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Ep. 50 - Diversifying Lead Sources, Subscription Boxes, and Battling Customer Churn with John Roman

After leading several successful sales organizations in the telecommunications and software space for almost a decade, John began investing in companies in the eCommerce arena. Then when a close college friend launched BattlBox in early 2015, John knew he had to be involved. So, he invested in it, offering advisement in a limited capacity.

Since BattlBox, John has been involved in several eCommerce company launches, participated in two successful exits, and acquired three companies.

In This Conversation We Discuss:

  • [1:31] John’s story of how he got started with Battlbox
  • [4:47] What made Battlbox grow?
  • [5:46] John’s first website/platform
  • [6:41] Talking about Cratejoy as a platform
  • [7:57] John’s reason why they migrated to Shopify
  • [8:31] ReCharge is a great billing solution for subscriptions
  • [9:38] John’s story with Facebook ads in its heyday
  • [13:23] Sponsor: Simplr simplr.ai/honest
  • [14:13] Moral of John’s Facebook story: Diversify your lead sources
  • [15:13] Battlbox’s other lead sources
  • [16:15] John’s leap from focusing on Battlbox to managing other brands
  • [17:55] The best way to learn marketing is to run your own business
  • [18:52] What point in the business did John decide to expand?
  • [21:00] Learn the business first, before hiring other people.
  • [22:25] Sponsor: Gorgias gorgias.link/honest
  • [23:14] Are all of John’s businesses under the same umbrella?
  • [25:03] Economies of Scale in eCommerce
  • [26:50] How John prevents customer churn
  • [30:23] John’s takeaway for a multi-platform strategy

Resources:

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Transcript:

 

John Roman  

But the experience phase is very important, too in creating a community for each brand and just engage superfan customers. Treating them as if their family. And that's our mantra and how we view our customers.

 

Chase Clymer  

Welcome to Honest eCommerce, where we're dedicated to cutting through the BS and finding actionable advice for online store owners. 

 

I'm your host Chase Clymer, and I believe running an online business does not have to be complicated or a guessing game. 

 

If you're struggling with scaling your sales, Electric Eye is here to help. To apply to work with us visit electriceye.io/connect to learn more. Now let's get on with the show.

 

Welcome back to honest eCommerce. I am Chase Clymer, coming to you from Columbus, Ohio. And today's guest on the podcast is John Roman. He is a serial entrepreneur. 

 

John is the CMO and co-founder Battlbox along with being the managing partner at Carnivore Club and six other brands in the eCommerce space. I feel like he's going to have a lot to share with us today. Welcome to the show, john.  

 

John Roman  

Hey, Chase. Glad to be here.

 

Chase Clymer  

Awesome. Where are you calling in from?

 

John Roman  

Metro Atlanta. The suburbs.

 

Chase Clymer  

Oh, nice. I will actually be down there shortly for a wedding.

 

John Roman  

Okay. When?

 

Chase Clymer  

About two weeks from now. 

 

John Roman  

Oh, nice. Okay. So the weather will still be really good.

 

Chase Clymer  

It'll be a lot better than Columbus, that's for sure. 

 

John Roman  

(laughs)

 

Chase Clymer  

Awesome, awesome. So you're managing and you have your hands and almost eight brands. What led you there? What's your background? How did you end up in this in this position?

 

John Roman  

Completely by accident. Not quite. But... So, my background is business to business sale. Sales leadership. Typically, telecommunication, software as a service companies. And I was doing that. 

 

And in 2015, we had a company that we had some shares in --that I was working for-- publicly traded. It was purchased. I got a  decent little payday and I was trying to find some investments and really just try to --in a very, I guess, non-scary way-- try to build something outside of working for big companies so that I could eventually not have to do that. 

 

And a friend that I went to college with, Daniel Dabbs, we had linked up. I have a Christmas party every year and he came to that. We're talking. He ran a company at the time that was kind of t-shirt, swag-like marketing material stuff --logos and stuff-- for companies. And they were actually just individual. They had a couple of locations outside of universities. So the slow time for him was December. 

