Recharge COO, Chathri Ali, spoke with Patrick Campbell, the founder and CEO of ProfitWell. More than 8,000 subscription companies use ProfitWell to track, understand and optimize billions of dollars in recurring revenue.
In this wide ranging conversation we discussed everything subscription ecommerce. From churn prevention strategies and retention trends, analyzing freemium vs free trial in the DTC space as well as content marketing tactics.
We also asked Patrick about:
- The verticals that are hurting and those that are thriving over the last six months
- His futurist’s prediction for 2020’s Black Friday / Cyber Monday
- The DTC business he’d create today if starting from scratch
You can read a transcript of the interview below.
Chathri Ali: We’re so excited today to be joined by Patrick Campbell, CEO and Co-Founder of ProfitWell. ProfitWell is based in Boston and their company is focused on automating revenue for subscription businesses. Welcome, Patrick.
Patrick Campbell: Yeah, thanks for having me. Excited to chat, all things subscriptions, DTC, and everything in between.
Chathri Ali: So, we’ve known Patrick now for, it feels like five years, but probably more like two years at this point.
Patrick Campbell: Yeah, I think so. Many networking events and conferences, so I feel like that kind of accelerates the relationship.
Chathri Ali: Yeah, I mean, being in the subscription platform services business, we will run into each other quite often. At this point, I probably have seen you maybe on average, seven times per year, if I had to guess.
Patrick Campbell: Yeah, all before the events shut down. So, now we just meet virtually, which is always fun.
Chathri Ali: Exactly. I guess now that you said that, we might as well dive into the meat of the conversation at this point. For the business now that your business has shifted, I’d love to know A, how did you guys start off 2020? As of the last quarter, how things changed for you guys?
Patrick Campbell: Yeah, a lot of ways to answer that question, but the rawest way is we started off 2020 super confident. This was the first year that we had done a very, very serious planning. So, it was one of those things where we did unified planning for the first time, and literally, by the end of January, the plan was just kind of thrown out the window. Because all of a sudden, things started happening, and everyone was just in a world of indecision.
I think what was really fascinating is you have these luminaries of Silicon Valley and successful folks saying on one side, “Everything’s going to be fine. It’s going to all blow over in a couple of months,” and on the other end, “Basically, it’s the end of the world. Don’t expect from revenue for four years.” Reality ended up being something, obviously, in between. I think when those types of things happen, you have to realize that you got to throw kind of everything out the window. So, we ended up doubling down.
I think what was really cool is this kind of crystallized our vision a little bit. I think it did for a lot of companies, because you decided, “Oh, where are we going to prioritize?” We put together a couple of contingency plans, thinking, “Well, if revenue looks like this, we’ll have to do this. If revenue looks like that, we’ll have to do that.” Thankfully, it was one of those situations where we were a little worried in Q1, because we did have some folks, some customers who basically put stuff on hold, and then all of a sudden Q2, that all came roaring back. So, we had this situation where our Q2 was something like 170% or something like that, which kind of made us up on the year.
I think that really came down to us doubling down on basically telling our team like, “Hey, as soon as everyone kind of got comfortable, AKA our customers and our prospects comfortable with, hey, this is the new normal, hey, we have a good eight-week window that we really have to go aggressive because we don’t know what’s going to happen after those eight weeks.” Now that we’re after those eight weeks, I think, things are just in this weird new normal. Thankfully, that’s good for our business. It’s one of those things that we can do what we can to help those who are obviously hurting.
Chathri Ali: Yeah, I know you did a subscription kind of not stipend. What did you guys end up creating in terms of what you’re offering?
Patrick Campbell: Yeah, totally. So, we’re in this unique position. So, we have a couple of different products, kind of our core product is this free subscription financial metrics product, so it plugs into Recharge. I won’t name anyone else that plugs into because Recharge is the only one for us. But it’s one of those things where we basically give you free access to all of your subscription financial metrics term, like LTV, a bunch of other fun stuff too.
