Latest / eCommerce Podcast / Subscription Models for eCommerce That Grow Your Customer Lifetime Value | Thomas Lalas

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Subscription Models for eCommerce That Grow Your Customer Lifetime Value | Thomas Lalas · eCommerce Podcast

• 0:00
  Welcome to the E-Commerce Podcast with me, your host Matt Edmundson Now this is a show all about delivering E-Commerce, well helping you deliver E-Commerce, wow.
• 0:10
  And to help us do just that today, I am chatting with Thomas Lalas about retention marketing of all things.
• 0:18
  We're gonna get into that.
• 0:19
  Yes, we are gonna pick his expert brains.
• 0:22
  But before we do, let me invite you to stop on by the website, ecommercepodcast.net, sign up for the newsletter.
• 0:29
  And all the show notes and links go to your website, no, they don't, go to your inbox automatically for free.
• 0:36
  And you can get that just by signing up, which I appreciate on its own is just really boring, right?
• 0:40
  It's the standard podcast newsletter, isn't it?
• 0:43
  Well, let me tell you, we are jazzing it up.
• 0:45
  There's going to be some extra content, some extra stuff in there.
• 0:49
  We're trying to make that newsletter a lot more, you know.
• 0:52
  A lot less lazy is probably the better way to put it and be a bit more creative with it.
• 0:57
  So do make sure you sign up for that at ecommercepodcast.net.
• 1:02
  Now let's talk about Thomas, a former military policeman, which if you're like me, makes me instantly think of Jack Reacher.
• 1:09
  He's turned subscription whisperer, which I think is a great title and helps million dollar e-commerce brands keep their customers coming back for more.
• 1:18
  When he is not slashing churn rates,
• 1:21
  and maximizing retention for eight to nine figure brands.
• 1:25
  This ex academic and startup founder is tackling his most challenging role yet.
• 1:31
  Being a dad.
• 1:33
  yes, Thomas, welcome to the show, man.
• 1:34
  Great to have you.
• 1:35
  How are we doing?
• 1:37
  Pleasure being here.
• 1:38
  I'm really excited.
• 1:39
  mean, you are such an amazing host.
• 1:41
  I can't wait for this conversation.
• 1:42
  So let's get going.
• 1:44
  gets you everywhere on this show Thomas.
• 1:45
  I'm not gonna lie That straight out of the I'm not being rude but it's it's in the how to be a great podcast guest book 101 Just say really nice things about the host right at the
• 2:00
  start and they'll like you
• 2:02
  or just be a great host and people will just naturally give you compliments.
• 2:07
  And again, well done.
• 2:09
  It's working.
• 2:11
  Let's just change the topic of this show and call it feeding Matt's ego.
• 2:15
  That's what we should.
• 2:19
  man, love it, love it, love it.
• 2:21
  It's great to to you.
• 2:22
  Where about, I mean, I'm in the UK, it's seven o'clock in the evening here.
• 2:26
  I've got a belly full of delicious food.
• 2:28
  Whereabouts in the world are you?
• 2:30
  Right now I'm in Greece.
• 2:31
  I used to be in the UK, so it's nine o'clock my time.
• 2:35
  And after that, baby is going to call for, you know, to go to bed and I'll be there as a good daddy.
• 2:42
  yeah, that's the last thing of the day, you know, interesting conversation with a fellow Liverpoolian.
• 2:49
  Hi.
• 2:51
  Yes, I'm a Liverpool fan and I used to live in Manchester, but I supported Liverpool.
• 2:55
  I didn't tell anyone.
• 2:56
  I was in Manchester last night and I won't mention the Liverpool game because we don't want to talk about it.
• 3:02
  But I was in Manchester last night with my long-standing friend.
• 3:06
  We've been friends for 30 years and he happened to be visiting Manchester.
• 3:10
  So Liverpool is not that far if you don't know British geography from Manchester, it's like 40 minutes on the train.
• 3:15
  So I caught the train into Manchester.
• 3:18
  He and I had some food, just catching up.
• 3:20
  It really great.
• 3:21
  And we found this pub called
• 3:24
  What was it called?
• 3:25
  Something like the stinky cow or the stinky pig or something like that, or the craft.
• 3:29
  I don't know.
• 3:29
  It something to do with pigs, I think.
• 3:31
  And it was great because it had these booths and it was like a sports pub.
• 3:35
  And in each booth that would seat six people at the end of it was a TV.
• 3:38
  So you got your own TV.
• 3:39
  So you didn't have that thing where people couldn't see the TV.
• 3:42
  So we sat and we had a, we had a beer and we watched the game and we left, so disappointed.
• 3:47
  Uh, but yes, it's just, was fascinating watching a Liverpool game in Manchester.
• 3:53
  The first time I'd done that.
• 3:54
  Yeah, yeah, yeah, yeah and they actually showed the game which was also quite impressive so You know these these things also always awesome So tell us how did you get it?
• 4:08
  Forgive me if you're watching the video ladies gentlemen I'm I've got my cup of tea in my hand which I'm drinking my butter mint tea How did you get into?
• 4:17
  Retention marketing.
• 4:18
  What was the story there?
• 4:21
  It's always because of need.
• 4:23
  Usually people share their origin story and it goes something along like, I have this problem and I want to solve it, so now I'm solving it for other people.
• 4:33
  For me, it's more like a story of pain where I'm an ex-startup founder, among others, and I've done the academic circle, lecturing, and I'm an ex-military.
• 4:44
  But when I was in the startup world,
• 4:47
  I realized that we were growing, but acquisition was what was driving that growth, but not retention.
• 4:53
  And eventually the startup collapsed and I realized that we should have maintained the customers that we got.
• 5:00
  And because of that, when I transitioned from being the offer owner, the startup owner, and become a service provider, I realized that this is a great place to get started.
• 5:10
  Email, SMS, retention, subscriptions, et cetera.
• 5:15
  Something I was already familiar with.
• 5:17
  I've made a ton of mistakes on.
• 5:20
  I tried to fix it and eventually in the last seven years in the Ecom world, I've kind of powered through the ranks of the retention industry.
• 5:28
  and some people consider me, you know, they call me a wizard, an artist or like the best.
