Speaker 1: 0:00

So you want to launch a subscription box and don't know where to start? Girl, you are in the right place. I'm Julie Ball and I'm Renee Gonzalez, your host here at Subscription Box Basics, a podcast for new and aspiring subscription box entrepreneurs wanting to avoid overwhelm. So grab a coffee, some pen and paper and let's have some fun. Hey everybody, and welcome back to Subscription Box Basics.

Speaker 1: 0:25

I'm super excited today for the guest I'm about to introduce. Just get your pen and paper ready, because today we're talking about Facebook ads. Whether you love them or you hate them, or you're curious about them, this is the episode for you. So today I have my friend, josh Coffey on the podcast. He is the founder of the e-commerce alley and has been helping e-commerce clients generate listen to this more than $70 million in sales through Facebook ads and email marketing. Now, if that doesn't make you lean in, I don't know what does. Josh hosts his own podcast called the e-commerce alley, and I can tell you from experience that this guy obsesses over new customer acquisition and building sustainable businesses. Josh, welcome to the podcast.

Speaker 2: 1:16

I'm super excited because, julie, I had the privilege, the honor, of interviewing you and Renee on my podcast. I don't remember where that was, it was like six months ago, maybe something like that. Yeah, fantastic. I even took principles from it and I started teaching in our coaching program. Sorry I stole it, but I gave you credit on gamifying your box and gamifying your customer journey. I'm super excited and just before this I got to tell I told you this is the second guest podcast I've ever been on. I'm like 120 episodes into mine. All I do is interview and stuff and I've only ever been on the Rainmaker podcast. That's the only other podcast I've been on with Steven and his wife, but she wasn't on the episode.

Speaker 2: 1:55

Chelsea Steven and Chelsea Chelsea. Yes.

Speaker 1: 1:58

Did you know I'm in that mastermind.

Speaker 2: 2:01

I did not know, but I'm learning that everyone in this industry is all connected because we have a lot of people that are coaches there, like Cassie Ford and a lot of other people who are also in our max profits mentorship program.

Speaker 1: 2:13

Oh my gosh, look, we're learning new things about each other on the fly. Yes, I started dabbling in Amazon products probably maybe last summer or so. I just love different business models and you know that I have a place in my heart for product-based businesses. I love that story. Without further ado, let's dive into the topic. We're talking about Facebook ads, the reason. You guys, as you're listening, you're thinking okay, well, Julie's been in business for a long time, Can't she teach us about it? No, this is not one of the spots. That is my zone of genius. I have always looked to others to help me learn this, to help coach my students through it, because this is an ever-changing landscape. This is one that I just while I was coaching subscription boxes, I couldn't keep up with Facebook ads as well. That's why I brought someone like Josh on board. Just tell us, why do you think Facebook ads versus any other platform that's out there?

Speaker 2: 3:17

For a lot of reasons. Number one it's what I teach, and do you know I'm biased. Outside of that, the reason we are so heavy like all chips in on Facebook is we've gone in spots. We've been in business for 10 years. As of October, I remember, like six, seven years ago, we had this moment where I had maxed out our lines of credit. I had maxed out our credit cards. We were in loads of debt. We were overstaffed at our agency and in our business.

Speaker 2: 3:48

We looked at what were the things that produced the most revenue for us, what actually got us customers very regularly, what took the least amount of resource to do that, Either time and money. When we looked at everything, there were two things that produced 90% of the revenue. The first one was Facebook ads 50% to 60% of revenue that we did, as well as the clients that we managed did. Then the other 20% to 30% of revenue came from email. It was this moment in time where I'm like, hey, we have to stop doing all these things that are like take a lot of resource and time. That were good at the beginning, which you should do, but at a certain point you have to decide if I want to really start having predictability in my business unless, like peaks and valleys, you need the stability with orders coming in every day.

Speaker 2: 4:32

We decided to go all in on Facebook and email. Those are the two things that we believe heavily, Not that social is not important and not that Etsy or Marketplaces aren't important. That's just what our experience has been, why Facebook is interesting If you look at. Have you heard of like Tripple Whale, Hiro's North Beam? Have you heard any of those tools before?

Speaker 1: 4:52

I've heard of Hiro's.

Speaker 2: 4:55

If anyone listening is like what the heck are these weird words that they're saying? There are tools out there, called attribution tools, that allow you to run ads and track out everything that happens. Well, north Beam and Tripple Whale they basically they manage billions of dollars and spend collectively. And they came out with their software and said hey, based on all of the ad platforms that direct to consumer e-commerce businesses are spending on, get this, 70% is going to meta of spend of all brands in their platforms, 24% is going to Google and all the remaining entire 6% is going to everything else TikTok, snapchat, x it's hard to say X now.

