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The Metric Nobody Tracks That Drives 56x Subscriber Growth · eCommerce Podcast

• 0:04
  Welcome to the e-commerce podcast.
• 0:06
  My name is Matt Edmundson and it is great to be with you this beautiful day.
• 0:11
  We're talking all things e-commerce with, well, how do we describe Jay Myers?
• 0:17
  Just the fabuloso, just all round good egg, which is Jay.
• 0:24
  I've been looking forward to this conversation man.
• 0:26
  It's so good to have you on the show.
• 0:27
  But before we get into it, let me just give a quick shout out.
• 0:30
  Welcome to the show.
• 0:31
  If this is your first time with us, make sure you hit the like, subscribe and all that sort of good stuff button.
• 0:35
  And of course, if you're regular, a very, very warm welcome back to you.
• 0:39
  And of course, if you haven't done so already, check out the website, ecommercepodcast.net, because there you can sign up to things like the newsletter, which I
• 0:46
  still don't understand why people haven't done that.
• 0:48
  And you can also come find out about the cohort groups.
• 0:51
  If you are in e-commerce, running an e-commerce business, come check out the cohort groups.
• 0:55
  They are free to join and I love them.
• 0:57
  They're great fun.
• 0:59
  All that aside, Jay, welcome to the show, man.
• 1:02
  Been looking forward to this.
• 1:03
  It's about time.
• 1:05
  You know Matt some days.
• 1:07
  Do you ever wake up some days and then you look at your calendar and you got a bunch of meetings and you feel like some stress in your chest and it's like, I got this
• 1:16
  client call this one.
• 1:18
  And then I actually had a back to back call like one minute before this call.
• 1:23
  So like no break.
• 1:24
  I did.
• 1:25
  I managed to get a glass of water, but that was it.
• 1:27
  And then it was like it's like one of those days.
• 1:30
  And then I just thought for a moment like how lucky am I?
• 1:35
  I get to come on your podcast.
• 1:39
  I get to be in this space, with people that I just love working with.
• 1:42
  I'm doing what I love.
• 1:45
  I just love the commerce community.
• 1:47
  And I just had this moment this morning, because I had this full calendar and looking at it and just, I'm grateful to be here and thankful I've gotten to know you over
• 1:56
  the years.
• 1:57
  And it's such a joy, this commerce world that we're in.
• 2:02
  So thank you for having me on.
• 2:04
  No, it's great.
• 2:05
  I'm with you. You wake up, feel lucky every day, don't you?
• 2:08
  You feel like God was shining down on me when he gave me this career option.
• 2:12
  We have these, I don't know they do them in the UK, but these roll up — Tim Hortons is a coffee chain here and they do like roll up the rim to win.
• 2:22
  And you know, you can win another coffee or sometimes you can win a car or something.
• 2:26
  I never win.
• 2:27
  My son's like, dad, you never win.
• 2:29
  And I was like, I go, you know, I got everything.
• 2:32
  What else would I want in life?
• 2:33
  I don't need a roll up.
• 2:35
  I don't need another donut or a coffee.
• 2:38
  So, no, I agree.
• 2:40
  I got everything I want.
• 2:41
  Yeah, yeah, no, it's good to be grateful.
• 2:44
  Well, let's jump into it.
• 2:47
  Well, first of all, let's tell everybody a little bit about what you do, Bold Commerce, which is a great system.
• 2:52
  Let's get into that.
• 2:54
  And then we'll jump into the conversation.
• 2:56
  Sure.
• 2:57
  Well, I personally am an e-commerce operator.
• 3:01
  I was since 1998, so I'll age myself real quick.
• 3:05
  Built my first.
• 3:06
  than me.
• 3:07
  I started in 2002.
• 3:09
  Oh, you're just a rookie.
• 3:12
  Oh, look at you.
• 3:16
  So my first website didn't even have a checkout.
• 3:19
  It had a phone number and I built it with Microsoft FrontPage back in '98.
• 3:23
  And I was scanning catalogs for product images because most brands didn't even have their own website at the time.
• 3:33
  Like we would get — I ran an archery store like a family archery business and then as we would get, we would get
• 3:39
  the print catalogs and I got a scanner and we'd scan them because you'd go to the brand's website and they wouldn't even have a website yet.
• 3:45
  It's like that started anyways.
• 3:47
  Fast forward, I ran e-commerce brands all my life, 2009, put one of them on Shopify.
• 3:55
  They had this concept of an app store, which was kind of new at the time.
• 3:58
  Now every software platform has an app store, but back then that wasn't the case and looked at the app store and I wanted to.
• 4:07
  Originally do some stuff for my own brands.
• 4:10
  I thought I want to build this tool.
• 4:13
  We launched an app as an experiment.
• 4:15
  Me and three buddies.
• 4:16
  The first app we built was an upsell app.
• 4:18
  We literally thought, well, what's the easiest thing we can kind of build and it might make an impact on the stores and it was super simple.
• 4:26
  It was like you click add to cart and a pop up comes up and says you're buying a leather jacket.
• 4:30
  Do you want this leather treatment kit or whatever?
• 4:33
  And it took off.
• 4:36
  Merchants loved it — every review was five stars on it and we were using it on our stores.
• 4:43
  But the three of us kind of looked at each other and said, maybe there's some potential here for like the app, not just and to put into perspective at the time, I
• 4:53
  think Shopify had around 30,000 merchants like now they're 4 million something.
• 4:57
  So we didn't know if there was any potential for it to make money.
• 5:01
  We just thought if it made a little bit.
• 5:03
  That's bonus, like some beer money or whatever.
• 5:06
  Right.
• 5:06
  So anyways, it started to do well.
• 5:09
  And then we kind of thought, what's another app we could build?
• 5:12
  And we're like, wow, there's no easy way to run flash sales on Shopify, like schedule a sale, change prices, change it back automatically, put a countdown timer on or whatever,
• 5:22
  you know, there's no way — we built that.
• 5:24
  And then the next we're like, well, what can we build next?
• 5:27
  And then we're like, oh, there's no way to do
• 5:29
  product options well, like color swatches and if enter initials and for monograms and like you could just have a dropdown product option.
• 5:36
  So we built that.
• 5:38
  Then we built a store locator app.
• 5:39
  Then we built a membership app, then the subscription app.
