Welcome to the Pilothouse podcast for Direct to Consumer Brands and Marketers
Last week we were lucky enough to sit down with two legends in the ecommerce game, Smoothie Box President (and former Butcher Box CRO) Vin McCauley and Snow Teeth Whitening’s Josh Elizetxe.
Vin McCauley is the co-founder of Smoothie Box and formerly the head of CRO at sister company Butcher Box which, a profitable subscription model, where they’ve mastered the logistics of delivering frozen products to US doorsteps in a scalable way. Smoothie box is well positioned during the quarantine as a convenient solution for healthy eating.
In preparation for the video interview, Vin was kind enough to write down a series of answers. We’re publishing them here because they contain so much awesome wisdom about these two key topics.
Here is video from the interview...
1. Why don’t we start with a quick update from each of our guests about their business, and followed by a quick update with what they’re seeing so far in terms of performance during the current pandemic moment.
SmoothieBox is a wellness brand that ships high quality organic smoothies to peoples doorsteps. As people are doing store avoidance measures, any food company that ships to doorsteps should be seeing the business have a relative amount of organic growth. In some ways, we’re viewing this as temporary spike in sales while we help serve our local communities.
I do believe we (in the ecommerce space) may see longer lasting increases in general. US Ecommerce Percentage is around 14% of total retail and (pre Covid) was on track to grow to around 17.5% by 2023 (according to Oberlo). When the SARS epidemic hit Asian countries, similar to the pandemic we’re facing now, ecommerce grew in China in a lasting way, now topping over 36% of their countries total retail sales coming from ecommerce. The length/duration of this pandemic has the potential to instill new habits in the American buyer causing similar growth in ecommerce sectors. I think they’ll be industry specific. For instance, dating sites should see an increase in interest as social gathering is reduced. Evite type social gathering sites will see a decrease, for the same reason.
2. Everyone wants a subscription business. Vin’ you’ve been a key part of two great businesses with this model. What’s been the key for you guys to be able to build out profitable and scalable subscription businesses?
Lots to unpack with this question, but succinctly for SmoothieBox, we need a product that solves a problem for our customer. When people use your product like a prescription, then it’s much easier to present them with a solution that is a subscription. For some our members, they simply feel better when they start their day with a whole food organic smoothie. They continue to leverage the good start of their day to make other good decisions. For others, adding a bunch of fiber into their diet is what was lacking making their gut health significantly improved. For others, adding our collagen to their smoothies helps keep their hair, nails and skin glowing, strong and healthy. Yet others, we become the easiest way to lose weight by simply using as our product as a responsible meal replacement.
Lastly, Amazon has done wonders for educating people on the “Subscribe & Save” mentality, so we’re finding less a need to educate on the benefits of subscriptions.
3. Let’s start with discussing tactics for raising AOV and Customer LTV in your business.
There are 6 Core Areas for Subscription Biz. Subscription Box, Subscribe N Save, Memberships, Media/Streaming, Saas, Digital/Info Products
For us, we look to grow our AOV and Customer LTV by seeing what other streams we can dip our toe in, what makes sense for our customers and what other methods we can try to expand our footprint. For example, we launched as strictly a Subscription Box company. We evolved to add “Subscribe and Save” and are currently looking into some Membership options for our members.
As well as we have to perform. We need to get a high percentage of our boxes delivered in 2 days or less to our customers. No one likes to waste food, I think our moms drilled that into our heads growing up with “there’s starving children in _____” so its key for us to be able to get our product and keep it frozen for the duration of the shipping.
4. Vin this is a unique case, because just 8 short months ago, we stood on stage with Ezra Firestone and Molly Pittman in our Hot Seat in Barcelona and we gave some suggestions on how to do just that.
Maybe we can start by talking about a few of the suggestions, whether you implemented them, and how they worked. Josh these ideas apply to your business too so I’d love to get your thoughts on them as well
Spending 10–15% of your ad budget spent on creating customer touch points between subscriptions to improve MRR
Adding Upsells To the checkout process. What have you both done and how has it worked?
Adding a survey to your post purchase email flow to dig in on customer intent to dig in on ads?
mproving the payment options so you can either break the payment out, or save by buying a subscription.
Creating an “ad grid” to specifically target different avatars in a systematic way to scale your ads.
You really had an incredible group of people at your last iStack event.
After meeting Eric, Ezra, Jim Banks, Nick Shackleford and Molly in Barcelona, we went back to the drawing board to focus on building a stronger brand, really identifying our core personas, introducing more “people” into our branding and analyzing the data coming in. When running a subscription business, analyzing not only ROAS, but LTV by cohort/persona becomes supremely important.
Since we use Shopify and ReCharge, getting our data right was a big challenge. We brought in Jim Banks from Spades Media, aka the Google legend, to help us not only get our data cleaned up, but also to help us analyze whats coming in and how best to utilize the data that we can now trust.
For us, a pattern started to emerge which caused us to rethink our entire business. Our customers were looking at us more like V8 (drinking their veggies/health) vs a competitor to SmoothieKing or Jamba Juice. We thought we were in the smoothie space, but the data was consistent in that we are in the “healthy drink space” and that was a HUGE learning for us, that is now driving our marketing efforts.
