Take Your Business to the Next Level With Subscriptions

0:00It's not about hoping somebody forgets their subscription is going to renew and capture another month out of them. It's about building so much value, they'll never leave and they'll never want to cancel. Hello and welcome to Shopify Masters, your companion for starting and building a business. I'm Adam Levinter. Are you utilizing all the tools and resources available to you in order to grow your business? Maybe you're waiting to learn about the industry events near you that can help you reach your goals. For subscription economy leader, Paul Chambers, creating the Subscription Summit, the first and only conference devoted to those who work within the direct-to-consumer subscription industry was a complete no-brainer.

0:40Paul is the CEO and co-founder of the Subscription Trade Association, Subta. He's also the co-founder and CMO of Capsiva, a rapidly growing CPG pain relief product on top of a number of other things he's doing, including being the CEO and founder of Core3 Solutions, the parent and holding company for Element 5 Digital, Mocha Boca, Rocket Effect, and Gentleman's Box. Paul has been starting and scaling and selling companies on Shopify's platform for years. He's here now to share strategies and tools for subscriptions and detail how your business can benefit from implementing a subscription model.

1:17Paul, welcome to the show. Yeah, thank you. I really appreciate this opportunity. We've spoken to a lot of businesses on this show where the founders have years of entrepreneurial experience, some dating back to college. But yours is interesting because your entrepreneurial experience dates all the way back to the fifth grade. Yeah. So let's just go back there for one moment. What was that business back in fifth grade that you were running? I was selling tongue splashers. They're these candy little like gumballs that painted your mouth a color when you ate them. So you sold a blue gumball. Everybody would have a blue mouth after that.

1:55And it was fun because they came in these paint cans. And I would have all these empty like paint cans afterwards. Very interesting. And over the years, you continue to have these big entrepreneurial ventures. You go to undergrad at Michigan State. And if I recall, you didn't really want to go to university, but you stuck it out. You sort of knew early on that you wanted to be an entrepreneur. Is that right? Yeah, I started my business, my first business when I was in high school. And the first business I set out to build was an absolute failure. I borrowed$10 ,000 from my grandparents because I wanted to build an internet service provider.

2:32So we all remember those good old days of the ISPs and dial-up internet. And I built a business model, proved to my grandfather that it could work. And that was my very first recurring revenue business, actually, and failed miserably.

2:48Bought all the wrong equipment, didn't know what I was doing, So I started building websites from there. And I had built a nice business. And I didn't want to go to college. I got into Michigan State. I wanted to keep building the business. And my mom said, all of my kids will have college degrees. And I was like, oh, that's awfully scary, the way she presented that. But I went because she made that demand. And I always tell everybody I started for my mother, but I finished for myself. And it was extremely valuable going to Michigan State. Any regrets looking back or all good things from there?

3:18So what's interesting is you'll hear me remark from time to time, I don't live life with regrets. I only look back and find ways I want to make improvements or changes. I've been through an awful lot. Just as I set off to Michigan State, my father died in a plane crash and completely changed the course of my time there. And I took over his business at the time and had a lot of things going on in my life and pushed through. Graduated college, had a bunch of other businesses that probably shouldn't have started but did. But those all shaped me for who I was and who I am today. And so, yeah, not one bit of regret because everything builds on top of the next thing.

3:59And your father was a physician, but also an entrepreneur as well. Is that right? Yeah, he was a leading hair transplant restoration in the United States, hair restoration doctor. And he came from Greece when he was 18 with$100 in his pocket, put himself through medical school with a Fulbright scholarship and some loans. and learned the technique of hair transplants and built a patented technique that he eventually went on to build 16 offices worldwide. And, you know, it was only his passing that stopped the business, but he had a great, great success with what he was doing. He's on Oprah and Donahue and Geraldo back in the day.

4:35And I remember coming home from school one day and seeing my dad on Oprah. That was a very interesting phenomena. But I learned a lot from him in terms of like the hustle mentality. Because if anybody, if he can come to this country on a boat with$100 in his pocket and build a business the way he did, anything's possible. There should be nothing stopping me from building a successful business if he could do it. Did you feel like you had an alternative path at all after college? Or for you, was entrepreneurship really it? Entrepreneurship was always it. When I was younger, friends and my parents and different people would ask me what I want to be when I grow up.

5:13And jokingly, the answer was always rich. I didn't really realize what that meant at the time. And that's not the same answer today. The answer today is just to feel, be happy and fulfilled. And I've got four kids now and that changes a lot of things. But I always knew I wanted to run my own business. In elementary school, I started selling candy. And in high school, I started selling keychains and then building the internet service provider and just always found ways to hustle things out and to get there with it. I've had so many different, my father was a big influence, but so was my grandfather.