• 5:42
  The list goes on.
• 5:42
  We, at one point had 32 apps in the Shopify app store, which in hindsight, it was a bit of a disaster.
• 5:51
  Cause maintaining it became very hard.
• 5:54
  So we've become more focused over the years.
• 5:57
  We just sunset.
• 5:59
  Some of them, we sold some of them that weren't kind of core to our strategy of what we're trying to do.
• 6:06
  Sometimes we would get referred to as like the Swiss army knife for Shopify.
• 6:11
  And while that might be helpful to brands as a company, it doesn't — it's not a story that resonates.
• 6:22
  And there's a lot of reasons why you don't want to be a Swiss army knife as a brand.
• 6:25
  Like if there's a brand listening to this podcast,
• 6:28
  You want to be known.
• 6:29
  So say you are selling a green supplement — you want to be the greens supplement for women over 40.
• 6:38
  Let's just, whatever you pick a niche, right?
• 6:40
  You don't want to be greens for everybody.
• 6:43
  You always do better when you have a story — this is branding kind of 101 and we just built everything.
• 6:50
  We're like we see a problem.
• 6:51
  Let's build it.
• 6:51
  We see a problem.
• 6:52
  Let's solve it.
• 6:53
  But we got a lot more focused over the years and
• 6:57
  And now we have eight apps as of a couple of weeks ago, but last week we launched a new one.
• 7:05
  So now nine and we're really focused on the repeat commerce of helping brands get customers, keeping them coming back through all of the tools we have kind of help
• 7:22
  with that in some way.
• 7:23
  Like that's our goal.
• 7:24
  How can we help brands?
• 7:27
  Not just getting new customers.
• 7:29
  Actually, we don't do much in that space at all.
• 7:31
  The acquisition, it's once they're in through whether that's through subscription or through membership or through a VIP pricing program or our new app we launched last week,
• 7:39
  Repeat, or we're at this weird time right now where there's three big things happening.
• 7:46
  Actually, maybe four, but three.
• 7:48
  One is most brands I talk to, say they're double what they were spending four to five years ago to acquire customers.
• 7:55
  It's
• 7:56
  way more expensive to get a customer in.
• 7:58
  Two is search traffic's down.
• 8:03
  Like I talked to some brands and it's down over 50%, which is people just aren't going to Google search anymore to find you.
• 8:11
  They're going to their AI agent of choice.
• 8:15
  And then you've got agentic commerce kind of around the corner, which is meaning people are just going to AI to find products.
• 8:22
  And they now can.
• 8:25
  Potentially complete the purchase — that's still early.
• 8:27
  And I know OpenAI, depending when this podcast is released, but they just rolled back their purchasing within it, but they're going to turn it back on.
• 8:34
  They're just figuring it out.
• 8:36
  But the ability to purchase within whatever your chatbot and potentially never even go to your website, it will happen.
• 8:44
  So all that to say, when you do get a customer, it becomes really important.
• 8:48
  So we're focusing on helping brands with that.
• 8:52
  And that's our mission right now.
• 8:55
  Yeah.
• 8:55
  I talked for a long time.
• 8:56
  Went from 1998 to present day there in one monologue.
• 9:01
  I got a sip of water after that one.
• 9:04
  I mean, it's great to listen to your story, Jay.
• 9:06
  And I love how the stuff that you talk about, the solutions all came out of your own experience, right?
• 9:14
  I was always amazed.
• 9:15
  I've said this a few times on the show, but when we were doing our own e-commerce businesses and we were doing well, we found a lot of people would come and ask us for
• 9:24
  advice.
• 9:24
  So we started doing the coaching, the consulting side of the business.
• 9:28
  And I was always amazed when you go visit a customer and...
• 9:33
  You go, who have you talked to about this in the past?
• 9:34
  And they go, well, we talked to our web design company and you go, hmm.
• 9:38
  It's really interesting how you're listening to somebody who knows how to build websites, asking them questions on how to run a business.
• 9:44
  You know, it's a bit like going to a midwife and asking for parenting advice, right?
• 9:50
  They're good at this bit right at the start, but it doesn't mean they can do everything else.
• 9:54
  And it always intrigued me.
• 9:57
  So I'm always intrigued when real life scenarios bring about solutions to.
• 10:03
  problems, don't they?
• 10:07
  It's always a challenge because I sometimes find myself telling people like, you can be passionate about something, but there might not be a good business opportunity there.
• 10:16
  So there's a little bit of luck and timing as well too, right?
• 10:20
  So you have to have, it's kind of this overlapping three circles.
• 10:25
  You need passion and skill and there needs to be market opportunity.
• 10:32
  And that's like the Venn diagram overlap.
• 10:34
  And sometimes there's passion.
• 10:36
  Like I could be a rock mountain climber, love mountain climbing, and I want to build a new shoe, but there just isn't the opportunity.
• 10:45
  Like the shoes are good.
• 10:46
  There's no opportunity, but when they do overlap and if you have the passion for something and the expertise and the skill and the market opportunities there and there's overlap,
• 11:00
  that's.
• 11:01
  That's when great businesses are built and we got lucky.
• 11:04
  Like we, our timing was honestly a big factor of that, right?
• 11:07
  Like we were early.
• 11:09
  Yeah.
• 11:10
  Very good.
• 11:10
  How did the launch of repeat go?
• 11:12
  I've not asked you since we chatted last.
• 11:16
  It went amazing.
• 11:17
  Honestly, better than we had hoped.
• 11:19
  You know how sometimes when you're building something, whether you're a product company, like you're building clothing or something that you have like an ideal
• 11:33
  customer, you're like if they bought it, that validates it, you know.
• 11:40
  And I have a few customers like that.
• 11:43
  But
• 11:43
  there was one that I kind of thought in my head like, okay, if these guys buy into it, then I know it's something good.
• 11:53
  So I had a call with them last week.
• 11:56
  I probably can't say who it is.
• 11:58
  I don't know.
• 11:58
  It's a very well known brand, but anyways, I had a call with them last week and at the end of the call, it was a 30 minute call.
• 12:06
  It was hard to get this person's time.
• 12:07
  He's very busy and at end of the 30 minute call, he said, yep.
• 12:12
  I love it.
• 12:12
  Let's go forward.