• 5:35
  So I'll take anything they, they share me with, but I feel pretty comfortable in this world.
• 5:40
  And I love digging into data and discovering patterns and innovating, connecting different services and different
• 5:47
  solutions in unexpected ways in order to get an edge over the competition.
• 5:53
  That's really good.
• 5:54
  I remember, it would have been 2012, 2013, somewhere in there.
• 6:03
  So a little while ago, we were running an econ business that sold beauty products at the time, right?
• 6:10
  And a friend of mine drew this sort of little triangle on a piece of paper.
• 6:18
  And in one corner, he put price.
• 6:20
  In another corner, he put quality.
• 6:24
  And in the other corner, he put service, right?
• 6:28
  So you got price quality and service.
• 6:30
  And he said to me, Matt, you can only have two.
• 6:34
  You can't have all three.
• 6:36
  In other words, you can't have a company that is really driving down, you know, give him really good prices, low prices to a quality product and deliver great customer service.
• 6:48
  But you know, the math don't work.
• 6:51
  And so
• 6:52
  When we were doing the beauty company at the time, we were a quality product at a low price.
• 6:58
  So our customer service was not great.
• 7:01
  Um, and so you had to go and get a lot of new customers, right?
• 7:03
  New customer acquisition was a big deal.
• 7:06
  Um, and I remember 20, 23rd, uh, 2012, I deliberately, after looking at that little triangle, Thomas, I, I said, no, we need to shift.
• 7:17
  We need to move from a sort of a low price, high quality product model to a.
• 7:22
  a quality product, still keep the quality product, but deliver quality service, which means our prices had to go up to be able to pay for the, you know, the increase in
• 7:32
  customer service that we were about to do.
• 7:35
  So you know what, we did this.
• 7:38
  And I wish I could sit here and say that the day that I did that, my business boomed, because it didn't at all.
• 7:44
  Our sales fell for the first few months.
• 7:47
  Where I noticed it was the following year was we grew by over 20 % and we grew so quickly because we started to get a lot of returning customers.
• 7:56
  And it took a little while for the returning customers to get used to the, or for customers to get used to this higher quality of customer service that we were trying to
• 8:04
  give and experience and so on and so forth.
• 8:07
  And then we got the returning customers back.
• 8:09
  So I am a big, big fan of...
• 8:13
  this idea of retention marketing in terms of, I know new customer acquisition is important.
• 8:18
  It's not the topic of today's podcast, but I'm a massive fan of retention marketing.
• 8:24
  I'm a massive fan of getting customers coming back time and time again to buy, because it really helped us out, you know.
• 8:31
  Absolutely.
• 8:31
  And something that I hear over and over again from brand operators is that they want somebody to fix their retention leaky bucket.
• 8:41
  Yeah.
• 8:42
  That's how they call it, know, leaky retention, leaky bucket.
• 8:46
  And the point is that you spend all this money, all this effort to acquire a customer.
• 8:54
  So you have a CAC of, you know, I don't know, 80, 90, $150, depending on what you're selling.
• 9:01
  And in order for most businesses to make their money back and break even, they need to have each customer to buy multiple times.
• 9:08
  Yeah.
• 9:09
  So that's why subscription is very important and retention is very important because it unlocks the, the true LTV of the brand.
• 9:18
  Right.
• 9:18
  And, and when the competition is so fierce, you need to be able to afford higher CAC to get customers that other brands can't afford to pay.
• 9:26
  So that's why it's very important to focus on retention.
• 9:29
  and I'm, and I'm seeing not, not many brands really pay attention to what's happening, post customer acquisition.
• 9:38
  They feel that.
• 9:39
  Their job is done once they get the customer because you know what with media buying the feedback is instant.
• 9:46
  It's daily.
• 9:46
  It's momentary.
• 9:47
  You you know exactly how they had performed but with retention you have to wait for a month to see if the person is going to buy again.
• 9:54
  So it's going to you don't have real time retention.
• 9:58
  You need to wait for you know 28 30 plus days and that is a low really slow feedback loop.
• 10:07
  So that's why I would like
• 10:09
  for brands to focus on retention and think of the first two weeks post-purchase as a part of the product, not as an afterthought.
• 10:18
  It needs to complement the product, the experience, the ads, the website, and to educate the first-time buyer so they can actually stop having objections, regrets.
• 10:32
  to be educated about the product, how it works, and to make it a part of the lifestyle.
• 10:37
  yeah, retention is not an afterthought.
• 10:39
  It should be a part of the product itself.
• 10:42
  Well, absolutely.
• 10:42
  And I think it should be a big part of your marketing spend as well.
• 10:46
  I don't think it's just something that you go, we'll just send emails and it's fine.
• 10:50
  I think you have to actually allocate budget because you know, the leaky bucket analogy, there's a great phrase which I've used a lot recently is you don't fix a leak in bucket by
• 11:00
  adding more water, right?
• 11:02
  And you just don't.
• 11:05
  And so it never sort of fixes it.
• 11:08
  And I guess the other...
• 11:11
  true ism about e-commerce is those with the deepest pockets win the most customers, right?
• 11:15
  So you, if you can, if you've got great customer retention, it means you can go higher on the cat, which means your new customer acquisition, the whole engine gets fed.
• 11:24
  Yeah, you can reinvest the money back into growth if that's your goal.
• 11:28
  Yeah, absolutely.
• 11:29
  Absolutely.
• 11:30
  But you're right about retention marketing.
• 11:34
  But what you do retention wise, it's not like I can do it now and A B test it today.
• 11:38
  You have to, depending on your product and your product's lifecycle, you've got to play a bit more of a long game, haven't you?
• 11:46
  So what have you, let's get into some tactics.
• 11:49
  Because I think, I mean, we can all agree with the principle.
• 11:52
  And if you can't agree that retention market is important after the conversation we've just had, I'm not sure how much.
• 11:58
  how much more this podcast is gonna help you today.
• 12:01
  But it's one of those things where I think the majority of people go, yes, it's good.
• 12:08
  I get the leaking bucket analogy and I need to stop the leak.
• 12:12
  I appreciate that.
• 12:15
  What are some of the things that we should be thinking about, Thomas, here in 2025 that maybe we're not?
• 12:24
  Are we still missing?