5:47So was my stepfather. My mother always kept me grounded. And so those things really helped kind of lead me down that path of building businesses. So how many businesses today are you a founder of? And the second part of this question is how many of these businesses are still in operation? there's been many adventures and i would never call anything a failure because again they're like lessons learned and so they're definitely adventures but you know two dozen probably businesses over the course of time everything from a chain of gourmet popcorn stores around metro detroit here at one point i had five or six retail locations between malls and main street down to you know most recently invested in a pizza robot my main my main focus and i've had a marketing agency I've helped put my eyes and ears into for the past 25 years.

6:38And that's what the internet service provider business scaled into. But where most of my time goes today is building SubSummit, our conference for consumer subscription companies. Do you have a filter by which you decide how many businesses you want to be involved in at any given time? And how do you split time over the course of a day or a week in terms of all of these companies, these investments that you've made? The largest reason why I'm able to, for the most part, is just amazing teams amongst all the organizations. And I'm able to come in, lend my knowledge and expertise, and share the things that are important to me and where I want to see us going.

7:20And the team takes that vision and runs with it. I'll give you an example. Two years ago, I said to my brother who works with us here over at SubSummit, I said, you know, I would love to walk into the studio, record a podcast, and walk out and the rest happens from there. And the rest being, it's saved down to the proper files and folders. It is cut up into shorts we put across social media. It gets posted on my social media on my behalf. And in the beginning, I had to help with a lot of it and help do it all. And now I'm so blessed and so lucky that that happens. And a lot of it is conveying to the team what we want to see and where we want to go.

8:01And I've got Alex and Bradley sitting in here with me right now, making sure when I walk in, the audio board's ready, the mics are tuned perfectly, and recording and everything else happens. And same thing, I've got an amazing team over at Zabon, Element 5, and Capsiva, all those different brands that we're running. I'm able to kind of lend my knowledge and expertise, and the team takes it from there. I'm joined by Paul Chambers, a subscription economy leader and the co-founder of SubSummit. Hope you're enjoying our conversation. If you haven't already, please subscribe or follow Shopify Masters wherever you get your podcasts and leave us a review or feedback.

8:36For the show, it certainly helps our audience to find us. Paul, let's jump right into what you're doing now and the origins of the Subscription Trade Association, which dates all the way back to 2016. So we were running Gentleman's Box at the time, which was a subscription commerce brand for, we would say, can make any man into a true gentleman. It was a monthly subscription box of ties, pocket squares. It would give you a whole ensemble every single month that would up your style game, we would say. And that started when Chris and John, my co-founders here at SubtonSubsummit, had an idea for it.

9:16They brought it to my marketing agency, and we decided we'd build it out in exchange for equity in the company.

9:24About 2016, it was the summer of 2016, we were talking about attending a conference as Gentleman's Box. And Chris and John were telling me about it was kind of an e-com conference, and they were going to meet these other people. And I was like, guys, we should find a subscription conference to go to. That's where we want to meet. We need to learn more. We wanted to absorb knowledge from amazing people around us and some super intense Googling, and it didn't exist. And you know the entrepreneur mindset. When something doesn't exist, you're like, oh, well, I should just build that. That sounds easy.

10:02Turns out running a conference is one of the most difficult businesses I've ever built. And I refer to it as like a wedding on steroids. You want everybody to be happy, from the speakers to the sponsors to the attendees. You want to create an amazing experience for everybody. But we did it. We gave ourselves a three-month runway. We wanted to hold the first one in Detroit. So we called 200 of our best friends and hustled it out, reached out to people. And we were able to, within three months, build a conference with slightly over 200 attendees. FedEx wrote us a sponsorship check, among a couple others.

10:37And we did it. And we held the first event. And we're like, wow, that was awesome. And we didn't expect to make any money, by the way. We were expecting to break even. We made a couple bucks. We're like, oh, this is cool. But most of all, we accomplished our goal of learning from others. I remember sitting there with Michael Burkine from FabFitFun. And he's like, guys, like, you know, he gave us a couple tips. And we applied those to our business immediately. And saw a media ROI with what we were doing. So the conference just, you know, kind of took on a life of its own from there and continue to grow and scale.

11:07But you, John, and Chris are still running Gentleman's Box simultaneously, right? This is pre-acquisition. How do you decide that you want to take Subta Forward? How do you decide that you want to sell Gentleman's Box? Well, so we started to see the potential with the conference and where we were going. And the conference is super fulfilling because the connections, see the conversations we had come out of it. I remember a very large streaming provider coming up to us and saying, I learned something from the underwear subscription talk that we took back and applied to our business that had a six-figure impact on our bottom line.