• 12:13
  I'm going to bring in our CTO next week.
• 12:15
  Let's schedule the setup.
• 12:18
  And it was just super validating.
• 12:21
  Like we've actually, every single person that I've talked to has basically either said, can we just turn it on right now?
• 12:31
  Or when can we schedule onboarding, which onboarding is really only like a 10 minute thing, but I'm not used to that.
• 12:39
  Like I'm used to this big, long sales cycle.
• 12:42
  And having multiple meetings and someone sending an RFP and quotes and back and forth and the way that the install kind of works, it's completely frictionless.
• 12:55
  And then there isn't that cost upfront.
• 12:57
  There's nothing unless it actually works.
• 12:58
  And so it's very fun getting on a phone showing someone saying, Hey, we could just try it.
• 13:06
  It doesn't, you know, so it went really well.
• 13:09
  Thank you for the support, by the way, on everything.
• 13:11
  No, no, no.
• 13:12
  No, I've given away my codes.
• 13:13
  Now this is one of the things I wanted to mention actually, a couple of years ago.
• 13:17
  I don't know if you remember, Jay, we sat down, we had breakfast at SubSummit and I said to you, listen, Jay, I have a question for you.
• 13:25
  If you were going to do a beauty brand today.
• 13:27
  And I think I was asking this because I'd just sold my beauty business.
• 13:30
  I think that's why, how would you do it?
• 13:34
  And you said I'd make it members only and I'd make it so that,
• 13:40
  to be a member you had to be invited and if you were an existing customer you could only invite five people.
• 13:49
  I mean, that's just summarizing some of the things.
• 13:51
  So basically it was this limited, exclusive referral model and when we talked last week, or the week before, about Repeat and what you were doing there, you said that you
• 14:03
  were doing this thing where you would only give five codes — it was members only, you had to be invited and you
• 14:09
  had to get the invite codes off specific people and I was sent three.
• 14:16
  I wasn't like sent like a thousand codes like a giveaway for free on the podcast.
• 14:20
  It was like, here's your three, choose the best.
• 14:23
  And there was psychology behind this and I get it after our breakfast.
• 14:27
  And I was like, I was so stoked man, because you were living your own advice.
• 14:34
  Yes, and you know, it's funny. I'll give a little bit of context to it.
• 14:41
  So I did a talk at SubSummit in 2022 called The Subscription Death Curve.
• 14:48
  Were you at Orlando SubSummit?
• 14:51
  Oh okay, because our breakfast was I think the following year or two.
• 14:56
  Yeah, okay. But we see this thing with almost
• 15:01
  all of our subscription brands and the death curve is basically flatline.
• 15:05
  So they grow, it's healthy.
• 15:08
  And then any company that is subscription has a subscription component to it.
• 15:14
  Like you're going to have churn and nobody has zero churn.
• 15:18
  Like the best brands maybe might have two or 3% churn, but that's like, usually it's like seven or eight or whatever.
• 15:25
  And so eventually you get to a point, let's say you can acquire
• 15:31
  whether you're acquiring 100 customers a day, 1000 customers a day, when your customer base hits a certain point, your churn and your acquisition are the same.
• 15:39
  So like it might be at a million customers, which is awesome, even million subscribers.
• 15:43
  But if you have 10% churn, that means you got to acquire a hundred thousand customers a year just to balance that out.
• 15:50
  Right?
• 15:50
  So you'll eventually flatline and we see the data, like almost 90% more of our brands as they grow, it starts to
• 16:01
  go towards this flat line.
• 16:02
  Gets more and more.
• 16:03
  And then a lot of them are actually in a flat line.
• 16:06
  And so there's only a few that like have this really healthy, healthy growth.
• 16:14
  And you know, the bottom line of that talk, we did a lot of research for that and we looked into some of our stores that were doing really well, but then we also looked
• 16:24
  outside of our brands.
• 16:25
  What we found was there's really,
• 16:30
  I made it a little bit more simple in that talk.
• 16:32
  There's a little bit more to it, but there's two big things.
• 16:35
  But the one big thing is I remember before the talk, I asked everyone, I said, put up your hand and tell me what's your most important metric you track.
• 16:44
  And people said, just yell it out — LTV or customer acquisition costs, churn.
• 16:50
  Like all these different numbers, like average ARPU, average revenue per user or per customer.
• 16:57
  And I said, okay.
• 16:59
  Interesting.
• 17:01
  And then I said, hold that thought.
• 17:03
  And then in the presentation, there was this one slide where we took these customers that had flat line growth and we said, okay, well, what happens if we double the acquisition?
• 17:14
  Like, can we break out of this flat line?
• 17:17
  And so doubling the acquisition just moves the flat line up.
• 17:22
  So if you acquire instead of a hundred customers a month, if you acquire a thousand, like you pay Meta more to acquire,
• 17:29
  but you still have like 7% churn.
• 17:31
  Instead of flatlining at, you know, a thousand customers, you flatline at, I don't know exactly the math, but like 2200 customers.
• 17:40
  You still flatline.
• 17:41
  You just flatline at a higher number.
• 17:43
  And then actually you flatline at the exact same time.
• 17:46
  So if the flatline is after 32 months, it's exactly the same.
• 17:51
  And then we said, well, what if you reduce churn?
• 17:54
  Okay, so like, what if your churn is only.
• 17:57
  5% or 2% or 1%.
• 17:59
  Well, when we punched it into the model, reducing churn did reduce the flatline, but it actually just pushed it further out.
• 18:09
  So you still flatline, but instead of flatlining after 32 months, you might flatline after 47 months or 62 months or whatever.
• 18:18
  So acquiring more customers moves the flatline higher for more customers.
• 18:23
  Reducing the churn moves it
• 18:26
  further into the future, but either way you still hit that flat line.
• 18:31
  And then I took this third example of the store that was doing, I can't remember exactly what it was.
• 18:36
  It was like a hundred new customers a month.
• 18:39
  And I think I had the churn at like 10% and it was acquiring a hundred customers a month.
• 18:44
  I took a third store and it had this growth curve that was like this.
• 18:50
  And it was like both of the other stores at the end of 30 months, they ended up with
• 18:54
  a few thousand subscribers, but this third store was like 56,000 subscribers or something.
• 19:01
  And it had the high level of churn.