What’s kind of cool is we have about 20% depending on how you measure it of the entire subscription market using that product. So, what we ended up doing is not only selfishly because we were like no one can give us any direction, but also because it could help our user base and our customer base, we put together this index which was basically tracking what stuff looked like in terms of growth over time. As a part of that, we had a bunch of partners who kind of came in, and basically were saying, “Hey, there’s all the stimulus happening, why don’t we do like a stimulus program?”
For some folks, it was a glorified affiliate marketing, like, “Hey, here’s just our affiliate code,” but for other folks, there was this genuine need of “Hey, if the subscription world is hurting, we should give back to the community. In the long run, this is going to help our business.” So that kind of capitalistic altruism that I think was really, really helpful. So, there’s a lot of companies that basically we’re giving away year memberships, “Hey, it’ll be free until you can pay,” a lot of stuff like that. I think to me, as a founder kind of showed this shift that’s happened in the past 10 years of hey, there’s a lot more “Let’s all rise, let’s all be successful,” and a lot less like, “Hey, if you’re successful, I can’t be.”
Chathri Ali: So, for the specific business trends that you did see after you put that together, and by the way, that’s awesome and it is altruistic, but also very needed by a lot of businesses at the time. For what trends you saw, were there certain verticals that were doing better than others? Is digital SaaS subscriptions following the same trends as physical subscriptions?
Patrick Campbell: Yeah, that’s a great question. So, basically, you had a situation where two types of companies did terribly. Those connected to doing anything outside, so even, DTC brands that had subscriptions for like sports and teams and things like that, those just started getting crushed. SaaS companies that had to do with serving restaurants and things like that, those folks got crushed. Some of those have recovered because they kind of changed their business model. But I think the folks who were doing really, really well were the obvious ones of anyone helping you go work from home.
But in the DTC space, we just saw just rapid crazy growth, because all of a sudden, people were not necessarily not comfortable with going to brick and mortar, but some of them were. But plenty of them were just thinking “Well, I have a lot of time. I want to find other entertainment like things like Hunt A Killer,” a game for those of you don’t know. I just realized saying it out loud, it’s like a big name to not explain, but it’s like a game that you can get on a monthly basis, all the way to like subscription boxes for kids just because now all of a sudden there’s no child care.
So, what we noticed to really answer your question, subscription fitness in DTC, having to do with fitness as long as it didn’t have to do with going outside like a ClassPass was doing really well, as well as even utilities and things like that. Toilet paper subscriptions were doing really, really well. Makeup was doing really well, even though people weren’t going out as much, which is really interesting, beauty care, these types of things.
So, I think we had the moment, or we are in the moment now for e-commerce not only just general e-commerce but also subscription e-commerce. The world of SaaS, it flattened for three, four weeks, and then it just kind of went back to normal, which is really fascinating. That’s why we wanted to publish the data because we wanted to make sure that we were reacting to the right information.
Chathri Ali: And then what about the churn side of the equation during this time? Because to your point, I think a lot of people in the subscription space were expecting everyone just hitting cancel on March 12th or whatever date you want to say when everything essentially became very real. Probably the day that Tom Hanks announced that he got COVID is probably the day.
Patrick Campbell: Yeah, Tom Hanks and Rita.
Chathri Ali: Yeah, T. Hanks. So, what, in terms of churn, prevention strategies have you guys seen that people have implemented for their business, or are there any trends in the retention side that you could talk about?
Patrick Campbell: Yeah, absolutely. So, retentions got a special place in our heart just because the beauty of the subscription model obviously and you know this, the relationship is baked directly into how you make money, right? So, oftentimes, we’re so hopped up on acquiring customer, I call it Facebook brain, right? Because it’s one of those things where yes, you’re going to spend half your budget if not more on ads and acquisition and salespeople if you’re in the world of SaaS, but it’s one of those things where you have to remember it’s a multi-move game with a customer. You have to go beyond that initial purchase.
What we saw was the only flatness in B2B really came from churn. So, new revenue actually accelerated, which was fascinating. In the world of DTC, specifically subscription e-commerce, everything was kind of okay. But what we’ve noticed recently in the past few weeks is that we’re actually starting to see some contraction in the market, because all of these brand new customers that people are getting, all of a sudden, there’s a good portion of them cancel, right? You could argue that some of that’s because “Oh, they use the product, they didn’t like it,” but I think that’s not the case.
