S5 E17: Building successful subscription brands with pre-orders marketing | ORBYT Skin & Azio Beauty | Jonathan Penna

S5 E17 PODCAST

Mariah Parsons and Jonathan Penna, Co-Founder of ORBYT Skin & Azio Beauty, discussed their experiences navigating the challenges of e-commerce during the COVID-19 pandemic. Jonathan shared his journey of transitioning from a bakery to an e-commerce business, highlighting the challenges of scaling an operation during a global health crisis.

Mariah provided context and asked questions to delve deeper into the topic, exploring the impact of COVID-19 on the e-commerce industry and the strategies for adapting to the new normal. Later, Mariah and Jonathan discussed various strategies for building successful subscription-based businesses, including personalization, direct-to-consumer marketing, and optimizing subscription retention and growth.

Jonathan shared their experience with onboarding AI-powered customer support tools like Sienna AI, emphasizing the importance of careful onboarding and optimizing automations.


Episode Timestamps:

  • 3:49 Skincare brand development and marketing strategies

  • 9:10 Pre-orders and subscription model for a brand, with focus on education and UGC to drive sales

  • 13:37 Marketing strategies for a skincare product with pre-orders and subscriptions

  • 18:36 Implementing dynamic pricing for subscriptions, with focus on customer frustration and retention

  • 23:02 Increasing subscription conversions through easy customization and control transfer to customers

  • 28:44 Subscription services and customer preferences

  • 34:12 AI-powered customer support tool and retail expansion

  • 38:50 Strategies for expanding a subscription-based e-commerce business


Did you know that 20% of your website traffic hits the order tracking experience? Turn all of that customer engagement into customer loyalty. Malomo helps you get ahead of shipping issues, brand your order tracking experience, and reconvert shoppers while they wait for their package to arrive.

To see what your custom mockup of branded order tracking and transactional email/SMS would look like, fill out this form & we’ll send your custom design right to your inbox!

Be sure to subscribe to our pod to stay up-to-date and checkout Malomo, the leading order tracking platform for Shopify brands.

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TRANSCRIPT

This transcript was completed by an automated system, please forgive any grammatical errors.

SUMMARY KEYWORDS

subscription brands, product, customer, pre orders, sold, pharmacy, started, super, cancel, purchase, running, sense, retailer, launch, tracking, called, retention, month, working

SPEAKERS

Mariah Parsons, Jonathan Penna

Mariah Parsons 00:05

Greetings and welcome to retention Chronicles, the podcast with learnings from expert e commerce brands and partners. I'm your host, Ryan Parsons. If you're here, you're either on a quest for ecommerce enlightenment, or you accidentally clicked the wrong link. Either way, I am thrilled you stumbled into our corner of the internet. And I hope you'll stick around. We've got pearls of wisdom for everyone, whether you're running a multimillion dollar business, or simply just starting out on your entrepreneurial journey. Before we unleash the brilliance of today's guest, let's give a shout out to our podcast sponsor Malomo. Malomo is so much more than just another Shopify app, their post purchase wizards making beautiful and branded order tracking smoother than a jazz solo. So our amazing founders, like our guests can keep their customers happy and up to date while they track their orders. So hit that subscribe button, like it'll increase your LTV overnight, and go listen to her other episodes. Echo malomo.com That's gomalomo.com. Get ready for insights chuckles and perhaps a profound realization or two with this newest episode of retention. Hello, everyone, and welcome back to retention Chronicles. Super excited for our guests here today, as I always am. Jonathan, thank you so much for taking the time today. I'm super excited to learn a lot more from you and just have a great chat. So if you do us the pleasure of introducing yourself, tell us a little bit about about your background. That'd be great.

Jonathan Penna 01:39

Awesome. Well, thank you very much for having me. My name is Jonathan pin. And I'm the co founder and CEO of a company called OB Group. We are very small ecommerce aggregators. And we have two brands. One is called OB skin and the other one is called as your beauty and that sensor.

Mariah Parsons 01:57

Love it. So how did you Can you expand a little bit on like how you got into this space? Because I think it's always interesting with E commerce being you know, air quotes, relatively a new industry how someone lands in this space, because I very much felt like I was enticed by the community and the team we have at Malomo, but knew nothing about e commerce before getting into it. So it's always a fun backstory to dive into Can you share a little bit more about that?

Jonathan Penna 02:23

100%. So, in reality, I'm French, and this is going to be super cliche, but I used to have a bakery.