We are testing Post Checkout Upsells as well as testing some companies that we find to be natural compliments of. For instance, many supplement company are in the “habitual” business. Meaning, they are only as good as they are in helping their customers develop good habits. It’s similar for us, the main difference being their product needs a vehicle to make it more drinkable, that’s where SmoothieBox comes in.
5. Let’s talk about angles. What angles are you seeing working with your products today?
Shipped to your door, Stock Up, Free Shipping, Breakfasts for a Month.
6. I read an interesting post yesterday about someone running an agency was having a lot less conversations with their clients right now about how “on brand” the creative is. What are your thoughts on the struggle between building brand equity and driving ROAS at this time?
I’d push back and might suggest that in times like this, this is where you brand has a chance to shine and really develop a voice. In times like these, your brand will develop one of three attributes : deaf, empathetic or neutral For us, a key part of our brand is shipping food for your doorstep, so we’re doubling down on that branding message right now for obvious reasons. We also support schools to make sure all children are getting healthy meals (not two separate classes of kids with two separate lunch offerings), so we’re looking into how can we support the schools we work with now that their cafeterias are closed and they are delivering meals to those who need it.
It also begs the question are you building a brand with a legacy OR are you just schlocking product. If just moving product, I’d agree, don’t focus on brand and just enjoy the lower CPA’s. If you are building a brand, now is a great time to really let your company live out its brand.
7. Let’s talk about CRO a little, do you have insights you’ve distilled about improving conversion rates on your funnels?
One phrase drives almost all CRO work I do and that is “a confused mind can’t convert”. When explaining it, I put it in terms of dating and marriage. When dating, if there was anything off or not right or at all confusing, we weren’t going to convert this dating to marriage. In order to convert from dating to marriage, you needed to “know she was the one”. Ecommerce is the same way, if you introduce too many questions — the visitor gets confused and can’t convert unless they are really high intent.
One of the challenges and mistakes I see with a lot of ecommerce subscription businesses is asking the question of Frequency during the funnel. Frequency is a “box 2” question. The visitor is looking at a Box 1 purchase. So asking when they want their Box 2, before they’ve received their box 1, makes no sense to the person shopping. In their mind they are asking themselves “do I want to buy this” while the site asking “and when do you want your next one”. We let people know they can adjust frequency at any point from their member account.
KSS applies to your funnel. Keep it simple. In an effort to increase AOV, some funnels get jammed up with options and upsells …. But at what cost to your conversions?
Another example is we are testing a one product store. Meaning everyone gets a Variety Box as their first box. Try all of our flavors. No decisions to make, we made them for you. After you receive the box, we have email sequences that discuss dialing in your flavor profiles, adjusting your flavors and frequency.
We don’t push people to a specific product cadence, as everyone moves through the product at their own pace. We recently had a mother of 8 sign up. She upped her frequency to every 2 weeks, when the average cadence for our customers is every 6 weeks.
8. With traffic being the cheapest it’s been in over five years, we’re working with clients on unique ways to take advantage, like running polls, lead capture, quizzes, contests and more at different places in the funnel. Let’s talk about how that’s working and what we’re learning.
We’re mainly testing messaging. Stock Up, Shipped to your door, Free Shipping, Feed Your Family, etc. It’s a daily conversation for us. What we don’t want to be is a brand that fear mongers, in order to move product, that’s a short sighted strategy. Fortunately for us, our message is particularly relevant, so we’re also experiencing a cost reduction in traffic and CPA’s.
9. Thoughts on traffic mix and measurement for brands these days, what’s working and are we truly omni-channel yet?
I think for us omni-channel is a future goal, in fact, we’re just starting to dip our toe in multichannel. Our sister company has provided us with a super effective scaling strategy, so in some ways, we’re just following in a general process that worked well for them. As mentioned above, we’re bullish on ecomm, especially in the current pandemic and beyond. Not sure to what extend, but we believe that similar to 9/11, we are entering a “new norm”.
10. Vin, if you were running Snow, what would you focus on next?
Josh’s messaging is also particularly relevant, since he is selling an “at home” product. My dentist is not doing any maintenance or work that isn’t needed right now. I couldn’t schedule a teeth whitening appointment, even if I wanted to. So pounding the “at home” messaging I would imagine is something he’s already focused on. Even if you aren’t going out, you still want your teeth to be white when in Zoom meetings and working from home.
Also as “health” and “staying healthy” is front of mind for everyone right now, the fact that “as your mouth health goes, so does your overall health and well being” — focusing on the importance of a healthy mouth being a foundation to your overall health, may resonate with people that are in general trying to be a bit healthier to stave off Covid.
Eric Dyck has over a decade of experience in the performance marketing world and has spent the last five building a tight-knit community of high-end media buyers and direct to consumer brands, creating connections and learnings that benefit everyone. With Pilothouse, Eric is leveraging internal learnings about ads, funnels, and traffic sources to help new brands scale their companies with paid traffic strategies.