Speaker 2: 5:36

It's still Twitter to me and everything else, and so if you look at where businesses that are really thriving are spending, it's actually on meta. 70% of direct to consumer brands are spending 70% of their budgets on meta. So to me, that's why it's so important is that if you look where the money is going, it usually shows you in the market where the value is.

Speaker 1: 6:00

Here come in right from the data perspective, and I think it's smart because there's so many businesses that have the funding and the personnel to actually test all that stuff and if it wasn't working, they wouldn't be spending all their money there. So let's take a step back. I forgot to even say give us a little bit about your background. I know who you are, I know what you do, but I know some of the listeners are going to be meeting you for the first time. Who is this Facebook ads guy? Where do you come from?

Speaker 2: 6:32

So I came from this little town in the middle of nowhere, ohio, where even the cattle get to vote here. So we still live here, we're headquartered here, but we do have some theme elsewhere. But yeah, no, 10 years ago got into the online marketing. I was big on social media at the time, leaning heavily to Twitter and things like that, and as the market evolved and where I saw a lot of the value, we decided to lean into Facebook back in like 2014, 2015. So we're going on eight years of only being all in on Facebook and then we stacked an email there and so what we kind of do just the e-commerce alley is a whole.

Speaker 2: 7:08

We rebranded two years ago, so the e-commerce alley just kind of like was eight years and then two years were the e-commerce alley from our previous agency, flight Media, and basically we went all in and on Facebook ads and what we do is we basically teach e-commerce businesses how to leverage Facebook ads to create new customer flow every single day, because one of the greatest problems that most e-commerce businesses have I'm sure a lot of people listening is inconsistent sales.

Speaker 2: 7:34

And when you have inconsistent sales and then you start to struggle on the profit front and when you have a little profit, then you feel really, really burned out and you feel really stressed out, and so if we can create predictable sales and reliable revenue, then what happens is your fixed costs are already covered and it starts to grow your revenue, you're more profit and then you just you start to make this momentum and fuel like energy, and so that's what we basically teach and we have a cool Facebook group about 6,000 of us there and we live stream in the studio here every week and we like break down different elements of Facebook and budgeting and all kind of budgeting on ads not regular budgeting stuff like that.

Speaker 1: 8:10

Right, and y'all are not a stranger to the subscription box world. The listeners here are all in the subscription box industry and I know that you've worked with a lot of subscription box business owners and I think that's so cool, because so often when we get our own Facebook ads or when people target us, it's always about selling digital assets, selling courses selling this or that.

Speaker 1: 8:36

And it's such a different world than selling a product via a Facebook ad. So that's one thing I really appreciate about you guys is that you can actually speak with experience of product based businesses in Facebook ads.

Speaker 2: 8:51

Well, and you're so right, it's so different. So like I am in the digital, like I sell digital stuff, like it's great. But you know what? Digital people don't have costs of good soul. Digital people don't have to deal with returns, they don't have to deal with inventory forecasting and pre-planning what the next. And then you look at subscription boxes. Subscription boxes are a whole different. I even put subscription box, so it's like digital. And then there are what I call margin based products, products that they can make. They make all their money on the front end. And then you have LTV based products, which are subscription boxes, food and beverage, things that have like residual revenue from them, so subscription boxes I even put in a other category from other physical products. So I'm like digital physical subscription box because it behaves so different.

Speaker 2: 9:40

And if you don't understand the math and the numbers of like lifetime value and how powerful that is, then you're usually because we work. But we work with a good handful of them and I got a text from one yesterday. I met him one well less than a year ago, last April, and he came in. I met him. He was doing about 2,500, $2,500 a month and he texted me yesterday and he said we're now a seven figure brand as of this. And the thing is, as long as you know your math and you do the right stuff and you're consistent, it pays off and you have this wonderful thing called lifetime value, that like high lifetime value that most other businesses don't have. And so, mike, he just kept scaling and scaling and scaling and like slow and steady. So subscription box.

Speaker 2: 10:25

My biggest piece of advice for anyone listening is like don't look at all these big brands, don't look at BattleBox and Pip Sticks and look at all these big companies out there that are really big. They got there over a very long period of time and for you, the biggest asset you have is consistency and compound of time because you have this residual that kicks in. So, yeah, I love this subscription box world. In our coaching program I had to break out a separate little group of them because they are the minority of the entire program of just subscription box, because it's different language, different numbers you have to look at when you're making advertising and budgeting decisions and your strategy is just generally a little bit different than other people.

Speaker 1: 11:06

Yeah, okay, well, let's dive a little bit into that. So a lot of times people will come to me and say okay, can I use ads for launch? I need to grow my email list, can I use ads to acquire new customers? So all these things. So where do you even think that is in the subscription box world as it pertains to ads? How do you get started? Where do you get started?

