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Tier-Based Subscription Benefits - Acquisitions - Working Remotely - with BattlBox

Tier-Based Subscription Benefits - Acquisitions - Working Remotely - with BattlBox

by christopher george

3 years ago

Join Chris George as he discusses the lessons learned from acquiring multiple subscription-based companies with John Roman of Battlbox. John and Chris also discuss the lessons learned from operating a tier-based model.

Transcript from video:

you're immediately increasing revenue
while decreasing costs at the
acquisition point we have all these
automation set up and as soon as your
engagement falls off we have a word then
in it yeah
our Navarre clock if you sending a lot
of traffic to battle box and they don't
buy a battle box you can then introduce
them to something else right everybody
welcome - sup - studios Chris George
here and we've got John Roman from
battle box John how you doing man so
super excited to have you on the show
excited today to talk about some of the
things you've built not just with battle
box but how you now merge into and
acquired other companies and talk about
some of the struggles and successes of
that if you could real quick just let
everybody know who you are click
background yourself and just a quick
intro name is John Roman I serve as the
chief marketing officer for battle box
also Managing Partner of carnivore Club
which we'll get into was one of our
acquisitions we've been around for a
little over five years BattleBots was
launched in February 2015 and for those
that don't know battle boxes tell us a
little bit about that and sure why you
guys built it things you know things
that so battle box is outdoor enthusiast

camping survival subscription box so
it's it's it doesn't follow the usual
rules of a sub box when you think of it
so every month the box size is is
typically different because we cater we
come up with the products and and what's
in the box and then we we have to
sometimes make a new box cube to make it
fit um so it's it's it's a different
viewpoint the price points range from 30
to 150 but the surprising thing is that
the vast majority of our customers are
are in the highest tier we shipped a 16
pound monthly box before which reason
hey thank goodness we don't do that yeah
it's gotta have some shipping
- cause associated with it I think what
you're doing is awesome I think it's
super creative and for those that are in
the outdoors like that's this is
something they should definitely check
out you mentioned having multiple tiers
and so you know I think that there's
boxes do that but not as many and you
mentioned also that you got more
subscribers in the high end which I
think deed has shown that's better right
so you're probably seeing a higher
lifetime value the customer lower chirp
our retention rates yeah lowered sure
yeah the the tier piece is interesting
so my business partner Daniel who's
who's the brainchild and came up with
the idea he came up with the four tiers
and I remember back in in February of
March of 2015
like we were all you know I am a betting
placing bats we were like okay the vast
majority are gonna be in that basic at
the time it was twenty five of us yeah
we'll have a little more in the advanced
day some in the pro and maybe a couple
dozen in the Pro Plus and we quickly
were wrong well conventional thinking is
that if it's cheaper they'll sign up
yeah but the reality of it is is the
higher quality customers are the ones
that spend more they're not more
discretionary income you don't want to
discount yourself out of business
meaning we try to be hesitant on what
kind of discounts Aguila in the first
box and when you've got a lower priced
one then maybe you do like half off your
first line the likelihood of churn it's
just higher right it's crazy so like
every metric you can think of if you can
tell a difference between the tiers like
the amount of the amount of tickets open
by a customer okay
sure the higher the lower ones and not
even my clothes like it's like I like a
six hundred percent higher rate
geez is it like everything from like
where's my box to like where's my
why did you renew this month things like
that yeah it's good if everything taught
the lower level just asking like and
there's nothing wrong with these
questions right there they're paying
customers but right asking like will you
explain to me how to use this product
yeah asking like like just they're being
very very needy which is okay we love we
love explaining it in in showing the
practical use but it is very surprising
to see that customer spending the last
tend to be the most yeah have you done
what have you done a cost analysis or
risk analysis again
that it might be interesting to do as an
exercise even for businesses to think
about yeah because like you mentioned
yourself right you've got additional
resources being used and the lower cheer
customers that have lower journal or LTV
what would that look like had we done
that if you thought about it we haven't
done exactly what you described we've
had discussions revolving around the
lower tiers actually a little over I
guess a year and a half ago now we
actually made the decision to raise the
price of the lower to the base of it 25
a month when it first came up it was
twenty five a month plus five dollars
shipping and then we moved to 25 a month
plus actual shipping calculated shipping
also you say calculates now yeah and
then the third step is it's now it's now
30 a month plus calculated check so what
have you seen in regards to growth
change turn change customer acquisition
costs it's interesting so I know that
there's other brands too that have had
success in adjusting the price I think a
big part of it is not just like it's
also like where it's at so there's
there's a lot of data that something
price at 25 is just as likely to sell at
27 and at 29 right so you made that
adjustment for you guys it makes sense
to have that sort of extra resources
like that it's the point it makes sounds
good you didn't raise the price of a
higher trade one though um no but we've
also we've also discussed the
possibility of that because the
interesting thing and one of the only
downfalls of our tiered model is that
the boxes all stack so if you buy an
advanced you get everything from the
basic it's pro you get basic advanced

