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:
Chris: you're immediately increasing revenue while decreasing costs at the acquisition point
John: we have all these automation set up and as soon as your engagement falls off we have a word then
in it
Chris: yeah
John: our Carnivore Club
Chris: if you sending a lot of traffic to battlbox and they don't buy a battlbox you can then introduce them to something else right [Music]
Chris: hey everybody welcome SUBTA studios Chris George here and we've got John Roman from Battlbox John how you doing man
John: good man good to see you Chris
Chris: so super excited to have you on the show excited today to talk about some of the things you've built not just with Battlbox 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
John: name is John Roman I serve as the Chief Marketing Officer for Battlbox 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 BattleBox was launched in February 2015
Chris: and for those that don't know battlbox is tell us a little bit about that and
John: sure
Chris: why you guys built it things you know things that
John: yeah so Battlbox 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
Chris: yeah
John: 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
Chris: that's crazy
John: hey thank goodness we don't do that regularly
Chris: yeah it's gotta have some shipping ah high shipping cost associated with it
John: right
Chris: 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 churn
John: and our retention rates yeah lowered chrun 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 man
Chris: yeah yeah
John: placing bets we were like okay the vast majority are gonna be in that basic at the time it was twenty five a month
Chris: yeah
John: we'll have a little more in the advanced day
Chris: right
John: some in the pro and maybe a couple dozen in the Pro Plus and we quickly were wrong well
Chris: right conventional thinking is that if it's cheaper they'll sign up
John: yeah
Chris: 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
John: right
Chris: meaning we try to be hesitant on what kind of discounts you give 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
John: right
Chris: it's just higher right
John: 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
Chris: sure the higher the lower ones
John: and not even my clothes like it's like I like a six hundred percent higher rate
Chris: geez is it like everything from like where's my box to like where's my shiftment why did you renew this month things like that
John: yeah it's good if everything taught the lower level just asking like and there's nothing wrong with these questions right
Chris: right
John: 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
Chris: 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
John: yeah
Chris: because like you mentioned yourself right you've got additional resources being used and the lower tier customers that have lower journal or LTV what would that look like had we done that if you thought about it
John: 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
Chris: got it
John: 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
Chris: also you say calculates now
John: yeah and then the third step is it's now it's now 30 a month plus calculated shipping
Chris: so what have you seen in regards to growth change churn change customer acquisition costs nothing
John: it's stays the same
Chris: 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
John: right
Chris: 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
John: 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
Chris: health of fulfillment - right because in the boxes and that's also the same they just don't have all the items
John: 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
Chris: right right
John: 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
Chris: right
John: welcome with a show you get to stay exactly
Chris: right yeah
John: you were there but uh you know new customers would the additional words
Chris: yeah I think that had multiple tiers is nice because you're giving people options by a higher opportunity for Less first box
churn
John: great
Chris: 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
John: so we have it we've actually had lots of discussions
Chris: 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
John: we decided when possible strongly
Chris: yeah so I know that for our gentleman's box team
John: right
Chris: they've got to that's like for our for their premium box it's like no more than five pounds it's policy
John: yeah
Chris: 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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Chris: 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
John: right
Chris: 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
John: right
Chris: 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 road blocks or road bumps
John: yeah 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 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
Chris: 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 battlbox and they don't buy battlbox you can then introduce them to something else right
John: exactly 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 Carnivore 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 battlbox
Chris: right
John: 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
Chris: where was the retail shop in the mall or was it located in shopping center
John: freestanding in somewhere brevet ladder Atlanta
Chris: you couldn't like you some of the inventory from battlbox there things like that is that what you doing
John: 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
Chris: so you can use your expertise and the individuals on your team that are working on Battlbox Carnivore 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 Covid 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
John: 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
Chris: your team is partially remote
John: yeah so we have technically we have three offices
Chris: 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
John: so don't I don't make phone calls I don't dislike them but so yeah back flat calls Arbor
Chris: yeah that's right call through slack
John: 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
Chris: 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
John: sounds good
Chris: [Music] Thanks to you