Speaker 2: 11:29

So they're gonna be the basics, for sure, of like, how do I set up my business manager and how do I set up an ads manager and how does the hierarchy of like campaign ads at ad? Like what does that look like? So they're gonna be the basics of that, and if I was like starting as zero, I'm just gonna go to YouTube and just search that. You can see a breakdown of that, very, very easily defined, just the general basics of how Facebook works. Once you've got to have the general, I think that you have to evaluate what's the objective based on where I'm at right now. So, for example, like I know you guys, you guys are big on like building a pre-launch, pre-launch list, right, you guys build a list. How do you guys build a list right now? Like what are some of the key strategies to use?

Speaker 1: 12:10

Oh, giveaways for sure are one of the things that we recommend, because that way you can have a prize that is very desirable to your target audience. You're not just giving away Amazon gift cards, you're giving away something very specific. We like to recommend the software, king Sumo, because it's one of those ones that has like the viral capability. So like share for more entries or go follow us on Instagram for more entries. So I love that in the very beginning stages and I've used it all along the way like six years into my box I was still using that King Sumo giveaway software.

Speaker 1: 12:46

But what I like about it at the beginning is, at the same time as you're gathering email addresses for your launch, you can also grow your social media because you're saying get two extra points for following us on Instagram or go watch this video I created for another five points. Go visit my landing page for five points. So you're kind of hitting them at multiple points and getting them really excited. But the main point of it for us is to grow that email list so you have someone to launch to.

Speaker 2: 13:17

Okay, sweet. So we're gonna build let's use that as strategy number what based on where you're at? I'm in pre-launch and I'm gonna build on your strategy, because I'm familiar with this, by the way, and we have a lot of people that run giveaways on an ongoing basis to grow their list tremendously. I'm gonna build on that, and then what I wanna talk about is like that's pre-launch, right, but then what do you do once you launch?

Speaker 2: 13:39

So I think it's kind of like two different buckets. Some of you are like I'm pre-launch, how do I amplify this? And I have like 10,000 people on my list, or how do I amplify this? I already have launched and I wanna say, how do I get more people buying my box right now? Two different categories, two different objectives. So one is lead gen and one is purchase conversion objective.

Speaker 2: 13:59

If we're looking at Facebook, so if you're using King Sumo, there are two others. I'll just drop them out there. King Sumo I know who created that Noah Kagan, I think it's a. He owns King Sumo. I've never used King Sumo's giveaway tool, but I have used gleamio and I have used Upviral with Wilco, with the owner Wilco. Him and I are friends. So Upviral, we used to use that huge fan of it. We used to build this out. Fun fact, we used to actually do what we call giveaway launches for clients and so we used to build this huge giveaway and then we would build their email list and then we would sell to the email list on the backend.

Speaker 2: 14:36

So I'm familiar with the process you're talking through. I just haven't done it in a long time. So here's what I would do. So if that's your objective, then what I'm gonna do is build out a Facebook lead gen campaign and it's gonna be very, very simple. We're just gonna drive traffic to where you. You have to figure out where you're driving traffic. I'm gonna drive it to where you're already pushing people. So I assume you have organic, you have your friends. If I'm just getting started, is that the typical scenario? Like we're just getting started? Yes, okay, pre-launch friends, family, organic audiences that I have. So this is like warm audiences. Now I wanna say, can I grow this from a cold audience? People that don't know me stand up.

Speaker 1: 15:16

Yes, that's such a challenge. It's like getting beyond your own network.

Speaker 2: 15:21

Absolutely. And I think part of it, too, comes to like a limiting belief that like people aren't gonna want it, or there's like this deep fear down that like, hey, I don't wanna run ads because it's going to these people that don't know who I am, and deep down we're afraid of failing, we're afraid of it not working. And I wanna tell everybody listening it works, it works, we do that. I'm in 20 to 30 ad accounts every single week. I get stories every day.

Speaker 2: 15:46

I got an email this morning from a guy that I mean I'm not gonna go into detail on the emails, but I get emails all the time of people that never got into Facebook ads. They were so nervous they took the first steps, they started figuring it out. The first is the worst, is what we like to say, but then over time you get these skills and you get better. Just like the first time, you probably plan your month for a box, or plan the quarter you like over forecast, the amount of product that you need, or you under forecast. We just had a client do that and then they sold out of their boxes and they're like, oh, what do I do while I'm waiting for the next one? And so the first is the worst, same thing with Facebook ads.

Speaker 2: 16:21

So all of that said, you can do it. I mean, here's what I'm gonna do. I'm gonna centralize all of my traffic. I'm gonna send to that page that you build for the giveaway. Do you usually just? This is my curiosity Do you usually embed that on your website and send them there? You?

