Why Shopify subscription programs stop growing (and the fixes that get them moving again.)
Your subscription program is adding customers every month—so why has it stopped growing?
Matt Holman, founder of Subscription Prescription and known as “The Subscription Doc,” explains how churn creates a hidden ceiling: eventually, the subscribers coming
in simply replace those going out.
Matt and Kurt discuss why improving the offer can produce a better return than obsessing over retention, including:
They also compare Recharge, Skio, and Loop—and explore how AI could change subscription management.
Guest
Matt Holman, The Subscription Doc
Subscription Prescription: https://thesubscriptiondoc.com
The Cancel Page: https://thecancelpage.com
Sponsors
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https://zipify.com/KURT
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Speaker A:
This episode is brought to you in part by Swim. Here's the thing about wishlist apps. Most of them just sit there. A customer saves a product and then nothing happens. Swim actually activates that data. When someone wishlists a product, you can trigger price drop or back in stock alerts and feed that intent directly into Klaviyo or your CRM. You're not guessing what people want because they've told you. Plus, customers can share wishlists for gifts and your team can view them to offer personalized service online or in-store. And unlike cart abandonment, wishlist data is permission-based. These are people raising their hand saying, "Hey, I want this, just not right now." Swim's been around for over a decade. It powers 45,000 stores and installs in about 5 minutes. You could try it for free today at getswim.com/kurt. That's G-E-T-S-W-Y-M.com/kurt. So if you sell on Shopify, you either offer or have considered offering a subscription. There is just so much value in having recurring revenue in a business, predictable recurring revenue every month. Obviously that's very attractive. and for the customer, it's gotta make sense. And usually the answer is convenience and savings. I have a total of 1 subscription in my home. I subscribe to the air filters for my furnace. My wife subscribes to coffee as well. So maybe 2, 2 physical goods subscriptions. I think that's it, 'cause it's really hard to get people to subscribe to things. They understand that, well, hey, it's going, well, I think these are the objections, at least they are for me. 1, am I going to end up with too much or too little of this? I, is the convenience worth it? And then two, you know, what are the savings? Does it make sense to buy this now or should I just rebuy it later since it's so convenient and easy to buy it anyway? But like, man, having the subscriptions now, you know, with a lot more predictability, we are going to make these sales. Like there's just a floor to cash flow potentially when you have subscriptions. So I get the attraction. And we've worked with enough clients to know it is both really hard to do and really rewarding to do when you can make them work. But I'm not a subscription expert. I need someone who knows more than me. And joining us today is Matt Holman, the Subscription Doctor. Matt Holman from, uh, Subscription Prescription is your service, isn't it?
Speaker B:
Absolutely. Yeah. Great to be on here, Curt.
Speaker A:
You're the Subscription Doctor. I want to walk through a hypothetical. A store sells, uh, we're gonna go with coffee. That's just like such a universal one. Store sells coffee. Their subscription program is now on your table, Dr. Dying. What's the first thing you check?
Speaker B:
First thing I'm gonna look at is see what growth and retention levels look like, because one of the most common problems we get with a brand that has actually started scaling or has had some kind of success with subscriptions is that they're probably at a point where they're acquiring the same number each month that they're losing each month. So 5,000 subs, 10% churn rate, you're only bringing in $500 a month, you're losing $500 a month. You're kind of capped out. That's what I would say was kind of probably one of the first things I would look at is the acquisition side to see how that's comparing to when people are leaving.
Speaker A:
And so really we had, it's easy to, well, not easy, but you can get them off the ground, but it sounds like they plateau due to churn. If I'm getting 10 new subscriptions, I'm losing 10 new subscriptions. Right. Why would that be? So yeah, I've seen, I mean, I've seen this pattern.
Speaker B:
Yeah, it's a, it's a funny phenomenon, right? You think about like, um, you think of like massive subscription brands, say like Dollar Shave Club or Harry's, that have grown like considerably, or Rise Superfoods, all these others, and they reach a point where their growth engine cannot support the amount of subscribers that they're losing each month. So even, even at scale, when we're talking about they're bringing in 20 or 30,000 subscribers a month and they're churning 20 or 30,000 subscribers a month because they have such a large base. Like, granted, those are rich people problems in the subscription space, but that does happen. But it happens at smaller levels too, where you could just have a few— you know, we see you get, you can get capped out at 2,000, right? If you're a small business and you're only acquiring out of all of your purchases each month 200 and a 10% monthly churn rate, which is decent, it's not like fantastic, but it's decent, more better than a lot of other brands, that's 200 subs a month that you're losing. So that really, because it comes down to the balance, I'd say the next thing to like look at is, is there like something fundamentally broken in the pro— in the, in the product experience where like at the point of cancellation there's like a, an issue with flavor or an issue with like say mushroom coffee and it just tastes horrible and people don't like the texture or something else where you're seeing a huge cliff in that month 1, month 2 period. That's the next place to look at. And it's usually something that's like The brand just can't quite get aligned with who's buying it and what their expectations are.
