Tim Bucciarelli:
Welcome back to another episode of Shaping eCommerce with IronPlane. I'm Tim Bucciarelli, Director of Engagement with IronPlane, and today we're talking all about subscriptions and specifically, we're talking about the platform called Subscribe Pro with Rob Holthouse. Thank you for joining us today, Rob.
Rob Holthause:
It's a pleasure to be with you, Tim.
Tim Bucciarelli:
If you could just give everyone a quick bit of info about your background and your work with Subscribe Pro. That would be great.
Rob Holthause:
I'd be happy to do so. As you can tell by my literal background, most of my background has been with music as an educator and a performer.
But I've been in sales for over a decade now, and I've been at Subscribe Pro for the last five years, where I've headed up sales and all new revenue.
And I like to kind of describe Subscribe Pro succinctly as an eCommerce subscription solution. But you know, digging a little deeper, we power all different types of subscription club boxes, subscribe and save, recurring order donations, and we work with a bunch of different customers all around the world.
Tim Bucciarelli:
And what you hit on what was going to be my first question, which is really just clarifying for everyone. What are we talking about when we talk about subscriptions? Because a lot of folks will think immediately like, oh, media streaming or Netflix or you know, you get a subscription, and you can get it over your computer. You can get it like a DVD in the mail. Not anymore. But you get the idea. What are the major subscription buckets would you say that people tend to work within?
Rob Holthause:
If I was going to define subscription at its highest level, it's anything that you're going to be charged for on a regular basis. That's like the 30,000-foot approach to like what a subscription is. As you zoom in a little bit, as you just said, there are multiple types of subscriptions.
I think the one that people probably think about the most common is what we refer to as like a replenishment subscription. So that's going to be things like vitamins or skincare, or those are the most common for us, but also things like pet food, coffee and tea things that you would get on the regular delivered to your house. Hey, I never want to run out of my favorite kind of coffee. Please send me two bags of this every month or what have you.
There's also the model that a lot of folks are familiar with. And I feel like I first kind of remember this getting really popular in the popular psyche was Birchbox in 2011, 2012. And everybody was kind of going crazy for that of like, hey, we'll send you this every month you get a different box with different goodies inside of it, right? That's more of what we would consider a curated box. You know, you signed up for the experience and the surprise and delight factor of like, Oh, I wonder what I'm going to get this month. Like, I'm excited to open it. People are doing that with like wine clubs, beer of the month, cheese of the month.
And then the third category that we use internally within Subscribe Pro would be like an access subscription. So something that you're paying to get on a regular basis is an online textbook and a membership in a club. Technically, if you think about it like Amazon Prime is an access subscription It’s like if you're a member of Spotify, you're if you're paying for Spotify Premium, you're getting access to an ad-free experience on their platform. And so that can be extrapolated to any SaaS platform with a recurring revenue stream.
And I think it's important while we're kind of chatting about that nowadays, I feel like every consumer - I don't think that I've ever met somebody who isn't familiar with it, like we live in a subscription world now, right? Like everybody is just like everybody has Netflix. Everybody has at least the free version of Spotify. Most people are like subscribing to their pet food or their vitamins that day.
So I think the important thing for merchants to consider for subscription platforms to consider is how you present that to customers, making sure that it's clear and that they're familiar with your terms of service, that kind of thing is going to be very important.
Tim Bucciarelli:
Could you just give a quick snapshot of the history of Subscribe Pro? How did it start?
Rob Holthause:
So we're going back to nine years ago, our founder, a guy by the name of Garth Brantley, who's still our CEO and is still my boss. He had a development agency, and he realized that there was kind of a niche there that could be filled. At the time, most of his work was on Magento, which historically has been our bread-and-butter platform.
We work on other platforms now, but Magento is still probably number one for us, and he was like, I think that I can build a solution on Magento that kind of addresses some things that other solutions don't. And he set out to do that.
The company was founded in late 2013 and really started to take on clients in 2014. And like I said, I came on board five years ago in 2017 to continue the company's growth. But yeah, it came out of a development agency being like, Hey, I think that there is an opportunity here. And then it was good enough that it was just like, Why don't we just do this instead of being a dev agency? Because we feel like this solution really has legs.