Mariah Parsons 02:30

Oh my gosh, stop it. That is so amazing. I'm

Jonathan Penna 02:33

from my story started like in 2019, we essentially raised about a million pounds to basically build like a b2b bakery that was essentially delivering to hotel and restaurants and little stories. So we spent one years building this business, and we literally launch the first mouse 2020 is like literally 20 days before,

Mariah Parsons 02:57

oh my gosh, wow. When

Jonathan Penna 02:59

we launched we had about like 2.5 million pounds of like contract sign was like big hotel and big restaurants. And all this contract with smoke, obviously COVID is like force majeure type thing. And we had about 20 staff when we when we learned it was a pretty big operation. Because to make bread you need a lot of people etc, especially at like, big scale. And I knew very quickly it was like, the market is too far to even think of scaling in this industry. And most of the investor were actually restaurant owners. So we very quickly we were like look, we we haven't spent most of most of the money so we basically shut down the business returns the phone to investor and and then I was just left with a business that just fall apart because of a pandemic. No job and the only stuff to do is ecommerce in that sense. So that's really how I ended up in this space really. Okay,

Mariah Parsons 03:58

so is it right after the bakery that and expanding on the b2b side of that that you dive into orbit group and start doing some stuff there?

Jonathan Penna 04:10

Yeah, we started in reality it was to be honest, I was just purely like trying to sell a bit of everything in that sense. I was just trying to get better on marketing, trying to understand how it worked etc. And to be frankly honest with you, I literally bought a course online and as done in my room for like two months, didn't really see much of the light outside and just tried to like launch brand etc, etc. And actually, like obit group can weigh after about like, I think that was 2020 I think about like six or seven months after I meet my co founders maximum Nullah and we wanted to build a men's skincare brands COVID skin and We started working on the project working on the brands. And then we had to basically go to Korea to meet a supplier within within the skincare industry. And my girlfriend, mom she owned like in Essex clinic in the UK. And she basically retail is very expensive skincare. And I knew the price and knew everything and a bit random. When we're in South Korea, we basically walk into a showroom, and I literally saw the same product being sold, not sold, but like being exposed in the factories. And when I was speaking with, with a chemist, I was like, Okay, how much does this product has to make like was a sort of process to do this type of stuff. And that's when essentially like the concept of as you come to light, because at this time, we realized that the skincare have like some crazy market and this product that they were returning for 150 pound in the UK, because actually like not even seven pound to manufacture in South Korea. And when we look at like how the brand, were actually distributing the product, we were like, okay, so they manufacture the product in Korea, this is being sold to like a distributors in the US that is being sold to like a distributors in the UK. And the UK distributor is distributed to like clinic, or like, okay, so many like different steps, we call have the same quality, and be direct to consumers, and basically pass all the saving to customer and using subscription to further reduce the price, etc. And as well as your launch, basically. So initially, we end up with two brands, or with as you and we were like, Okay, let's just try to scale both. And we're gonna see which one of the brand worked the best. And then we're going to try to like capitalize on this to basically scale it further. Okay,

Mariah Parsons 06:46

do you feel like you have that answer now of like, which one is kind of doing better? Are you willing to share a little bit? Yeah. As

Jonathan Penna 06:53

you as you, which is doing whatever, then all of it, especially when it comes to retentions. And I think, you know, like the mistake we made with OB, to be honest, was worth it were two generalists when it came to skincare. And I feel like if we're more like targeted towards, let's say acne, for example, men will have been way more keen to essentially commit to a subscription and keep it for the long run. Acquisition for obits was always always been ours, we've always been easy. The retention has been terrible. And with as you acquisitions with a bit more complex retention on the other end being amazing. That's, that's

Mariah Parsons 07:30

Yeah, that's so interesting that you can you're kind of running like your own AV tests with brands that are like in Yeah, in one. Usually someone who has one brand is running AP tests within that brand, right. But being able to kind of compare the similarities and differences between the two brands and see like acquisition is higher on one but lower on the other. And then vice versa. Do you have any insight of as to why that is? Or do you think that's really because like the messaging was, it sounds like a little bit more tailored for as your beauty then for orbits?