Speaker A:
So, all right, let's say a merchant has 500 subscribers and they're listening now and they're like, huh, I've had 500 subscribers for the last 4 months because of that, that churn where, uh, unsubscribes is equivalent to subscribes. What number do they pull up right now to know if this program is dying?
Speaker B:
Yeah, you're looking at your retention numbers in whatever subscription app you're looking at or you're using is going to show you right away what your, say, your typical or average monthly churn is, is essentially where you're going to go look at that. And I would say the reason I point that out is as an acquisition issue off— it's— and I'll say the solution to this problem is often like an acquisition problem is because the amount of work, if you have 500 subs, the amount of work to go from, say, I'm losing 50 a month to only 45, right? That's a 10% change in your 10% churn can require like hours and hours and hours of trying to figure out how you're onboarding people or playing with your cancel flow. And if you can take all those hours and put them onto the acquisition side and just get an offer that's better, I can go from 50 subscribers a month maybe to 60 or 70. With the same amount of effort. And then I'm fixing that, that at least in the short term, that where I balanced out with growth and churn.
Speaker A:
So short term, we like top of funnel better than finding leaks in the funnel. If I can get more people— sounds like your belief is it is easier to add people to top of funnel than it is to fix the program. Yeah. Yeah.
Speaker B:
If you think about just— I like to think in terms of like ROI, like how I spend my time and how a brand should be spending their time and You know, very few brands have a retention marketer on staff who has nothing better to do than to go fix like a couple of like random emails or transactional stuff, right? They're working on campaigns, all this other stuff. So the issue is, again, if, if I can make an improvement on month 3 to month 4 renewal rates, maybe I get at a small scale, I get 5, 10, 20 more subscribers or even 100 subscribers. But at top of funnel, I can put in that same amount of work and effort and process and I can in theory double the amount of subscribers I'm bringing in every month.
Speaker A:
So, all right, we're starting to do some funnel math here. Yeah. Tell me about, with subscriptions, talk to me about some funnel math.
Speaker B:
Yeah, so I think it's, we first just look at purchases in a given month, right? So like again, in the coffee example, right? If I'm getting 1,000 purchases a month, how many of those are subscriptions versus one-time? So say I'm getting, you know, 50,000, 66,000 monthly site visitors. I'm getting 1,000 orders. I can't quite do that math in my head, but I feel like that's around a 5% site conversion rate. And then on the subscription side, we'll see anything from, you know, you're converting 10 or 20% of those purchases to subscriptions all the way up to 80, 90%, or 100% if you're just forcing people into subscriptions. I'd say forcing people. I, I say, I like to say like a good range is if you're at 40% opt-in rate, you're doing pretty well. And, and I think 40% should be considered by most brands to be kind of like table stakes because you can get to 40% without gimmicks, without doing a bunch of trickery, just with solid value and design positioning. You can get to a 40% opt-in rate on subscriptions. So if I'm getting 1,000 orders a month, I should be getting 600 one-time, 400 subscriptions. And then if at some point, again, if I have 10,000, if I, if I have 10% churn a month, then that means my cap would be 4,000 subs. So when I hit 4,000 subscribers, I will be losing 400 a month compared to the 400 a month I'm bringing in on this model.
Speaker A:
Hmm. 40% seems unusually high. Is there a typical number? That's 40% your goal number.
Speaker B:
I mean, I've, I view it as table stakes, kind of like a starting point. I mean, the joke I make and you know, I've been doing this a long time, so I'm good at it, is I can get you to 40% with like my eyes closed. Like we should be able to, like if you have a decent product and you have a decent, you know, you have some traction, you know how, what people like or not like, then it's about making sure that the subscription looks good. Now sometimes that's testing like gift with purchase or bulk options, like buying one month, the coffee example, buying one month, two month, three month. Um, but you should be able to get to that point just by doing, I think, investing in one, defaulting to the subscription option, subscribe and save, and then actually putting decent design effort into. So one of the things I hate is like the one time and the subscribe and save look the exact same except for like it says, one says subscribe and save 20%, the other doesn't. The subscribe and save should be like a bigger box. You have some of the perks in it. You should have strikethrough pricing showing that it's 20% cheaper, 10% cheaper, right?
