The VIP Loyalty Strategy That Works, and Why Your Subscription Might Be Illegal

Jay: [00:00:00] Adam, it's so good to have you on. The last time we did this was 2000, I wanna say 21, maybe it was the mid right smack in the middle of the pandemic. And so I'm holding my favorite book right here, which is the subscription boom that you wrote. Was it six years ago now?

Adam: I think I wrote it in 2018, 20, late 2017, 2018 into early 2019. It was published in 2020 officially.

Jay: Okay. And like, holy cow, has the world changed since then? Hey,

Adam: Yeah, a hundred

Jay: I mean, do you look at this book, I mean, a lot of the things you talk about in this book are timeless. Like, it's not necessarily like tactics that only worked in 2018 here. It's more about subscriptions in general. But let's dive right into it.

Quick background on who you are. And then I wanna get right into like what you're seeing in the world. Subscriptions. I got a long list of topics, but can you give us, give our listeners quick background on who you are?

Adam: sure. The quick headline is [00:01:00] entrepreneur, operator, author, podcaster, I guess is the best way to describe it. Was an operator, founder of a subscription couponing company from 2010 to 2018. Sold it, started the book writing right after that because I really had no clarity as to what I wanted to do next, but had a bit of a thesis on where things were headed in the world of subscriptions and had a little bit of experience eight years of that experience running a subscription company.

So thought, hey why not put pen to paper here?

And now at the helm of Scriberbase, which is almost seven years old, and something new that I'm working on called Axis Brands, which is almost two years old. So straddling between those two companies at this point.

Jay: And I wanna get into both of those 'cause they're actually quite different which is interesting. But both very applicable to I think a lot of our listeners. So let's start a little bit on the subscription front, if that's okay. And then I want to definitely get into Axis Brands, [00:02:00] but what have you seen in the last few years?

What are some of the big trends you're seeing change in the subscription space that you're really paying attention to these days?

Adam: I mean, I think the core thesis of the book remains pretty steadfast. So subscription economy, you know, is about $550 billion of value. Today. It's estimated to reach 1 trillion by 2028.

So that compound annual growth rate is pretty strong.

Roughly 60%, but. What is working and what's not working in the world of subscription has certainly changed.

And then

you have sort these sort of like macro themes that are related to subscription commerce that have certainly changed the game. Like membership and paid loyalty is now a big thing. Personalization, of course, AI is a big thing. There's this sort of quote unquote subscription fatigue that's creeped into the market

the past few years. So that's something that's new. The [00:03:00] shift from company to consumer control is a big theme we're watching as well. There's been an FTC crackdown with the click to cancel ruling, et cetera. And then I think one thing that's pretty interesting to watch is this shift back from sort of subscription performance marketing oriented brands that are contingent on media buys on Facebook and Instagram, et cetera, that are driving the growth of that particular business to shift away from that

to more sort of long-term brands that are not only focused on, you know, quote unquote D2C or online commerce, but potential omnichannel expansion as well. And then of course, like we're recording in April, 2025. So there's this new thing called tariffs, which are impacting the world of subscription commerce as well.

Jay: Do you think does subscription have as much. Specifically a little bit more in like the e-commerce side. 'cause I know you, you work with like software subscription and a lot of different [00:04:00] sides of it. But maybe honing in on e-commerce, would you say there is still as much upside potential as there was a few years ago?

Is it changing? Is it, are we seeing any type of, like a ceiling of subscription or what are you seeing in those regards?

Adam: So, I mean, I don't think that subscription commerce is going anywhere. I certainly don't think e-commerce is going anywhere. There's been a bit of a reversion to the mean post pandemic. So we saw obviously a massive e-commerce boom, let's call it between 2020 and 2021.

Now as there's this sort of like reversion to the mean there's new challenges Absolutely that are impacting e-commerce on a macro level. So customer acquisition costs have increased significantly. You've got increased competition. You have that post pandemic normalization that I just mentioned. You do have the impact of these privacy changes on advertising.

Now you have tariffs. [00:05:00] So I do think there are challenges, but I'm very bullish long-term on e-commerce.

Like D2C e-commerce was a thing 20 years ago when I graduated business school. It's still a thing now. People want to buy online, people wanna buy from their mobile phone. This isn't going away. So what I think we're seeing right now is just a bit of a correction.

Jay: Interesting. So I wrote down right as you were saying this, 'cause I remembered in your last question you said something I wanted to get into the the FTCs changes on click to cancel. So before I forget, you just mentioned it earlier, this is very timely, can you give the details on that?

You mentioned it in the last kind of question, but I don't wanna skip over that because I think that's really important for probably a lot of listeners right now. What is that?