I think what’s really happening is brands have not necessarily focused enough on what’s going on beyond that initial purchase. And then all of a sudden, they don’t have the right tactics as well as the right strategy in keeping those customers around. There’s some really mechanical things you can do. I think that one thing we talked about a lot and selfishly, because we have a product that works on this is credit card and payment failures. We saw those go up a lot in the past few months in DTC. But in addition to that, some of the other mechanics are working to get people on a longer-term plan.
We run a lot of tests on a bunch of different DTC brands just for our own research and leads. We find that the amount that don’t ask us to get on a quarterly plan, a semi-annual plan, or even an annual plan, I think it’s like 10% of people ask us to do that, which is kind of insane if you think about it. Those folks typically churn. They cancel at a much, much lower rate, because they’re more bought in.
And then ultimately, it’s figuring out why those people are canceling. There’s not enough people doing offboarding as they call it, which is, “Hey, you’re canceling. Why are you canceling?” Because if you find out, “Hey, it’s because I couldn’t find the right variant of the brand.” Well, hey, here it is. Here’s the blue color you were looking for. Not enough people are doing that because they’re spending so much of their effort, basically getting that customer and barely any keeping it.
Chathri Ali: Yeah, I was just going to comment on the trends that we’ve been seeing that somewhat reflect what you were talking about with regard to certain new merchants or new customers, we call them merchants, new customers on the SaaS side or subscription side who onboard with us during COVID, because a lot of commerce was moving online. We saw this surge in new users for Recharge in April and May. And then in June and July, as things somewhat start to normalize, we saw that growth flatten out. So, we haven’t necessarily seen a lot of churn on our end, but rather those new users who are coming in and testing out Recharge and other tech partners that we integrate with as well.
So, for us, a lot of our growth reflects what you saw in e-commerce. And then to your point about flattening out, we’ve also seen a little bit of that happen as well. So, for yourself, if you could say one thing to either a merchant or digital SaaS company, what would you say is the one thing that you would focus in on with regard to churn. Other than maybe failing payments, what’s one aspect of subscriptions that you would highly recommend folks lean into?
Patrick Campbell: Yeah. Before I speak to one thing, I have to generalize, right? But I think that the generalization is actually key, because when you look at retention, it’s made up three parts. Your active churn, these are people who are actively canceling. Your delinquent churn, your payment failures, and then your expansion revenue. So, your existing subscribers are spending more with you.
What’s really kind of fascinating is that with the exception of the failed payments, the other two pieces are a function of dozens of things. The person didn’t get the right value prop when they were coming in. So, they weren’t set with the right expectations, that’s why they’re leaving; or they didn’t really like the product, that’s why they’re leaving; or they didn’t necessarily see the discount that you’re offering. They had a bad support experience or something like that.
So, I think the key if I have to give one thing is, is that you have to obsess with the why. So, you have to obsess with why people are leaving, why people are upgrading. If it’s not the mechanical stuff, which can kind of be solved, it’s normally going to be how do we change up our product line to go after these customers, or maybe we don’t like that customer. Maybe we don’t want that customer, which is totally fine. That’s okay churn if that’s not the right segment, but then you need to adjust it up funnel and basically look at the channel that those customers are coming through. Maybe turn off those ad campaigns, because they’re really, really poor lifetime value customers.
I think if you obsess with the why, you start to measure your LTV by channel, where you can actually look at what is your retention by channel. You start to ask those questions of those customers, and then you kind of fight the game of inches or centimeters for the folks outside of the US in terms of making sure that you can kind of incrementally lower that churn over time.
Chathri Ali: I love that. I think in your opinion, would you say that’s easy to do?
Patrick Campbell: Of course not. I mean, well, I shouldn’t say.
Chathri Ali: What does it take to do that? If you’re sitting at home and you’re thinking, “Well, where do I start?”