Speaker A:
Like.
Speaker B:
It should be above the one-time purchase, simple design positioning on that. And then I really like simple things like loss aversion where like if I, if somebody clicks from the subscribe and save default to the one-time purchase, what changes on the, on the add to cart button or in that one-time purchase option to make the price visually look different so that people see that they're not getting as good of a deal would just be some simple things. So yes, if you're below 40, 40 is the goal. Right? And so I think a lot of brands that I talk to are, you know, they're in the 10, 20%, like 20, 25%. Um, 40% is really achievable. Um, from 40, getting to 50 and 60 is a lot of work and you can break things, but it is worth figuring out for a lot of brands if you're trying to go subscription first. I think that it's really, really hard to get over 60, 65% without doing something where you're like making the one-time harder to see. Or you're just dumping so much value on the subscribe and save, like, uh, you know, with, um, Everyday Dose and Elevate out of the UK do this where you're getting all this gift stuff for subscribing. So that's— I think you have to use some of that stuff to get people up into the 80, 90% or higher.
Speaker A:
All right, I— you said my 3 favorite words: free gift with purchase. That's 4 words. Gift of purchase is 3 words.
Speaker B:
Gift with purchase.
Speaker A:
Yeah. You said my favorite word, gift with purchase.
Speaker B:
I don't need to say free because gift implies free, but yeah, it's the English language for you.
Speaker A:
So I got this app PromoParty that does free gift with purchase for Shopify stores. Walk me through an example of what free gift with purchase with a subscription program is like. Is it really just like, hey, we got a client who sells tea and we're like, hey, buy 100, subscribe to $50 worth of tea. And we'll give you a free mug. Is it like that straightforward or is it like— It can be.
Speaker B:
Yeah, it can be.
Speaker A:
The other one I've done that's cool is like to reduce churn is, hey, stay 3 months and on month 4 we'll send you the free gift. Yeah.
Speaker B:
Yeah. I'll say this. Something you said in the intro about like subscriptions make a lot of sense because, you know, people like that baked-in LTV or that higher customer value. I will say too, like from an offer testing standpoint, subscriptions is like another lever to pull. So like in the— I know like I've been in e-com long enough to know that like the world of you want to make everything fast and frictionless and all that stuff is, is true. That's still true. But a lot of people do spend time thinking through purchases and you're spending $50 or more. People are like putting in some effort. So I do think a little bit of friction on the offer can be— can make sense if you're having people select like a quantity amount and whether they want to subscribe and save. And the reason I say this is because gift with purchase can be layered in as another option here. So you could do something as simple as, hey, we have a, you know, for selling coffee, maybe we don't do this on our 4-pound bags because they're only $20, but on our 5-pound bags that are $50, if you subscribe, we give you a free curated similar flavor from that same like flavor profile, a smaller sample size if you subscribe. As opposed to one-time purchase, and maybe we'll still do like 10% off the subscription. And I really, really like that approach because if you think about that extra 10% is $5 of— is $5, right? So we're talking about a $50 bag of coffee. And I know we're sorry, everybody, we're doing all this math. You're talking about a $50 bag of coffee. 20% off is $10. If I can just do 10% off that $5 of margin, I can use almost every store that I know of, unless you're just getting started, you have like 1 or 2 products, has something in their catalog that costs less than $5 in margin from a landed cost standpoint. So it makes sense to say like, hey, just to get you to subscribe, we're going to give you this gift up front. Now where things can get kind of like fun and interesting is if I start adding like, hey, here's 1 bag is $50, 2 bags is $90, and 3 bags is $130, right? So I'm aggressive— more, I'm increasing the discount per bag that you buy, and now I'm going to give away a gift or an item that's worth like $20 to get you to take that because there's more margin available on that purchase. Is, is a, is a nice way to do that. So I called out Elevate, E-L-A-V-A-T-E, out of the UK. They do, um, collagen, and the more you buy, they unlock all these extra gifts at the point of purchase. It's really, really fun. I'm not sure everybody can pull this off. I don't think everybody can pull this off, but it's definitely a site that's worth looking at to see how they kind of structure that. But I'll— my final point is the gift with purchase has— does two, two things. One, I think it's cheaper oftentimes than throwing away massive discounts because the landed cost of the gifted product. And two, generally speaking, we see people that are more value-driven than discount-driven that are attracted to gift with purchase options. And so they are, generally speaking, better subscribers because they're not just gonna cancel your product and go get an alternative because they offered them a steeper discount. They're more interested in getting value out of you as a brand.
