
typically recovered 70 65 to 70 percent
of those customers that initially on
that first renewal attempt of donning
had failed so we've knocked out two
thirds of them gotten them back we're
feeling good but
even though that process is over at that
point we pull an export of that
remaining 30 percent that remaining
three percent that that couldn't get
resolved during the dunning process and
our cs team luke and his team they then
take ownership of that export and they
start reaching out it so we use gorgeous
and it's not it's manual but we're using
macros in there
for these communications so it's one by
one it's not batch but it's good because
this is personal right so they're
reaching out the cs team over over
another series trying to get the card
resolved so this at this point
the the churnbuster email
it looks like it it looks like an email
right there is some there are some
graphics there's a footer at the end of
the day it's it's a marketing email
right there's some images in there even
though it is a letter the cs emails that
they're doing they're text text only
there's not an image
at all
there's no color it's literally text so
it's getting through to the inbox
potentially when the other ones might of
for whatever reason had deliverability
issues yeah
so so yeah so that they do that and
their attempts to bring back that third
typically another six to nine days
depending on where the ending process
falls on the month
and then from that they'll actually get
between 30 and 50 of those guys back
themselves so the end result is there's
one and a half percent or so are
actually passively churned when you
started with that 10 potential and get
it all the way down it's pretty
impressive and the cs team being able to
do that it's just it's it's cool just
how they've turned their department and
into that profit center and and focused
on obviously customer experience and
making sure customers are happy but
doing it while also generating revenue
is is pretty cool yeah and one
analogy that i always have is your
customer support team and it's your job
to support them in making a purchase and
we're really starting to see the
amalgamation of cx and sales there's a
lot of overlap there it's customers are
coming in ready to buy you're not
educating them as much you're helping
them solve their problems so that
they're comfortable giving you money on
a regular basis 100
that's awesome is there anything else on
on passive trend that you want to
mention or that you think we should
before we get on to the i don't want to
call it the fun stuff but i mean
it's pretty fun what we're talking about
no i mean i i think it's one of those
things if you the stuff i walk through
if you're if you're not doing that it's
not something you should figure out in
q4 of this year you know we're at the
end of april right now but there's a
couple days left you need to figure it
out in april right it's like compound
interest every month it goes on that you
haven't done this like you are just
making the situation so much worse yeah
you have to have something in place by
default any of the default options of
letting your customers know it's very
vanilla right and it's not it's probably
the same email that's getting sent every
time because it's the same email
depending on your email client it could
all be stuck in one one little folder if
you're using gmail right
it's possibly in the promotions tab so
it's not even making its way to the
consumer if you send the same message
over and over again it's you're just
asking the email clients to tag you as
potential spam yeah no it's just it's
one of those things that once you point
out it's just so obvious my parents like
adding an abandoned card email it's just
you'll wish you did it sooner 100
let's take a quick commercial break
maybe watch a couple trailers including
for the netflix tv show southern
survival which you were a big part of as
part of the battle box family of
marketing we're gonna hear all about
that right after
this welcome back hope you enjoyed that
trailer because that's what we're
talking about which is southern survival
just so tell me all about that tell me
how you got the show started how it went
to netflix i'm just so excited about it
because you did a blog post and let's
let's put the chart up here somewhere of
what happened
during that
time because you saw steady traffic huge
huge spike and then still study traffic
that was way higher than the steady
traffic before and even now you were
saying was it 12 of your post-purchase
emails hey how did you hear about us say
from the show southern survival on
netflix yeah yeah so so the show it was
a process right it wasn't like we just
had a show and it went up it was a
couple years of us trying and being
rejected we had gotten reached out to by
high noon entertainment which was a
production studio best known for like
fixer-upper and cake boss
so they a couple feathers in their cap
so to speak these are the real deal they
wanted to do the show for history
channel history channel sat on it for a
sizzle reel so before even uh a pilot
the less than a single episode history
channel sat on it for like six months
past discovery channel was next they sat
on it for maybe a little bit more than
six months and passed so it was a
and in the pitch from high noon to
history and discovery was just give us
money to shoot a pilot that's all we
want to do and then netflix came along
they met with them and netflix has
enrolled in the uh let's do a pilot
right they said okay we'll do a season
yeah so they said we'll do a season and
we want the right of refusal of up to
seven seasons wow so it was that's just
netflix what's the budget here we go
and off to the races they filmed for
about six months
and five months and then came back to do
some last minute touch-up shots in
january of 2020 filming like the second
half of 2019
so 2020 got those last little shots in
january went to production and then we
just sat and waited we didn't get any
communication of when the show was gonna
launch we didn't know what it was called
for a while very little control over
everything which was maddening as a
business right you need to kind of like
plan for this we had a million
discussions on what growth was going to
look like
at this point there was no case study to
look at right there was no
brand having a show in a streaming binge
scenario to compare it to that the only
example was duck dynasty but they were
on traditional television so you had an
episode a week right this is during the
pandemic so eight episodes okay i guess
we'll watch our way right now or over a
couple days it was a different scenario
than it ever happened before for a brand
so there was no playbook right there was
no one to call and ask so we finally
came on an idea of what we thought
growth would look like we were actually
pretty spot on which was great and yeah
the show launched july 4th weekend we in
the next two week span like you
mentioned we saw about uh 1.2 million
unique visitors come now they didn't
behave like our traditional targeted or
no no but that many viewers even at a
fraction of the conversion rate you're
still going to see
some good stuff
even the long tail of a few months from
now because when did the the show come
out so it launched in uh july 2020 yeah
so it's july 2020 maybe it's too late
for camping season this year people
watch it and then they start thinking
for next year hey remember that southern
survival show i want the cool outdoor
stuff now as i start to get it so so
you're right so we saw that initial