 

He was chatting with me about, "I want to do something else." We threw a bunch of ideas around, none of which were Battlbox. It was more (about) consulting ideas. And then fast forward in February of the next year, 2015, he comes up with this idea. His wife was getting a Birchbox subscription box in the mail and he was watching her excitement level (when she was) unboxing it each month. 

 

Went to find a box for him. He wanted to experience this. And he wanted outdoor camping gear, survival gear, couldn't find one. Three weeks after that, he had launched a website and was ready to go and that's... I came in as an investment. 

 

Offering my assistance from like a business side on a very, very small scale. We saw exponential growth. And about a year later, I quit my job and jumped in this full-time. And now we're just continuing to try to grow and diversify. I've fallen in love with eCommerce. It's just such an enjoyable industry.

 

Chase Clymer  

I can agree completely. There's just something... I think it's the tangibility of the numbers. And if you have any... If that appeals to you at all, you can see where your efforts are helping or you can quickly see if you've made a mistake. You failed fast, so you gotta move on from it.

 

John Roman  

100% and I'm kind of a data nerd. So I can just completely geek out on the analytics and come up with business plans based on that. It's just... It's a lot of fun. It plays a lot of my strengths, too. Which just makes it even more enjoyable.

 

Chase Clymer  

Absolutely. So let's go back to the first one. So, Battlbox. Where did you guys find your initial growth? What was working for you back then?

 

John Roman  

So, none of us really had any eCommerce background at all. Daniel had this great idea. We open up a website and we had gathered from the masses. You run an ad on Facebook and people are going to come to buy if they like it. And this is circa 2015 so we're acquiring customers for $4 and $5, which is... 

 

It was the heyday. At that time, acquiring customers for that was insane. So that was our focus. It was 100% Facebook. Acquiring customers for $4 or $5, running ads... That was the sole focus because out of pure naivety, we didn't know any better. It worked and if it works, why would we not just do that?

 

Chase Clymer  

Absolutely. And we'll get into what happens when it doesn't work here in a bit. I have a few more questions. 

 

John Roman  

(laughs)

 

Chase Clymer  

So what's your first website? What was it built on?

 

John Roman  

So we initially launched on Cratejoy which is a niche, subscription box-centric platform. 

 

Chase Clymer  

Mm-hmm.

 

John Roman  

And it was great. It allowed... Daniel had a website up using their template within a couple days and it made a lot of the business aspect of it from the digital side a lot easier to onboard and get honestly, what could be considered less than even proof-of-concept, up and selling. 

 

So it was really... We're not with them anymore for a multitude of reasons, but at the time, it was great. We had a site up and running taking orders within a couple of weeks total.

 

Chase Clymer  

Yeah. I mean, you have got to find out whether or not your product had any legs. Finding that product-market fit. I think that's... I remember Cratejoy. I believe it's still around. 

 

John Roman  

They are.

 

Chase Clymer  

Yeah. But I remember when the whole subscription model got super popular and a lot of things we're launching on Cratejoy. 

 

And I think, "Yeah, that could test product-market fit real quickly." And then just going to today, I can see parallels. Because Cratejoy also almost had a marketplace element to it, did it not?

 

John Roman  

No, they did. They did. 

 

Chase Clymer  

Yeah.

 

John Roman  

That was a big thing. They were pushing them because they were getting a reoccurring percentage of the revenue from each box. So it was a potential great revenue source for them. So they were really, really, really pushing that.

 

Chase Clymer  

Yeah, so I think that's cool. So these days, if you're thinking about starting a business subscription, Cratejoy might be a good idea. Or just to see if your product has legs, throw it up on Amazon. Do you know what I mean? 

 

And if you're seeing the sales there, it means that you are onto something. And then it might be worthwhile to invest in an actual website and building an actual brand.

 

John Roman  

Right. 100%. Before you dump your savings or a large sum of money, yeah. Test it. You'll find out pretty quickly.

 

Chase Clymer  

Absolutely. So, after Cratejoy, I'm assuming you jumped over to Shopify?

 

John Roman  

We did. So, we were with Cratejoy for 2 and a half years. We had a combination of a semi-falling out with them, semi we really couldn't... We've kind of outgrown them and a lot of the things we wanted to offer our customers we just weren't able to. So yeah. So we moved over to Shopify Plus and then we went with ReCharge for the subscription billing piece.