Speaker A:
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Speaker B:
Right.
Speaker A:
And so trying to figure that out, I think that helped a lot. And then we include subscriber perks like you get 15% off now. If you stay subscribed, it goes up. That was a retention effort that seems to have paid off. Um, we do reduced shipping and then we're just like, hey, you can update it anytime.
Speaker B:
I will say, I, I like, I think for, for beverages especially, like you benefit a lot from what I would call like frequency aligned consumption alignment. And so you might be better— some, I'll say that sometimes you're better off at the point of conversion to not do that, but it causes tons of confusion and friction after the fact. So I like leading with that because you'll get people that better understand like how much tea they need to order. So it might— your AOV might be a little bit lower because of that, but I think it can still be really, really powerful. I like testing the defaulting the subscribe and save, especially if you have all of those kind of different perks and benefits listed, just because it does show a lot more so that somebody clicks on one-time purchase instead, they'll lose all those things. But I get, I get why brands like doing it. They're sometimes concerned at people feeling like they've been duped. So some depending on the brand and the type of consumer, right? Like not everybody's paying attention. Like if you have an older demographic, they're more likely to just kind of go with the default and not, not check that. But I would say like sometimes a little bit of increase in CX tickets is worth the opt-in rate difference because it can be material if you, if you opt into both there. And then with tea, I think what's really, really fun is you can package like the hard part, say, with like protein powder is like you can do sample packs, but it's not the same thing. It's not quite as effective. Whereas with tea and other similar beverages like coffee, you can do sample sizes of other flavors. You can easily increase the amount somebody gets. So if it's like, hey, we're trying to ship you 3 boxes at once, or subscribe and get a 4th one free. If you buy 3, you get a 4th one free for subscribers. Or like simple things where you can use the product itself as the gift. So anybody that buys this, you'll also get, you know, 3 alternate flavors to try as part of that process. Or at the very least, you don't do that, but you surprise and delight. Like I ordered from Create recently their, their creatine gummies. I ordered watermelon, and in the bag was a bunch of different small, like, uh, single serving— well, there's 3 gummies to a serving— of different flavors they had. For them, flavors was a big deal. And I think tea, it's the same kind. It's, it's absolutely— you get somebody on— if you can get somebody— somebody has to find the flavor that they like the most. And so what we see on the LTV side is when people are willing to switch flavors those subscribers are incredibly valuable compared to people that don't ever swap their flavor, just because it's, it's, there's a stickiness to it. Like they found what they want to get. Yes, people that stick, find it right away, um, will stick around. But generally speaking, people that are willing to switch flavors are worth more than people that are not, because if they start to get tired of it, they'll switch to a different flavor. They won't just cancel and just pick up something else.
Speaker A:
Interesting. Okay, good to know. So really if you could do free— include free samples, if that's practical to include in an order, that seems like an easy win, subscription or otherwise.
Speaker B:
Yes. Yeah, absolutely. Especially with a product where people are not sure what it tastes like. You know, if you're selling a hydration, then you've got 10 different flavors. Everybody might have a preference for orange or watermelon or whatever it is by default, but for your particular brand, maybe it tastes a little bit different. So getting people an option to try different things will make potentially get them to stick around longer.
Speaker A:
So those customers who edit orders, who make product changes, have higher lifetime value.
Speaker B:
Yeah. We did a study a couple years ago with a pretty large sample size, um, about 200 brands, and we looked at, uh, frequency adjustments and basically changing the SKU or variant, and people that were willing to make 3 frequency adjustments were 200% as valuable. So basically getting the frequency right were worth twice as much. And, um, the, uh, making the, the SKU adjustment was at least 3 changes was 600%. So it was like, again, people that are willing to change and find the flavor were va— worth vastly more, you know, 6x more than people that don't.
Speaker A:
That's pretty good.
Speaker B:
Yeah, it's pretty awesome. So flexible subscriptions has been like— I've been a proponent of that for years and years, especially that study just kind of confirmed it. But I will say the thing for me that I always try to keep in mind is that there's, there's stuff that you do before purchase and there's stuff that you do post-purchase. So, well, like if I'm selling a supplement or protein powder and so maybe I just want to default my bag to on the front end to 30 and 60-day as a subscription options. I don't wanna list like 2-week, 3-week, 4-week, 5-week, 6-week because all those extra options can often be like confusing and a friction point. But post-purchase, if somebody goes into their portal to adjust their frequency, I want them to see like 1-week, 2-week, 3-week, 4-week, 5-week, 6-week, 7, right? Like I want them to see all of that.