Speaker 1: 16:37

can. It depends on what website platform you're using, but Kingsumo does give you a landing page URL that you can share. Now, it's not your domain, so I don't know how that impacts Facebook ads, but you can embed it on a WordPress page, for example.

Speaker 2: 16:54

So Okay, so if you were doing that, it would depend on the integration of Kingsumo. Sometimes you could add your pixel in there. Yeah, is it a lot? I don't know if it allows you to do that, I'd have to double check.

Speaker 2: 17:05

I would bet that they do, gleam does, upviral does, I'm sure they do. So here's what would happen is, whether it's your website or not and it's a landing page, what you would do is create a Facebook ad campaign and I would create the objective of leads and, as long as you can just connect your pixel from Facebook after you set up your account to Kingsumo, you would just create a series of ads, and I'm not gonna get into like ad testing and stuff like that. I would just say the basics are. This is I would create a campaign and I would create an ad set in the campaign and I'll share it.

Speaker 2: 17:41

Now, this is a little nerdy, but when it comes to ads, a lot of people think that, like who you target is like the critical component of your success. Like I need to select this interest, or I need to build this lookalike audience, or I need to do someone who is interested in crafts but also is a mom but also has kids between ages, this and this, and we think we have to get caught. We get caught up in like who we need to go after. But Facebook's machine learning and AI is so, so good that right now we, for most accounts, we're doing what's called broad meaning there's no targeting at all, like zero targeting, even for the most random, precise niche. As you can imagine, mike the guy I talked about, his subscription box is a T, it's called project life and it's a fertility T, so he's going broad.

Speaker 2: 18:29

Facebook is very good at finding women who have gone through whether it's IVF or IUI, and they've had the, they've been struggling with infertility and he helps them and Facebook just finds them. So what I would do is set up a campaign in the ad set where you have to choose your targeting. You choose no targeting. If there's a gender that you go after, great, choose the gender and then, within the campaign, we would add three ads. Without getting into super nerdy stuff about testing frameworks and stuff, I would just come with the best three ads that you can. Three images, by the way. I see images do better than video in sub box world. I'll say that For the most part, I see images do better.

Speaker 1: 19:04

Interesting.

Speaker 2: 19:06

That is the majority of them. I'd probably say it's like a 70, 30 split 30%.

Speaker 1: 19:12

Any specific type of image Like an unboxing or a flatline, oh yes yes, yes, okay.

Speaker 2: 19:17

So what we generally see do well is really simple. Like you can just open a Macanva and show the box with everything in it Crazy huh. It's a crazy concept. What's inside the box? Here's what some people get really wrong is they start by showing that they love the branding of the box. You think it's such a great packaging and the colors and the brand name on it and all of that, and we love it. And then we, we put the box. Nobody knows that it's a like if you look at it straight on, nobody knows it's a box. It could look like a button. They don't know it's in the box. And so, like, really make it known that you could have the box like open up with everything coming out. Or you could just pull everything out and have a flat lay of the shot of the product in it without the box, even in the picture, because it comes in a box. But do people care that it comes in a box? Not really. They usually care about how the stuff in it makes them feel or how they feel connected their kids or their animals, you know, whatever it is, that's what he's doing. The best right now is. That's so interesting product just laid out.

Speaker 2: 20:19

I will say the ones that do video really well are ones where maybe your, your box is a little harder to understand. So, like, if I look at like Nicole, we work with Nicole from G Pig box. G Pig is like guinea pig, so she does stuff for like guinea pigs and so to like just lay out all the product, that's pretty easy to understand. Okay, guinea pig, guinea pig product, show little guinea pig on the image. But then you look at Mike who sells fertility tea. That, by the way, is $450 a month subscription. It's not a cheap subscription. Then we move the needle with an image and convince people of what it is and the value of it, that it's worth $449 a month. From an image we learned that we couldn't, so in that case video made more sense. So I would say if you have a product that's like hard to understand, then video will probably be worth landing into.

Speaker 2: 21:08

But I would say the majority of sub boxes again, the majority, the 70%, 80% that you could just do an image and images are great. So I would have three images with three different headlines, the bet in three different primary texts, and here's the best way. I would say this If you were to take all of your chips and you're like playing poker. I don't play poker, I don't even know how it works, but if I was and I had a big pile of chips and I was to just take all my chips and put them all in on these three headlines and these three primary texts with those three images, then that would be Mike all in best. So what that means is, with the best capabilities, with the best, your best ability to write ad copy, which the first is the worst. The first headline we write is probably the worst headline because we don't know anything yet. So take the best knowledge that you have right now and write three headlines, write three primary texts and then just put them with the images however you see fit, and that would be the campaign. Drive them straight to that giveaway landing page.