Patrick Campbell: Totally. I should rephrase, it’s not that it’s difficult. It does require effort. I think that’s the thing is like talking about any of these pieces, it’s the fundamentals. For some reason, big old retail brands when you think about like Hallmark or Reebok who we’ve worked with. They have these giant teams. They have 100 people focused on customer research and all kinds of sub projects underneath that. Look at the world of software, none of those people are doing research.
eCommerce is probably the world where you can actually understand or you should understand your customer better than anyone else, but no one puts the effort in. Everyone talks about it. We like to retweet the tweets that talk about it, all these different things. But at the end of the day, we don’t send the survey. We don’t get on the phone with customers.
I think that the best thing to do is in terms of churn is add some offboarding. When someone hits that cancel button, have something pop up, even if it’s just open response, “Hey, why are you leaving?” If you want to get a little more sophisticated, you can give them a couple options. And then based on the option, you can maybe offer up a salvage offer, like, “Oh, you didn’t get a chance to use the product. Well, how about we give you the next month for 10% off?” or “How about we pause for the next month?” There’s a whole host of different things you can do, but again, it just takes starting to put the effort.
So, what I recommend with folks is, “Hey, put a number on the board, go talk to 10 customers or people who didn’t convert in the next month or send one survey or whatever it ends up being.” Now, having those conversations and sending the survey and all that kind of stuff, you have to do those in a better way than a worse way, but it’s one of those things where it just takes the effort. And then what you’ll find is you start to get addicted to it, because all of a sudden you start getting answers to questions.
And then maybe you don’t trust it, so you go ask more people, and then you keep hearing and so you start to trust it. But then that that answer begets another question, which then you want to go get more answers and so on and so forth. Ultimately, you look back in a year, and you’re like, “Holy cow, I just improved all of these things and realized I was wrong on half of them, which allowed me to kind of fix them by talking to customers.”
Chathri Ali: You mentioned tweeting and we were looking at your own Twitter, because this real time stuff here, Patrick. You said on Twitter today, “Ended up studying a bunch of #DTC subscription data lately and found a troubling trend in the subscription eCommerce market.” You gave your best at web impression. So, I’m curious, without replaying this video, what’s that one tidbit that you were concerned about? What was troubling?
Patrick Campbell: Yeah, it really came down, it was retention. So, we basically saw what we were just talking about where the curve was just going up into the right. I mean, we advanced I think McKinsey said 10 years and three months or something like that. And then all of a sudden, that growth was flattening and almost going down in certain places. It’s just one of those things that I don’t want us to lose this opportunity. This is an opportunity where we accelerated so many things.
I don’t think we’re going to decelerate to the point where we were at all, because I think there’s so many people are like… Similar to probably our parents who finally are starting to put their credit cards online, now there’s a bunch of people who are really excited to buy stuff and try out new brands. But I think that we need to learn from this and accelerate our momentum rather than just letting the wave ride us and then not changing anything about ourselves.
Chathri Ali: I would love to hear your thoughts on strategies around freemium versus free trial, because of your pricing background. For subscription, you can maybe start with a free trial and then upgrade to a subscription or your free trial automatically turns into subscription, which is where Recharge comes into play. What are your thoughts on how free trials work for DTC?
Patrick Campbell: Yeah. So, what’s really kind of fascinating is I actually think freemium is one of those things where it actually can be used really well with DTC, but of course, you’re like, “Wait a minute freemium, there’s like physical cost here. What does this mean?” It takes a little bit of a recontextualization of how you get that customer to be washed over with your brand and to be nurtured by your brand, because a lot of times what happens right now is we just discount.
In every DTC brand I go to, there’s a pop up that’s like, as soon as I’m trying to get off the site, “How do you want 10% off?” or they make me feel bad with their copy saying, “Oh, you don’t want this? You have to click this button,” these types of things. I think that that’s okay, but what if I want to be a premium brand? What if I want to be a premium brand, where discounting, it just doesn’t feel right? Discounts do erode your brand. If you aren’t a true, true discount brand, you should be really careful with them. That means like, go give “Buy one, get one free,” do stuff like that. Rather than give the discount because it does feel different in the eyes of the customer, even if it’s the equivalent kind of percentage off the particular product.
