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:
Lucas: 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 Battlbox 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
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John: thanks for having me good to see you again
Lucas: 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 churn
John: 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
Lucas: yeah you're you're done by the end of the year if you don't replenish it
John: 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
Lucas: that stat was on the office 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
John: yeah
Lucas: 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
John: 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 churnbuster we've used churnbuster 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 battlbox is 12 days long and during that process we have six touch points that we execute through churnbuster 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 those 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
Lucas: and you don't even know what what it is it's okay is this netflix like
John: yeah
Lucas: 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
John: 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
Lucas: yeah like i love my salami but if i my car doesn't go through and i don't get my salami box on time at my Carnivore Club i'll survive
John: yeah you'll be okay
Lucas: i have alternatives but yeah
John: 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 Battlbox 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 Currin 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 message 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
Lucas: 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
John: yeah now you're 100 right it's maddening so so yeah so we have this process through churnbuster 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 Gorgias 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
Lucas: yeah
John: 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
Lucas: 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
John: 100 percent
Lucas: 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 next
John: 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
Lucas: yeah
John: 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
Lucas: 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
John: 100 percent
Lucas: 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 Battlbox 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 and 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
John: 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 rejection 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
Lucas: 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
John: so it launched in uh july 2020
Lucas: 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
John: 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
Lucas: 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
John: if we want another season or another show like it's
Lucas: 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
John: that'd be cool that'd be really cool
Lucas: 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
John: sure so man there's a bunch of things i had sold a couple businesses before but nothing of substantial size like battlbox 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 and 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 Battlbox 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 expensive rough it's it's a crazy concept that you're paying this firm a lot of money to basically give you a proctology uh
Lucas: 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
John: 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 this 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 deferred 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
Lucas: 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
John: 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
Lucas: made sense for you at that time
John: 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
Lucas: 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
John: sure so Battlbox.com new e in there so ba ttlbox.com carnivoreclub.co you can find me on linkedin i'm also on twitter but i do ahorrible job i suck at twitter but i'm there and then my blog is onlinequeso.com so i'll talk about e-commerce stuff and kind of go into a kind of behind the curtain additional detail view on stuff
Lucas: 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 subscribed stay safe have fun whatever you'd like to hear me say at the sign off
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