• 12:26
  the fundamentals or are other things that we should be looking at because we've got those down.
• 12:31
  When it comes to retention, yes, we are absolutely missing the plot on the fundamentals.
• 12:38
  It is a disaster, more often than not.
• 12:43
  It's quite easy to go and check on Shopify what your retention looks like.
• 12:51
  now we have two different categories.
• 12:52
  have brands that have on one time purchases and subscriptions and brands that go subscription only.
• 12:58
  For me, I specialize in subscription only.
• 13:01
  And I think that's the smartest thing to do to create a powerful subscription offer and to prove to your customers that they need your product again and again, and remove any, any
• 13:11
  objections from their head.
• 13:13
  And the goal would be for them not to cancel while when you have one time products, the goal is always to sell.
• 13:20
  as fast as possible and there are so many opportunities for you to pitch again in a different way that makes sense.
• 13:27
  There's not enough time to educate.
• 13:30
  You need to think about the next order which you have to drive.
• 13:33
  So that's why a lot of subscription first models.
• 13:37
  But it all starts with the offer.
• 13:40
  A bad product, a bad offer with bad economics cannot be fixed with a retention system because it's just the math is broken.
• 13:51
  It needs to be a product that makes sense and it's something that unlocks acquisition, something that people really want, but also something that people will keep wanting.
• 14:02
  And usually there is a starter kit, there is a great offer, the upcoming offers also matter.
• 14:07
  Because if let's say,
• 14:09
  there is an offer that includes a starter kit with a main product, a couple of freebies, free stuff, and then the second order is just the product by itself and sometimes it's
• 14:19
  even more expensive than the first purchase.
• 14:23
  By contrast, you're not going to like the second order, or you might be tempted to get all the freebies that were offered to you upfront and then cancel right away because you've
• 14:34
  just gained the system.
• 14:35
  But this is a customer where you've lost money as a brand.
• 14:40
  This makes sense for you to acquire this customer in the first place.
• 14:42
  You want the customers that will keep buying, break at least, break even, and then keep buying.
• 14:49
  This is the profit is.
• 14:50
  So the offer is the number one thing that brands need to really start restructuring.
• 14:57
  I see a lot of plain offers done and all subscription optimized.
• 15:01
  Just slapping the button of subscribe and save is not a subscription offer.
• 15:08
  This is the laziest thing you can do.
• 15:09
  And honestly, if you try to acquire customers purely on lower prices, you're going to be outspent by the competition.
• 15:18
  They're going to have a better offer, better retention.
• 15:20
  They're going to outspend you.
• 15:21
  You're done.
• 15:23
  So this is where we start.
• 15:24
  It's all about the offer to begin with.
• 15:26
  This is great.
• 15:27
  And this is very timely because actually we've been having conversations about one of our sites which has a one time purchase on it, but it also has subscription options on there.
• 15:41
  it's interesting, isn't it, this whole idea.
• 15:44
  By the way, let me give a shout out if you are in the subscription business.
• 15:47
  SubSummit, are you going this year?
• 15:50
  Not really, I mean, being a father, I can't really go places.
• 15:55
  Yeah.
• 15:57
  But I want to.
• 15:59
  Yeah, well, it's a great show.
• 16:00
  And I know Paul Chambers is coming on and I know we've had Chris George on and he had very similar philosophy to what you said Thomas and actually actual fact he almost talked me
• 16:12
  into just doing my supplement company on a subscription only model.
• 16:17
  Do I mean it's like, why would you want to do it any other way?
• 16:20
  Matt and is like, and I
• 16:22
  happened?
• 16:23
  He said he almost he almost turned you into a subscription based business what happened?
• 16:30
  Well, almost turned me into a subscription only based model.
• 16:35
  The way the supplement businesses were, we didn't look in at our purchases.
• 16:45
  Well, to be fair, let me just qualify.
• 16:48
  I would probably think about it more now because such a high percentage of our orders are now subscription, right?
• 16:55
  So we've converted.
• 16:57
  a lot of our faithful customers into subscription customers.
• 17:02
  So I'm very keen to talk to you about offers and what works there.
• 17:06
  I'm also really keen to hear what you've got to say Thomas about because this again is another conversation we've been having with our subscription customers with one time
• 17:14
  purchase clients, right?
• 17:18
  And I love my conversation I had recently with the guy, the founder from the razor company, always completely gone, it'll come back to me.
• 17:26
  He deliberately didn't do subscription, which I thought was fascinating.
• 17:29
  That's definitely worth listening to.
• 17:33
  But the, we found with one-time purchases, it's really straightforward for me to do an upsell, right?
• 17:43
  And increase the average order value.
• 17:46
  Where we've had a bit of an issue is trying to figure out how do we increase the average order value on a subscription-based model?
• 17:54
  Do you see what I mean?
• 17:55
  So in other words, with supplements, you kind of go, right, well, I'll take my Omega-3, I'll take my multivit, and I'll take my vitamin D.
• 18:03
  And that's it, I'll put the whole thing on autopilot.
• 18:05
  So I subscribe to a deodorant company, for example, and every two months they send me out some deodorant, but that's it, it's a repeat purchase.
• 18:14
  And I think, I don't know how that deodorant company can get, can help me increase my order value over time.
• 18:24
  other than putting its prices up.
• 18:26
  How does it get me to buy more stuff?
• 18:28
  So two things I want to dig into, how to increase average order value, but let's start with the offer side of things.
• 18:35
  So you're talking about your first thing you've got to work on is the offer.
• 18:39
  And it can't just be subscribe and save because that's lazy, which I just think is brilliant.
• 18:43
  I'm totally quoting you on that.
• 18:46
  What else, what sort of things should we be thinking about?
• 18:48
  What have you found work really well?
• 18:51
  Yeah, and there is a very interesting founder course coming out where I'm a guest.
• 18:58
  and it's been taught by the co-founder of Motif Digital, the agency I used to work for, Jordan Menard.
• 19:08
  Shout out to Jordan, amazing guy.
• 19:10
  So he breaks down this entire subject in a course for the platform founder, if you want to check it out.
• 19:16
  I'm a guest for like a module.
• 19:19
  But basically the whole point is to create something that...