Now, in terms of freemium, I think that one of the biggest opportunities that I think a lot of DTC brands have is using freemium-type communities. So, freemium-type communities, if you think of like what Glossier did and some of the other folks out there, not only even Billie, they not only use their community for basically fixing and making the product amazing, but they also used it to kind of basically start to almost create… I don’t want to say a cult, because that’s a little too aggressive, but almost kind of create these like super fans who then not only felt like they were a part of the process but also felt that they were part of something special, even if they just like checked that one email that came in once a week.
And then when new products came out, they were able to tweet about it at social and they didn’t have to pay a bunch of influencer and marketers in order to get stuff out there.
A big missed opportunity that I see a lot of brands are is you end up having old inventory. It just kind of happens, where this is where you see clearance sales. A lot of times it’s old inventory and it’s not for every brand, but I think there’s a world where you could start to use some of this old inventory that’s just sitting on the shelf and maybe not moving as an incentive. Now, you’re not going to call it old inventory, but there’s a world to kind of bring those folks in basically as a bundle. It’s not freemium in the sense of us using some software application, but it’s actually freemium in terms of using what we’ve always used with our samples or “buy one, get ones”, and things like that.
Chathri Ali: Yeah, I can talk to a couple of the points you made in terms of the influencer marketing and maybe using brand ambassadors who are unpaid as the brand champions or brand evangelists. One good example that we’ve seen is Pure Vida, which is bracelets. They’ve done an amazing job just finding these really authentic customers who love their product, who have created user generated content that they can use that as either how they advertise or share those images to essentially attract more users versus high ad costs because of the competition on Snapchat, Instagram, and now TikTok of all places.
It’s becoming a competition there. So, they’ve done a really good job of just creating that free user acquisition in that way. It’s authentic. So, for a brand like theirs, that makes sense for them. And then, with regard to the inventory, we’ve seen some brands do some clever marketing. One, for example, is a box company of ours, a curated box of goods has added on their checkout the ability to add a mystery box of items.
Patrick Campbell: Got it.
Chathri Ali: It’s $40. I think it was a 40% take rate on-
Patrick Campbell: That’s great.
Chathri Ali: … that upsell.
Patrick Campbell: That’s an add-on.
Chathri Ali: Yeah, it’s an add on mystery box of items. Their customer for their curated boxes are just so passionate for their brand that they just know inherently, whatever it’s in that mystery box, because I’m a brand evangelist, I’m just going to hit yes. I put that trust in them to curate the items that do go into that box. So, yeah, they’ve seen overall their AOV go up, by their $100 normal box so $40, 40% uplift. So, overall, they were surprised by how little of a tweak you could do to create that much impact.
So, on the note of UGC and content marketing, what’s your personal philosophy on how DTC brands today in today’s market where A, we’re at homes? Our eyeballs are going somewhere. It’s not that we’re on an airplane now. We’re now choosing to spend our time and energy in different mediums. What do you think about content marketing and how brands can use that avenue today?
Patrick Campbell: I don’t know if you have a number of hours to talk about content. This is something that’s really kind of fascinating is that if you really think about let’s just say, the American buyer, but I’d argue kind of a Western buyer or an affluent middle class type buyer, if you really want to kind of define a little more broadly, what’s been fascinating is that over the years, these brands have basically gone through a couple waves.
So, the first wave was kind of “Hey, let’s do some quality.” This was kind of in the ’90s, ’80s, where you’re getting a little bit more of the rise of luxury brands that were able to kind of expand beyond like the truly, truly affluent. And then beyond that, all of a sudden, it was the rise of either environmentally friendly or some sort of better, no-GMO type products. You saw that kind of through the ’90s and the early 2000s.
And then there was all of a sudden, the rise of kind of the culture brands. What I mean by that is you’re seeing a lot of identity get imbued into brands, and then buyers are basically connecting with those identities. So, if you look at Billie, for example, I mentioned them before, Billie basically has said, “Hey, we’re going to change the hundred-year history around women’s hygiene. We’re going to change it so that these things are a choice rather than something that’s been shoved in front of our faces for the past hundred years of what it means to be a woman. We’re going to get rid of the pink tax.” There’s an actual social or a cause element to the brand.