Adam: So we did like a full half hour webinar on the details of the Click to Cancel ruling which is included in something called subscription scale, which is our course that we have online for enterprise and for their teams. The Kohl's notes on the [00:06:00] FTC ruling is that companies need to make sure their terms and conditions as it relates to their subscription or membership or continuity offer are clear and conspicuous, that there's no ambiguity, that there's no confusion. That is the easiest way to sum this up. If the company is deemed to be in violation of that North Star they're subjecting themselves to FTC scrutiny and or fines or what have you. So the FTC, you know, this has been going on by the way, for more than two decades dating back to, you know, probably e-commerce.

When you were running businesses, Jay when weight loss, you know, Acai Berry, garcinia, nutraceutical offers were all the rage. Consumers had no ability to cancel their subscriptions. Once they were enrolled, there was no toll free number to call. They couldn't contact the company, they couldn't talk to a customer service agent. And so BBB complaints started to tick up. State ags were [00:07:00] notified. The FTC was put on alert. So this goes back a very long time. Things have been moving in this direction of company to consumer control as it relates to their subscriptions for a very long time now. Now of course we have Visa and MasterCard getting into the game with these new tools that they're developing to allow customers to manage their subscriptions in app or within their online banking to see what they're paying for and to be able to sort of pause, defer, hold, click, cancel, whatever on the fly.

But the FTC is quite aware of the ambitions of some companies that try and play hide the ball. We've seen this, right? We've seen it with bad actors. We've also seen it with very quote unquote above board actors like Fabletics or Columbia House which just made it very difficult for subscribers to pause or cancel their subscriptions. So this is where this is coming from.

Jay: The New York Times,

Adam: New York Times. Exactly.

Jay: Tried to cancel my [00:08:00] subscription recently. I couldn't, there was no way to physically do it online. I had a phone to cancel, even though I subscribed online. So would that be something that falls under this? Like, I can still cancel my New York Times subscription, but I can click to subscribe, but to cancel, I have to call a customer service rep.

Adam: Yeah. The idea is that it must be as easy for you as a subscriber to cancel as it was for you to sign up.

And the FTC is the determinant of that.

That's the governing body that decides Also the ruling and the law applies to businesses of all sides. Sizes.

Excuse me. So it's not like if you're a small e-commerce brand and you're sub $1 million in top line revenue, that you're immune to this law, you're not.

Yes. The probability of you getting caught up in some sort of FTC action is quite low. But If the FTC decides to do some sort of random audit of your industry, your category, I don't know, Shopify businesses in general in [00:09:00] this particular industry or space you're not immune if you're a small business.

Jay: Yeah. Well, and there's for sure, like we've seen this in the ADA compliance space with accessibility on websites, that there are people just going out and maliciously creating lawsuits against sites for the purpose of easy wins.

And so they can find sites that don't have certain things they don't meet certain guidelines for people with maybe visual impairments or something else.

And then it just easy pickings. And this might become a thing where it's easy pickings for subscription brands. Like, one thing that comes to mind is what does this mean for all the brands that have these very elaborate cancellation flows? Like where you go to cancel and you pick a reason why, and you say why, and you're giving an offer and you know, the offer for a discount or you're given if you say no and say, well, how [00:10:00] about a swap?

Or you can still cancel, but it's definitely more clicks than you took to subscribe, like if you can. So what does it mean for those, or has there been any precedent for that yet?

Adam: No precedent for that, but I would say that the FTC will be the best judge as to whether that cancellation flow is clear and or confusing or ambiguous for the consumer. One thing that you can do as a business if you do have an elaborate cancellation flow and if you want to know sort of the direction of things is look at your NPS look at your reviews online. Look at your BBB rating.

Better Business Bureau, right? Like are your complaints ticking up month over month? Look at your refund requests. Look at your chargeback ratios or chargeback numbers on your merchant accounts. These are all early indicators

as to whether or not your cancellation flow is actually, you know, strategic [00:11:00] or something that's really gonna piss off a consumer.

Jay: right. Yeah, it'll be interesting. And I mean, so when has hasn't rolled out yet, correct?

Adam: I think it was October actually of 2024.

Jay: I thought,

Adam: on fact check. We need to fact check that.

Jay: oh, okay. So the law is actually in place, but there, sorry. Have there been any cases yet that you're aware of?

Adam: Have to check as to where the cases are are at. I'm not totally sure.

Jay: Okay, so I guess one positive is we would've, I feel like we would've heard. I would've, I mean, I'm not aware of any, we've got thousands of brands using our subscription software. I'm not aware of any that have gotten in serious trouble for being a bad actor. I mean, they can hide, cancel buttons with CSS and customer portals.

 You can do anything you want. I'm not aware of any myself, so I mean, to me, maybe that's a good sign that it's scared enough people to clean up their act ahead of time.

Adam: I think it's probably a story of the FTC going after the big whales first.

You know, who are the [00:12:00] gross offenders and then moving downstream from there.

So to the extent that Bold is serving, you know, e-commerce businesses between one and 50 million in revenue, I suspect that's kind of like the last of the cohorts that the FTC will go after.