• 19:23
  adds value to the lifestyle of the person.
• 19:26
  We don't buy a product just for the product itself.
• 19:29
  It supports a lifestyle.
• 19:31
  It supports our identity.
• 19:33
  So things that you can add that support the lifestyle of the person and who you want to be.
• 19:38
  Number two, things that you can use with a product.
• 19:42
  Very straightforward example.
• 19:44
  You buy coffee, you need a cup.
• 19:46
  You need a frother or whisk.
• 19:47
  Right?
• 19:48
  So this is something that you will need.
• 19:51
  You were going to buy this anyway, or you had it at home.
• 19:53
  but now you have a branded version of it.
• 19:57
  And things that are branded, you show it to your friends.
• 20:00
  And this is marketing.
• 20:02
  You can take a picture of it.
• 20:04
  You know what you can't take a picture of?
• 20:06
  Things that are digital.
• 20:08
  It needs to be physical.
• 20:09
  So anything that can be added in a way where postage doesn't get inflated, you know the price of posting doesn't get inflated, that can fit into a box as a starter kit, and you
• 20:20
  turn it into a beautiful starter kit, that's a great offer to
• 20:23
  get with.
• 20:24
  But I've seen the mistake a lot of brands make is they add too much value in the starter kit.
• 20:32
  And by comparison, the second third order don't look so appealing anymore.
• 20:37
  What I alluded to earlier, they cancel because they want to get all the freebies.
• 20:41
  So what we've seen working really well is spacing out the freebies month over month.
• 20:47
  So they have something else to be excited about.
• 20:49
  And basically they gamify the experience.
• 20:53
  block the new freebies.
• 20:55
  It's a game.
• 20:56
  And if you add all sorts of fun activities, post-purchase, the whole thing becomes a game.
• 21:03
  It's who can be healthier.
• 21:04
  It's who can be more loyal, who can not break the streak.
• 21:09
  So you turn this whole thing into a fun lifestyle project, becoming a better self.
• 21:16
  And it all starts with the offer.
• 21:18
  But again, finally, the offer needs to be something that makes sense economically.
• 21:21
  So I'm not going to
• 21:23
  play CFO here, I'm not the person that runs the numbers for the offer.
• 21:28
  I'm a person that is participating in the process of designing the offer.
• 21:32
  But I don't know how to explain what makes most sense financially.
• 21:37
  What I know is once the offer is out, I know how to track the payback period and I know how to maximize LTV after that.
• 21:46
  And the goal, just like Netflix is trying to push the retention point as close as possible.
• 21:53
  the first episode meaning retention point is once the person is hooked now and will watch the rest of the series no matter what they want to get you hooked as early as possible
• 22:03
  same thing for the payback period you want to push that payback period as close as possible to the first purchase if you can be profitable the first purchase amazing but
• 22:12
  most brands are not so the goal is to make sure and this is a great site for for the AOV question is to push AOV to push the stickiness of
• 22:23
  product and to get them to commit for longer.
• 22:26
  So yeah, let's back to you now, because if we start talking about AOV, I will never stop.
• 22:31
  And it's going to be a monologue.
• 22:33
  Well, I know we'll get into that in just a second, but I like what you say here because what I'm understanding here, Thomas, and it makes total sense when you think about it is
• 22:42
  actually take your no brainer offer and space it out.
• 22:46
  So it's a no brainer offer for the first order, the second order, the third order, the fourth order, and so on and forth.
• 22:52
  And bring those, just elongate that offer so it makes sense just to keep coming back.
• 22:58
  And obviously it's got to work for your economics.
• 23:01
  and you know, work that out.
• 23:02
  But I like it because like you say, most subscribed businesses are all about that first offer to try and get you to sign up.
• 23:12
  And not so great at then keeping you, you know, giving you reasons to stay really is like, I don't know.
• 23:22
  And so you do tend to leave, but I do get the point.
• 23:26
  I'm thinking, for example, about this deodorant company, actually they
• 23:30
  they gave you an offer at the start, but they've not really done anything since.
• 23:35
  And I've left it just cause it's on autopilot.
• 23:38
  Would I recommend them as a company?
• 23:40
  You start getting into really interesting existential questions all of a sudden because of, well, actually in theory, they've still got my business.
• 23:48
  I've not stopped it yet, but I don't feel any brand loyalty to them, if that makes sense.
• 23:53
  I don't feel like they've done anything to...
• 23:57
  to stop me from churning if I find a better product or someone else woos me over here.
• 24:04
  And I think whilst at the moment it's convenient, it's not actually retaining my mind and my soul other than it's just retaining my wallet because it's super convenient for right
• 24:17
  now.
• 24:19
  Yeah, you're saying that you're not a fan.
• 24:22
  You are just a buyer on auto.
• 24:26
  Yeah, I mean, I obviously like their product.
• 24:28
  I keep using it.
• 24:30
  And in some respects, I like what the company stands for.
• 24:33
  What I've not become is a lot, well, maybe I've not become a loyal fan.
• 24:37
  I've not shared anything out on social media.
• 24:40
  I've not gone and said, hey, you should buy this because it's awesome.
• 24:45
  They've not really done anything to sort of keep me as a customer.
• 24:49
  They don't really email me.
• 24:53
  It's sporadic as to whether they email me to let me know my orders coming out.
• 24:57
  It's just, it's just a bit rubbish really.
• 24:59
  But this is the reality.
• 25:02
  This is what most brands do.
• 25:05
  Mm.
• 25:05
  It's that's why they asked me to come in and build something, system, a proper system that actually collects data, but actually pushes for an app.
• 25:16
  So all cross-sell that actually builds loyalty, uh, that educates the customer that gives them a real reason to, to choose to stay subscribed and then to keep talking about the
• 25:29
  brand and bringing more people in.
• 25:31
  This is what retention systems do.
• 25:33
  Most brands don't email.
• 25:35
  don't email enough and they don't build that brand loyalty.
• 25:39
  And again, right now they could have your business and they do because as you said there's no competition.
• 25:45
  But the moment somebody else comes on board and that has a better product they're done.
• 25:50
  So this business might be dying without them knowing.
• 25:54
  Yeah.
• 25:55
  just because it just hasn't happened yet.