• 19:05
  It was like the top.
• 19:06
  Wasn't like the 1%.
• 19:07
  And it had the lowest number of customers per month.
• 19:09
  There was only one thing that we changed about that store in the model is we increased the referral rates by 0.4.
• 19:21
  So
• 19:22
  In the previous models, the formula was the average subscriber was referring point eight people.
• 19:31
  So meaning some people might refer three, some people might refer one, but on average point eight.
• 19:37
  And we just changed that to one point two.
• 19:41
  Like not that much.
• 19:42
  Like we just changed it to one point two and the impact in the 30 month difference of customers was like
• 19:52
  56X like it was insane.
• 19:54
  Right.
• 19:55
  And the bottom line is there is no bigger thing you can do to your business to change the long-term health of it than increasing customers who refer other customers.
• 20:09
  And then what was interesting is not one person said that was a metric they track.
• 20:14
  And I asked the whole room — I don't know, there was a pretty full room and I asked the whole room.
• 20:18
  It was like, does anybody know their referral rate?
• 20:21
  Like what?
• 20:22
  The average customer refers and nobody put up their hand and one guy kind of laughed and he put up his hand and he goes, okay, I know mine it's zero.
• 20:31
  But other than that, nobody knew. It is arguably one of the most impactful things you can do to your business, but yet almost no one tracks it.
• 20:43
  Without going into all the details of the talk, we looked at what brands spend their time, money and resources on.
• 20:52
  And for most brands, it's like 90% is spent on acquisition.
• 20:58
  Your entire marketing team is generally acquisition.
• 21:01
  Like you run ads, you run paid media, your social marketing team, your email marketing, you go to events, like that's all acquisition.
• 21:09
  And your budget, like your budget that you spend on ads.
• 21:15
  Some brands had a, then there's like retention.
• 21:20
  So retention is when you cancel something, like you go to cancel your phone bill and someone might call you or not your phone bill, your phone plan.
• 21:27
  And someone might call and say, Hey Matt, we can offer you this discount if you stay.
• 21:31
  So that's retention.
• 21:32
  So it's acquisition, retention.
• 21:35
  And then remember the acquisition is if we acquire more customers a month, retention is can we reduce the churn?
• 21:41
  And then referral, meaning what percentage of money, resources, time are brands spending on
• 21:50
  increasing referral was less than 3%.
• 21:53
  So I bet you people listening to this right now if I said like what budget or how many headcounts do you have on your referral program?
• 22:05
  Like you might be like, well, we have a referral program, we have a share 10 get 10 or whatever.
• 22:08
  But like, that's it.
• 22:09
  Like they're not actually spending.
• 22:11
  Even those share 10 get 10s don't do anything by the way.
• 22:13
  But so it's actually the exact opposite.
• 22:16
  It's the opposite.
• 22:17
  It's flipped around.
• 22:18
  It's the
• 22:20
  The thing that people are spending the least amount of money on has the biggest impact on a business.
• 22:27
  It's completely backwards.
• 22:29
  And so to our breakfast there, that's why I thought if I was starting a brand, I would still do some acquisition to get a bit of a base, but then I would make it 100% invite
• 22:45
  only.
• 22:47
  And there are...
• 22:48
  Some things that I would want to do — the invites need to be intrinsically motivated, not extrinsically motivated, meaning if it's purely incentivized by
• 23:01
  reward based like the carrot versus the thank you, it doesn't work the same.
• 23:07
  And so actually something that we're doing, I don't mind saying this, like it's, well, whatever if people know, but so we built this model into our app.
• 23:15
  And so when you log into Repeat,
• 23:18
  you as a customer, you get one invite code.
• 23:24
  And the way it works — just so people know — Repeat is an AI reorder agent.
• 23:31
  You install it in your store and it predicts when customers need to refill and it nudges them to reorder through all kinds of channels.
• 23:38
  Push on site browser, push SMS email and then it gets smarter over time and each cycle it gets smarter on that.
• 23:48
  It's completely free — the way the pricing model is, it only has a fee.
• 23:52
  If it makes a sale, if it doesn't make a sale, there's no cost.
• 23:55
  And so what we did is we built into the app, we called them golden tickets and now when a merchant installs it, they get one golden ticket and it says, Hey Matt,
• 24:12
  and they get an email as well too.
• 24:13
  Like, thank you.
• 24:14
  Like after you've had a successful,
• 24:18
  some reorders come in.
• 24:19
  So not day one, but after you've had seen some success, it will message you and say, Matt, so excited.
• 24:24
  You're getting some reorders.
• 24:25
  Is there anyone you know that also has a store?
• 24:28
  Any friends in any communities that you think could benefit from this?
• 24:32
  We have a golden ticket.
• 24:33
  You can give them, that'll give them $300 Repeat credit, which is super valuable.
• 24:39
  $300.
• 24:39
  Just so people know the fee is like a 1% commission.
• 24:43
  So you could do $300 — what's the math on that?
• 24:47
  30,000.
• 24:47
  Very grand, yeah.
• 24:49
  It could generate $30,000 in orders and we cover all the SMS and other feeds.
• 24:53
  So you're just thinking about who you can share it with.
• 24:58
  It doesn't say anything about any reward or anything for you.
• 25:01
  It's just, you're thinking who could use this.
• 25:05
  And then you're thinking who's the ideal customer.
• 25:08
  And then you might reach out to a friend and say, Hey, John, I'm using this app on my store and it seems to be working pretty good.
• 25:16
  I can give you.
• 25:18
  A referral code that'll give you $300 credit.
• 25:21
  Like, are you interested?
• 25:22
  Let me know.
• 25:24
  And you're validating, you're finding the ICP, like the ideal customer profile for the app.
• 25:32
  If it's a share 10, get 10 or give someone 10% off, like you just share those with anyone.
• 25:37
  And all those referrals do is it rewards people that are already buying.
• 25:42
  It's like, have you ever bought something online or you're telling you,
• 25:45
  you're talking to your friend, you're buying something and then your friend's like, I have a code for that to get you 10% off.
• 25:50
  Here's my code.
• 25:51
  Well, that didn't change your buying behavior.
• 25:54
  It just gave you a discount on something you were already going to buy.
• 25:56
  Right?