health of fulfillment - right because in
the boxes and that's also the same they
just don't have all the items we raised
the price of the bottom - it took a
little bit of the additional budget away
from the top - which obviously what is
not a sustainable right it was it might
had the margins to support it but now we
want to keep you know pushing me
open delivering core core and better
products we were to get excited about
and it were a little handcuffed so we
actually had discussions possibly
possibly raising it just so we can put
more in there now we would of course I
think when you do something like that
like if we end up raising it
we grandfather everybody existing right
welcome with a show you get to stay
exactly right yeah you were there but uh
you know new customers would yeah I
think that had multiple tiers is nice
because you're giving people options by
a higher opportunity for Less first box
churn great what I wanted to ask you was
have you a be tested the standalone
shipping costs charge versus an
all-in-one price versus a calculated
shipping price so we have it we've
actually had lots of discussions I'm
sure to see what that comes out as right
because like for example I know for a
lot of brands it's just one price right
well no matter what the shipping is I
think I think when you've got our boxes
under 16 ounces it's actually okay
because like the shipping differential
is so minimal that you just come up with
this average and you budgeted for the
average shipping for you when the box is
bigger and it weighs more like ten you
know four or five pounds to California
is gonna cost much less than four or
five pounds to say New York right cuz
you're based in Atlanta have you guys
built like a policy in regard to like we
don't build a box that weighs more than
X pounds now we decided when possible
strongly yeah so I know that for our
gentleman's box team they've got to
that's like for our for their premium
box it's like no more than five pounds
it's policy yeah the classic is no more
than 16 ounces it's literally a policy
like if you're gonna if it goes 5.2
pounds like okay we gotta eliminate
something that's an item out right this
helps the forecast sort of like revenue
and making sure that you're staying
within budget
real quick John before we get into that
a little deeper I want to just take a
moment and think one of our subs or
partners and then we'll be back right
after this quick commercial
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consultation it's very hard to build a
direct-to-consumer subscription box that
is gonna hit a hundred thousand plus
subscribers you've got their Dollar
Shave Club
you've got Harry's you've got these
anomalies right for the most part it's
hard to get to that number and I love
what you're doing because you guys have
looked at this and said you know we can
build a really good business that's
driving a lot of profitability and
revenue at x-number but getting to a
hundred thousand can be difficult right
so we're gonna diversify and we're going
to acquire more brands that target men
and for the sake of just numbers and
examples not that this is what you guys
are at but you could get to a hundred
thousand by having five brands that each
have twenty thousand subs right and then
there's a lot of economies of scale and
there's a lot of benefits to having
these brands merged tell us a little bit
about how you were thinking about that
some of the brands you acquired and then
where you've seen some of that success
and then even go into like where did you
see something like interesting sort of
not failures but like yeah so carnivore
Club was one of the companies we
acquired July of last year
says one of our more recent ones monthly
artisanal meets curd meets meat
subscription shelf-stable
there was a lot of just synergies and
you know as you mentioned the economies
of scale where just day one we can we
can take the business and we can impact
the bottom line literally in a flip of a
switch so so from our shipping rates to
to shared resources from from a talent
employee standpoint you can just a wine
really really really move the needle and
you can take a business that you know
might have been considered a lifestyle
business or has paid me a salary and I'm
kind of good with it with no real path
to growing really all of a sudden you
can you can you know just basically
unlock this cash flow word that you can
get really dump it in the business and
really try to push it to that next level
was a toronto-based
company originally so there was a
Toronto office we still have the Toronto
office it's just an additional office
the team from Toronto to super talented
and they plugged it in our ecosystem to
were um you know Curtis as an example he
was running Amazon for a carnivore Club
and his rival box yeah
Auto bombers are paying an agency to do
it yeah they got subpar job internal