• 25:58
  But wishing or hoping for a competitor not to arrive is not a strategy.
• 26:04
  It's not something the investors would really support.
• 26:08
  So yeah, you gotta be proactive, man.
• 26:12
  You really have, especially in the subscription space, because again, one of the things that I've learned from certainly people like Chris George is that actually whatever it is
• 26:26
  now, we've got an average of, I can't remember the number, so let's just pick a random number.
• 26:31
  We've got a typical average of say 20 subscriptions.
• 26:34
  We subscribe to Netflix, to Disney, to Sky Sports, and whatever it is, right?
• 26:39
  So we've got all these different subscriptions.
• 26:41
  We've now got to the point where we don't want any more subscriptions.
• 26:44
  So to take on a new one, we have to cancel an old one.
• 26:46
  It's kind of a mindset that we've fallen in.
• 26:49
  And so the ones that we cancel tend to be the ones that where we just don't have, like you said, we've not had a reason to stay subscribed.
• 26:57
  There's no sort of real brand loyalty.
• 26:59
  It's just like, well, I'm now prepared to go through the inconvenience of canceling the subscription because I no longer want you and I want this one over here more.
• 27:07
  And it doesn't...
• 27:08
  And it's not even like Netflix competing with Disney.
• 27:10
  It's like Netflix competing with my deodorant company all of a sudden, because I've just maxed out on all my subscriptions, which makes competition, I think, a little bit more
• 27:19
  interesting.
• 27:20
  so I'm intrigued by this.
• 27:24
  And I'm intrigued by these sort of changes in this model and why what you're saying is becoming more and more important.
• 27:32
  What you're saying between the lines, what I'm reading is that the product itself plays as an important role as the brand around the product.
• 27:45
  Here's an example.
• 27:47
  You have a dildo, right?
• 27:49
  But...
• 27:50
  Will you stop using it?
• 27:51
  Will you stop using a deodorant overall?
• 27:53
  Probably not.
• 27:55
  Coffee.
• 27:55
  People that drink coffee will never stop drinking coffee.
• 27:59
  People that take sleeping pills, they will never stop taking sleeping pills or they will find something that helps them sleep.
• 28:06
  All we do is basically try to fulfill our existing needs with a better product.
• 28:13
  So if somebody comes along with a better product, better brand, more fun experience and does what you
• 28:19
  want to get better and healthier, you will get it.
• 28:25
  You might pay the premium, but you're switching from your existing need, a solution to your existing need, to a better solution.
• 28:34
  Brands cannot manufacture needs out of thin air.
• 28:38
  They tap into existing needs.
• 28:40
  So if something is a luxury in hard times, you might cancel it just because it's an extra.
• 28:47
  Right?
• 28:48
  So the product
• 28:49
  the industry you're in plays an important role in retention, know, as much as the quality of your offer and everything we're talking about.
• 28:59
  So sometimes you might have the perfect retention system, the perfect offer, perfect product, ecological, know, cheap, convenient.
• 29:07
  But if it's a luxury, somebody might cancel this first when the times get hard.
• 29:13
  Yeah, yeah, it's so true.
• 29:15
  So true.
• 29:16
  So Thomas, let's talk about AOV.
• 29:18
  Actually, before we do, normally I save this to the end, but it's in my head right now.
• 29:23
  If you're regular to the show, you'll know, usually not every show, because quite often I'll forget, but I've remembered today, I asked my guests for a question.
• 29:31
  And this is quite an interesting point of the show to ask for said question.
• 29:35
  So Thomas, you said to me at the start of the recording, you're like, I've got my question, I know what it is.
• 29:39
  Do you want to know what it is?
• 29:40
  I'm like, no, tell me in the show.
• 29:42
  So now is your time to give me your question.
• 29:46
  Hello ladies and gentlemen, so Matt wants me to ask a question.
• 29:52
  So Matt, you have recorded hundreds of...
• 29:58
  of interviews.
• 30:00
  You have spoken with hundreds of interesting people that are experts and they're amazing at what they do and they have audiences and they work with amazing brands.
• 30:09
  You are not a content creator to me, you are a network provider.
• 30:16
  So how do you think about all this asset that you've built, the network, the side product of your show?
• 30:24
  How do you think about it and what are your plans?
• 30:28
  This is a great question.
• 30:30
  Very good question.
• 30:31
  In fact, I was talking to, I don't know, do you know Peter Murphy Lewis?
• 30:35
  Do you know him?
• 30:36
  Strategic Pete?
• 30:37
  He's been on the show before actually.
• 30:40
  And, I don't know, well, he does play musical instruments.
• 30:44
  He's also on the TV a lot.
• 30:46
  And he's, anyway, he's a marketing guy.
• 30:50
  Anyway, I was talking to him about this very question.
• 30:53
  So today, this afternoon in fact, it was morning for him, afternoon for me.
• 30:57
  And so I will answer that question.
• 30:59
  It will be on my social media channels.
• 31:01
  Come find me.
• 31:02
  Let us find me on LinkedIn at Matt Edmundson, or you can find me on Instagram at Matt Edmundson.
• 31:07
  I really need to get better at the old Instagram thing, but I'm pretty active on the old LinkedIn.
• 31:11
  So come find me there and you'll find the answer to that question.
• 31:13
  Thomas, thank you for that question.
• 31:14
  I thought it was a great question.
• 31:16
  So let's get back into it.
• 31:18
  AOV.
• 31:18
  How do I, if I'm a business which is managing my attention through subscriptions.
• 31:26
  which I appreciate is one specific route to do retention.
• 31:30
  And obviously a very sensible one.
• 31:33
  mean, my experience is this has been great for retention marketing is introducing the subscription.
• 31:38
  What?
• 31:41
  How do I increase average order value?
• 31:43
  Because this for me is a big thing, right?
• 31:46
  Subscription has its advantages.
• 31:48
  One of its key downsides, it seems to me, is the ability to easily increase average order value with upsells and cross-sells and things like that when someone's going through
• 31:56
  checkout.
• 31:57
  What are your thoughts on this?
• 31:58
  Because I have my pen, I have my paper, and I'm very keen to hear.
• 32:03
  Is it okay to also shout out a few companies that can make this easier?