Jonathan Penna 08:08

Clearly, I think it's clearly you know, like, the offer that we add for orbit was, is mainly focused on like, having like a reduced trail to try our products. Orbitz was a subscription first brands, we didn't do any sort of like one off purchases when we started. So to be honest with you, I feel like just the offer was more compelling on Orbitz. But then like, on the flip side, the retention was terrible. With SEO, we actually started the brands by many being on pre orders. So when we started as yo, one of like, the biggest issue that we have was just to supply the demand that a product has in that sense. And it was very often like sold out. And that's when we started using a tool called purple dots to like, basically enhance the sort of like preorder job, etc. And what we realized was like the first time that we launch a preorder job, it got sold out very quickly. And then we were like, Okay, let's just try to run like paid add on those. And we actually saw like a CPA increase, but like, not too much, we basically decided to keep this, this, this sort of like, pre audit strategy in that sense. And for the first full years, we basically scale to I think we did about 2 million the first year, on lips on pre orders. So many pre order jobs. And then after, like when we started to, to have more cash, and they actually enabled us to create like this beautiful negative cash flow conversion cycle because we're actually pre selling our products before to have to pay for them. Which, you know, in an ideal world, that's where you want to be when you're running brands. So this basically enables us to scale very quickly without external capital in that sense. And then after like, we use this preorders build up at our advantage when we launch our subscription offering on our ecommerce site, because one of the main perk when you subscribe to a brand, we were like, Okay, if you subscribe, you basically are guaranteed that you have your order coming regularly. So you don't need to go through like the pre audit pain that you had since one news. And that's why like, I think the first one that we launched description, we had, like 6000 subscribers right away.

Mariah Parsons 10:27

Wow. Okay, so I want to drill into this a little bit, because it's interesting to me like the pre order side of things I feel like, and I'm curious if you agree with you see this a lot with like celebrity brands, or like someone who already has a really big following of like, pre launching something, and then having major success with kind of this strategy around like FOMO. Marketing? So do you think that was what was lending success to this, of like, seeing that other people have it and then wanting it and then running like ads on the pre like saying the pre orders? Or do you have any idea as to why you saw you like, you could get to 2 million in revenue, based off of this strategy, because we haven't, we haven't talked to another brand who's kind of seeing this, except for one agency that kind of works with pre launch brands and their reader brands. So I'm curious,

Jonathan Penna 11:23

I think, I think to be honest with you, like we've done this, because we didn't have any other option we needed to sell, we didn't have any stock. And the only way to take money now and fulfill the order letter was literally doing pre orders. So initially, we really pushed it out, because we needed this money to get in into inside of the company. And I felt like it for this to work, you need to have a good product, and you need to have to have customers are willing, essentially to wait for like, three weeks to like when we started, like we had a two month delivery timeframe. So it was massive. And then slowly, we started to reduce this timeframe from two months to like, two weeks in that sense. So it took us one years to fully reduce this. But I'm not too sure why worked it out? Well, I guess it was just probably like more education around a product. Because what realized initially was a CPA with like very high when it started. And then it started to go down when people actually expect for when they buy your brand to be able to be on pre orders. And we will see like in the comments on the ad they were like, oh, yeah, if you see them and stuff by like 1015, because they might be sold out after. And you have to wait two months for it. In that sense. We really had like the sort of like network effect of people fully understanding that if they wanted to buy a product, they generally had to wait. And if basically they were coming to a product page and the pre orders were basically being released in like three weeks time, it was actually a good deal and a good time to buy now because potentially you couldn't be like one month to month in that sense. So So yeah, I guess just a lot of education.

Mariah Parsons 13:05

Yeah, a lot of education. It sounds like also UGC to back up that education of people on the comments saying, like, Oh, this is good enough that you're gonna want multiple bottles or products or X amount quantity. And then you don't want to have to wait. So like order it upfront in the presale. Do you remember what the ad creative looked like? Specifically? Like, is it? Are you like advertising? That you'll like the you know, you'll have this product go on? Pre presale opens up for this product in three weeks? Or is it just like, is it more like educational more like word base,

Jonathan Penna 13:45

basically, like we're a team which we're too small at the time to really have a lot of different types of of creative that say, Okay, we do a drop the for the next week, and then it is going to be back in stocking cetera. So like, all creative, we're mainly using direct response marketing with usership uses the creators a lot of whitelisting as well at the time. And basically, your messaging was very much like it can be on pre orders. If you don't pre orders, like, basically, you have to secure space, because you might not be able to get it with this one even stock. And if you didn't stock, you better get a lot now because it might be sold out very quickly. So we had like this evergreen type messaging that will work, whether it was on pre orders and whether or not it was on like, fully fully installed in that sense.