Tim Bucciarelli:
To dig into the technology a little bit, do you guys consider yourself as a Magento extension or Magento module, or are you like a SaaS function that can be tied to the Magento platform?
Rob Holthause:
That's a very good question, and the answer is yes and yes. So we're a little bit different than sort of an off-the-shelf extension that you might get in the Magento marketplace in that we are a SaaS solution that uses a Magento extension to work. So we're an API-driven solution. We have our own platform to manage subscribers.
That's where the subscription engine sits that generates Jane Smith’s order every 30 days on the 12th of the month or whatever day she picked, you know. But we connect to Magento via API, and so the sign-up happens within our Magento extension.
There's a page for customers to manage their subscriptions, and we rely on the Magento cart to place recurring orders. But we also have our own platform that houses subscriber data. So yes and yes. So it's kind of a two-parter.
Tim Bucciarelli:
What other platforms are you working with today?
Rob Holthause:
A majority of our clients, better than half of our clients at this point, are still on Magento. But we also work on Salesforce Commerce Cloud and, technically, WooCommerce and Zoey. But we don't have a ton of clients there. Salesforce Commerce Cloud is kind of the big one after Magento Adobe Commerce.
Tim Bucciarelli:
We talked about already a whole bunch of different varieties of subscriptions. So it seems like pretty much any merchant could, in some way, benefit from a subscription platform. Now everyone has different budget constraints as well. So when we talk about Subscribe Pro, where do you find yourselves? And let's just focus maybe in this conversation on Magento because that's really what IronPlane works in any way. What makes a subscription platform worth a customer's while? Should they typically have several subscription transactions?
Rob Holthause:
Subscribe Pro's trajectory has really accelerated over the past few years. When I came on board, an overwhelming majority of our clients were SMBs.
We still have a bunch of them, which is cool, like people that have been with us for five, six, seven, eight years even, and some of them have really grown with us, which is very interesting. But we've really trended up market, especially in the past 2 to 3 years.
The majority of our clients now are kind of more enterprise and sort of the small and mid-sized clients that we had seen earlier. We handle that really by having flexible pricing. I don't want to put this out of the realm of anybody that wants to work with subscribers.
So we work really hard to provide the most features and support and enterprise-level customization for the largest clients that we work with. Some of which are massive. We're talking Fortune 500 international kind of companies while at the same time not forgetting Joe's Coffee, some random small shop, could also benefit from our solution as well. We don't want to put them out and have them be at the expense of us focusing our energy on the larger merchants.
So it really is kind of across the board because there are so many different kinds of merchants that could benefit from subscriptions. Even after the change to Adobe Commerce, we still work with a ton of SIs like IronPlane. So I still have conversations with the reps at Adobe. For us, I'm just as excited to chat with an SMB as I am to chat with a massive client that already has a subscriber base of 100,000 monthly.
Tim Bucciarelli:
When you talk about that shift from SMB to enterprise-level businesses, that's very in keeping with what has been happening with Magento users across the board, where SMBs have opted to shift to platforms that have come up over the past five or ten years and are totally usable by them for their needs. So that's like Shopify or BigCommerce. And now, what's left on Magento are the companies that really demand that type of flexibility and customization. So that's very consistent with what we've seen as well with our clients.
Could you share a company you work with that's particularly interesting to you or that you can highlight for us?
Rob Holthause:
On Magento, the two or three that spring readily to mind for me, just because we've had sort of the longest ongoing partnership with them and we've worked the most on best practices and that kind of thing, the three that pop readily to mind would be BrainMD, Charlotte's Web and RXBAR.
All three have been with us for a long, long time. You know, all three were with us on Magento one and then made the shift to Magento 2, and we helped them with that. We've worked with them on best practices. We've worked with them on tracking their churn and minimizing customer turnover, that kind of thing. And all three of them have really grown their subscription solutions a lot as a result of a partnership with Subscribe Pro.
They're all in kind of a similar vein. If you may have noticed, BrainMD is a supplement brand, Charlotte's Web is a CBD supplement brand, and RXBAR is a protein bar.
Outside of those clients that we've been with for a long time are wineries. They’re now powering a curated quarterly box with six wines delivered to your door.