• 25:57
  This is you're proactively reaching out to someone to find the ideal customer.
• 26:03
  Now for e-commerce brands, like imagine you have a skincare subscription, same thing.
• 26:07
  You log into your skincare subscription and there's one offer there and it's
• 26:13
  Would you like, is there someone you would like to give this skincare subscription free for three months?
• 26:18
  Like not 10% off, like three months, completely free.
• 26:22
  Well, because you only have one, you're going to reach out to someone who has a skincare issue and you might say like, Hey Matt, I know you were talking about dry skin
• 26:33
  the other day and I've got this three month offer.
• 26:38
  Are you interested?
• 26:39
  But let me know if you're going to use it.
• 26:40
  Cause if you aren't, I'll give it to someone else.
• 26:42
  Because I only have one.
• 26:45
  So you really find the perfect customer.
• 26:48
  And then once that customer activates and either subscribes or in our case, installs the app and goes through onboarding, installs it.
• 27:00
  We send a thank you to the original person saying, Hey, Matt, thank you so much for sharing it.
• 27:06
  Steve over at Nike.com just installed it and activated.
• 27:10
  And we wanted to give you $300 too.
• 27:12
  As a thank you.
• 27:14
  And then you're like, well, that's awesome.
• 27:17
  Cause you didn't even do it for the $300.
• 27:18
  Right?
• 27:19
  It's like, you know, those coffee punch cards, buy 10 coffees, get your 10th one free.
• 27:25
  When you buy your 10 coffees and you get your 10th one free, you don't come out of the store going, I got a 10th free coffee.
• 27:33
  Oh my goodness.
• 27:34
  But imagine you go to Starbucks, I go to Starbucks all the time and I walk in and I order my latte and the barista is just like,
• 27:42
  Hey Jay, this one's on me.
• 27:45
  It hits different, you know?
• 27:47
  Like.
• 27:48
  I agree.
• 27:48
  I just, I posted about this actually the other day, because I think when you, with the 10th one free, I've noticed like there's a restaurant here in Liverpool.
• 27:58
  I regularly eat at when I'm in town.
• 28:00
  And it's like your 10th burrito is free.
• 28:05
  Well, I'm expecting that, right?
• 28:07
  That's, I'm earning it.
• 28:08
  It's now part of the price.
• 28:09
  It's not a gift.
• 28:10
  This is, this has become a transactional thing.
• 28:12
  And so, but when I go to Five Guys,
• 28:16
  they destroy the extra fries in the bag, right? And you're kind of like, that's interesting, but the trouble with Five Guys is they do it every time, so now you expect it, and so
• 28:26
  they've again built that into an expectation. If you don't get it, you're like, well, why have I not got that? I'm not happy. And so yeah, I think you're right. I think it's really
• 28:34
  interesting psychology you've got going here.
• 28:37
  Yeah.
• 28:38
  Well, and then to go one step further, every brand — and this applies to e-commerce brands, not just us as an app company — you will have a small
• 28:50
  percentage of your customers that will always spend way more, but they'll also refer way more customers too.
• 28:58
  And so the goal is to find those customers and then
• 29:06
  unlock more and more for them, but keep it exclusive for everyone else.
• 29:11
  So every time you share and refer someone, it's like, Matt, thank you so much.
• 29:17
  We wanted to give you this reward too.
• 29:18
  And you know what, since you shared, if there's anyone else, I wanted to give you three more golden tickets.
• 29:24
  Same thing.
• 29:24
  They get $300 credit free, like on us.
• 29:28
  Thank you so much.
• 29:29
  And then so there's only three, you share those again, unlocks another three, but
• 29:35
  like imagine if you just logged in and you just saw share this code with anyone and anyone gets this — there's no exclusivity.
• 29:41
  It doesn't feel limited.
• 29:42
  You don't feel limited. So the goal is to find, because to have healthy viral growth,
• 29:53
  there's what's called the viral coefficient and if a viral coefficient is greater than one, you have viral growth, meaning all you need is on average a customer to refer one.
• 30:06
  0.0001 customers and you've got viral growth.
• 30:09
  Some customers will refer 10 and a lot of customers will refer zero.
• 30:14
  If you don't have a way for your super customers to refer 10 or 20, you'll never make it.
• 30:20
  Like you're going to be relying on 20% of your customers that refer a lot and 80% that hardly refer any.
• 30:29
  And so you just need a mechanism for them, like don't cap it for them.
• 30:34
  But still make it in a way that is, yeah.
• 30:37
  So no, I'm a big believer in it.
• 30:38
  We're trying it.
• 30:39
  I'm excited because we're literally putting our money where my mouth is with this idea and we're gonna do it.
• 30:48
  And there is a real reason just for the release of this app though — it does take, when a store installs it, it takes the longest we've had last week.
• 31:02
  We had one store
• 31:03
  They were a very large store, like millions of orders.
• 31:07
  It took five days to process.
• 31:09
  Most stores take 24 hours-ish, but it goes through your entire store.
• 31:18
  It ingests every order, and then it looks at every single customer, and it starts to build confidence levels for reorder predictions.
• 31:27
  A lot of customers won't have any reorder confidence level or prediction.
• 31:31
  ...
• 31:32
  But then when a customer does have a high enough confidence level in a prediction for reorder, it then uses what we call our AI gut check.
• 31:42
  It's algorithmic based at first, then AI layered on top of it.
• 31:47
  Cause algorithms can be wrong.
• 31:49
  Good examples — like I might buy a couch for my house.
• 31:53
  I think we were talking about this the other day, but I buy a couch for my house.
• 31:57
  And then I buy a couch for my cabin.
• 31:59
  And then my daughter goes to college and I buy her a couch.
• 32:01
  It doesn't mean I need a couch every three months.
• 32:04
  So even though an algorithm might say we have a 77% confidence that this person needs a couch every three months, then it checks with AI — is a couch a reasonable product to
• 32:16
  reorder?
• 32:17
  It might give back a one, 2% confidence level on that.
• 32:21
  And then that blended together creates the score — there's actually more that goes into that.
• 32:26
  Then we also look at that customer, across everywhere else they order, are they
• 32:31
  an over consumer or an under consumer.
• 32:34
  I always say like some people squeeze the toothpaste bottle harder than others.