Speaker A:
Yeah. As a thing to do.
Speaker B:
Yeah. So that's the thing is like sometimes, cuz we see this in like the food space too where like, um, like the Butcher Boxes of the world, where everybody that they survey will say they want control over the order. They want to be able to pick what they're getting. And so these companies will build these really sophisticated front-end systems to get people to build all these things. But when it comes down to people, what people buy, 90% of people pick the same op— same 3 options, for example. And so you're better off just showing people like, here's the Wagyu and here's this, this, and this. Here's a preset bundle. And here's the— you can buy it one time or subscribe and save. And if you, if you prepay for 6 months, we'll throw in like free desserts, you know, that kind of thing. But on the back end, if somebody gets tired of one of those 3 options, they should be able to open that up and swap one of those or any of those things out. Or maybe they get tired of the dessert they're getting and they want to pick a different free gift. So that's where I say like sometimes you have to, you have to separate in your mind sometimes what gets somebody to buy versus what gets somebody to stay. 'cause all this control and all this optionality on the front end can be overwhelming and unnecessary, but on the back end, it's almost always the right path to go. And that's why, like, again, if you have anything where, uh, where people are adjusting frequency or SKUs or their shipping date, like, I really like SMS for that because you give people the control they need, but you don't do that kind of stuff up front because then you'll— people won't ever make the choice. Or make a choice.
Speaker A:
Do you have a preference on subscription apps? Surely you do.
Speaker B:
Yeah, it does, but it changes. So like, uh, we liked Recharge really early on. Um, Skio has been pretty amazing for a long time. Um, but like, we also like Loop. Uh, Loop does some stuff in the cancel flow metrics that nobody else is doing. Um, that's really, really powerful. They break them out into like separate stages. And so The analytics is a little bit more powerful. So I guess it does kind of depend on the brand. So like for, from a complexity customization standpoint, Recharge is still like the king, like just because of what you can do and their custom SDK and the developer community and everything. I think Skio is probably the best option when you're running like a lean team and you just want to be able to make quick actions really easily and make adjustments to the cancel flow really easily. But then Loop is like, we have clients on Loop that Loop bends over backwards, like on Slack and with their developers and engineering team, right? Like it's a, to make things work. To the point sometimes where they have to push back a little bit on the brand work. They tell the brand like, sorry, we do so much, but we can't do that too. But I would say those are probably good. And then there's another one, AutoShipCloud, whom I worked at for a number of years. They're doing some really interesting stuff in the B2B space on Shopify that you'll be hearing more about in the next few months. They're doing some really cool stuff too.
Speaker A:
Yeah. And I would agree with your picks on there, like Recharge, Skilloop, those three I have used recently and all three are extremely good. We've got client retainer stores using them. Yeah, really, you know, no complaint between the three. It's like they're all— I would say if you're considering it, demo all three and then decide and you're not going to make a wrong choice. It's just, you know, which one makes the most sense to you. Yep.
Speaker B:
It's, it's, it's very rare. And one of my pet peeves is when people like they're on one and they tell me they're switching the other and I ask them why and they, the complaint is just a general software complaint, which is like all software is annoying at times, right? Like, so ain't that the truth? Yeah. So there's not like a, like, is this just a nature of the relationship and you need to maybe escalate or, or, or often you don't know that they do the thing that you need to do, or that while it might look— I'll just say like a really classic one is like the customer portal. People are like, oh, I like how the customer portal on this app looks compared to this app. And I'll say, one, that may be true, but, but do you know that that brand you're looking at, how much custom dev they ran or the example they're showing you to get to that point? And do you know that you could do the same thing on whatever app you're using? And then two, like I always hate the customer portal thing because I'm like, so the place where your customers go to cancel is where you're worried about investing in your subscription platform.
Speaker A:
Yeah. Okay. Okay. I'm glad it's not just me.
Speaker B:
Yeah. No, for me it's like, okay, well, like look at integrations. Like if there's a specific, so it always comes back to like, what's a specific, like what does your subscription do that's different than what the platform supports? So like prepaid subscriptions can be really hard. Meal box swapping dynamic stuff can be really, really hard depending on the platform you're on. But like pretty much every, pretty much everything else is, it's just a different version of a, of the same thing. So then it gets into support and pricing. But, but yeah, so it's like a lot of brands that tell me that they are tired of something and switch, like they actually haven't invested a ton into their customer experience so that they don't really know what they need. As opposed to every once in a while, somebody go like, hey, we've been trying to do this and we keep butting our heads. I'm like, oh, that's great. That one specific thing works better over here. And then it's like, then a migration is a no-brainer.