And then on, I don’t know if it’s the other side of the spectrum, another particular person, like Black Rifle Coffee, which is a little polarizing depending on how you look at the world. But it’s one of those things where they’re just unapologetically a particular identity.
So, when you have that, I think that what ends up what kind of growing is content can be a way to show the world who you are. Assuming that that kind of pulls into whatever you’re selling, it’s a really, really wonderful experience because more and more buyers want to understand who they’re buying from for the first time in history. Now, you had that previously, but now we have just so much information. The only way to kind of get through all that information is through content.
Now, in addition to that a little bit more pragmatically, here, content is the way to build audience. It used to just be like SEO. That’s kind of the focus of content, basically getting those organic clicks. But right now, if you look at the cheapest channel right now and I know it doesn’t feel cheap, but in terms of the lowest customer acquisition costs, it’s basically those folks who are coming in through audience.
Audience typically comes through those brands who were acting like media companies. In the past two and a half years, we started acting like a media company because we saw in the data that for us to get as much leverage growth as possible as a SaaS company of all things, we needed to basically start a network and we needed to have shows. We needed to have podcasts not just one but multiple. We needed video and we needed written still.
It took a lot longer than we thought, because there’s a lot of like not necessarily heavier costs, but it’s just a different change of thinking, and it takes time to figure those things out. So, I think you’re going to see more and more. I think it’s a law of linear commerce or something that Web has published around every brand eventually becomes a media company. I think that he was applying that mainly to DTC brands. I think that’s just going to be any company in general.
Chathri Ali: I see, I would argue that every brand’s eventually going to become a technology company at the end of the day, because you can create the content, you can create that media, but you’re going to have to put it in the right channels. You’re going to have the right technology to track attribution on that. You’re going to have to use technology to optimize your site for the inbound traffic.
At the end of the day, the folks you end up adding to your team are the analytics and the growth marketers or growth hackers, and then obviously, the sales team. Everyone’s focused around the metrics and what’s working. So, I think it’s both, media and technology, but what are your thoughts on that side?
Patrick Campbell: Yeah, what’s really funny is it’s not that I disagree. It’s more of I think there’s like two groups. There’s the group that you’re 100% right on. I think overall, you’re 100% right. But I think what ends up happening is there’s the group that actually uses what you’re saying. Now, there’s the groups that will track things and they’ll do it right.
And then there’s this other group. This other group has a lot of different problems where they don’t hop on these trends of media, technology, getting their data into a unified play in these type of things. And then they lull themselves into kind of a false sense of security around like, “Oh, yeah, well, we have Google Analytics. Oh, yeah, we have like this data,” and they don’t connect the dots. They get too caught up on either tracking everything or tracking basically nothing.
So, it’s one of those really fascinating things where I completely agree with you. The only asterisk I put on it is that I think that’s so table stakes. I think that’s it’s going to be the water of a company. Your technology has to be there. Whereas media probably, I would say, most brands need to become it, but there’s going to be some that are going to squeeze everything they can out of the enterprise sales model, the licensing model, all these different things. So, yeah, basically what I’m trying to say, and I got here in a really roundabout way, you’re more right than I am. That’s what I’m trying to say.
Chathri Ali: So, I think that’s going to be the title of this episode.
Patrick Campbell: I love it. I’m okay with it.
Chathri Ali: So, if you were to start a DTC brand today in today’s environment, given everything that you know and everything you already talked about where brands need to focus their energy, what do you think that DTC business would be?
Patrick Campbell: Quilts. I’m not even kidding.
Chathri Ali: Why?
Patrick Campbell: So, quilting, okay. Actually, I don’t know if you know this, I started my startup career in DTC. I don’t talk about it a lot because we started doing a lot more in DTC a year and a half ago, but I worked at a customizable jewelry company. It’s like a competitor to Blue Nile. I learned so much about basically, for lack of a better phrase, older women.
What was really kind of fascinating is that in addition to my mom being a hardcore quilter, I actually researched this market a lot. Here’s some fun facts about the quilting market. It’s a $4 billion a year market. It’s huge. The average buyer, the average quilter essentially, mostly she, but he or she spends something like $10,000 a year in quilting supplies. I know, I know. I know that seems insane.