Speaker 2: 22:05

Now I would say typical results I see in giveaways is easily under a dollar per lead, depending on the product. So it's like a mass consumer product. That's like, let's say, dogs, like we've done a dog giveaway before. So if you have like dog pet products, pet products are a mass consumer market. So your cost per lead might be 20 to 30 cents. Someone who's like we have someone else who does giveaways all the time. He sells high end handmade guitar, electric guitar cables, so a little bit different. So for him it's like 75 cents, 80 cents, so it's a little bit more, but you should be under a dollar per lead. So if you're like mass market, I would expect even less as you spend, launch the ads, commit to an amount and then sit for five days, let them optimize for five days and then, usually by five days in it'll stabilize at a cost per lead and you'll be able to see what that looks like.

Speaker 1: 22:59

So again Okay, so do you put like a campaign budget or a daily budget?

Speaker 2: 23:04

A daily budget Daily budget Okay yeah.

Speaker 2: 23:08

So you could set. What Julie's talking about here is what's called lifetime budget. So, like you could, you could choose a starting, an end date and say I want to spend this amount in this window of time. You can do that. I would just say that we see daily budget do pretty well and then, if you want to, you could always just just do the calculations of how long you want to run it for and then just have an end. It's the exact same thing. It's just how Facebook treats. It is a little bit different. So we do daily budget for the most part.

Speaker 1: 23:32

Okay, another question how do you feel about, in something like this, targeting the country? So, like most of my students only shipped to to the United States, so obviously those are the only customers that are valuable to them. So is this a good time to go ahead and target to the country?

Speaker 2: 23:52

Yes, what else would you normally target? What would you say?

Speaker 1: 23:56

Well, I think if you didn't, if you didn't exclude other countries, you know, my concern would be that you're going to get a bunch of leads from countries that you can't ship to.

Speaker 2: 24:06

Yes, yes, okay. So I think when I say broad, when I say broad, it's more in regards. Only thing you would select is demographic. So location, age, gender, those are the only things I would choose. So do what makes sense for you. So if you're like us, only great us. We only sell to women, because this is a, you know, a haircare, makeup product, whatever. Just go to women and if there's a certain age range, go ahead and put the age range. I will say this most if you're new, unless your product has to be sold to like, let's say, boom by Cindy Joseph, is makeup for women over 50, right? Unless you're a very precise situation, I'm going to remove my bias and I'm just going to let Facebook choose and I won't put an age range Unless you have a lot of data to say hey, I know that this is only my audience here in this age bracket. I'm going to exclude that because you would be surprised at how easily Facebook oh, good there, yeah, very, very good.

Speaker 1: 25:00

Yeah, all right. One more question when it comes to imagery Is there a personal, you know unboxing picture or one that you've done, as that looks more lifestyle, more like user generated content?

Speaker 2: 25:13

It kind of. Obviously. The unfortunate answer is it depends. But I would say that use what you have like.

Speaker 2: 25:19

Don't go like I think people believe, because we have seen all these fancy like Dr Squatch ads, we've seen purple mattress ads or dollar shaped all these like high production, half million dollar ads. Right, we think like we have to go have these professional things. So one thing that we specialize in is, add to we teach what's called rapid experimentation and ad testing, where we'll go test like 50 to 100 creatives in less than a week. So we're like really good at doing this methodology and I will say, from testing thousands and thousands of creatives, the ones that usually win are things that are just like taken on your iPhone because it's so native to the platform. It's so natural to the platform when you start overlaying text and banners and fancy things like it looks like an ad.

Speaker 2: 26:02

And if it looks like an ad usually it did not always, but oftentimes it deters people from clicking on it. So, honestly, if you have the product, I'm not going to go invest a high degree of resource in getting product photography done. I'm going to say, hey, what do I have? Let's open up my box and let's put this on a white sheet of paper, you know, makes it a little easy to call attention to what the product is, and let's just snap the photo, or let's take the photo, throw it in Canva, remove the background, you know, and play with it if you have that skill set.

Speaker 1: 26:29

Yeah, and one thing, quick tip guys. If you're like, okay, I need to take some photos, I would go to literally like the Dollar General, I'd get some of the phone board so that it was a little bit more structured behind it.

Speaker 1: 26:42

And here's a quick tip lay the box on the back and then splay the products out. Take the picture from straight above, because it's easier to make the products look almost in a way where you can see them better and they're kind of displayed more with more space. If you have your box sitting up like normally on your table, you have to figure out how to prop this, this item, up, how to make sure this one doesn't flop over. Just flip it on its backside and, like, lay it out, layout all the products, so nothing's gonna fall over. It's just an easier way to take the picture.