We've also worked with some charities and are now working with some universities that use Subscribe Pro as a tool simply for recurring donations. So it's not even technically an access subscription because you're not accessing anything. It's just like, hey, would you like to donate to the political science fund or the music fund or feed the needy? Those types of recurring donations.
I think there's an interesting use case for subscribers, too, because, in this case, there is no physical product that's being delivered. It's just a donor or a large group of donors that are signing up for regular donations to a charity that they believe in, which is cool.
Tim Bucciarelli:
One thing I wanted to touch on, you mentioned the word churn. Could you define that? I think most folks will know what it is, but define it in the context of subscriptions and talk a little bit about why that's such an important thing to minimize.
Rob Holthause:
Churn is basically any number of customers that you lose. You could look at it as the percentage of customers that you lose versus new ones that you've signed up for subscriptions in a month. You know, there's kind of a variety of ways to describe that. Perhaps the most insidious kind of churn that we're always trying to minimize is what we call involuntary churn.
Someone's credit card was updated, but they forgot to. update their account. And then that subscription just kind of fails and lives in subscription purgatory forever.
There are a number of tools that we have that minimize that involuntary churn. We have some clients that do a kind of a save-the-sale workflow, trying to capture a cancelation reason or offering a coupon code marketing tactics that keep customers engaged or excited for their next order. You're never going to eliminate it completely, just like you're never going to eliminate failed orders. There's every month or batch or whatever, there's always going to be some percentage of people whose cards fail or some other issue.
But for the most part, you want to try to minimize that. You want your customer service team to kind of stay on top of that as much as possible because like it's reliable, actionable revenue like we know that we have X number of subscribers. We know that our average subscription order value is X dollars, and that's reliable revenue month over month that you really want your eCommerce team to do as much as possible to protect.
So working to kind of maximize that experience for subscribers, which we talk about all the time, your subscribers are your best customers. Their lifetime value can be 10, 15, 20 times that of a nonsubscriber.
Tim Bucciarelli:
It feels to me like this world of subscription platforms is really big these days. It seems like there are a lot of different companies offering a similar type of service. Can you talk a little bit about kind of the marketplace as you see it and where Subscribe Pro fits, and maybe some of the competition that's out there?
Rob Holthaus:
There are a ton of folks doing this. Many SMBs have gone to the Shopifys and the BigCommerces of the world. And so there's a ton there's a massive uptick in the number of kind of subscription solutions on those platforms.
That's not an area that Subscribe Pro is involved in yet. As I said, our major focus is Adobe Commerce, Magento, and Salesforce Commerce Cloud.
Really for us, it's kind of more comparing a SaaS solution to kind of an off-the-shelf extension because that's a lot of times what merchants that I'm speaking with are looking at is like, I can go to the marketplace and spend this flat fee on this solution and implement it. Why wouldn't I want to do that?
And in most cases, I advocate against it because it's nice to have a low upfront fee, but then you own it, and there are costs associated with it. There's the implementation of getting that set up the way that you need it. There are the maintenance costs of running it yourself. It's built into your Magento. So you've got to make sure that everything works really, really well.
I think that there is some benefit to an API-driven solution like us and some of the other SaaS solutions where we kind of sit next to Magento and connect via API. It's more flexible, but it's more stable too. It's not built into the architecture of Magento like a lot of those off-the-shelf extensions are.
So when you look at SaaS solutions in the space, particularly in the space that we're involved in, it's really just us and Ordergroove. I know that they're a competitor, but I have nothing bad to say about their product. They work with world-class clients. The big difference, what sets us apart, is that we are kind of smaller and scrappier. And so we're able to be a bit more agile and probably able to take on a bit more customization than they might be interested in.
We really like to dig in on use cases. My personal cellphone number’s in my email signature, for crying out loud.
Tim Bucciarelli:
Let’s back up and talk a little bit more about that connection, if it's an API connection or it's an extension that enables your SaaS platform from a Magento admin point of view, I'm going into the admin tools, and I'm seeing an area where I can adjust some configurations within the Subscribe Pro functionality or do I go out to a separate portal, and I do that separately or how does that typically work?