expert yeah you're immediately
increasing revenue while decreasing
costs at the acquisition point and then
the other I think more most important
thing too is that you're able to search
diversify your traffic right so like if
you're sending a lot of traffic to
battle box and they don't buy battle box
you can then introduce them to something
else right so we have we have all these
automation set up where okay you on
board it through through an email pop up
on that site and as soon as your
engagement falls off a certain point and
you haven't bought you know we have a
word then carnival club or it introduces
going gear which is another acquisition
we made going here is camping outdoor
other fights knives a very similar
demographic to battle box right so it
made sense it was our first taste of
retail right it was a traditional econ
like eighty I think at its peak was
eighty percent was done online
where was the retail shop in the mall or
was it located in shadow freestanding in
somewhere brevet ladder you couldn't
like you some of the inventory from
battle box there things like that is
that what you doing yeah so we we
figured out solutions like that um the
biggest win that company brand has had
was it launched a subscription box that
they have this loyal fan base very so we
launched EDC Club which is whatever
everyday carry doing ash lights little
gadgets that you would have on your
person and so you can use your expertise
and the individuals on your team that
are working on battle box karma Club to
work on that sub box while still
focusing on the retail end of things
so you diversify in the portfolio which
is great right
I mean given what's happened with the
köppen 19 crisis like I'm sure that they
retouch I was probably not open right
now maybe it was right and if that was
your only business then he'd be really
in a bind but you've now got this online
presence so these are all super smart
things all around what are some of the
things you're running into is it hard to
like if you got somebody into it you
know marketing is it hard to like manage
all that is it hard court you know get
your mind set I'm the way a brand works
and you had to sometimes shift it and
you know you know how do you work
through some of those things so what we
found is for the most part there does
need to be a dedicated person for a
procurement product right you can get in
a trouble awake if you're in one mindset
of a brand and trying to switch another
so typically each brand has that one
person that owns product and then
there's the shared resources so for
example is he's our marketing
coordinator across all brands so a lot
of his activities adding the additional
brand doesn't take that much more time
your team is partially remote yeah so we
have technically we have three offices
I've been having a lot of discussions
and getting some content to the
community about working remote because
for some people well this this pandemic
has caused them to be forced to work
remote and they may not have been used
to it is there a certain tool that you
use is there a certain meeting style is
there just something they you know you
could suggest to people that are
starting to to work in this new norm so
don't I don't make phone calls I don't
dislike them but so yeah back flat calls
Arbor yeah that's right call through
slack yeah you can call through slack
has a video on it yep you sure your
screen I think the most important thing
for businesses culture and a lot of
culture comes from like your daily
interaction yeah I think I think video
if you could do video always do videos
yeah Cardale make it a video look at
this is awesome John thanks so much for
being on the show thanks for being a
good friend I hope we get to see each
other soon not not wait till November
and hopefully this is all all come
down but I love to have you back in
Detroit grab a drink and stay safe stay
healthy and I'll talk to you soon sounds