spike and even with it not behaving
you're right even at a crappy third of
normal conversion rate that many people
sales went the right way but you're
right the interesting thing is how long
in the tooth has been where at this
point 20 months 20 months ago 21 months
ago this this aired and you look at our
our uh post-purchase survey currently
where did you first hear about us and
that we're only giving to new orders new
customers and we still have 12 sometimes
13 14 where it's still the netflix show
it's created this organic channel that
that we get we're still getting
customers from me every day that's
amazing it's just and that's why i love
about podcasting content in general is
good content is a gift that keeps giving
because the asset was was produced and
now in another fiscal year it's still
paying off dividends so how can you not
love that if
we want another season or another show
like it's yeah more more more shows it's
i want to show you i want rolled up with
lucas walker where i just roll up on my
motorcycle to various industrial food
production places like amy's burritos
and then just walk through the the
assembly line that'd be cool that'd be
really cool yeah we'll see maybe in a
couple years on uh on netflix it'll
it'll happen but we'll see
anyway i think we're up on on time here
we did want to talk a little bit because
the company was acquired and so just
sort of in the last three to five
minutes what should anyone who's selling
their business know when those talks are
early early on a lot of entrepreneurs we
kind of fly by the cuff a little bit of
wild west don't want to do anything we
don't have to if those conversations are
are starting what ducks should you start
to get in a row that talking to other
entrepreneurs you're like yeah we know
no one does this so a little warning of
hey if you're going to be acquired make
sure you do this
sure so man there's a bunch of things i
had sold a couple businesses before but
nothing of substantial size like
battle box it definitely was a new dance
that we hadn't done before some of the
things we did right is the decision was
made okay it's time to sell we had to
plan for it so we had to have at least a
trillion 12 months that told a good
story that was strong financials showed
how profitable we could be showed some
growth while we were the previous owners
if you're not trying to sell you you're
probably making decisions that are going
to lower your tax responsibility
treating the businesses as a personal
and not treating the business in its
best way for the business so we had to
have at least a trolling 12 of that all
decisions being best for the business on
us personally which might mean that we
might have a larger tax burden which is
a tough pill sometimes for an
entrepreneur to swallow but it's because
the business matters right it's not you
at that point so we we did a good job of
that right our 12-12 month was not fun
from a tax burden but it showed what
battlebox was capable of things we
didn't do well we did not even think and
again naivety that we need to have
audited financials and man that is
it's it's a crazy concept that you're
paying this firm
a lot of money to
basically give you a proctology uh

yeah just going through ever so i
imagine they're just going through every
transaction want to make sure you have
the proper type of invoice
yeah so crazy things like okay so let's
look at this order and then from that
what product did you buy and show us the
purchase orders for that and show us the
line item for this and it's a lot right
we're on the financial side richard toms
our cfo ben they took the brunt of that
right they both of them aged a couple
years going through that but there were
all kinds there were other parts of it
right so part of that audit is is
inventory audits they came to our
warehouse they print us an export out of
your inventory management system print
them the export and they're they're
checking and okay let's go to l7 in the
warehouse you should have this many of
and you can't be off one or two in
either direction and if you do instead
of the five things we're going to test
then we're going to test 10 things but
but all of that has to be done and
because we didn't have any of that done
it it delayed the process so we had we
began discussions in january february of
of 2021 we had a letter of intent by the
end of march beginning of april so four
or five weeks into the conversation we
had agreed on a deal we didn't close
until october and most of that the vast
majority of that besides some other
curveballs we did self-inflicted was
because of the audit and if we would
have just had the audit it would have
been a much much quicker process and
then weird nuances like we renew our
subscribers on the 15th of the month
and then we're not shipping
typically our shipping window is the
fourth to the ninth of the following
month if we sold our big renewal on
april 15th we were treating that as
april revenue shouldn't be april revenue
because we're shipping it in in may it
needs to be
in its deferred revenue for may so like
weird nuances like that like we didn't
know that had to be a thing we didn't
know we couldn't realize the revenue
until was actually the month it was
shipped in just little nuances and like
that's just and it's so
i get it but at the same time it's like
oh just what uh what a pain so so to sum
it up hire a good accountant early on
correct yeah if you can't have a if you
haven't skilled enough to have a
full-time cfo think about a fractional
cfo right think about paying a couple
extra bucks for that good accounting
firm because that's what slowed us down
and it's not like we were doing anything
that wasn't on the up and up when it
came to our books it's just the
attention to detail the way to treat
something via journal entry stuff we
didn't know any better right we weren't
doing anything that wasn't completely
honest it's just we were categorizing
things in ways we shouldn't just because
of naivety made sense for you at that
time yeah this looks like this expense
this looks like this revenue the end
result wasn't much different but it had
to be organized and be in a way for
the third party firm that did the audit
to sign off on it so it was not fun and
it could have been we could have been
proactive and done that and we could
have closed in july that was the initial
plan even doing an audit the plan was
a letter of intent april was closed in
july and it just wasn't possible because
the audit took so long so i think that's
after that i need some time in the woods
alone to refresh myself where can people
find you john where can people get in
touch if they have other questions maybe
not about the brutal side but if they
want to buy a subscription box where
should they head to or where should they
head for just general business musings
and writings if you got anything to
promote now's the time now's the place
sure so new e in there so
ba you can find me on
linkedin i'm also on twitter but i do a
horrible job i suck at twitter but i'm
there and then my blog is
so i'll talk about e-commerce stuff and
kind of go into a kind of behind the
curtain additional detail view on stuff
awesome thank you so much make sure
you're subscribed come hang out with us
wherever you are we will find you and
i'm sure there's some links below to
click and you'll see some related videos
shortly thanks so much make sure you're
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you'd like to hear me say at the sign

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