• 32:38
  So we apply also a ratio of how they consume and then we come up with a prediction level and then that all takes time and then even when it's done, we still have a human verify
• 32:50
  every store, just in case — AI is awesome, but we still have it.
• 32:55
  So.
• 32:57
  So there is a legitimate reason we kept it invite only for now, so yeah.
• 33:01
  But even so, I'm curious, the high performers, the small percentage you spread a lot and you give them three golden tickets, the next time they refer someone, are you still giving
• 33:13
  them the $300 credit?
• 33:15
  Are you creating that expectation or are you just doing something different or you're not giving the credit to them every time?
• 33:21
  We do after they have done the first one, which there is a little bit of a test here.
• 33:29
  But the whole idea is the first one, it weeds out people trying to game something like there is no other than people who listened to this podcast now.
• 33:42
  They'll know whatever that's fine.
• 33:43
  I don't care.
• 33:44
  Whatever.
• 33:45
  You know what?
• 33:46
  People are going to know it anyway.
• 33:48
  So, but
• 33:50
  In general, when a merchant installs it, the only call to action is: give someone — if you have a friend that runs a store and you think they could benefit, they can get $300
• 34:01
  credit.
• 34:01
  There's no mention of any benefit for you.
• 34:05
  So you would have no motivation to try to game it by installing it on a test store or something to just trigger the referral or refer a link to a friend.
• 34:17
  Because people try to game stuff and in any.
• 34:20
  Referral program, there's always a percentage of abuse and that happens.
• 34:24
  But the initial one, there would be no incentive for that.
• 34:31
  After that, we are making it known like, thank you so much.
• 34:37
  If there's anyone else you know that could use it.
• 34:41
  We love you to share it.
• 34:43
  Same deal.
• 34:44
  Happy to give the same reward.
• 34:45
  And here's three more tickets.
• 34:47
  So we're making it, we're not
• 34:48
  hiding it at that point because we feel that person has shown that they're not gaming the system.
• 34:56
  We do have a check.
• 34:57
  There are two things that have to happen for it to be validated.
• 35:02
  They have to share it with someone and the store has to generate seven orders through the app, which for a lot of stores that happens the first day.
• 35:13
  So as long as the store is a legitimate store,
• 35:16
  seven orders or it needs to send 50 nudges.
• 35:21
  So it just means that has to be a store that actually has customers, actually has orders.
• 35:28
  If it doesn't, then it would never trigger the reward for the share.
• 35:35
  So we do a little bit to check that.
• 35:37
  But I mean, we're just trying to make sure it's a legit store.
• 35:40
  As long as it's a legit store, we want to reward that first person and not
• 35:45
  keep it a secret after that initial one.
• 35:47
  And I think for brands running this, I would do the exact same thing too.
• 35:50
  Like once a person was intrinsically motivated the first time, not extrinsically from some carrot, they're doing it because they want to share it.
• 36:01
  I think it's fine to share it openly after that.
• 36:06
  Yeah, which makes it — going back to your R coefficient, which we all learned in COVID, didn't we?
• 36:12
  Once they've referred one person, well, then you've hit one and anything after that's now a bonus, isn't it?
• 36:19
  And you just wanted to get them to the second or third.
• 36:23
  Well, because you're going to have a large percentage of your customers that don't refer any.
• 36:28
  So you need that group to refer as many as possible to make up for everyone else.
• 36:33
  Yeah, absolutely.
• 36:34
  Absolutely.
• 36:35
  That's really intriguing.
• 36:37
  I'm really intrigued to see the results for you, on the whole thing and measuring that out.
• 36:44
  For people who are listening, maybe they don't have a membership site, maybe it's just a straightforward e-commerce site.
• 36:49
  How would it work for them, do you think?
• 36:50
  The strategy.
• 36:52
  There's actually a very easy way you can do this — this came up at SubSummit and I've done a few talks on this and what I would do is on whatever most platforms
• 37:04
  you can export a list of coupon codes.
• 37:09
  I know in Shopify, this is really easy to do.
• 37:12
  I'm pretty sure in other platforms, it doesn't matter where you are, but I would export a list of
• 37:19
  discount codes, single use discount codes — for as much as you can give, something very valuable. I like three months, feels like the right amount to me, like give something
• 37:34
  that's actually big — when someone hears it they're gonna say, oh, three months of the subscription, like that's big. That's a big deal.
• 37:43
  But just remember, I know it seems big but most of our subscription brands are paying
• 37:48
  hundred to $200 acquisition cost through Meta.
• 37:51
  It's expensive to acquire customers.
• 37:53
  So just think of this as your acquisition cost.
• 37:57
  So if you export this, you have this as a CSV, almost every email tool I use, you can merge in.
• 38:05
  So literally take your email customers, have a column with your customers, their email, the coupon codes, and have maybe three per customer or just one or two or whatever.
• 38:16
  And then
• 38:17
  create an email that you send to all your customers and just like, Hey Matt, I wanted to give a special offer for you — you've been one of our best customers and we wanted to
• 38:27
  give you three coupon codes to give a hundred dollars off something or three months free or something very special.
• 38:36
  Like we're not giving this to everyone, but you've bought a few times from us in the past.
• 38:40
  And you're a subscriber or you're a member or find something that validates it.
• 38:46
  And then merge in those codes — below are three codes you can share.
• 38:51
  Each one can only be used one time.
• 38:52
  Unfortunately we can't give more because there's real value here.
• 38:57
  It's like a hundred dollars per code or whatever.
• 39:00
  And then that's it.
• 39:01
  Like you don't even need an app to do this.
• 39:03
  You could just do it through a mail campaign, merging them in.
• 39:07
  That's the simplest way.
• 39:10
  We do have a membership app that if someone
• 39:15
  is on Shopify and they are running a membership program, we can put these offers behind like in their member portal and it feels really nice.
• 39:24
  But like, I mean, I'm always like, I would rather someone listening do it if they want to use our app.
• 39:29
  That's great.
• 39:30
  But you can even do this without an app.
• 39:33
  The point is it needs to feel exclusive.
• 39:36
  So, maximum three — dollar values are better than discounts.
• 39:45
  And like, I don't care what anyone says.
• 39:47
  I know people debate what's better, discount, dollar.