 

Chase Clymer  

Hey, you answered my next question.

 

John Roman  

Yeah. We love ReCharge. Those guys are great. They feel like... When we're working with them, --and I have a couple of calls monthly with our account manager-- it's like he's part of our business. (He) asks questions like he cares, and gets strategy and plans with us to really, really try to grow the business

 

Chase Clymer  

They're my number one recommendation for subscription, as long as it's pretty straightforward. The further you get away from the traditional subscription model, you might be trying to fit a square peg in a round hole.

 

John Roman  

Oh. Yeah. We broke some things for sure when we went over to them but I think, as long as you can bring resolution when you break things... But the most important things... Things are going to break everywhere. 

 

Things break on Cratejoy, things break on Shopify, it's (about) how quickly do you respond and how quickly do you get resolution. And what you get from those guys, I haven't seen anything like it. 

 

Chase Clymer  

Oh absolutely. 

 

John Roman  

They jump right on it.

 

Chase Clymer  

Awesome. So let's go back though. You were saying, you guys were in the heyday, the wild west of Facebook ads. You guys are acquiring customers for ridiculous numbers. So you went all-in on that strategy.

 

John Roman  

Yeah, I mean, it was great. I wish I knew what I know today because I would have... My partners, Daniel and Patrick, we would have taken every single credit card, every dollar we had and thrown it to grow the business in 2015 at $4 and $5 acquisition costs

 

For us, it's gone significantly higher. But everything was great. Rocking and rolling, throwing up Facebook ads. And thoughts throwing up Facebook ads at the time, so this is the first time we've done this. We're probably not thinking like experts in that space with proper audience segmentation and true multivariate testing

 

We're setting up ads and they're working. So we did that. Everything was going great. And we threw some new ones up. Friday, Labor Day weekend. So we're several months into the business. Everything is just going perfectly. 

 

New promotions, all these deals, we're gonna blow Labor Day out. So excited about it. Get done with the ads halfway through the day and they all go active 3:00 or 4:00 Eastern Time. We're excited. At this point, we're still in Google Analytics live. 

 

Watching people come to the site, seeing what they're doing, then all of our ads turned off. And shortly after that, we get another notification that our Facebook account has been shut down. And this is --at this point-- 6:00 or 7:00 PM on a Friday. 

 

So we went from tons of traffic to our site to literally no traffic unless someone was coming back because they had not purchased previously. So all of a sudden, we had no business. so it was kind of like an aha moment of "what do we do?"

 

Chase Clymer  

Can you translate that to dollars and cents? How did that affect your bottom line?

 

John Roman  

Yeah, I mean, so we were expecting to have $30,000-$40,000 weekends and that's just with first time boxes. Obviously, these guys are going to love the product and stay with us for a multitude of months, or some years. 

 

So it was kind of a, "Oh crap! We've ordered stuff. If we can't figure out advertising at this point, we're going to have our first major hurdle trouble. Because we've ordered all this product to put in these boxes and now we can't advertise and we were off Facebook. We couldn't get..." I don't know if you ever tried to call and get someone on the phone from over there, it's a little difficult…

 

Chase Clymer  

Mm-hmm.

 

...at times. So, sending multiple messages, using every feature they have tried to appeal this. We got super lucky. And we had a Battlbox customer --that was in our forum-- that actually worked for Facebook and was, I don't know, a couple offices or cubicles or close by the manual auditing team that was responsible for killing ads. (laughs) 

 

And he said, "Do you want me to go over there and get it fixed for you?" And we said, "Yes, please." And I kid you not, an hour later we were back in business and back on Facebook, as if nothing ever happened. 

 

But we were very scared for a solid five, six days because we went from the top of the world to we're not getting any sales.

 

Chase Clymer  

Mm-hmm.

 

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Chase Clymer  

So let's break this down to the lesson learned. You were putting all your eggs in that one basket and... 

 

John Roman  

100%. 