Rob Holthause:
So there is a bit of a presentation there in the Magento admin that allows you to select whether a product should be available on subscription or not. That's like if you're adding a new product and you just want to click, yes, this is available on subscription. It would transmit that information to Subscribe Pro, but for the most part you'd be using Subscribe Pro’s merchant app to manage subscription details.
If there's any kind of a subscription discount, what the order frequency should be for a particular product, you'd be able to like look at customer information within the Subscribe Pro platform. So there is some functionality in the Magento admin, but most of those tasks would happen within the Subscribe Pro admin.
And is it true that there's enough openness within the API that, if you did have an agency that was skilled in building out those API connections, you could actually bring in some of that Subscribe Pro data into the Magento admin. I don't think that we've got anybody doing it, but again, that's kind of the cool thing about working with Subscribe Pro and a scrappy kind of agency that's interested in customization.
We can technically make it do literally anything that you want. I mean, like, the sky's the limit. With a moderate level of effort for implementation and an SI that is familiar with that solution, like IronPlane, would be able to implement anything relatively quickly. And we would help with testing.
That works for most clients that want to use Subscribe Pro. We didn't make everything fully perfect and ready to go because then it wouldn't apply to as many people. But by building it to like 90 to 95% of the way there and then customizing it the rest of the way, it's the difference between buying a suit off the rack or buying a suit with a jacket that's your size, but you need the waist to be taken in a little bit to be just right for you.
And that's kind of our design philosophy. It needs to be really good for a majority of people and then just take a couple of tweaks to make it right.
Tim Bucciarelli:
I think most folks listening to this might be in the B2C category, but we also work with several B2B clients. Have you come across B2B clients who are using your tool for some type of kind of reorder process for their existing clients?
Rob Holthause:
We have, although transparently, it is not as common.
I think a lot of times, the challenge there is that with B2B orders, they're subject to change in a lot of cases - Like I know exactly how much coffee I drink for the most part, so I know how often I need more coffee or like I know how often I need more food for my dog. In a B2B instance, I feel like a lot of times, those orders and invoices can kind of vary based on the needs of the business.
So it's a bit harder to predict "we're always going to need X amount of product." The ones that we do see that are doing that are a lot of times it'll be like incidental business. So what I mean by that is we worked for a long time with a coffee roaster where most of their business was B2C.
You could go to their website or your favorite coffee, give me two bags a month, cool, please and thank you. But they also had some wholesale customers that were coffee shops that would buy like ten, 15, 20 pounds every week or two, and they just roughly knew how many customers had walked in off the street. And so it was kind of a smaller scale B2B.
We do work now with some B2B clients that do access subscriptions. So recurring billing to access online technology like CAD software or engineering solutions or accounting, things like that. So in those cases, it's a bit easier because it's just an access subscription. It's not really like, it's not a product that's subject to change.
Tim Bucciarelli:
Could we touch a little bit more on kind of how the processing of the orders goes? Let’s say I'm going to this very familiar store that just implemented Subscribe Pro to build out their subscriptions for shampoo. What am I, as a user, going to see that's a little bit different once Subscribe Pro has been implemented?
Rob Holthause:
Ideally, almost nothing should change. The only thing that you would see that would be different is that there would be a radio button for subscribing. A customer should never see Subscribe Pro’s name or logo.
They should never be redirected away from the merchant site. They should never know that we exist.
Our entire goal is to operate entirely behind the scenes so that every interaction happens only with the merchant and that we are sort of the man behind the curtain, so to speak. The end user is going to come to the product details page, and there's going to be a subscription widget there powered by Subscribe Pro. But this widget will be themed to kind of match the overall look and feel of the product details page. They'll have the option for a one-time order if they just want to order at once, or there'll be a radio button for subscription, and then if they choose that, they'll have whatever the order frequency should be for that given product.
And that can be configured down to the product or category level because, obviously, some things that you might order more frequently or some things you might only order every 3 to 6 months or even up to a year. So based on what product you're looking at, you would have those product frequencies available, you would select the frequency that you want, and then you'd add it to the cart.
Now we also show the widget in the cart too. So if you had selected a one-time order and you change your mind, you don't have to like remove it and read it. You can just switch to a subscription on your way to the checkout. We also support a blended cart, so you could have a subscription order and a nonsubscription order together in the cart, or you could even have multiple subscription items in the cart with different delivery frequencies and be able to checkout.