• 39:49
  Like the data, dollar discounts always convert better because you own, or even better, you can do this with our app, but you can't do this with a discount code, but
• 39:59
  credit is even one step better.
• 40:01
  Because credit, you own a credit versus a discount.
• 40:10
  A percentage discount is something that you can earn later.
• 40:14
  So if I said to you, Hey Matt, I've put a $50 credit in your account.
• 40:19
  You do have to spend a hundred dollars to use it, but there's a $50 credit in your account.
• 40:24
  I've put it there for you.
• 40:26
  You own that credit.
• 40:27
  You feel like ownership of it.
• 40:28
  Now, if you need to, but say I sell sports leggings or something.
• 40:33
  Now, if you buy sports leggings somewhere else, you kind of feel like you're losing money because you're not using the credit that I put in your account versus if I said, Hey Matt,
• 40:42
  here's a coupon for
• 40:44
  25% off anything up to $200.
• 40:46
  It's still the same $50 credit, but it doesn't hit the same.
• 40:52
  One taps into the ownership part of the brain.
• 40:55
  The other taps into like the future earnings and it just doesn't drive the same.
• 41:00
  So the dollar discount is somewhere in between — percentage discounts the worst, credit is the best, but it's hard to do credit.
• 41:11
  You,
• 41:12
  depending on which tools you're using.
• 41:14
  You can't put credit in someone's account that's never ordered from you before, but you could do with existing customers.
• 41:20
  But anyways, so a dollar amount — like a $50 you can give to someone, an actual dollar amount.
• 41:28
  That's what I would do.
• 41:30
  Like simple and just, you don't even need any tools to do it.
• 41:34
  Yeah.
• 41:34
  Yeah.
• 41:36
  And as you're talking about the dollar amount, I'm laughing because I got an email last week from Lucy at Tom jewelry.
• 41:43
  You won't know Lucy necessarily or Tom.
• 41:45
  I mean, maybe you do, but Lucy has been on the show, right?
• 41:47
  She's been on the show last year, I think, talking about her jewelry store.
• 41:52
  She sent me an email the other day and it was just one of these automated emails saying, Matt, you've got nine pounds 83 in your account.
• 42:00
  And I was like, have I?
• 42:02
  Wouldn't a full.
• 42:03
  And the first thing I did was go onto the website and thought, how the bloody hell am I going to spend this nine pounds 83, right?
• 42:08
  And you're just like, that was smart.
• 42:10
  That was, I don't know where that nine pounds 83 came from, but I thought that was smart.
• 42:17
  So this taps into this concept of sunk cost.
• 42:26
  If you can get someone to have, so you can just issue credits.
• 42:33
  One of the most powerful things you can do as a brand is have a membership program where customers get monthly credit.
• 42:42
  And so, we do this.
• 42:43
  This is like our bread and butter with our subscriptions app.
• 42:46
  It's like gold.
• 42:48
  So every month, rather than just a potential discount, you get credit — I still think VIP pricing is awesome.
• 43:01
  I'm not saying don't do it.
• 43:03
  But when you have a credit every month, issued in your account, if you shop somewhere else, you feel like you're losing money, like it will drastically change the buying
• 43:14
  behavior and it's
• 43:16
  what's called the sunk cost fallacy.
• 43:18
  People make irrational decisions based off of sunk cost.
• 43:23
  And it's why people say there's 80% of the clothes in your closet you never wear, but you won't give away cause you bought them.
• 43:33
  Some people say it's why they're in marriages for longer than they should.
• 43:36
  Cause while you've been here this long, or it's also why people make bad decisions in their business.
• 43:42
  Like you've spent a year working on something.
• 43:45
  And
• 43:46
  most businesses are going through this right now.
• 43:48
  We're going through this at Bold.
• 43:49
  Like we've spent a year working on something.
• 43:52
  Now comes AI.
• 43:54
  We probably should scrap everything we've done with this one product for the last year and rebuild it AI native, but that would be wasting a year of sunk cost.
• 44:07
  The right decision is to do it.
• 44:10
  But anyways, humans make wrong decisions because of sunk cost all the time.
• 44:14
  And
• 44:16
  It's one of those things that it's a super strong behavioral impact, but brands have not tapped into it.
• 44:24
  Like brands tap into everything else.
• 44:26
  FOMO, like fear of missing out, urgency, social proof.
• 44:30
  Like you buy something cause you want status, social status.
• 44:33
  I mean, not social proof.
• 44:34
  Sunk cost is hard to tap into.
• 44:38
  Like, what are the mechanics on your store?
• 44:41
  Car dealerships do it.
• 44:42
  You go look at a car, they ask you to leave a deposit.
• 44:45
  Cause then if you go look somewhere else, you gotta ask for your deposit back and it's awkward and that's why they get you to leave it, right?
• 44:51
  So the mechanics are hard, but membership, paid membership does it.
• 44:57
  If you're paying, and Fabletics actually does this really well.
• 45:03
  You pay like $50 a month, but you get $70 shopping credit every month.
• 45:09
  So are you gonna buy your gym shorts at Nike or Lululemon or?
• 45:14
  Fabletics, where you're getting this credit every month, right?
• 45:16
  It's not a potential future earnings.
• 45:18
  So I'm a huge fan of any way you can work sunk cost or credit into your business model.
• 45:28
  That was what I remembered also from your SubSummit talk because you talked a lot about how memberships were better than subscriptions.
• 45:36
  Better is maybe the wrong word, but different because of the sunk cost fallacy and using all kinds of examples which I thought was quite genius actually.
• 45:45
  I'd not thought that way.
• 45:47
  Well, paid membership is better than free loyalty.
• 45:54
  Subscription plays into it, but that's the biggest comparison is like almost every store has a loyalty program and you go through the shopping mall, you buy something, you get to
• 46:04
  the cash register and everywhere you go now, they ask you, are you part of our loyalty program?
• 46:08
  And you're just like, no, I can't be bothered.
• 46:10
  I got too many loyalty programs.
• 46:12
  But yet at the same time,
• 46:14
  you're probably paying for Amazon Prime.
• 46:17
  You're probably paying for other programs.
• 46:19
  So you'll take out your wallet, like Restoration Hardware we pay for.
• 46:23
  We pay for Costco, we pay for Amazon.
• 46:28
  These are membership programs that we pay for.