 

Chase Clymer  

...then the basket disappeared. (laughs)

 

John Roman  

Yeah. And then... We were putting all the eggs in the basket and they took their basket with our eggs in it. It was absolutely brutal. But you're right. There was a huge lesson learned. And it was one that in retrospect, in hindsight, is a common practice for us now for any brand, anything we're involved in. 

 

But at the time, just due to naivety,  we didn't know any better. And that's just diversification of your resources. You have to have multiple lead sources. You can't be dependent on one because things happen. And if your business is dependent on someone else and exclusively depends on that one other entity or person, that can be problematic.

 

Chase Clymer  

Absolutely. So what's the second lead source that you went into?

 

John Roman  

So the next one we went into was Google Ads or I guess, Google Adwords at the time.

 

Chase Clymer  

Absolutely. And you started splitting it up the traffic sources and...

 

John Roman  

Yeah, so we tried that. Honestly, when this happened, it was Google Ads. But then right away (we're like), "Okay. Let's try Twitter. Let's try Reddit. Let's try Pinterest. Let's try everything." And we knew some stuff wasn't going to resonate and it wasn't gonna work for the right demographic retargeting, but we know. 

 

"Let's try everything. Let's find as many different lead sources that are profitable, that give us either the return on ad spend or the customer acquisition costs we're comfortable with that's profitable and let's keep it diversified." 

 

And we still keep it diversified. We typically have between five and six lead sources now at all times active. And none of them are... There are ebbs and flows when we hit an amazing ad we're able to scale it. But for the most part, we try to keep them all pretty equal in their results and performance.

 

Chase Clymer  

Awesome. And so what was the leap from going from focusing on Battlbox to bringing some other brands under the umbrella?

 

John Roman  

Sure. So, when I made the initial investment to be a part of Battlbox, it was in the agreement/in the contract that I wanted to better understand the business model of the subscription box piece. And if it was successful, we wanted to stamp it out and replicate it a couple of times. So that was the next step. 

 

We launched in December and  January, --December '15-January 2016-- we launched first BBQ Box, which was a monthly subscription box for barbecue source: sauces, seasonings, rubs, and recipes. 

 

And then the next month we launched Spartan Carton, which was a fitness-centric workout gear: workouts, supplements, protein bars, stuff like that. So we launched both of those pretty quickly just to try to test "Hey, is this business model more than just kind of the subscription, Battlbox business model?" 

 

But really, our roadmap and our strategy of how to launch one of these, was it correct? So we out we launched both of those in short order and had them until June of last year when we sold both of those businesses.

 

Chase Clymer  

So, in managing multiple eCommerce brands at once, I'm sure that There were a lot of lessons learned, especially with the different types of audiences and the way that you were acquiring them with paid advertising. 

 

(I'm) pretty sure there's no better way to learn the ins and outs of marketing than running your own business.

 

John Roman  

Yeah, no. I feel like in these past 4 and a half years, I feel like I've gotten the equivalent almost of a master's (degree) in marketing. I've just gone from knowing really nothing to forced learning. But it's crazy when it's (your) business when it is your livelihood when you've got to figure it out, and it's interesting and engaging, and you're enjoying it, it's crazy how fast you can even sponge everything and just learn. And we're still learning. I try to learn something new pretty regularly when I do.

 

Chase Clymer  

So with the business growing over time and the brands' growing over time, when did you guys take your feet off the gas and start bringing in consultants? 

 

What phase of the business where you guys are like, "Alright. Well, we know this works. We need other people to run this so I can focus on either building a new brand  or trusting a new model." When did that happen? How big were you? What was going on?

 

John Roman  

So right when we hit... For Battlebox, when we were projecting... So our first year, I think we did $4.5 million. The second year, 2016, launching the other brands about halfway through the year, we were projecting an eight-figure gross revenue number that year. And we were all burning the midnight oil but there was so much oil to burn. We were spreading ourselves too thin. 

 

So yeah. We had to identify, "What's something that we're comfortable finding experts on? And what do we think that we're doing okay, that maybe someone else can do better? Someone smarter and can do a better job?" 

 

So the first thing we started doing was, was outsourcing some of our marketing. So we took paid advertising, 80% of our social content and then some tech at the time, just like connections and integrations and setting up some automation. So we outsourced all that to an agency. The agency was doing everything.