Mariah Parsons 14:31

Okay, wonderful. So has the team grown since like when you were running these campaigns in terms of like, have you experimented in trying to have a little bit more targeted creative, or is it is it still like that evergreen strategy of just keeping

Jonathan Penna 14:49

well now we don't do any more pre orders and yet a team of other I've grown quite quick quote unquote quiet quite a lot now but at the time when we were doing like load of computers, to be honest, it was only like My two co founders and myself, and then we're working with like few agency, especially when it comes to like beta, etc. But, you know, we always had like this sort of like evergreen type marketing. And the thing is, like, one of the reason why is because we didn't have any visibility as well on the stock. So it was very hard for us to like, say, okay, in two weeks, we're going to be sold out, because maybe we will be sold out way before and sometime it will take like a bit more time in that sense. So ever, if I remember correctly, even like, email marketing strategy, it was super evergreen. So sometime it was sold out and on pre orders in some time, he was fine. And messaging remained the same.

Mariah Parsons 15:39

Okay, that's really helpful. So was there any any worry from you of like, Oh, someone? And right, some of it was, you couldn't? Sometimes you just couldn't do anything, right? If a product is sold out, then it's sold out. But was there any worry on your side of like, Oh, my God, we're missing these people that want our product, but aren't able to get it was that any? I guess was there any emotion attached to that, or you were just so excited, and hyped that the it was going so well, that the product was selling out.

Jonathan Penna 16:14

So to be honest with you, like obviously, we knew that if we were fully stocked, we made a lot more money by the time like we couldn't have more stock. And as well like it tied up as well to like the way we manufacture skincare, because a wall brand concept is like luxury skincare without the luxury price. And to be able to achieve this, we have to use a network of labs and a process to actually manufacture this product is a bit more complex than just having a key like a turnkey supplier, when we can go and in like, few weeks is done, like we have to buy the packaging, then we have to buy the ingredient. And then we had to find the best contract manufacturers etc, to actually do the assembly and to build the formulation. So we had like, longer term, like, longer, sort of like manufacturing process in that sense. So we knew that we couldn't be more quicker. And we like as well the idea of like, all this marketing around the pre orders, etc. And at the same time, as soon as we restock, we could see like a self three pill of profitability and created by it's literally a lot. And after you know, like, if I just look back what we do now. So now we were many drivers subscriptions, we have subscription-first brands that we try to keep this type of form over that we used to have with the pre orders by having something that we call the dynamic pricing when it comes to like a one of one of purchase. So basically, the way on how we work is if you want to sort of like get a subscription today, you will have like the subscription price, like that's on the website or the day after day, and this will be locked forever. But if you come back next week, the price might change. So we're really trying to push people into subscription that's fully customizable, you can cancel anytime you can do what you want with it. But at least your description and you have your price essentially are locked in. Because a one off price can vary based on like ingredients can vary based on like demand and stock as well. But we still try to keep a stock for a subscriber of course. So when we when we kind of like run low in stock, we're just gonna put the website in pre orders for like two months for example, at the day of today, keep our stock for subscribers. And then as soon as we have a big restock basically Techmo subscriber inside of the ground. Okay,

Mariah Parsons 18:35

fascinating. So how to like power subscriptions? How are you? Are you using something in your tech stack to do so

Jonathan Penna 18:46

we're using skill to be honest, like we use we use recharge first but then we realized like secure was way better when it comes to like the flexibility of like keeping everything subscription was way easy for the customer. So we made a switch in I think was in November's and honestly like we've been loving it.

Mariah Parsons 19:07

Okay, so yeah, I'm familiar with recharge not so much the Schio um, so I'd be curious to hear kind of where the platform but we can chat more about that later. Um, so with the what is it called? What did you call it like the lock in the price?

Jonathan Penna 19:27

We basically call it like dynamic pricing.