Speaker 2: 27:19

Yeah, I love that. No, I think that's easy. And one thing to keep in mind is intent versus intrigue. So I was on a call yesterday with a pretty big supplement company and we're analyzing all their ads and as we're looking at them, she's like well, which one of these do you think is gonna resonate the most? And they had two different creatives she's like and break down why you think so? And one creative was a supplement it's called Bloom, by the way, and this is a supplement of the product and it has like the powder. And then it has the drink next to it and it has mangoes in the background and strawberry, so you can like kind of smell it or taste it through the screen, which is great.

Speaker 2: 27:58

And then the other one was this athletic model who was in her sports clothing and she was holding the drink, like this, and there was text over her and she's like which one do you think would be better? I'm like are you running to men and women or just women? And she's like we're running to men and women. I'm like well, the moment you add a woman with her shirt off and a sports bra and leggings and you don't exclude men, what are they gonna click and it's gonna skew all of your budget. So what I say is, like one has a great degree of intent. This is the product and there's no question about it. One has a great degree of intrigue and so you're getting a lot of clicks, but not a whole lot of leads, in this case, or a whole lot of purchases, if you do in a purchase campaign. So when you're doing it, keep this in mind.

Speaker 2: 28:42

If you have a product that's like for and I like to give the extreme of like kids or babies or animals right, If you have a little cute puppy on your photo, you're gonna get a lot of clicks, but it might not be because of what your product is so like. If you were just wondering with the photo of a dog and there's, you don't see the product and know what it is, they're gonna click in, thinking it's like a video of a dog or a blog post on a dog or whatever that is. And then they get there and then there's there's lack of congruency between the ad and the landing page. So, whatever you do, I'm all about. I'd rather be highly intentional where it's like. This is what it is. Click here, buy or click here, join the giveaway versus trying to be like really intriguing and scroll stopping in a way that like doesn't create a congruent experience for the person. So I would just say, in your photos, just pay attention to that. Yeah, that's great advice If that can skew you from systematically.

Speaker 1: 29:32

Okay. Okay, so you kind of broke down the objective of leads growing your giveaway list. So what are some thoughts on if your objective is to convert new buyers?

Speaker 2: 29:45

So this is actually the area that we play in them. This is what we primarily do is. So there are only two objectives you should ever have lead gen or purchases only two types of campaigns. Facebook has other objectives. Don't worry about any of them. None of them matter except leads and purchases.

Speaker 2: 29:59

So when you're running a box, I would just say there are kind of a couple of things here. The first thing is you have to have a really good offer, and this comes into knowing your numbers. You have to know your numbers. So if I'm just doing back of napkin math here, an offer is gonna be what will you give someone for their first box purchase, whether it's like a free gift with purchase, or 40% off your first box, or $10 off your first box, or whatever that might be right. We call them cash cow offers. You need a good offer to get them in on day one, but don't expect to be profitable on day one, and I know that's not what anybody here wants to hear. Nobody wants to hear that, but that is my mass observation from doing this for a pretty long time.

Speaker 2: 30:45

The subscription box world 2017, pre-2021,. Yeah, you could be running like four ROAs and it's like happy as a duck with a french fry. Like you're good, you know. Like you're just raking in the profit on the front end. The market is more saturated now but that's not a bad thing. Like, hey, the subscription box world is growing, that's awesome. You just have to be more intelligent with your marketing and know your numbers better.

Speaker 2: 31:09

And so here's what I would do. The first thing is I need you need to calculate your I call it your 31 and your 61 day lifetime value. And here's why it's 31. Because if someone buys a box today, well, in 30 days they renew. So technically, if I can collect, I want to figure out how much profit do I have in my box for two in 31 days. So when it's two months worth of boxes, it's actually only 31 days because they process 30 days later, if that makes sense For most of us. Some of us are rolling and there's a little bit different stuff in there, but ultimately I want to figure out how much do I make in the first two payments, which would be a 31 days, and then how much do I make in the first three payments.

Speaker 2: 31:52

So like, let's say, your box is I'm sure you use round numbers here $50. And your cogs in that ship to them and everything are 50%. So you have $25 in profit in the box and within two months, 31 days, that's $50 in profit. So if I can acquire a customer for less than 50, then I'm breaking even in unprofitable within two payment cycles. So I have to float the gap for a little bit. So if I could acquire them less than 50, that'd probably be a good range to acquire customers, but if I'm acquiring them, I'd call it like 100. Well, that's four payment cycles that I need to be profitable. And yes, while some people that are just sitting on a bucket load of cash confront the gap in it capitalally, in the meantime, until they're profitable on it, most people can't.

Speaker 1: 32:36

I can't.

