{"id":13369,"date":"2019-11-01T11:42:08","date_gmt":"2019-11-01T10:42:08","guid":{"rendered":"https:\/\/chartmogul.com\/blog\/?p=13369"},"modified":"2023-08-11T11:14:34","modified_gmt":"2023-08-11T09:14:34","slug":"busterbox-segmentation-ltv","status":"publish","type":"post","link":"https:\/\/chartmogul.com\/blog\/busterbox-segmentation-ltv\/","title":{"rendered":"How BusterBox is using segmentation and LTV to grow to \u20ac100k in MRR"},"content":{"rendered":"\r\n

What is BusterBox?<\/strong><\/h2>\r\n\r\n\r\n\r\n

BusterBox<\/a> is a monthly subscription box that delivers healthy treats and fun toys for pets to thousands of customers in Ireland and the UK.<\/p>\r\n\r\n\r\n\r\n

The mission of the team is to offer products that are naturally produced and that don\u2019t include chemicals that can harm a dog. And all of that at an affordable price point compared to traditional pet stores.<\/p>\r\n\r\n\r\n\r\n

\r\n

We want to make as many dogs happy as we possibly can and save their owners money compared to physical pet shops.<\/p>\r\nLiam Brennan, Co-Founder<\/cite><\/blockquote>\r\n\r\n\r\n\r\n

I spoke to Liam Brennan, one of the 3 founders of BusterBox, to learn about the unique challenge subscription box companies face and how ChartMogul is helping to solve them.<\/p>\r\n\r\n\r\n\r\n

The Challenge: The subscription box economy is different<\/strong><\/h2>\r\n\r\n\r\n\r\n

Liam admits that running a subscription box company is a balancing act.<\/p>\r\n\r\n\r\n

\n

It’s like walking a tightrope and with subscription boxes. There are so many different things going on.<\/p>\n Tweet this quote<\/a>\n <\/blockquote>\n\r\n\r\n\r\n

At any given moment there are so many levers that you can pull. You can invest in a channel, which has a slightly higher CAC but gives you better customers, who repay the investment faster.<\/p>\r\n\r\n\r\n\r\n

The challenge is to find the right recipe.<\/p>\r\n\r\n\r\n\r\n

Unlike SaaS founders, most people who sell subscription boxes are not so focused on their revenue data \u2014 in many cases, they don\u2019t even know what the relevant metrics are and why they should matter to them.<\/p>\r\n\r\n\r\n\r\n

In addition, while there are similarities between SaaS and subscription boxes, Liam suggests there are also some big differences in the two models. Entrepreneurs who want to sell subscription boxes need to take them into account.<\/p>\r\n\r\n\r\n\r\n

\r\n

If you have a good SaaS product, you have a much lower churn and a much higher lifetime value, but your cost to acquire a customer is typically much higher too, and it takes much longer to get somebody signed up. Whereas, with the subscription box, the churn typically is a bit higher, but you can sign people up much quicker and much cheaper than an equal size software company.<\/p>\r\n<\/blockquote>\r\n\r\n\r\n\r\n

In addition, subscription box companies need to keep a close eye on the cost of the boxes they are selling and make sure they have a healthy margin.<\/p>\r\n\r\n\r\n\r\n

Understanding the value of tracking and analyzing their data<\/strong><\/h3>\r\n\r\n\r\n\r\n

Liam admits that at the beginning of BusterBox they weren\u2019t very focussed on metrics either, but they quickly realized the value of measuring and understanding their subscription data.<\/p>\r\n\r\n\r\n\r\n

\r\n

We weren\u2019t using anything specific \u2014 we were looking at the dashboard in Subbly<\/a>, our ecommerce platform.<\/p>\r\n<\/blockquote>\r\n\r\n\r\n\r\n

Liam admits that Subbly has been instrumental in helping them grow their business. But from the beginning of BusterBox, he and his co-founders knew that understanding their subscribers and their metrics was the key to growing their business. And that required a dedicated tool.<\/p>\r\n\r\n\r\n\r\n

\r\n

About 3 months in, we started using another tool for subscription analytics, but the data wasn\u2019t correct. We were spending more time trying to figure out churn ourselves, using a combination of that software and Stripe and it was never 100% correct.<\/p>\r\n<\/blockquote>\r\n\r\n\r\n\r\n