Mariah Parsons 19:30

Okay, dynamite pricing. Okay. Um, so with that, is that something you've rolled out more recently like with the addition of scale to your tech stack in November you said or was that something that you've been doing for a while? No,

Jonathan Penna 19:43

it's something we're like we we implemented subscriptions in October's we then move with Keo in November's we used to be with recharge with Orbitz, or many skincare brands we knew well like the to be that sense and dine repricing we've been testing it out since I think it was mid January this year. Okay, something quite recent recent like couple months. Yeah, yeah, we're still doing a lot of like a B test, we have multiple, like product page templates that we switch at the moment. And we're still trying to find like the best way to calculate a pricing. But honestly, like, it's something that we're very excited about, just because I feel like if you truly have a dynamic pricing, when people subscribe and commit a subscription, like they're way more keen to stay in, because they know that the price will essentially change down the line. The only like important stuff to give to your kids too, if you do this, you need to give like a fully customizable subscription. Like they need to be able to do like everything they want, when it comes to like setting up like their own delivery date, skipping orders, making sure like you let your customer know at least like twice before the auto renew, etc. Because I feel like the more of the less you let your customer know about it the most would be willing to like just cancel, and then it would be of course high, like harder to get them back in.

Mariah Parsons 21:12

Yeah. And they'll be frustrated with, you know, having gone through that annoying subscription process before. So let's double tap on that, because I think it's we're changing the thoughts around subscription. But in the past, that hasn't been the case with like, letting your customers know when they're about to be receiving product from their subscription. I think a lot of brands in the past have gone with the notion of like, silence is better of like, trying, I don't want to say sneaky, but it's like a little bit sneaky. of like trying to make it Yeah, like trying to make it difficult to remove a subscription if you want to get off of it trying to kind of like hide a bunch of these things, which it kind of blows up right? Because the customer gets frustrated. You're the brand support team is then flooded with requests have I want to cancel my subscription? Why is it so like difficult to do? You know, all that stuff. And then you're also losing revenue, because you're, you're making your customers upset? And you're, you know, losing out on that retention of retaining that customer. So this is Oh, yeah, go ahead.

Jonathan Penna 22:26

Just to give you a bit of information on this, like, when we launch or with in June 2022. That's exactly what we did. So I think we did like close to 1 million in like annual recurring revenue, the first month of launch. And so we were super buzzing about the success of the launch, etc. Super exciting. And then we were like, Okay, let's just try to make it as hard as possible to get sales we keep the people on the tour and like the probably be like, Yeah, that's fine. terrible mistake. You learned. Yeah. And we've paid a price for it.

Mariah Parsons 23:04

So you Yeah, you see, and I think unfortunately, it's either hearing about like cautionary tales from other founders of like, you are going you might be tempted to do this, don't do it. Or it's experiencing it yourself with either another brand or the brand that you're currently working on and then have to maybe remedy remedy some of the some of that, that approach before. And so I wanted to ask with subscriptions specifically and like trying to get people on a subscription I know before we were chatting, this is a big thing that Malomo obviously can help with of like the order tracking page of pushing someone to just even know about your subscription program on that in part of in that part of the post purchase experience. So my question to you is what other I guess areas of the or parts of the customer experience are you trying to push that subscription to to your already you know, your first time buyers or your or your repeat purchasers that aren't on subscription

Jonathan Penna 24:13

at the moment I guess like we mainly obviously like we try to have at least 30% of tealium subscription on like cold traffic that's the sort of like target that we have. And of course like sometime when our base pricing will be higher because we have low stock so we decided to essentially like put the one of purchase at like let's say 50 pound and the subscriptions price stay at 24 pound or whatever there is a price today we of course gonna get like a higher opinion on this edition of commission rate we'll take a little bit of a hit but end of the day with subscription for his brand and like we're happy to give you plenty of conversion if we have to get a lot more subscriber Um, but I guess most of where the conversion after will will happen in a funnel will be by email marketing down the line, when we're going to have a lot of offer for them to essentially switch to subscriptions. And then we have another funnel where we're going to try to like increase the average order value in the subscriptions by giving them free products, or giving them like discount and that like a bundle with something that seems to do very well like quick action links. So there's just a link that you put in your in your email flow. And just when you're going to click, you will automatically switch this product for like a vendor, for example. And it's very easy for the customer to do so. So we had a lot of success with this, but to be honest with you, and like the tracking page is something that we clearly have left out. And I'm super curious to know how we can sort of like increase the conversion of nonsubscribers subscriptions through this channel. And