Speaker 2: 32:37

For me. If I'm profitable in two to three cycles, I'm okay with that. Most people in our coaching program that we do. We try to get them profitable within two. It's very hard, being flat out. It's hard to be profitable on day one. If you can dial it in, awesome good for you. That is the minority, but if you can be profitable within 31 days, then guess what? You're pretty close to a credit card payment cycle, right? So you only have to front the gap for that one day, plus the two days of processing before you get to your bank. So you have a three or four day buffer that you just have to float the gap of being a little bit upside down on the ads, if that makes sense for that small duration of time. So here's what happens. What most people do, though, is they say my box is $50 and it's costing me $50 to acquire a customer After my cogs. I'm upside down $25 on that customer in month one, and so they get in their head and they're like oh shut them off.

Speaker 2: 33:31

They panic. I'm running a one return on ad spend. I can't live on that. Well, guess what? 30 days later you'll be at a break even.

Speaker 2: 33:39

Or you'll be profitable and so if you know your numbers, you have the fact that you have lifetime value. So today won't feel good, but in a month, okay now this feels good. In month three, oh, this feels really good because I paid from three months ago and I'm still collecting on those customers and so most people don't know their numbers, I would say, and they don't know how much they make in a lifetime on a customer.

Speaker 1: 34:01

Or if they're early, or if they're early stage. They don't have that data yet.

Speaker 2: 34:06

Yes, well, and you know what's kind of interesting is. Here's quick math For anybody here listening or watching that doesn't know theirs. They're just starting. Let's use a $50 box as an example for simplicity here. What is an average churnery when you say in the subscription?

Speaker 1: 34:21

box. So we recommend to keep it under 10. So let's say like five would be really good.

Speaker 2: 34:28

Okay.

Speaker 2: 34:28

So five is good. Let's say that at the beginning we're not that good, let's go 10. Let's just be 10 here. Here's how you figure out your lifetime value. Back of napkin, you take your AOV. So let's just say I'm a $40 box. Let's change it up $40 box divided by churn rate 0.1, right, that's 10%. That means your AOV probably can't see it here is 400, your lifetime value is $400. That means the average person. If you're churning 10%, right, it means they churn after 10 months. Well, 100% turnover.

Speaker 2: 34:58

So you take your monthly AOV, monthly box, right, divide it by churn rate and that gives you your lifetime value. And if you say, okay, I have 50% margin, well, that means I'm gonna make 200 in profit over 10 months. Okay. So then we get really nerdy and say, okay, divide 200 in profit divided by 10. It means I make $20 profit per box per month. And if your cost-required customer is $40, well, it takes two payments cycles, that's actually 31 days to break even. If it's $60 to acquire a customer, it actually takes three payment cycles, which is 61 days. And so with that in mind, know your numbers then you need to have a really solid offer to get them in in the first month.

Speaker 2: 35:38

Sometimes you can go without an offer. I would say right now, what I'm seeing do pretty well is like free gift with purchase, so like if you have something like you could just throw in for free and it's really light, doesn't change the shipping doesn't cost a whole lot. Free gift with your first box is a really good lead-in. What I see not doing well and I'll share this it's really common. I feel like everyone comes in to our program that we work with with first box is one box free with six or 12 month commitment. Well, here's the thing if you're new and no one's ever worked with you, who commits to six or 12 months? It's very unlikely, and so my recommendation is to focus on the month to month. You might have prepaid options, but focus on that one month, right, and say, okay, if they only went one month, what could I offer them on? Maybe 40% off your first box, maybe free gift with purchase, maybe $10 off your first box, and I'll give you some gold here.

Speaker 2: 36:31

We saw this do a big uptick for people in our world right now, and that is if you're paying for shipping. Sometimes you don't even give a deal off. You know what you should do. Test this first Don't pay for shipping and just lower your price by the amount of shipping. So we had someone who their box was 59. And I said, kimberly, how much is your shipping? 10 bucks. I said great, your box is now 49. And your shipping? You don't pay for shipping anymore. They do. They pay the $10., that single switch, and now she's signing one to two new boxes a day. But I literally just flip flopping things like that.

Speaker 2: 37:06

So, like play with your offer once you know your numbers and know how long it takes to break even.

Speaker 2: 37:10

And then I would just say, like you have to, you have to commit, you have to commit for life, for like a long period of time.

Speaker 2: 37:17

Like to go slow, especially in your world, in subscription world, to go slow is to go fast and to go fast is to go slow, Because if you inject all of this cash, you're like, okay, I have saved up $10,000, you know, for my savings, I want to just put it all into ads right now. You're going to throw it all in and you're not going to know it works yet you don't know your offer, yet you haven't dialed in your landing page. You haven't dialed in. You know your ads and your targeting. And so go slow and just know that it's this constant rise because with subscription, your revenue trails your ad spend. You acquire them today but your revenue will trail the ad spend over time because it's a recurring subscription and so you will realize your return in a longer time horizon, which is it kind of stinks, you know, versus the other people that are like they're running and they're like I got a forward return on ad spend and I was profitable on day one, but they have to fight to get repeat purchases and you don't.