Chathri Ali: I have a lot of questions.
Patrick Campbell: 99% of them have Facebook accounts. They’re older, which is really interesting. So, they tend to be cheaper to go after. There is a younger cohort that’s kind of growing. So, if I was going to start a DTC brand, I don’t know if it’d be a quilt of the box company. But there’s this thing with quilting not to get too far into the culture of quilting-
Chathri Ali: Let’s do it. I mean, we took a pivot.
Patrick Campbell: I know we took a hard pivot. I could talk for this for hours as well. But what’s really interesting is there’s kind of a block of the month that’s already a concept in quilt shops all across America, where quilters come together, and they have a block of the month that they make. And then over time, it creates an entire quilt. So, that might be my freemium strategy is like a pattern that they can have a block of the month community, bring them in, and then sell them not only quilting supplies, but probably have… I don’t exactly know what the subscription would be. I think there is a community subscription, and then there’s probably a box of the month. I don’t know. They really know their prices on stuff. So, you have to find something besides like, “Oh, you get a bundle discount” kind of a thing.
Chathri Ali: So, we have a subscription box company called Darn Good Yarn. So, essentially, yup, they send out yarn on different intervals. But I love this idea and I’m sure someone listening is probably having a light bulb go off, because I can imagine retention would be very easy with this group of passionate people. Acquisition even more so given that 99% of that group is on Facebook. That seems-
Patrick Campbell: It’s insane. Well, because they have to look at their grandkids’ stuff, right?
Chathri Ali: Right.
Patrick Campbell: Yeah, Facebook’s becoming older anyways. But yeah, there was someone who tried out of Florida. I found them a few years ago. I think they didn’t realize the logistics. This was like maybe five years ago when box of the month was still kind of… I mean, it’s still young, but I think even younger. Yeah, Darn Good Yarn. I think the craft market, the knitting market is super interesting as well. In all the world of technology and everything, there’s still a lot of people crafting and doing a bunch of different things. That’s the beauty of the technology at least to get started, had the barriers come down so much. There’s all these communities and these brands that are able to kind of tap into these communities. Most of the time because they were a part of the community.
Chathri Ali: So, Patrick, what do you subscribe to? What physical good comes to your doorstep every month?
Patrick Campbell: Supply, I don’t shave, but I like some of their other products. I was just thinking about this because someone else just asked me this. I get Magic Spoon cereal. I get Ritual for a multivitamin. There are too many. It’s not too many. I shouldn’t say that, because I do value all of them. There’s a lot. I can’t think of the others right now, but those are kind of the typical things.
Chathri Ali: So, we’re just about to enter the fall season. I say this because your company’s up in Boston. So, your weather turns quicker than ours does here, where I’m at in California, but already thinking about the last few months of the year and the fact that in e-commerce, the bulk of folks businesses is in Q4 because of the holidays and everything you can think about, BFCM, Black Friday, Cyber Monday. Putting on your futurist hat, what do you see changing dramatically this year versus last year?
Patrick Campbell: I think that’s a really good question. I think there’s two paths. We’re recording this the day that the GDP numbers came out and they were terrible, but we all knew they’re going to be terrible. But if the economy stabilizes a bit, let’s say the vaccine and stuff like that, even if they’re not distributed, but we get to the end of the trial and that’s right around October, folks have said, I think this could be the biggest Black Friday in history by quite a bit.
Chathri Ali: Why is that?
Patrick Campbell: The reason is you have multiple retail stores because of the operational expenses that they’ve had, who have already come out and said they’re going to be closed on Thanksgiving at least, which was kind of like the pre-Black Friday rush. You have plenty of people who are basically already priming themselves for buying these products.
What you’ll notice when you look at a lot of the DTC data, at least in the world of subscriptions, is that the Black Friday is it’s not quite forecasted, but you can kind of get some leading indicator data about what happened the 10 months before, because a lot of the Black Friday deals are going to the lists of the people who have purchased or who have signed up previously, even if they’ve canceled. So, I think that there’s a huge opportunity that we primed a huge portion of the population around Black Friday. Since we have this 10X lift in the world of eCommerce, in subscription eCommerce, I think there’s a huge chance this is an enormous Black Friday.