Mariah Parsons 26:01

yeah, yeah, totally fair. I love the point that you make of Yeah, like the quick action links. I think the, it goes along with the same notion of like making it easy to customize your subscription. And now there's tech that can like actually help do that. So it's not the brand having to do it all on their own. It goes with the same notion of like, if you make it easier for customers, it kind of seems counterintuitive as a brand founder to make it so easy for customers to like change. And I think the scary part, just from having spoken to 100 plus founders is like you don't you kind of lack control over what the customer is doing, because, but that's exactly how it should be right? Like every customer is different. But the scary part is that you're giving up that control. But we see this time and time again of if you're more proactive with your shipment notifications or with your you know, you're actively messaging your subscription program, then you're putting the onus on the customer, and then the customer feels like they have more ownership. So they're more involved. Like nobody likes to be forced to do something, right. It's against our psychology. So it's one of those things where it at first glance can sound counterintuitive of making it really easy for people to swap things out or to customize, okay, like this is the frequency that I use the product on, this is what I need, whether that's shorter or longer. Purchasing cycles, I think it's really easy to focus on like, Oh, if some if a customer is able to customize their subscription experience, the fear and that's where like, naturally we tend to go is the fear is like, okay, they're gonna put like six months, say your average purchase purchasing cycle is like one month, right? Or that's your goal. The fear is someone's going to put six months from order between order order. And it's easy to focus on the cohort of people that will be doing that. But just as easily, it's, you can see the reverse, where people are going, Okay, I use my whole family uses this or right, like all my, all my siblings and right, whatever the case is, we use it so much that we want to purchase it every other week. And like shorten that time, from what the original goal from like the brand side of the perspective is. So I think it's conversations like this help, I guess reframe the, the way that people are looking at the like, potential, I guess devastation, right. But there's also a lot of potential growth when you put the ownership on the customer and they're able to be happy throughout the buying experience and say like, no, I really liked this product, I want to buy it when I need it. And that's that's how it should be. So I'm Yeah, it's one of those things that I love hearing more and more that brands are tending to go in that

Jonathan Penna 28:54

as well I just on this, I feel like one of like, the biggest reason why people can sell generally speaking is like, number one, they don't like the product and number two, they have too much product and from experience is very hard to like estimate how much someone will use your products. For example, like skincare, we have some people that will have like a six week turnaround and some people might have like a three month turnaround, just because they use less product and they're happy like this, but as a brand is very hard to like estimate. So, you know, like, if you don't give the option to fully like you summarizes you're literally shooting yourself in the foot for sure. Yeah,

Mariah Parsons 29:34

and to I think it comes down to like, as a person, do you? Do you like having a subscription because it's taking care of you and that or it's taking care of for you? So you can like have one less thing on your to do list or do you like being the person that is like Okay, I like to decide what okay, I can see that I'm running low on my product I want to purchase now. And so it's like, even just as person to person, like, I know, myself as a buyer, I tend to subscribe to things that obviously I know I want and need, because it's like one less thing that I have to do, right. So if I can, like set up the cadence where I know, this is, you know, I've used this product for X amount of time, and I'm going to go through it this quickly, I can set it and forget it, that's easier for me, because I'd rather have that but I do know some people where it's like, I don't want any secret hidden fees, where it's, I'm not expecting them to be charged to me and all this other stuff, where they would much rather go and click that button every single time because it makes them feel better. So even like, going from the, how they're using the product, and just how as a person they are, I think the customizability that, you know, these, these subscription programs are giving customers it really helps and like, it sounds like what you said around the option of going of skipping all the you know, middle people of going from the manufacturer, to getting the product in store you went DTC, and that is the beauty of talking directly to the consumers you get to market and be so personalized for the consumer. In this, you know, type of business that it's that it's so much fun. And so, you know, so, so much of a such a such a newer age, I feel like of the customer experience and marketing and all that in general.

Jonathan Penna 31:28

And revenue, like the funny thing is like last day, so we tracked like this quarter customer that suscribe will can sell straightaway. And really often like they just can't sell straightaway, just to make sure as you mentioned, there is no heightened fee and they can actually can sell is about 20% of those customer that will then straightaway start another subscriptions with another product. And then it will measure subscription together. And it will keep the subscription up to running in that sense. So it's a bit like you know, they just want to make sure they can actually can sell and when they see that everything is working fine. And like they can fully can sell and it's no hidden fees, etc. They will be like, Okay, I'm actually going to re subscribe and maybe add another product that I think will be good for for me. And then after that we'll just stay and not cancel the subscription straightaway. Which is fine. Yeah.