 

Chase Clymer  

Absolutely. And that allowed you to focus on the things that you were uniquely qualified to do, I guess.

 

John Roman  

Correct. Yeah. It's (like), "Let's focus on the things we're really good at." So we did that. (We're) no longer using the agency. As we have grown, we brought some of those services in-house because we feel that we can do the best job now. 

 

Chase Clymer  

Yup.

 

John Roman  

We still keep advertising out separately. We actually... We're planning on bringing it in-house. We had a game plan for that earlier this year and a good friend of mine --who I've known for, actually a few years but never thought it made sense to use his services-- we ended up using his services. 

 

A gentleman named Brent and (his) company Stealth Venture Labs. So we go to them, and they manage all of our ad buying/advertising.

 

Chase Clymer  

Absolutely. So a question about how... You cut your teeth, you had to learn all this stuff. Do you believe that you're better off as a business owner doing it yourself and then hiring someone to do it for you?

 

John Roman  

I think so. And there's been other aspects of the business that probably ring a little bit more true to this, but it's tough to be able to inspect stuff if you don't have at least some basic understanding of it. 

 

Not that we shouldn't trust people and just let the numbers speak for themselves,  but sometimes you want to be able to look at the side of the business. And even if it's outsourced, you want to be able to make sure that they're doing a good job. 

 

Chase Clymer  

Yeah. 

 

John Roman  

And if you don't understand that part of the business or that side of the business, it's a little bit difficult. You're a little blind. And you just have to trust and hope that they're doing the right things. And that's not always the best situation to be in. 

 

Chase Clymer  

Absolutely.

 

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Chase Clymer  

So now, are all of the businesses under the umbrella? Or just most of them (are) on the subscription model?

 

John Roman  

So, none of them are under the same umbrella, which is really interesting. They're all separate business units for a multitude of reasons, but we do use shared resources. So a good example would be for Carnivore Club. 

 

So, Carnivore Club (is a) monthly artisanal meats subscription, like charcuterie. We actually acquired them on July 1 of this year. So it was a Toronto-based company with these shared resources, economies of scale if you will. 

 

An example would be on the Carnivore side, the Toronto side, we have a gentleman named Curtis and he was running Amazon for that brand. Amazon subscription box piece and then traditional Amazon FBA

 

So Battlbox at the time was outsourcing that to an agency, to run our Amazon. And by post-acquisition and shared resources, Curtis now oversees Amazon for Battlbox as well. And then on the Battlbox side, there are some shared resources like customer service, some of our content creators, graphic artists. 

 

And so for each brand, we have spreadsheets, where we track time use so that we can allocate (like), "At the end of this month Battlbox might have to cut a check to Carnivore Club or vice versa." Just depending on time use of the resources. By resources I mean, the employees and us.

 

Chase Clymer  

Absolutely. I feel like you could give a crash course in the economies of scale for eCom. 

 

John Roman  

That's the goal. We were able to. And so we're actually in late stages of acquiring a couple more subscription boxes and that's what we're doing now. We look at their P&L, balance sheet, and all their accounting docs and we're able to see "Okay, so last year this was their EBITDA

 

But with economies of scale with this model, we can take..." Maybe, their EBITDA was $400,000 and we can say "Okay. Day one. Just day one alone, we can get it up to $600,000-$620,000. And then over time, we can get it up to something else. And at the same level with the shared resources of this feature subscription box, they might be able to impact the EBITDA of the other brands too." So again, I think I'm getting a masters of that, as well, in the past year." 

 

Chase Clymer  

Oh yeah. 

 

John Roman  

I'm just learning... Baptism by fire.

 

Chase Clymer  

Such a cool, growth strategy for your business. And I'm super curious about all that stuff. So I'm sure we'll try to have you on again, and we can talk more about scaling your business by acquisition. I don't think that's a topic that I've seen touched on in eCommerce. I've seen it for other businesses, but that's not really the topic of today's show. 

 

John Roman  

Right. 

 

Chase Clymer  

I do have one last question for you though. With most of the businesses being a subscription, I think one of the biggest things with subscriptions is churning. You're losing customers. People are only there for a couple of months. What are you guys doing across the board to try to increase the lifetime value and keep people around? 