Tracking churn proves a challenge<\/strong><\/h3>\r\n\r\n\r\n\r\n

Liam shares that involuntary churn is one of the big issues in the subscription box niche.<\/p>\r\n\r\n\r\n\r\n

Unlike SaaS, these companies are selling to end consumers who would often use a disposable credit card or forget to update an expired card.<\/p>\r\n\r\n\r\n\r\n

Because of that, BusterBox needs to be flexible while making sure they don\u2019t keep sending boxes to people who are not paying for them.<\/p>\r\n\r\n\r\n\r\n

\r\n

If a customer doesn’t pay, and we don’t automatically cancel them, they go into the unpaid section for 30 days. A lot of the time they’ll come back, it’s just the market that we’re in.<\/p>\r\n<\/blockquote>\r\n\r\n\r\n\r\n

Liam and his co-founders needed a reliable tool that would give them accurate data.<\/p>\r\n\r\n\r\n\r\n

\r\n

We were getting highly inconsistent data in regard to the churn and customer lifetime value. And there was a lot of manual work involved.<\/p>\r\n<\/blockquote>\r\n\r\n\r\n\r\n

They came across ChartMogul, but the platform didn\u2019t have that feature either. Liam reached out to the support team and made it very clear how crucial this was for BusterBox:<\/p>\r\n\r\n\r\n\r\n

\r\n

We reached out to your support and said “Look, if you can add this feature in, we’re happy to come over to ChartMogul.” The customer service was unbelievable<\/em>! Within two days the feature was added on ChartMogul and that was pretty much it, and we just moved over straightaway.<\/p>\r\n<\/blockquote>\r\n\r\n\r\n\r\n

The Solution: ChartMogul provides the full package<\/strong><\/h2>\r\n\r\n\r\n\r\n

Liam and his co-founders were greatly impressed with the speed with which ChartMogul responded to their request and that wasn\u2019t the last time they received help from the support team.<\/p>\r\n\r\n\r\n\r\n

\r\n

Your salespeople were pretty direct with us from the early rollout. And obviously, they added that feature within two days, which just completely blew us away \u2014 we never thought a company would be able to move so quickly to add something in. And they actually worked with us for about a week being available on calls, etc. They pretty much told us everything about metrics and how to use the platform correctly. It was a really, really smooth process.<\/p>\r\n<\/blockquote>\r\n\r\n\r\n\r\n

Liam\u2019s journey began with a Google search for a tool that would solve their challenge with managing churn.<\/p>\r\n\r\n\r\n\r\n

There were other alternatives they explored, but none of them seemed to offer the flexibility \u2014 such as connecting multiple Stripe accounts \u2014 that they needed.<\/p>\r\n\r\n\r\n

\n

ChartMogul looked a lot more receptive to subscription boxes and a lot more friendly.<\/p>\n Tweet this quote<\/a>\n <\/blockquote>\n\r\n\r\n\r\n

ChartMogul is the go-to tool for managerial decisions<\/strong><\/h3>\r\n\r\n\r\n\r\n

Liam shares that ChartMogul is the first tool he looks at when he checks in the morning.<\/p>\r\n\r\n\r\n

\n

I want to see where our MRR is, I want to see what our churn is, I want to see what our LTV is predicted to be. ChartMogul comes really handy and really powerful for this.<\/p>\n Tweet this quote<\/a>\n <\/blockquote>\n\r\n\r\n\r\n

In addition, the 3 founders have a weekly meeting where they look at the sales and the overall performance of the company.<\/p>\r\n\r\n\r\n\r\n

With customers coming from wildly different channels \u2014 affiliate sales, inside sales, their Supply site, a standalone Shopify store \u2014 and being signed up on many different plans, it can be challenging to understand the performance of some channels and\/or plans.<\/p>\r\n\r\n\r\n\r\n

ChartMogul helps the team to break down their revenue plan by plan and understand how much it costs to bring a new customer in, what\u2019s the payback period of each, and how the lifetime value (LTV)<\/a> varies across channels.<\/p>\r\n\r\n\r\n\r\n

Armed with this knowledge, the founders can understand which channels are most effective and what\u2019s the best way to spend their marketing budget.<\/p>\r\n\r\n\r\n\r\n

Improving retention with cohort analysis<\/strong><\/h3>\r\n\r\n\r\n\r\n

Liam admits that the time of the month when boxes are sent out is exciting, but it\u2019s also when most of the churn occurs too.<\/p>\r\n\r\n\r\n\r\n