Mariah Parsons 32:20

Yeah. That's so funny. Are you hilarious as humans, right? Like the, the buying habits and the I was a I studied psychology, in undergrad. And so like, yeah, consumer and buying purchases, or buying behavior is just so interesting. If someone would like cancel right away to be like, Okay, I know, this will be okay to cancel, if I ever need that. But now that I have the reassurance that I can, I'm like, all in, right? And that's exactly what you want to see, how did you find out that that's kind of what people were doing and like canceling the subscription right away to make sure that they could and then purchasing more? Was it just, like evident in the data? Or did you kind of have this aha moment where you were like, Oh, my God, you know, from feedback, or whatever else people are doing this?

Jonathan Penna 33:04

No, no, no. So we just we just, we kind of like, super date data drive. And so we we like just trying to understand like, what type of people can sell what are like the main reason for cancellation, because then obviously will help us to sort of like tailor the program for like, 50 people. But to be honest with you is like just a metric. We couldn't track natively in skill. And we wanted to like understand like, this first sort of like, customer that can sell straightaway. So we managed to like what like the metric. But the Yeah, no, it was just just ourselves.

Mariah Parsons 33:41

Okay, wonderful. So I know we've been obviously talking a lot about subscriptions, because it's I think it's in presale and all that. Because it's very interesting. And this is exactly what the podcast is for right of wandering into different tangents and figuring out you know, what's interesting what to doubletap on. I do always like to ask, though, what are so in addition to right, growing revenue and retention? Sounds like a lot of the letter that you're pulling for that is subscriptions, and working through all of that. What are some other big priorities that you're focusing on now here in 2024.

Jonathan Penna 34:18

So initially, there were a few huge, like qubits, whether it's on on the DTC side or on like the b2b side, something that we just implemented not too long ago. And we were super proud of it. It's we basically went from having a first response time, I think we're about like six or seven hours when it comes to customer support. Now we're down to about 20 minutes blended, which is which is great. And firstly, like, I hate having to wait too long when I have an issue, and we actually realized that this was like an issue for this journey as well when like If there isn't like an issue on the address or anything and like, the customer had like a repeat purchase that they didn't really saw, like the reminder email, and in reality, they had more product and they just wanted to cancel this one very quickly. And if we cannot address the issue of like super quickly, this basically would have led to the customer literally like leaving and canceling your subscription. And we implemented like a tool called Siena AI, which honestly is mind blowing, where we were able to pretty much look at the most common issue that we have canceling subscription generally delivered a to cancel the orders getting a refund or product inquiry, etc. And optimizing using AI. All like the answer that we could get to the customers. Now basically, if you send an email to our customer support, and you're like, okay, is this product good? If I'm pregnant, for example, it will get like a first first answer. And like, I think it's one one and a half minutes maximum. And it will be like very much personalized for the product you're asking with your customer data on it is like auto related, etc. So that's something that we're super happy. And we literally implemented this in the last, I think month or so. And then a big priority for us at the moment is just to go into retail. But we want to go into retail slightly differently, we don't want to go into retail, going to the big retailer, because if you go to the big retailer, they're just gonna start putting your product on the online store, etc. They're like you, you basically shoot yourself in the foot in that sense, where most of us will essentially good to buy to get to the big retail instead of buying to your own website so as to walk around the way that we found is to work with pharmacy. So we did like a pilot test with about 37 Pharmacy in the last in the last few months. And now we about to like roll the product out to about 1.5 1000 Pharmacy this year, which again, is super exciting, super new. But yeah, just we just gotta want to sort of like, bring a bit more balance between the DTC and the sort of like b2b Well, being direct and not working with distributors.

Mariah Parsons 37:26

Yeah, okay, I love both of those. So quick question around the customer support tool, Sienna AI. Heard about it, but I don't know, a ton. So I'm curious with onboarding the technology, did it take a long time to kind of get the AI up and running or, like make sure that it's giving out the right answers kind of like test you all that stuff? Or was it pretty intuitive in terms of like, you kind of just set it up, and then it can, I don't know, scroll your website or your knowledge base or you know, past communications, blah, blah, blah, and then, like, get to know it's

Jonathan Penna 38:01

a bit like a baby, you really have to, like, educate her on a lot of like different problem and solution in that sense. And it's something very different. So it's clearly like a nappy to take when you set up those automations. But say, like, also get it, you can quickly like build your automation and, and the system will recommend you as well, like, based on your tickets, a recommendation that you could set up to automate all the future, similar inquiry for this type of problem. But I think you need to be careful on like, setting up a few automations make sure like they're actually running correctly, optimizing those before moving to the rest. So it's clearly like a process that can take few months to get it right. But see, if I just look at it day after day, we have about 70% of all our together fully automated, and then the 30% remaining, the generally speaking like very hard problem to solve that, generally speaking, require, like a human to look at them. So yeah, no, I'd say it's more like the sort of amount of work that you can produce down the line. I think the onboarding is quite, it's quite fast.