So you get the same checkout experience that you would if you were coming to the site to place a one-time order. You get a confirmation email like you normally would within Magento. The only difference is that if there's a subscription item in the cart, Subscribe Pro’s extension will capture that information and store it in our platform to generate subsequent orders. If I buy a vitamin subscription, I will get my initial order now, and it'll go through the site like any other Magento order. 30 days from now, the Subscribe Pro platform will say, oh, this is an order for Rob. His customer ID is 12345 It's for SKU ABCD. This is the token in the address. It will hit the Magento cart API, build out a cart, and push that through Magento.
So effectively, Subscribe Pro is automating the reorder process on behalf of the customer, which means that it gets an order number in the eCom platform it shows in the customer's order history. If I'm logged in, I go to my account page, and I look at my order history, I'll see not only the orders that I placed but also all of the subscription orders.
Tim Bucciarelli:
What if, as a purchaser of a subscription, I want to manage my subscription? Is that something that I do within Magento, or do I go to a different portal?
Rob Holthause:
You would still do that within my account page on the vendor’s site. So again, an end user should never be directed away from the Magento site. Subscribe Pro adds my subscription section to the accounts page within Magento. So you're still on the Magento site, you still see everything matches the theme of the site, and that gives the subscriber the ability to push my next order off by a week or two or skip my next order or pause for now, or update my address because I just moved, or change the card that I'm using to pay for it.
All of that is available on my accounts page on the merchant's site speaking to the subscriber. And the URLs all stay the same, so nobody gets freaked out by being pushed to a different URL for a different company that they've never heard of.
Tim Bucciarelli:
So what's next for Subscribe Pro? I'll just throw one idea out there. There's this whole idea of headless. Is that an area of interest for Subscribe Pro? It is. Are you already there, and what does the future look like for you guys?
Rob Holthause:
Technically, we could work in that type of setting. Currently, we don't have any customers doing that. But we could. I think currently, the focus is on product improvement. We're trying to add new features and make things run a bit more smoothly. So that's been a big focus this year, adding some things that the clients specifically have requested.
And then we're also kind of a bit further out on the horizon looking at where we want to go in terms of expanding our ability to work on other platforms as well. You know, we're still kind of in discovery there. We're chatting with some folks about it. I can't give too much away.
Tim Bucciarelli:
Any advice you have for folks who are considering looking into subscriptions? Where can they learn about subscriptions generally and Subscribe Pro specifically?
Rob Holthause:
Honestly, I'm of the opinion that the best way to do that is to speak with people that are doing it and doing it in a way that you like. You could Google it and read like half a dozen different articles, but try finding websites you think have a really good subscription program and look at what they’re doing. Reach out to them and see who they work with.
And you should have some idea of what your goal with subscriptions is, and it should be a reasonable one. It should be based on your current business and what you know about your current customers. The overall goal should be something like lifting revenue and providing customers with a better experience.
And I genuinely love having consultative conversations with people about it. I don't care for like pushy sales. I'm more interested in like meeting people and asking what they want to do, and trying to find a solution.
Tim Bucciarelli:
Just one last question. Is there a ballpark pricing structure, or is it so custom that it really has to be done based on conversations?
Rob Holthause:
I would lean more towards the second because it depends on if you are a mom-and-pop store that’s just getting this off the ground or you are a large international client that already has an existing subscriber base? It kind of really runs the gamut.
But suffice it to say that it starts way more affordable than most people would think. You know, if you're a small mom-and-pop kind of business, you could run subscriptions for a few thousand a year.
But if you're a larger business, you have a ton of subscribers already, then you're going to be looking at a number quite a bit higher than that. So it really is kind of based on need.
Tim Bucciarelli:
Well, hopefully, this is adding value to the many merchants that are out there and especially the ones looking to learn more about subscription software, and hopefully, they'll reach out to you directly and get a demo. Thank you very much for joining us on Shaping eCommerce, and we will look forward to speaking in the future.
Rob Holthause:
Tim, it's great to chat with you, as always. Thanks so much.