11:47like wow first of all like streaming and underwear subscriptions two totally different worlds but they were able to learn something from each other and we're like this is so cool and this is so fulfilling and the biggest part for me i i feel like life is too short to just come here work a job sleep eat sleep just have routine and rinse and repeat and not have an impact i really want to be able to make an impact on people's lives as much as possible And there's a way through that with SubSummit. If we can improve a company's vision on customer service, they can then take that and put that out there.

12:24And it can impact hundreds of thousands, if not millions of lives. I remember the day going over to my grandmother's house and her being in tears because the Comcast rep forgot to put her on hold. and had said to his buddy, I'm going to give this woman a discount because she's probably going to be dead soon anyway. And that to me has resonated my entire life. Like, wow, if we could fix Comcast customer care issue on their team and teach them better principles about just how better retention or better pricing or just anything in there, we could have an impact upon millions of people's lives. And so that was an obvious reason to move forward at the conference.

13:06So along the way in 2019, we found a happy home for Gentleman's Box with Cigar Club. They were able to finish the acquisition in 2020. That's allowed us to fully focus on building an amazing event. Yeah, it's interesting. The evolution of this thing is remarkable. I was at that first version of Subscription Summit back in Detroit in 2016. I got to say it was super raw, a little disorganized. But the speaker lineup was incredible. I mean, you guys had Katja Beauchamp from Birchbox. You had the FitFabFun guys, as you've mentioned. I mean, the stage setup was really poor. The lighting wasn't good, but nobody really cared because of the quality of the people in the room.

13:46And today you guys have carried that forward so well. It's just become a lot more professional in 2023. I mean, Adam, I remember like we had our first speaker up on stage and I look at the stage and I'm like, something doesn't look right. And we didn't have a backdrop. There's no back curtain on the stage. And I'm like, oh my gosh, we have to fix this. So in between one of the breaks, we were adding back curtains up there, you know, drapery and the lighting there was done by like the people who had done lighting at my wedding. I just had to call on them. I'd never run an event before, so I had no idea.

14:16And we figured it out. And, you know, here we are today. We'll be over 2 ,000 attendees at this year's Sub Summit and super excited for and so fortunate for how far it's come.

14:31Yeah. Yeah. And you consistently deliver great content leading up to the summit. Folks can read your research online. You guys publish newsletters and incredible market research on the subscription economy, trends, other analytics and metrics regarding the industry. When you look forward into 2023, what are some of the key trends that you're seeing in the subscription economy that are worth mentioning? Yeah, so you'll hear my business partner, Chris George, mention a lot, the 2023 year is the year of retention. And we lean into that a lot too with the theme at our event of engage and rich. And the biggest things that we're encouraging brands to do and what we see brands doing is along those lines.

15:22Find ways to continue to engage your customers, your subscribers, you know, even those that haven't purchased from you. And then enrich those relationships, enrich the offering, enrich the product, because you need to find ways to continue to tap into that current market or if your subscription brand, keep them on longer. And what we really try and talk about a lot is it's not about hoping somebody forgets their subscription is going to renew and capture another month out of them. It's about building so much value they'll never leave and they'll never want to cancel. If somebody is getting too much, like we get chewy dog food at my house for our dog on the subscribe and save.

16:03And I have a little bit of anxiety because I'm worried it's going to show up at the wrong time. But this month, my wife goes, you know, hey, we're getting low on dog food. When's it going to show up? And I go in to like check the shipment date. I was like, oh, it's on its way. And after a couple times, Chewy's figured out the frequency. and now it's arriving right at the right time. And they know the pace at which our dog's through and they use probably AI, the algorithm, whatever it is there that's driving that way to get it there. And so that's smart e-commerce, right? That's delivering value.

16:36So you mentioned Chewy. What other companies do you guys watch and who do you assume are sort of the leaders in this world of subscription? Yeah. Yeah, one of my favorites out there, and I call them the most polite subscription in the world because Please is in their name, is Vinyl Me Please. They're a vinyl record subscription. And what's fun about them is really they're more of a membership than anything. They're really cool because they provide so much value in what they do in their approach. When they originally started, it was getting a new vinyl record every month, every quarter, whatever frequency it was that you selected.

17:16And over time, they kept layering in more and more value into what they were doing. And so now, you know, as a member, not only do you get a new vinyl print, you know, every month, but also you're getting access into exclusive limited runs that they do. If you go to shop in their store, you're getting member pricing that they offer there. And so they're really layering in so much there. And also they created a place where you can trade and exchange vinyl records. You can talk about the records that you have. And so it really is creating so much more there. So I really admire them. And I had a fun talk with the CEO and founder of Skin Tea recently.