Speaker A:
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Speaker B:
You're risking a massive amount of revenue for a personal preference on your side that, because you just don't know, like things just go, I've done so many migrations and they're very standardized and they're almost always really straightforward, but there's always something that nobody accounted for, whether that's like how you built Shopify flows Right. Like it's stuff— there's always this stuff on the peripheral that like we just ran into that.
Speaker A:
Scope it out. Yeah. Best as you can. And there's always stuff that like no one thought about right up until you broke it.
Speaker B:
And then you're talking about 2 to 3 months, 2 to 3 months of work and support trying to fix that where, you know, like again, from my, from my team's perspective, in 2 to 3 months, do you know how many things I can test on your subscription program and like what revenue we can recover and all this stuff as opposed to doing a migration? So anyway.
Speaker A:
Yeah. Yeah. And it's like such a gamble. I mean, we did a migration from one of the platforms you mentioned to one of the other platforms you mentioned, uh, for a brand we mentioned on this episode. You know, it took months. It was scary. And then we had to wait, you know, even longer after that to figure out like, was this even worthwhile? And the answer was yes because of features we implemented just following, you know, the other app's onboarding process. we ended up with like reducing churn and growing the subscription program. It made me, after the fact, it made me think like, well, we didn't know what we didn't know. And so if we had used, we had those onboarding steps just in the other app, probably could have achieved the same result. Like I doubt it was something specific to the app beyond the act of migrating made us look through it all again.
Speaker B:
Yeah.
Speaker A:
Yeah.
Speaker B:
That's what generally we see that with Recharge where like, you know, cause they just, another leader and they have so many brands on it and people are like, they've either been annoying or bad in the past or somebody's like, hey, we, we saw this really cool feature set on Skio. And yes, Skio got bought by Recharge. I know that.
Speaker A:
I was going to say Recharge owns Skio, but runs them independently.
Speaker B:
They own them independently, but it's like, oh, well, you know that Recharge does that, right? Like they have the same splash screen thing. It's a little bit different, but it basically works the same. So yeah, we run into that a lot where But it's also funny. It's so funny being as a consultant because I really hate being involved in migrations because I know how big of a pain they are. But if somebody is doing them, you know, it's work. It's good to do. But at the same time, like, also I hate— there have been a few rare instances where I've recommended that they lead, that they make a migration. And that's just so risky because it's, again, my reputation for all of these unknown variables that are completely outside of my control. but you know, so I try to be really careful about software recommendations 'cause I, I think it's really important.
Speaker A:
I wanna know, all right, well, devil's advocate question. We're talking about all these different platforms and you know, I keep banging on Twitter. Really, you could point Claude at like anybody's marketing brochure, website, app listing, and help docs and go build this. Could it build a subscription program?
Speaker B:
Maybe it, the thing that's really, really hard is the future state of orders. So like, Everybody struggles with this. Like Stripe is really good at it, but that's the tricky part is like, if it's just, I'm selling us, I'm selling coffee. Okay. Then I just need to be able to hold future states. But the hard part is then how do you let somebody change a future state? Because the way the software propagates those events is say you buy something today on a 30-day billing cycle. Essentially holds a, a, now a secondary order that, that is set with those parameters. And 5 years ago, that meant if somebody goes and adjusts their schedule, they just adjust the virtual subscription event so that when the processing happens, the software knows what to then create as the next order date. But now because of customer experience and control and, and all these different integrations and apps that influence a subscription order, we often have to create subscription orders into the future. And so somebody might change what happens on their second order, but not this next order, but the order after that, right? So there's all these permutations that happen that make things really, really tricky. And then prepaids are the giant biggest pain in the ass of any subscription thing ever, because then you're holding a billing state and a shipping state that's separate, and those are separate items and stuff, and they get really, really tricky. So I would, I would not be surprised, like, I'm not going to say that it's not possible, but it is really, really easy to get wrong. I've met so many people that have built custom subscription apps and stuff like that, and they're very, very like pigeonholed into what they're doing. And that works for your brand, it works for your brand. But to build something that could be used by more than just you is— would be— I'd be pleasantly surprised because that'd be fun to build. I think what's—
Speaker A:
that's also true. There is a loaded question because there is a huge difference between I custom built a piece of software for me. An internal tool is what that would be versus we have a public app. The gulf between those two is massive. I think a lot of people don't realize that when they build these internal tools for the first time and they're like, I should start a SaaS. Please don't. Yeah, you're— well, let me just go ahead and save you the heartache now.