Now, if the economy doesn’t do so well, if finally, some of the stimulus starts kind of feeding us the sugar here, and all of a sudden, things kind of drop off a little bit, I think it’ll be maybe an average one, because there’s still going to be buyers, but maybe those additional buyers, and obviously, people unfortunately don’t have gigs, aren’t able to take advantage of things. Yeah, I think it could be big. I think there’s a good chance it’ll be big.
Chathri Ali: Yeah, I think you bring up a good point that what we may lose from just the economy taking a decline, there may be a gain in that new buyer category. Case in point, all of our parents have very quickly learned how to do things online in the last three months. My father is a professor at a community college. He had to overnight create-
Patrick Campbell: Zoom.
Chathri Ali: … an online Zoom approach to teaching his students. In my head if my father who’s turning 70 in October, if a 70 year old professor can do that in under, whatever it was, two weeks to move all of his courses online, I think we underestimate the buyer category for a very big age group that was not purchasing in the last year at this time, so BFCM last year. So, I do think that no one knows how big it’s going to be. I do see an uptick especially because you know what? They’re going to be the ones who are spending on to your point about grandma buying Christmas gifts or Hanukkah gifts. That’s going to be that new buyer category there.
To your point about advertising and how that is a very large audience still on Facebook, it could be a marketer’s dream depending on what category or product or vertical you’re selling. So, TBD, but we’re very much watching that here. But I do want to end on a high note. What are you most excited about for you at ProfitWell, your team, what you’re launching, what you’re rolling out, anything you’ve been sharing at this point?
Patrick Campbell: Yeah, I wasn’t prepared for that question. So, let me think just for a second. So, we’ve been on this mission to truly kind of create a media arm of the company. I think finally right around September, we’re going to officially launch that. Basically, being the first two and a half years that we’ve been working on this, we’re kind of a lot of beta-ing. It worked out. It was a good beta-ing, but we finally will have the site. We’ll finally have the workflows, all these other things that are set up. So, we have a lot of content. We have two shows coming out that are very specific to the DTC crowd that will help with kind of pricing and churn, which are kind of our two fortes when it comes to product.
And then the other really big thing that we’re coming out with, we’ve been focused on when it comes to retention, credit card failures. But what we’ve been kind of learning is that while credit card failures are the largest single bucket of churn, depending on the brand, it’s about 20 to 40% of your churn. The other 60, 80% is obviously important.
So, we’ve been working on using all this data we’re sitting on to not only do really good health scores that’ll be released in the next few months, but also figuring out how we can automatically reduce some of that churn for you through things like upgrades to annuals and things like that, as well as reactivation campaigns and a whole host of things where we set it up and we manage it and we do all the work for you. So, that you can focus on obviously the things you’re prioritizing. So, there’s a lot of those features that are coming out. It’s kind of the rest of the year’s retention for us, which we’re really excited about.
Chathri Ali: That’s really exciting. Is there a name yet for the site that you could share?
Patrick Campbell: Yeah, we’re calling it Recur.
Chathri Ali: Nice.
Patrick Campbell: So that’s a theme of our big… Not big, but our conference and things like that. So, just go on-
Chathri Ali: It’s big, Patrick. Everybody knows about it. You can say it.
Patrick Campbell: That’s all right. That’s all right.
Chathri Ali: Awesome. Well, Recur… So, did you get the domain?
Patrick Campbell: No, it’s still going to be profitwell.com/recur. We’ve played the double domain before. As you know, we changed our name from Price Intelligently to ProfitWell. Just never change your name. On a final note, try to get the name right the first time, because it’s not a disaster to change. It’s just a lot of like little paper cuts that you have to kind of take care of.
Chathri Ali: Branding lessons from Patrick Campbell.
Patrick Campbell: I don’t know if I’m the right guy for that, but sure.
Chathri Ali: No, it’s a terrific lesson. So, from retention to branding to content, this has been a fantastic conversation. Thank you for your insights, and thanks for joining us.
Patrick Campbell: Yeah, thanks for having me.
This interview has been edited and condensed for clarity.