Mariah Parsons 39:21

Yeah. And to you, I mean, I the argument can be made of if you're onboarding a human right to, like, respond to those inquiries, as well. It takes a long time. Right, like training wheels, you have to, you know, you can't just you have to on ramp them and whatnot. I'm also curious, do you happen to know if a lot of support tickets because we're more talking about some of the like support tickets that come in as a result of having a subscription program but in terms of other support tickets like a customer inbounding with you know, asking where's my order? which is what, you know, Malomo we see a good amount of just because, you know, that's so inherent to the tracking process. Right? Is Everyone's curious where the order is, does that Siena AI tool help with those types of support tickets as well. 100%.

Jonathan Penna 40:16

So I guess, you know, you can set it up like up to you for a little while, like the way we set it up. And we're quite fortunate that in the UK, we basically offer next day delivery to most of our customers. So we don't really have a lot of like, inbound to get when it comes to tracking just because if you ordered before, 2pm, you get your order the next day, so I guess I don't really have the time to sort of be like, oh, where's my tracking, especially for, you know, case, but we started doing a lot more testing selling in Europe, obviously, we seeing like this issue of tracking down being a lot more important because we have three to four days shipping time in that sense. And other Deaf Day, Sienna will essentially just sent back to the tracking page, like the carrier tracking page, because we set it up as it is, but you know, you can basically put any link in that sense, you really train it to do whatever you want. So we can put Malomo sort of tracking link is no problem.

Mariah Parsons 41:15

Yeah. Oh, that's all that fun stuff. Okay, wonderful. Um, and then I love what the idea but behind going to pharmacies and selling there and having like a little bit of a caveat, I guess you could call it of yeah, having someone not be able to purchase through a big retailers online store so that you know, you're not competing with yourself. So I think that's a great idea. I hope other founders who are listening, maybe are thinking through, you know, the, what makes sense for their brands, knowing that could be nonsense.

Jonathan Penna 41:50

Think about it, as well as not just this is like any big retailers, they might have like very tight requirements that you need to meet. For example, like, I know for a fact that a lot of retailer will give you like an hour slots to the delivery. And if you don't meet this hour slot, they might give you finality on your invoice, then they might have like very long payment terms. And if you look at the reality of started working with a big retailer, it's actually very easy to work with them, they will give you your shot as brands, because there's a lot of working with new brands, they love bringing fresh meat into the grinder in that sense. But it's actually very hard to stay with them on a longer and again, because they have really big requirements. And the thing is, like, if you go and work with like a tier one retailer and your product end up working very well, you might not have like the operation when it comes to the product demand excetera to be able to like sustain the scale with them, especially if they have like very long term in time, etc. So they might give you such a product might work very well. But then because you're not able to sustain the scale, they might pull you out of there essentially like the network of brands. And I think once you out, you out, it's very hard to get back into it. So as a strategy, like obviously, we want this very big retailer and we're not saying we're never gonna work with them. There's just a sense of like, okay, if we start working now with pharmacies, obviously, the volume is like, way smaller, on average, we make about 500 pound a month pharmacy. But if you look at the UK pharmacy market, I think there's 15,738 Pharmacy, so we can make a lot of money with this pharmacy. But at least you know, we can sort of like build operations, to the point where once we have most of the small pharmacy will go to the big retailer, and then we're going to be everywhere. And is it time for us to open a new market and that sense. And that's a bit how we see expansion. We don't want to be worldwide straightaway. We kind of want to focus on one market, get it up. And then once we pretty much everywhere moved to a new one in that sense. Yes.

Mariah Parsons 43:52

Yeah. I love that tactic. Okay, well, I'm going to wrap us up because I feel like we can keep chatting. If I don't. I want to be respectful of our time. But Jonathan, this has been so great. It was great learning about kind of the strategies that you are pursuing without or pursuing and like the uniqueness I guess of them with a pre sale and really trying to think through like dynamite, saving dynamite pricing, with saving and having a customer locked in at a specific price and like providing value that way. So thank you for taking the time. This is such a joy and I can't wait to continue to follow you know, what you are doing and what new innovation you are bringing to the market. Thank you very much.