 

John Roman  

Sure. It's a great question. I'll try to give a shorter answer but that's actually probably a whole another topic, too. So churn is so important, I think, just probably industry-wide in the subscription box space. Because (during) 2015-2016, when we were seeing this exponential growth and just this boom of the little sub-industry, people weren't focused on churn. 

 

They were focused on, "I can get a customer for $4. I don't care if they leave." And obviously, now with the exponential growth, --not really... There's still growth, but it's just not the same anymore.-- this little sub-industry, the market has gone back to a little bit more of reality. You know, paying attention to churn is huge. 

 

So I think, it boils down to a couple of things. One, --and this is for all of our brands-- we're not just putting items in the box. There's so much more to that. It's about the customer experience. And that's important. Yeah. 

 

Obviously, the products matter and putting high-quality products that have value in there but the experience phase is very important, too in creating a community for each brand. Just engage super fan customers, treating them as if they're family. And that's our mantra in how we view our customers for all brands. So that's very, very, very, key. 

 

The other pieces, the more math side... So, there's churn but a chunk of churn is also passive churn. So, you can do everything right but you lose these people because the credit card on file didn't work and the automated email that we sent went to a spam folder and they just don't even know--and out of sight out of mind-- they forgot about it. 

So it's actually been a big focus first, last quarter and this quarter. So for Battlbox, --I'll toot my horn in a little bit-- we have our total churn right at 4%. Which typically in the sub box industry, everybody's around --the good brands-- are typically around 10% to 12% If you're under 10%, you're doing something really, really well. 

 

So the way we got down to it was one, making sure that it wasn't just a great product but we're also giving the customers a great experience and they're part of this community. But the flip side is, we put some automation in place. 

 

I know you chatted with Kristen --earlier this month-- from Churn Busters. We implemented their product. We have certain parts of that journey with Churn Buster where it kicks that additional ticket off to our customer service team so they can take a look and see if actual phone call reach out makes sense or a text or maybe perhaps another email. 

 

On the math, breaking it down, there's the churn because we did something that made them want to leave and then breaking it off into the passive churn as well and attacking both of them at the same time was really beneficial and kind of helped us get the number down like it needed to be.

 

Chase Clymer  

Awesome. That was great advice. And I'm glad to see that Churn Busters is out there in the world working for people.

 

John Roman  

Yeah, no. We're very, very pleased with them so far.

 

Chase Clymer  

Awesome. Well, is there anything else that you'd like to share with the audience before you go today?

 

John Roman  

Yeah, Chase. It's one thing that... It's probably a takeaway and I think those are very, very important. Going back to... We're talking about the diversification of lead sources. So you know, our average demographic for Battlbox is 24 to 44 (years old) and we don't... 

 

So with that age group, the amount of users that are on Snapchat, for example, are not very high because typically, there's not a lot of 30-year-olds and 40-year-olds on there. 

 

So when we were trying to find all these lead sources, we tried everything. We tried Snapchat and it wasn't performing well. Big surprises. The age dem is just not there. But what we found was --and Snap is actually part of the six sources we use right now-- but we don't use it in a traditional prospecting like you would on Google ads or Facebook. 

 

We had the Pixel placed on our site and we use Snap purely for retargeting. So it's just another... It's just part of that multi-platform touch that gets the customer towards actually purchasing. 

So the takeaway is, if you're not having luck on a certain platform, you can always attempt that platform maybe just for retargeting and re-prospecting, purely just as another touch to try to get that, that prospect over the hump and to buy. 

 

Chase Clymer  

Awesome, thank you so much for coming on the show today and sharing all these insights. I, absolutely, will have you back next year.

 

John Roman  

Chase, thanks so much for having me, man. I really enjoyed it.

 

Chase Clymer  

I cannot thank our guests enough for coming on the show and sharing their journey and knowledge with us today. We've got a lot to think about and potentially add to our businesses. Links and more information will be available in the show notes as well. 

 

If anything in this podcast resonated with you and your business, feel free to reach out and learn more at electriceye.io/connect. Also, make sure you subscribe and leave an amazing review. Thank you!