For most people, getting the box in the post is great, but also a reminder that they are paying for this service every month.<\/p>\r\n\r\n\r\n\r\n

That\u2019s why BusterBox sends out a survey to their customers after each batch of boxes goes out. In this survey, they ask about various aspects of the experience \u2014 how happy they are with the contents of the box, with the delivery, how they feel about the price\/quality ratio, and so on.<\/p>\r\n\r\n\r\n\r\n

Then they look to the cohort analysis<\/a> chart in ChartMogul to find trends in their data:<\/p>\r\n\r\n\r\n\r\n

\r\n

We go to the retention chart, and we look at how many customers churned in a given month. And we can say “OK, the churn may have gone up a bit in July, what was in the box?”<\/p>\r\n<\/blockquote>\r\n\r\n\r\n\r\n

ChartMogul and the survey help BusterBox optimize the contents of the box and keep their customers happy.<\/p>\r\n\r\n\r\n\r\n

The Result: ChartMogul helps to get alignment across the team<\/strong><\/h2>\r\n\r\n\r\n\r\n

Last year, the BusterBox put a goal to reach \u20ac50,000 in MRR by Christmas.<\/p>\r\n\r\n\r\n\r\n

They set up the goal in ChartMogul and it stayed with them every step of the way.<\/p>\r\n\r\n\r\n\r\n

Now they\u2019re making strides towards their new goal of doubling that.<\/p>\r\n\r\n\r\n\r\n

Focusing on improving retention and LTV<\/strong><\/h3>\r\n\r\n\r\n\r\n

For Liam, the biggest challenge in the subscription box economy is not getting new customers, but identifying those who are going to stay with you.<\/p>\r\n\r\n\r\n\r\n

\r\n

Once you understand marketing and you get good at direct response marketing \u2014 because that’s what a subscription box marketer will be good at \u2014 there isn\u2019t really a long sales cycle, there isn\u2019t a lot of heart that goes into purchasing a subscription box. The goal is to reach that customer and get them to sign up for as cheaply as possible.<\/p>\r\n<\/blockquote>\r\n\r\n\r\n\r\n

But that\u2019s where the easy<\/em> bit ends. Because the decision to sign up is so easy and emotionally-driven, it\u2019s equally easy to lose customers if you\u2019re not targeting the right fit and not doing a good job with your boxes and your customer service.<\/p>\r\n\r\n\r\n\r\n

\r\n

If you’re not keeping your customers you bring really bad churn, it doesn’t really make a difference how many people you’re signing up because they’ll just leave and you lose money.<\/p>\r\n<\/blockquote>\r\n\r\n\r\n\r\n

This is why the North Star metric that Liam and his co-founders are tracking is customer lifetime value (LTV).<\/p>\r\n\r\n\r\n\r\n

The team uses ChartMogul not just to track their average LTV, but also to understand and optimize their marketing spending based on what customers each channel attracts.<\/p>\r\n\r\n\r\n\r\n

\r\n

Every time we bring in another affiliate or experiment with a new marketing channel, we create a new segment in ChartMogul and start looking at a few key pieces of data \u2014 how many people stay with us from Box 0 to Box 1, etc. This pretty quickly allows us to understand what channels are going to be profitable.<\/p>\r\n

Once we find a channel that looks like a great opportunity, we\u2019d open the floodgates and pour as much of our marketing budget as possible until that channel is saturated.<\/p>\r\n<\/blockquote>\r\n\r\n\r\n\r\n

Final words: You won\u2019t get anywhere without understanding your business<\/strong><\/h2>\r\n\r\n\r\n\r\n

Liam\u2019s final advice is for like-minded entrepreneurs interested in the subscription box economy.<\/p>\r\n\r\n\r\n

\n

If you don\u2019t get serious about understanding your subscription business, you\u2019ll never get anywhere.<\/p>\n Tweet this quote<\/a>\n <\/blockquote>\n\r\n\r\n\r\n

He often speaks to people who run subscription box companies and finds that too many still don\u2019t care about tracking and measuring their revenue metrics.<\/p>\r\n\r\n\r\n\r\n

\r\n

A lot of these subscription boxes are running absolutely blind. And they actually don’t really value their metrics the way a SaaS founder does. It\u2019s almost as if they think they\u2019re just selling boxes every single month \u2014 that’s not the case at all.<\/p>\r\n<\/blockquote>\r\n","protected":false},"excerpt":{"rendered":"

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