17:56Skin Tea, they're collagen sparkling teas. I had to read from their website here. And they provide a lot of health and wellness benefits to what they're doing. But she said they're diving into retail more now. But they started with D2C, subscribe and save, and just direct to consumer. And what she learned from her consumers, and especially from her subscribers, is set the stage for them continuing to grow and scale. They're their most rabid fans, and they're constantly providing feedback. And there's so many lessons learned in there and feedback that they've given that it helped them build their brand faster and smarter going forward.

18:38So it's really fun to see. And it's a great way to lean into that and understand how that data can help you build a stronger brand. Side note, we just actually finished a great episode with Matt Fiedler, the founder of Vinyl Me, please. You can check that episode out on Shopify Masters. Paul, I want to ask you about stats on the subscription economy. So there are so many different metrics and stats that have been thrown out there. UBS did a study, I think two years ago. Juniper Research just did one that has the global subscription economy growing 22 % annually through 2026. What are you guys seeing in terms of your team and the size and growth of the economy itself?

19:19Yeah, so we're seeing continued growth. And I think it's in so many different ways. You know, coming out of COVID, there's the quote, unquote, great unsubscribe. Because I think, you know, you'd seen a lot of people subscribe to different things, whether it be Bippy or, you know, who gives a crap for toilet paper that they couldn't get at the time, or HelloFresh for meals. And so as people started to get back into their previous routines and habits, they canceled those services. But I think there's a lot that came out of that too, in terms of lessons learned and ways to approach things differently.

19:56I remember having a conversation with a fairly large fitness company, a gym company, and they talked about being regulated in certain states to allowing people to cancel. Because A lot of the famous gym membership models will sign up, you're locked in for 12 months, and you can't cancel unless you move away from the closest one. But in California and New York, they're forced to allow people to cancel anytime. And what they discovered through that was people that canceled, let's say, after one or two or three months ended up coming back. But those that had to stay on for 12 months, they rarely saw them ever come back because they're so upset about being locked in and feeling trapped.

20:41And so now today, more and more of these gyms and fitness centers will offer cancel anytime. It's kind of the norm now, actually. You see Planet Fitness does that, like first month, you know, this and cancel anytime, no obligation. And they learned by caring about your customer and respecting them just as much as they hopefully respect you, you build a more long-term relationship.

21:10And so I try not to look at churn in a bad way. Churn is maybe a temporary thing sometimes, giving people the ability to pause and move on. So coming back to your original question, we see that slowing down. There's an upper limit on the number of subscriptions people want and have in their lives. Truebill, which is now Rocket Money, shared on our stage last year that 16, 17 subscriptions is kind of what you're seeing the average consumer, have some of our recent data suggesting 61 % of consumers have between one and four subscriptions at least. And so you're going to start to see what's with all these streaming providers out there.

21:51How are people going to bundle and pull those together? How are people going to manage the various different subscribe and save replenishments that they have? So that's a lot of where the conversation is going right now. Do you think if interest rates and or inflation hang around for longer than anticipated, that we will continue to see more subscription fatigue? Or do you not think there's an impact there from a macro standpoint? point it depends if oftentimes subscribe and save can save people money and so you might see more of that happening because if they're going to the store to get something and the cost is going up there but if they can subscribe and save and get it for a lower price point maybe they will um look at something like that more so than one-off purchases as a way to save money now i don't think that's going to be a big driver there but yeah for discovery and delight it very well could be.

22:45But that's where you have to just look at other ways to maximize that value of what you're giving to people. And then two, looking at your subscribers as great resources as to insight into your product can be so valuable. There's a company that I'm close with and help advise called Kepceva. They're like a pain relieving gel. And so the insight into those subscribe and save customers is out of all the purchases, how many are subscribing and saving? Then how many are keeping renewing it. And that'll tell you how well that product is working, in my opinion. If there's one-off purchases, it means that it's not working well.

23:22But if more people are subscribing to it and continuing to get it more, okay, this product is working well and people are really liking it. And you can see how often they go through it and things like that. Historically, we've seen a lot of these consumer industries being focused in the world of subscriptions. So pets, food and beverage, apparel. Now we're seeing a lot of movement in some other industries like education, automotive, travel. We saw some announcements with Alaska Airlines this year. We've got innovative subscriptions happening from Taco Bell and Panera Bread. What other industries do you think are going to be moving into this space that aren't already in it?

23:58So that's interesting. So I looked up Taco Bell the other day to see what happened to their Taco Pass. They paused it for the moment. They're trialing it. I thought it was a good way because how well Panera's coffee subscription worked for me. And the frequency, when I had the coffee subscription, the frequency I went to Panera had significantly increased, not for coffee, but for other food. And it worked. And I actually saw an article recently that suggested how successful they've been with it in terms of kind of following the Amazon model. So they started incorporating other pieces into it. They have their coffee subscription.