Speaker 1: 38:09

Yeah, and I think it's a mindset thing. I know when I first launched my subscription box, I worked on a lot of money mindset because I knew that I would have to spend before I would earn, meaning like I had to buy my product before those sales would go through and that I would be spending on ads to acquire the new people. Yeah, that wouldn't be profitable from that first month, but I knew on average how long they were going to stay. So, and the other thing too I think it's important to say is I just did an interview with Liam Brennan. He is co-founder of Busterbox and he talked all about offers.

Speaker 1: 38:49

We had an entire conversation about offers and you're right, Like it's so important to have that. What's in it for me, factor that carrot dangling in front of them to say, okay, enroll now, join now, subscribe now whatever word you're using and to test it. You know what works in the spring might not work in the winter. Like there's just different things. You got to keep it fresh, you got to continue testing. So this has been so interesting. I'm sure that you have all kinds of templates and stuff, because I know we've been doing you call it napkin math. I love that. I'm taking notes here and I'm sure the listeners are taking notes, but I know that you probably have all kinds of resources and templates. Will you tell everyone where they can find some of that stuff if they're looking to dive into this ads world and learn more?

Speaker 2: 39:39

Yeah, so I'll give you a couple of things. So like the e-commerce highly podcast. For sure I'm biased, but it's the second best podcast on the planet. Second, to subscription box besties here.

Speaker 2: 39:53

So so definitely go check that out. We have a Facebook group called the e-commerce alley. There's about 6,000 of us in there. Go check, just search the e-commerce alley group in Facebook. Super awesome, we're the studio. We're like live streaming every. Actually, I have a live stream here in 42 minutes and we dive into all kinds of stuff ads and email and growth. But I would say the biggest thing is if you're listening and you're like, hey, I want to know a campaign structure to follow and I'm doing purchase campaigns. We did a state of advertising a month ago and there is one campaign type that is outperforming everything else, regardless of spend threshold. If you're spending $10 a day or I just have someone yesterday that's spending $8,000 a day Number one campaign structure is advantage plus shopping. It is taking the cake on every other campaign structure we've done. I have a step-by-step video on how to do that, julie, I can just give you the link to that if you want to throw that at show notes or something like that.

Speaker 1: 40:43

Yeah, for sure.

Speaker 2: 40:43

Travel me, rattle off some long URL. Yeah, We'll give you a link to it completely free, Everyone here. Just follow the steps in it and set it up. I'm telling you. It's like I don't want to say there's a magic bullet, but there are moments in time, especially in tech, that some things are a little more magical and we put people in the structure and then suddenly their campaigns start performing Not 100% of the time, but a good chunk of it. So I would just say I'll give you that, Go out. It's like a 15 minute video. I walk through the ads manager do this, do this, do this, do this. We're going to set it up together, Okay, I love videos like that, where you're walking alongside me.

Speaker 1: 41:18

Now I know that when you get into the ads manager and you're creating a campaign, it almost feels like a wizard, like it's taking you step by step. But then I can get frozen in fear in different steps, because I was like, am I targeting too deep here? Or like, just like you said, just be broad. So you're probably in this video, walking through and saying, okay, step one, this is what you're going to do and let's move on to step two, like you're not going to get frozen in fear.

Speaker 2: 41:43

Yeah, exactly, and then you could always pause. But I literally walk through every setting in the manager in live time and it's like a fancy cool edited video that they're doing.

Speaker 1: 41:52

I cannot wait to check it out.

Speaker 2: 41:53

Animations and everything.

Speaker 1: 41:54

I've had so much fun chatting with you. Do you have any final words on Facebook ads? Or for those listeners who are brand new to this and they're just like man, I am fired up to get started now.

Speaker 2: 42:07

Yeah, you can do it. You know the first is the worst. We believe the marketing is mathematical equation, not an emotional decision. So if you know the math, if you lean into it, the first campaign is the worst campaign. Your hundredth campaign you'll be way better at it, way more profitable. The only thing you need to do is actually start. So that's what I would part on.

Speaker 1: 42:29

There was a friend of mine who, once we were talking, she said action creates confidence, and it's so true. It's like you're if you're trying something new, you're not confident in it and that's okay Fail, but then get back up and try it again. So and it's important it is a crucial part of an e-commerce business in 2024.

Speaker 2: 42:49

Yes, 100%.

Speaker 1: 42:51

So, okay, well, Josh, thank you again. I really appreciate it. I thank you for sharing all those free resources. I'll make sure everything is in the show notes so they can go check it out and, you know, really makes take some action and make progress in whether they're doing lead gen or trying to get more subscribers. So, thank you.

Speaker 2: 43:11

Of course.

Speaker 1: 43:12

See you guys. All right, thanks everyone for listening and we'll see you in the next episode. Bye.