• 46:31
  But at the other ones, I just like, I can't even take 90 seconds to sign up for free.
• 46:35
  So the reason why, actually Restoration Hardware — do you guys have that in the UK?
• 46:43
  Okay.
• 46:44
  They're a very high end furniture brand in America and they have this program.
• 46:51
  They started it in 2016.
• 46:52
  They were kind of one of the pioneers in this paid membership space.
• 46:56
  You pay $125 a year and that gives you 20% discount on the site.
• 47:01
  Cause like their prices are super expensive.
• 47:03
  Like a couch is $10,000 or something, so that gives you member pricing, but also gives you access to
• 47:13
  design services.
• 47:14
  So if you're doing your room, you want to talk to a designer, you can consult them.
• 47:19
  They don't do sales for non-members.
• 47:21
  They only do sales for their members.
• 47:23
  And so anyway, we pay this $125 a year fee, me and my wife — they're a publicly traded company.
• 47:32
  So they're open with their numbers.
• 47:34
  They have a hundred...
• 47:36
  This was a couple of years ago.
• 47:37
  It's probably different now, but it was a hundred thousand members.
• 47:43
  Made 95% of all the revenue and they spent 400% more than non-members and so it's not the $125 a year that they're making — I mean they make a
• 47:56
  little bit of money off of that. It's the impact it has on the buying behavior of the customers. Like every time we buy furniture now we check there first because, dog on it,
• 48:05
  we paid our membership. You know, we're gonna check there.
• 48:08
  So
• 48:09
  It has a real impact on what's called brand affinity.
• 48:13
  And that's the likelihood you are to choose a brand without comparing it to other brands.
• 48:21
  Amazon Prime is the best example of this.
• 48:23
  Like it's almost never the cheapest.
• 48:24
  Like the next thing you buy on Amazon, go look somewhere else, go look at Walmart — it's never the cheapest, never.
• 48:32
  But you pay your Prime membership.
• 48:34
  You know, the shipping is going to be there in two days or whatever.
• 48:38
  You just don't even.
• 48:39
  Price shop around.
• 48:40
  You've got very high brand affinity with Amazon and the Prime membership is a big component of that.
• 48:46
  It's crazy when you think about it.
• 48:48
  It's like, I do have this high brand affinity and I'm paying you for it too.
• 48:52
  I'm paying you to give me that brand affinity.
• 48:54
  And Jeff Bezos is going, that's awesome.
• 48:56
  Thank you very much, Matthew.
• 48:58
  Yeah, well, because it only works that way, right?
• 49:00
  If it's free, it doesn't have that sunk cost.
• 49:05
  Yeah, that's the beauty of it.
• 49:08
  It's crazy.
• 49:09
  Yeah.
• 49:10
  Crazy.
• 49:10
  It's reverse.
• 49:11
  Like it's just brilliant.
• 49:12
  Brilliant.
• 49:13
  Listen, man.
• 49:14
  We've only scratched the surface, but I'm aware of time and you're a busy chap.
• 49:19
  You've got a full day in front of you.
• 49:21
  So if people want to reach out to you, if they want to find out more, connect with you, find out more about Bold Commerce or the Repeat app.
• 49:29
  What's the best way to do that, bro?
• 49:32
  I am an open book.
• 49:33
  Anyone's welcome to shoot me an email.
• 49:36
  jay@boldcommerce.com. BoldCommerce.com is our main site.
• 49:40
  There's information on everything there.
• 49:42
  Repeat has its own website and I should have mentioned this, but Pete is P-E-T-E.
• 49:49
  So he's like a character.
• 49:50
  We actually debated between naming him Refill Phil or Repeat — Refill felt like it was only for pharmaceuticals.
• 49:58
  So
• 50:01
  Repeat is for everything.
• 50:03
  Yes.
• 50:03
  So it's repete.me — all about Repeat.
• 50:09
  So right now, if anyone wants to try that, like I said, there's no cost to have it on.
• 50:15
  There's only a fee.
• 50:16
  If it makes a sale, you can go there and get in the queue and the queue is going pretty quick.
• 50:21
  Like it's only a couple of days.
• 50:22
  We're getting through as many stores per day as we can.
• 50:25
  But hey, do you have any golden tickets left?
• 50:29
  Are you
• 50:30
  I've given them all out.
• 50:32
  Okay, well I'll get you hooked up with some more.
• 50:33
  If any listeners are interested, reach out to me or Matt and we'll get you hooked up so you don't have to wait.
• 50:40
  Yeah, absolutely.
• 50:42
  That's awesome.
• 50:43
  And you're on LinkedIn as well, aren't you?
• 50:45
  LinkedIn is probably my main channel these days.
• 50:49
  Yeah.
• 50:49
  And you have a podcast.
• 50:51
  And I have a podcast which you're coming on in a month or so.
• 50:56
  Yeah, I'm coming over to London actually in a couple weeks.
• 51:00
  Yeah, but you're not by London.
• 51:02
  Are you?
• 51:03
  How cool she?
• 51:05
  Well, I know.
• 51:09
  I'm two hours outside of London.
• 51:12
  It's pretty easy to get to.
• 51:14
  Doing the whole family thing.
• 51:15
  We're bringing the kids, we're gonna go to the Harry Potter studio, do all that, and then we're gonna go to Paris.
• 51:21
  It's our spring break, so that's our trip.
• 51:24
  Yeah.
• 51:25
  Awesome.
• 51:26
  Listen, Jay, thank you so much for coming on the show, man.
• 51:29
  Genuinely, really appreciate it.
• 51:30
  We should definitely do this more often.
• 51:32
  It's taken us too long to get this far, but you're a legend, man.
• 51:36
  Really appreciate you coming on.
• 51:37
  Really, really, really.
• 51:39
  No, no, it's awesome.
• 51:41
  Well, there you go.
• 51:42
  Another fantastic episode of the e-commerce podcast with a legend from the industry of e-commerce, Mr.
• 51:48
  Jay Myers.
• 51:49
  Do go check him out.
• 51:50
  Do connect with him, do check out Repeat and Bold Commerce and all of that sort of good stuff.
• 51:55
  But that's it from me.
• 51:57
  Have a phenomenal week wherever you are in the world.
• 51:59
  I will see you next time.
• 52:00
  Bye for now.