Speaker B:
Yeah. Well, I'd say the thing that gets me kind of excited is thinking about, okay, What, what's like this Recharge, Skio thing really gonna unlock is it's not so much that like, okay, Recharge and Skio are gonna share best features and then create some best feature platform because that'll be nominally better than what it was before. But again, like you have Loop and everybody else pushing the same, um, frontier. It's, can we start building something that's like AI in the sense of true personalization, right? So that if I have a single subscription, my experience is really, really tight and seamless. If you have 5, it's a lot more easy for you to grasp the complexity. If it learns about, I'm go constantly going in and changing my frequency, it's gonna communicate with me on how to like, or use machine learning to build the right cadence for me. So that's where I'm like really kind of curious to see a, a real world of AI where, or you just, you know, you log in and you just tell prompt it, or you get it, the SMS, and it just says, what do you want to do? And it's conversational. That's where I'm really curious to see. And so that gap I think will keep pushing the frontier for what other subscription apps are doing.
Speaker A:
And by, do you imagine it as the customer portal is materially different and customized to them? Or which, in theory could do it now, like simple subscription versus complex subscription, two different dashboards. Or is it, it's a chatbot either inside Kick in the store or via SMS?
Speaker B:
Yeah, I think the, the latter, cuz yeah, you can customize like right now with like, like Skew and Loop particularly, we can build like really, um, customized experience, like what order you're on and what product you bought. You can see a different type of experience. Um, but yeah, no, I mean more like I, you know, an, a chatbot that can communicate at some point with my own AI personal assistant or just, you know, Slack SMS message about my, my order and you just type back what you need or you can talk to it, that kind of thing. I think that's where it'll be really interesting because we see just so many people are frustrated by how do I change this? What does this mean? Like, I didn't— I don't want this anymore. I want this. Like, that's what, like, the portal is always trying to solve while also hiding the cancel button and, and making things harder. That you don't want them to be easily to do, right? Um, so that's where I think it gets like— things will get really interesting in the next 6 to 18 months.
Speaker A:
I don't know how the FTC is going to feel about this, these hidden cancel buttons.
Speaker B:
Yeah, it's like— yeah, no, absolutely. I mean, the thing we'll say is the legally, like, the one-click to cancel, while Shopify is on the, um, you know, target list for those brands, like, if you haven't worked in like digital subscriptions, you have— you won't have seen like these really, really— like, I call them gym memberships where it's just the shittiest like experience ever, where you're like, you're going through 10 pages and stuff. Like, a lot of times the Shopify one is, is fairly straightforward comparatively, but it, it does require a little bit of like clicking into the three little dot button to see more, to see where the cancel thing is. That, you know, um, but yeah, I will say this, my wife is a subscriber to one of our clients and she regularly tells me, I hate your cancel experience. And I was like, great, thanks.
Speaker A:
Yeah, mission accomplished, lady. So, all right, another devil's advocate question for you. Who should not have a subscription program? What disqualifies you?
Speaker B:
Yeah, to me, I get that subscriptions are the holy grail. I get it. I work in the space. But subscriptions are just a mechanism for enabling repeat purchases. That's really all they are. If you oversimplify it, you mentioned the air filter. I do stuff with my hot tub filter. Filter stuff. You can call it auto-ship, you can call it whatever. But I've seen stuff where like people trying to do like bedsheet subscriptions and like, like really big snack order subscriptions, or like, you know, if you want to get a chili powder, you know, subscription where you're using like a tablespoon, like every week kind of thing, and you're selling this giant bottle or jar. So I would just say like, you can lose a lot of time and work and energy, like trying to force subscriptions onto something that doesn't make sense. Um, so I, I would say to anybody who's curious about that or wondering about that, like, just, just put it on there and just leave it as an option and see what you can grab. If you can get 5 to 10% of people to want to take the subscription at 10%, then you've got some traction there. But for some brands, it just doesn't make sense. People are confused by it. Like, in the supplement space, people understand subscriptions are being sold all the time. Coffee, pet food, beauty, consumable goods. Yeah, consumable goods have had subscriptions for a long time. People get— they understand that. But when you're on a new product type, like I'm going to order sheets and you're trying to upsell me on a 12-month, like, pillowcase subscription, you know, good luck. Like, I've advised a brand that was trying to do— that's trying to do that. Like, so, so good luck with that. Like, but you now have to not only convince somebody that the subscription's valuable, but you have to convince them that why the eff there would be a subscription on a pillowcase to begin with. So, um, and then I will say this, like beverages that are physical, like, so like take Breeze for example, like that's, it's really hard because it's, they're heavy, the shipping is there, and then the consumption around is rough. Yeah, is rough. So I, I call it like the beverage snack category where it's like, say, a chip subscription. Well, I don't know about you, Kurt, but in my house, like, we'll eat one type of chip for like a week and then we won't touch it for a month, like between me and the kids or whatever. So like personal preferences on snacks and physical beverages. And also then you add the layer of like you can grab both of those things and like literally everywhere you can get them from a grocery store, a, you know, a gas station, whatever. So people usually will prefer the convenience of those types of categories, they are consumables, but they're often just easier to get in store or where you're stopping by, unless it's something special. Like when Breeze wasn't in retail, like you could really only get it online if you really liked it. But now if you're in an area where it's in retail, like it often means you can just go grab a 6-pack on your way home or 12-pack or whatever it is. So, so those are the ones I would say. And then again, if you have to educate people twice, then, then you're face— fighting an uphill battle.