• 32:08
  I'm not getting plagued by them, I'm a big fan.
• 32:13
  To me, it's actually quite easy to get these upsells and cross-sells and increase AOV.
• 32:19
  So I'm kind of surprised about like the number of businesses that struggle with this, because to me, it should be more straightforward.
• 32:27
  One thing that a lot of brands do, and I support this, is during checkout or before checkout, you actually push for more of the product they're about to purchase.
• 32:39
  So the good old upsell, you take 30 servings, now get 60.
• 32:43
  the servings and here's the deal.
• 32:45
  Or you cross-sell something that fits well with the product.
• 32:48
  You know on the back end which product goes well with which one from your portfolio and you create rules where you recommend this product when something is in the cart.
• 32:59
  So you just need to look into the analytics.
• 33:02
  Now by now we're talking about once they've started their subscription, the way that I approach this is in two phases.
• 33:10
  Phase number one, they haven't received the product yet.
• 33:13
  see the first order and they're anxious.
• 33:16
  Is it a good purchase?
• 33:17
  They're skeptical.
• 33:18
  Is it the right brand?
• 33:20
  Is this good value for money?
• 33:21
  So this is the time to get them to alleviate this pain and to get them to talk about themselves and reveal their needs because this is going to be the way we personalize their
• 33:32
  experience later.
• 33:33
  So I'm always asking right away, right after purchase, send them an email asking for questions, for a few answers in a survey.
• 33:41
  And I use these answers
• 33:43
  personalize their experience later.
• 33:46
  So armed with these questions, once the product is there, I make sure they share their enthusiasm in a Facebook group or in an ad, which makes the ad even more profitable
• 33:57
  because it has sub-social proof.
• 34:00
  And now these people, they're excited.
• 34:02
  You've done the right thing up to the delivery point, and now they're excited.
• 34:06
  But it's not the right time to upsell them because they haven't used the product.
• 34:10
  They need to feel confident about the product.
• 34:12
  first.
• 34:14
  The way that I achieve this with my brands is I do what I have invented this method which is called bite-sized premium master classes.
• 34:25
  A lot of brands do the simple trick like send an email with a lot of information or send an email with a blog post.
• 34:34
  And they believe that the education of the product is done.
• 34:37
  People don't consume blog posts.
• 34:38
  They don't read long emails.
• 34:40
  They need bite sized information.
• 34:42
  So I take this existing information and turn it into master classes, usually on Typeform, shout out to Typeform, where they see a few words in each slide with visuals and they
• 34:53
  click next and they
• 34:55
  get spoon-fed, know, small bits and pieces of the education we want them to get.
• 35:01
  And they start realizing that the product can be a part of their lifestyle, how it helps them achieve the long-term goals, the time span for them to feel the full effects of the
• 35:12
  product, etc.
• 35:14
  At the end of each masterclass, that's where the magic happens.
• 35:19
  I upsell them.
• 35:21
  more of their existing product if it makes sense or if I know what their initial purchase is and collect the right information post purchase, I offer them something that
• 35:31
  complements the product.
• 35:33
  And usually people that don't participate in these master classes, they will get a default option based on what I know historically from my customers and their journey.
• 35:45
  But what I've seen, Matt, is that 30, 33 % of people that complete at least one master class, they take the upsell or cross sell, which is huge.
• 35:58
  So I've basically turned knowledge and education into a
• 36:03
  event that has day one, day two, day three, and then there is a graduation.
• 36:08
  And the graduation includes a bundle of badges, downloadables, the next freebie, and a discount.
• 36:17
  And people choose what they want, and eventually they get multiple reminders and a fun system that doesn't feel pushy.
• 36:23
  And again, a lot of them get the absolute cross-salt.
• 36:27
  So in fact, that's why once I started implementing this system in businesses, you see that the
• 36:33
  upsell, the take of the upsell product increases in revenue more and more.
• 36:38
  So it stocks up and these people have far superior retention.
• 36:42
  So this is one of the things that I do.
• 36:44
  The second opportunity after they complete the master class and a week after the product, I check in with them again, send them to a good old type form and I asked them about their
• 36:56
  three main objections.
• 36:57
  I want to see how well they're doing.
• 36:59
  I asked them if they feel an early impact in their well-being.
• 37:03
  or whatever the product is trying to achieve.
• 37:06
  And I also ask them a question that will qualify them for a cross-sell.
• 37:12
  For example, let's say I offer a product that boosts your brain.
• 37:17
  It makes you more productive, more focused.
• 37:19
  But I also offer products that helps you sleep better, products for your gut, et cetera.
• 37:25
  I will ask a question that will help understand if the right next pitch is the sleep.
• 37:33
  or the gut product or whatnot.
• 37:36
  But I will not ask, hey, would you like this product?
• 37:39
  I will ask them a question that reveals the problem if they have another problem.
• 37:44
  And then we follow up with a sequence that pushes what they already told us.
• 37:49
  So now it's a seamless promotion that is true to who they are and what they struggle with.
• 37:56
  Yep.
• 37:56
  Finally, before the first reveal, I will basically do the raise your hand kind of sequence where I will show what the offer is.
• 38:06
  It's going to be usually a bundle of multiple products.
• 38:08
  It's going to be more expensive or it's going to be the product they bought, six months worth of stock or a year worth of stock.
• 38:17
  And initially we'll send it to every customer.
• 38:20
  Later, as I get data, I will send it only to people that have been tagged as likely to stay on board and not
• 38:26
  churn, right?
• 38:27
  If you're likely to churn, it doesn't make sense for you to buy a bigger bundle.
• 38:31
  Instead, you're to get an offer like a down sell so you don't churn.
• 38:35
  But initially, I will send this to everyone.
• 38:37
  So a bundle that upsells you and locks you in for a longer period of time, or a bundle with more products so you can get the holistic experience.
• 38:44
  And these people, like the customers, eat them up.
• 38:48
  They love these products and these offers because they make sense in terms of where they are.
• 38:53
  And we personalize the journey based on the signal.
• 38:56
  they gave us.
• 38:57
  And as you can imagine, this cannot happen unless you send a lot of email, but the right type of email, so you can collect all these signals.
• 39:06
  So taking a step back, brands don't send enough email.
