How a Coffee Roaster Went from $35k to $75k MRR in 3 months 🙀
Over the past few years, O-Joe’s coffee has sold its roasts primarily via wholesale or direct to consumer through one-time purchases. Joe had flirted with the idea of implementing subscriptions for his coffee, but even after he added recurring orders to his sales forms, it seems like people glossed over it. During the years he was building subscribers, but things were moving SLOWLY... Then suddenly in March of 2020, a flip switched after talking with a friend and things took off (even amid a global pandemic!) That missing puzzle piece was personal video emails.
Guest post by Casey Hill, Head of Growth at Bonjoro
Before we dive into the specifics of how Joe leveraged personal video, it’s important to note that the change we are seeing around subscriptions and eCommerce is a paradigm shift in the market. I would argue there has not been a more profound change in eCommerce consumer behavior since the early 2000’s when eCommerce as an industry took off. According to data from Shopify, since 2013 the lift in traffic and revenues for subscription eCommerce is several thousand percent 🚀
Studies from McKinsey further elaborate on this by showing the growth trend of eCommerce companies with subscription models and how they went from a fraction of a percent in 2010 to now over 15%❗ As subscription culture becomes more accepted across industries (think streaming services or software licenses), we are seeing a rise in people paying for subscriptions in everything from health and beauty products to fashion and lifestyle boxes. The way people buy products is changing and companies that want to stay cutting edge are wise to take note.
Okay, so back to O-Joe’s coffee and his incredible transformation … ☕
It all started when Joe was talking to a friend and he advised him to try something new. Every time a new customer purchased a product (one-time purchase), he told Joe to record them a personal video email thanking them, showing them the roast they were about to receive and educating them about the subscription option (but not pushing it!). Here is an example of an actual video he sent to a customer.
This style of the video produced incredible results, with 50% of his one-time buyers changing over to subscriptions within a 14-week period. Despite offering a discount for opting into a subscription, the steady revenues of these customers delivered an incredible revenue lift of over 100% in just 3 months! This crushes the average revenue lift of +20% that Shopify notes in the industry average for subscription customers vs. standard customers.
So why did it work so well?
- Make your customer an insider: Most people who support a boutique or a small coffee roaster like O-Joe’s (it’s just him and 1 partner) have a passion for sustainability, small business and ethically sourced ingredients. In the video above, do you see how Joe shows the actual coffee they are about to receive and the machines and labels in the background? It is clear that Joe’s coffee is not some mass produced brand, but something where people can feel part of a community. That is powerful.
- Don’t sell, just educate: I think one key reason behind why his conversions to subscriptions was so effective is he doesn’t push it in his videos. It isn’t even the “purpose” of his video. The purpose is around thanking the customer and showing them the coffee they are about to receive. Then he just slides in that they have a subscription option if they are interested and it can save them money. I think the way he presents that is the key to delivering the results he was seeing.
- Be authentic: One of the reasons why video is so impactful at delivering results is because it has body language, tone, facial expression etc. To maximize your ROI with video, it is crucial to not be scripted, not look ‘dead-pan’ at your iPhone and just read something off. Instead, let them know you as the founder, employee or a manager at whatever company you are working with. Relate to them and create that bond of trust and affiliation that comes from human connection. Nothing beats face to face connection, but in the world of eCommerce, an authentic and genuine personal video stacks up as second best.
- Surprise: Human brains are wired to light up when we receive something pleasant and unexpected. A personal video from an eCommerce company is certainly unexpected and it created a visceral reaction within the recipient. They feel valued, they feel special and they feel like a part of a community.
Joe also noticed some other pleasant surprises from his use of video. Customers who had received videos were starting to reach out more and ask questions or get involved. He noted that customers who had received at least 1 personal video from him were over twice as likely to get connected with the company for any reason than those who didn’t. His ARPU (Average Revenue Per Unit) or in layman’s terms, how much his average subscribers spent with him, also saw a lift of some 20% over the next few months as he started to use personal video as a way to stay connected with new subscribers and show new product lines or celebrate cool company milestones.
When I asked Joe if there was anything beyond personal videos that had been impactful for his subscription growth, he noted some additional great tips:
- Flexible subscription plans: If you have to go on a vacation and you can easily pause your subscription for a few months, that is a great experience. On the flip side, if you “discover” you were billed for three months when you didn’t expect it, that is a deal-breaker type of experience. In this new untreaded waters of subscription eCommerce, I strongly encourage people to give customers the ultimate flexibility to pause, cancel or delay their subscriptions at will. It will, over time, lead to better CLTV and PR!
- Give them extra: While getting a personal thank-you is a nice surprise, do you know what is even better? Getting a free bag of coffee out of the blue, just for being a loyal customer. Or getting a free sampling of an exotic and expensive new line. Again, customers love to be surprised with value. Spending a few thousands dollars a year to invest in your customers delight? It always pays you back. Trust me. O-Joe’s is proof of that.
- Offer a discount: Going from a 1-timer buyer to a subscriber is a commitment, and customers need a reason fordoing that. Typically I see brands offering about 5–10% discount on their products if people opt for a subscription. O-Joe’s does 15% for the first order and 5% thereafter to help really push people to make the leap.
Overall, the reason O-Joe’s is a huge success is because they invest in their customers. These tools and strategies aren’t some gimmick to them or something they are trying to copy from some guru. That leads to the scripted and staged sounding messaging I warned you about. Instead, O-Joe’s is building a community and is doing it on the back of real, authentic connection that adds value back to the customers. While many eCommerce businesses are seeing growth in sales due to COVID (eCommerce as an industry is outperforming projections by 20%), most of those businesses will be back to square one when it finishes. The few that build loyal and long-term customers, however, will scale and grow rapidly with stable revenue.
O-Joe’s is not the only small eCommerce business seeing great results from a subscription model. Companies such as Hubble (20% MoM growth & $30m+ subscription sales in under a year), Kopari (53% MoM increase in eCommerce subscribers), and TULA (from 0 to 20% of sales in 1 year) also see great results. [source]
Are you employing a subscription model for your eCommerce business? What are the results you’re seeing? Share your growth hacks with us in the comments section below 💬