Speaker A:
All right, give me, give me one common mistake, one tip that solves like just really common mistake. Like I, I just want one cheap fix.
Speaker B:
Billing reminder email. That's probably my favorite. Other than like, we already talked about offer testing in the beginning. It's billing reminder email. I can't tell you how many brands, big brands, I'll go look and it's like, hey, your order's set to renew in 3 days. Click here if you wanna make any changes. And I'll, I'll just pull on the Marsman example just 'cause I love that brand. We were lucky enough to work with them. Um, last year is they're all around this. You're going to Mars. It's men's testosterone supplement. And so their, their billing reminder emails, like, you know, a rocket ship taking off and like your mission, here's your mission brief. Like, it's like really, really fun. They really lean into the brand. And while not everybody needs to go that far, but even if you're just selling, like if you're selling coffee and all it is, is that you just have one really good flavor that people have a hard time getting somewhere else. Okay, well remind people that it's hard to find this somewhere else. Like if it's hydration, you know, whatever that is, people bought for a reason. Remind them of the reason. Um, I'll say the, the last one was, uh, I Heart Dogs. They sell pet food. They donate a portion of all their sales to feed shelter pets, and they lead with your order will feed X number of pets. Like that's what they're leading with, cuz that's what they know that their consumer cares about.
Speaker A:
I like it. Okay, so I need to go through, start reviewing client subscription programs. I'm really curious to know what our take rate is. I gotta find that analysis.
Speaker B:
Yeah.
Speaker A:
And geez, maybe I should do a report on, 'cause I've got over 24 months, I got about $300 million in order revenue data that I can analyze. That's got, you know, it's been anonymized. It's just great discrete data. Body of data, I'm going to go through and look at subscriptions. I have not done this yet. So we'll see what it says. Um, but I'm curious what that take rate is. And if it's under 40%, Gene, maybe I got to call you.
Speaker B:
I'll send you some examples. I've got, I've got this new site I just put up called thecancelpage.com. It's got a bunch of free. I've been using this, what I built over the summer with AI, because I've been messing with AI like everybody else. In fact, I think I showed it to you. You saw that I put a lot of work into the design and branding, not feeling like AI slop. Um, but it's got an offer library in there so you can see examples of different offer pages and like what they look like. So you can try to work on your take rate.
Speaker A:
Ooh, that's thecancelpage.com. I got that loaded up. This is nice. I love stuff like this that like, hey, here's just a library of stuff to go through. Like, oh yes, please.
Speaker B:
Chatbot trained on all my newsletters and like, it's just been really fun because I was like, you know, regardless of what I do 5 years from now, it's going to have AI involved in it. So I need to get better at it.
Speaker A:
Yes. I think, you know, being a software developer at this moment, this is our industrial revolution. Like previously we were farmers working the land without power tools. Now suddenly they're like, here's a diesel tractor, go.
Speaker B:
Right.
Speaker A:
We're like, what? Like, all right, you better figure it out. So I think that's, we're all, we're all feeling that. Okay. Uh, Matt Holman, subscription prescription. And thecancelpage.com. And I believe you have a podcast as well.
Speaker B:
Yeah, I got a newsletter and podcast called Subscription Prescription. You can get links to it.
Speaker A:
Subscription Prescription. Okay.
Speaker B:
Yeah. At thesubscriptiondoc.com is the website.
Speaker A:
At thesubscriptiondoc.com. All right. We will include that in the show notes. Matt Holman, thank you so much.
Speaker B:
Thanks, Kirk.
Speaker A:
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