• 39:11
  They don't communicate with the customers enough.
• 39:15
  That is a big takeaway.
• 39:17
  And if you're sending three or four emails post purchase,
• 39:22
  You're doing it all wrong.
• 39:23
  Sorry to say, but you are leaving so much on the table.
• 39:30
  Retention can go much, much higher and cross cells and up cells and LTV.
• 39:35
  Yeah, that's supreme.
• 39:37
  Because actually, a lot of what you've talked about there, Thomas works in subscription, but actually, it would also work in a one time purchase deal.
• 39:47
  I love what you said right at the start, excuse me, where, and I've not heard many people talk about it for a long time, it used to be this real buzz topic, but it sort of seems to
• 39:58
  have died a little bit.
• 40:00
  And that's the the
• 40:02
  the period between a customer clicking by now and the customer receiving their product.
• 40:06
  There's always a period of time.
• 40:08
  And in the UK, that might be one or two days.
• 40:11
  It might be three or four, depending on when it was ordered and when it was sold, when it was delivered.
• 40:15
  In the States, it may be more, do you know what mean?
• 40:17
  It depending on the size of your country.
• 40:19
  So you do have this thing where there is this anticipation.
• 40:25
  So in my hand, shout out to Tom's Studio.
• 40:28
  I really like Tom's Studio's pens.
• 40:30
  I have a...
• 40:31
  fountain pen in my hand where I write my notes with.
• 40:34
  I just really like their pens, right?
• 40:36
  And I ordered this pen a couple days ago, because I wanted one for my office.
• 40:42
  And it arrived next day, but it was delivered to my neighbor.
• 40:46
  And I thought, isn't it's just a bit, I really like their stuff and their packaging and their ethos.
• 40:55
  you know, I do, I am a bit of loyal fan of Tom Studios, but I'm just a little bit
• 41:00
  Little bit disappointed Tom Studios if you're listening.
• 41:03
  There's been no email and and just To what Thomas has said you could have sent me an email going Your fountain pens on the way Matt this this and sent me two emails the same day
• 41:15
  that up You know one email the day I purchased an email the day after going This is how to write with a fountain pen because it does require something a little bit different This is
• 41:23
  how you clean and maintain your fountain pen watch this video.
• 41:26
  Give me some nice quirky graphics
• 41:29
  By the way, if you draw something or write some poetry with it, take a photo and tag us with it on social media, do you know what mean?
• 41:37
  Those kind of things, they just haven't happened.
• 41:41
  And I get it because it's a small company, I guess there's like a handful of people trying to do everything and you can only do so much.
• 41:49
  But this idea of sending three or four post purchase emails.
• 41:53
  especially in that time where I'm waiting for the product and you can turn my fear.
• 41:59
  I loved how you talked about how you turn their fear or their anxiety into excitement.
• 42:05
  That was what I wrote in my notes, turn their anxiety into excitement.
• 42:09
  I love that.
• 42:10
  And I think it's just a shame we're not doing that.
• 42:14
  you join me at the moment and any more than we actually are.
• 42:19
  And I think even just doing that, you're going to have some massive wins.
• 42:23
  Yeah, and I really want to share this analogy.
• 42:27
  A lot of brands will say, yeah, but you know, people don't read emails.
• 42:31
  And you know, all these the old spiel about email is dead for the last 20 years.
• 42:37
  But email will go to space.
• 42:41
  But we're still going to use the spoon because it's a proven tool.
• 42:46
  It's been there for for eons.
• 42:49
  And the same thing for email.
• 42:51
  We might still send email to people when we go to space because it's the most reliable tool.
• 42:57
  We will never stop using email.
• 42:59
  So if brands are afraid of sending email, like would you be afraid of like eating with a spoon?
• 43:06
  It's a proven tool.
• 43:07
  Just use it.
• 43:09
  yeah, very much so.
• 43:10
  one more thing that a lot of brands are actually missing out on and actually two things.
• 43:17
  Number one, meet the customer where they are.
• 43:20
  And number two, tap into their network.
• 43:22
  You know, has to do with the question that I asked you about the network.
• 43:25
  Number one, meet the customer where they are.
• 43:28
  What makes most sense is...
• 43:31
  If you bring customers from Facebook, from Meta, build a Facebook group and put these people in there.
• 43:38
  You will generate a lot of UGC, a lot of social proof.
• 43:42
  They will do the selling for you because if there are a hundred thousand people on the Facebook group that love the product, you might think these people know something that I
• 43:51
  don't.
• 43:52
  You know, I didn't get the effects of the product fast, but these people did.
• 43:55
  So I'm going to stick around.
• 43:57
  So you got a, a never growing cell machine.
• 44:01
  the Facebook group, you know, so meet these people where they are.
• 44:04
  But also if you're talking to a younger audience and they found you on a mobile phone, then create an app.
• 44:12
  Use a company like Fuego to create an app and basically mirror the website and add additional features exclusive for the app.
• 44:21
  Now these people shop and they do things around your brand in their natural environment.
• 44:26
  But then also make sure that people bring friends.
• 44:30
  We use a referral
• 44:31
  because it's very easy and it just does the thing.
• 44:35
  allow people to talk about your product.
• 44:38
  Like you talked to me on this podcast and to a lot of people about your pen, right?
• 44:44
  If the pen company had sent like a referral email, you probably would have taken on like, know, whatever the deal is and talked about it and then profit from it as well.
• 44:56
  We don't do these things for the profit.
• 44:58
  We do it to recommend good products to
• 45:01
  friends and family, right?
• 45:02
  So tapping into this, it's just additional marketing that costs you nothing.
• 45:07
  You already paid to acquire this customer.
• 45:09
  So why not meet people where they are, create this community that is basically free marketing for you and tap into the network.
• 45:17
  These are basic things for me that a lot of brands just haven't tapped into.
• 45:23
  So just shout out to these amazing companies.
• 45:25
  And, you know, these are like some quick trips, quick tips that
• 45:31
  for retention that I want to share.
• 45:32
  Yeah, no, it's cool.
• 45:33
  And I'm glad you mentioned referral candy.
• 45:35
  Raoul has been on the podcast before.
• 45:38
  Sorry, well, I kicked my bin.
• 45:39
  Raoul's been on the podcast before and do go check out that episode.
• 45:44
  Shout out to what those guys are doing there, referral candy, which is great.
• 45:48
  I'm intrigued.
• 45:50
  The one thing you said, which slightly surprised me, was the fact you used type form to do these sort of mini master classes.
• 46:00
  for 10 years now.
• 46:03
  Yeah, yeah, and as soon as you said it, I could see it in my head and I thought that's really clever.
• 46:10
  I would not have thought to have done that with Typeform.
• 46:14
  But you know, Typeform's got good APIs and you can integrate it with all kinds of things now, can't you, and collect that customer data.
• 46:21
  And I like how you're using Typeform to pre-qualify.
• 46:26
  So for example, know, on a scale of one to 10, how well are you sleeping?
• 46:33
  could be one of the questions that we ask, because we have a sleep supplement, for example.
• 46:37
  And you kind of go, these guys are not sleeping that well.
• 46:40
  So I can put them on a sequence which talks about how you can use nutrition to sleep better, right?
• 46:46
  So it's a really, it makes a lot of sense to me what you said.
• 46:51
  And I can see why you like it as much as you do, Thomas.
• 46:54
  And thank you.
• 46:57
  Thank you for sharing that and bringing that value.
• 47:00
  I've genuinely enjoyed it.
• 47:02
  If people want to find out more about you, maybe connect with you, ask them, maybe they've got some more questions.
• 47:08
  Maybe they even want to talk to you about hiring you and getting your help.
• 47:13
  Or the course that you mentioned, you mentioned a friend's course, but I don't remember you mentioning what it's called or where to find it.
• 47:21
  Now's your time.
• 47:22
  Share all that information.
• 47:25
  Sure.
• 47:26
  the best way for people to find out about me and talk with me is through LinkedIn, Thomas Lalas.
• 47:31
  I have created a consultancy firm called The Art of Ecomm I'm still building websites, as we speak, etc.
• 47:39
  So I wouldn't recommend people to go to my website, it looks ugly.
• 47:43
  And the course, yeah, under construction.
• 47:48
  Optimizing.
• 47:49
  my sites are still under construction.
• 47:52
  Yeah, and the course that I talked about, the platform is called Foundr.
• 47:57
  It's the word founder, but without the E.
• 48:00
  It used to be a magazine, now it's an online platform with courses, consultancy, and a lot of cool stuff.
• 48:06
  So it's dropping sometime in March this year.
• 48:10
  It's all about offers and subscriptions and it's really in depth.
• 48:15
  Yeah.
• 48:16
  Sounds absolutely fantastic.
• 48:18
  And I know the founder goes, yeah, yes, great, fantastic.
• 48:22
  So we will of course link to all of that in the show notes as well, including Thomas's LinkedIn, which is we were commenting, whose post were we commenting?
• 48:32
  But we both commented on Jimmy Kim's post.
• 48:37
  You should follow him on LinkedIn.
• 48:38
  He talks a lot about email and.
• 48:42
  I just really like his LinkedIn post.
• 48:44
  He just basically tells you off every time doesn't it?
• 48:46
  It's just really funny and and we were both commenting on that and Yeah, you like we should talk about this on the podcast So I Thomas is active on LinkedIn come come find him
• 48:56
  and say how's it and we will of course link to all of that in the show notes, but Thomas Thanks, man.
• 49:01
  Genuinely appreciate that and thanks for coming and delivering some great value
• 49:06
  Loved it, man.
• 49:07
  It's you're a natural.
• 49:08
  Again, back to the compliments.
• 49:11
  You're a natural.
• 49:12
  You make everything flow so easy.
• 49:15
  Yeah, well done.
• 49:16
  Good to see you.
• 49:17
  I enjoyed that chat.
• 49:19
  bless you.
• 49:19
  We should do this.
• 49:20
  Well done.
• 49:23
  Let's see applause.
• 49:24
  That's enough applause.
• 49:25
  So brilliant.
• 49:27
  Like I said, we will of course link to all of the information for Thomas in the show notes, which you can see on the website, ecommercepodcast.net.
• 49:37
  If you subscribe to our magical newsletter, they'll be in there as well.
• 49:41
  And of course, I'm not going to try and pull the wool over your eyes.
• 49:44
  You're listening to this on a podcast app more than likely.
• 49:47
  or you're watching it on YouTube, the links will also be in the show notes.
• 49:51
  Just download them or click them in the show notes.
• 49:54
  Don't download them, just click them.
• 49:55
  They're there as well.
• 49:57
  Go and say, how's it going?
• 49:58
  Introduce yourself to Thomas.
• 49:59
  I'm sure he'd love to talk to you.
• 50:01
  But what a great conversation.
• 50:03
  Now do be sure to follow the e-commerce podcast wherever you get your podcasts from, because we've got some more great conversations lined up.
• 50:10
  And of course, I don't want you to miss any of them.
• 50:12
  Why would I?
• 50:13
  And in case no one has told you yet today, let me be the first.
• 50:17
  You are awesome.
• 50:18
  Yes, you are created awesome.
• 50:20
  It's just a burden.
• 50:21
  You have to bear Thomas has got to bear it.
• 50:24
  I've got to bear it.
• 50:25
  You have got to bear it as well.
• 50:27
  Now the e-commerce podcast is produced by Podjunction You can find our entire archive of episodes on your favorite podcast app.
• 50:34
  The theme music was written by Josh Edmundson and I just one more plug for the website.
• 50:39
  Get a e-commerce podcast.
• 50:43
  We never edit these things out.
• 50:45
  It's just the way we do it.
• 50:46
  They're just go to ecommercepodcast.net.
• 50:49
  It's real.
• 50:49
  It's authentic.
• 50:50
  That's right.
• 50:50
  It's just me messing up for the thousandth time.
• 50:53
  And if you're still listening at this stage, thank you.
• 50:56
  It's great to be with you.
• 50:58
  Do like, say like and subscribe to the show, but pretty much that's it from me.
• 51:01
  That's it from Thomas.
• 51:02
  Thank you so much for joining us.
• 51:04
  Have a fantastic week wherever you are in the world.
• 51:06
  I will see you next time.
• 51:08
  Bye for now.