Jay: They're going after like the Netflix of the worlds, the, yeah. Makes sense. Okay. I know it was a bit of a tangent there, but I wanted to touch on that, 'cause you mentioned it and I think it's timely. Just, you know, I think for those listening follow along, Adam, you mentioned subscription scale.

Tell me a little bit about that for our listeners. So this is a, well, sorry, I won't speak for you. Tell me about subscription scale and who that might be for a little bit.

Adam: Yeah, so we developed a course that we are now hosting on SKOOL SKOOL, the platform, S-K-O-O-L. It's a course in community. It's for businesses business owners, CEOs, and their teams that are in the world of subscription commerce. And it focuses on everything from, you know, going zero to one on the acquisition side to [00:13:00] optimizing retention and scale and beyond. So it's great. I mean, for us it was a way to remove some of, you know, my hands-on consulting work and remove me from the weeds, so to speak and develop some tools and thought leadership that we could host online and allow people to access on their own.

Jay: And can anyone join? Do you have to be a certain size or in a certain area or space of subscription, or is it across all verticals?

Adam: Yeah. So, the application process is short and sweet. It begins with a quick DM to myself or to our team. But no there's no hard and fast rule about who can and can't join so long as the North Star is, you know, an interest in creating subscription membership or recurring revenue or a company's already in market and having challenges around acquisition, retention churn or anything related. That's kind of the commonality, right? Is folks are Yes, in different categories, in different industries and businesses of different sizes from, you [00:14:00] know, 1 million to 500 million.

But the thought leadership is applicable depending on the stakeholder or the member.

Jay: Gotcha. I will put a link to it in the show notes. I definitely can speak for the value that you bring to the subscription space. So I think it's definitely, if anyone listening is. Doing anything with subscriptions A follow Adam on LinkedIn. B, get his books C Look at this group. In fact, Adam I think I'm allowed to say, 'cause you mentioned before the show that it's been posted publicly that you at SubSummit, which is the largest subscription conference, trade show in North America, might be the world I know for sure.

North America has named you the winner of the subscription impact award for 2025. I mean, that's huge. Tell me a little bit about that and what you can and what you can't say. I don't wanna

Adam: I mean, look.

Jay: go over any

Adam: Yeah I joke with the folks at SubSummit that they must have run out of [00:15:00] names but honestly super humbled by the award and can't wait to be with that team and folks that are attending that conference next month in Dallas. I know that you'll be there, Jay.

So we'll definitely hang out. I mean, it's a huge honor and I'm

very grateful, very thankful. I really don't know what to say other than I'm very excited. I mean, I've been at SubSummit. I was telling the guys I was at the very first SubSummit in 2014 in Detroit, when this team had absolutely no idea how to put on a conference, and that's the God's honest truth.

But it was fantastic. I mean, they had an amazing lineup of speakers. They had fantastic founders from, you know, the founders of Birchbox and Fab, fit, fun, and a few other sort of major subscription box players back then. Remember it's sort of like the height of subscription

box. Yeah, Right? 14. But like, the conference was like really disorganized. The floor was random. The [00:16:00] tables were disjointed.

Jay: Was it like

Adam: a stage,

Jay: people in a hotel

Adam: funny is like, there was a stage, there was sort of like the main stage where the speakers are, but there was no wall or curtain behind the stage.

And if you can imagine, you don't think about that when you attend a conference, but you take for granted that this is like one of those setup elements that has to be there or else it looks strange that there's like a, just an empty void of space behind the stage. And no sort of white. Wall or backdrop of any kind.

So those are like the small details that you know, Paul, John and Chris sort of missed back in the day. But they really nailed it in terms of bringing folks together, bringing smart people into the room around this whole notion of building a business on this foundation of subscription commerce, which I think is really cool.

Jay: Yeah. And for those who haven't been there, you go to their award ceremony now. It feels like the Academy Awards like it [00:17:00] is top notch.

Adam: I mean, the whole conferences is right. It's such the opposite of what we experienced in 2014.

I mean, it's one of the most buttoned up conferences I attend all year.

Every detail is thought out right down to the parties right. To your point, like everything is so well organized. So kudos to that team. Kudos to those guys that run that show. I'm excited.

Jay: Yeah. Anyone listening if you are doing subscriptions or even thinking about getting into the subscription Space SubsSummit I don't know exactly when this episode will come out, but this year it's May 28th to the 30th, it's in Dallas. And I always tell people like, I can't recommend it enough.

There's amazing talks, amazing panels of kind of all the subscription vendors are there. So if everything from, not just subscription platforms, but you know, agencies, marketing companies focused on subscription brands, logistics companies, box like, you name it, anyone focused on helping subscription brands [00:18:00] grow.

So, definitely check that out. So I'll make sure to link all that in the show notes as well too. So, and I'm a believer in the conference. I don't get any, there is no connection or affiliation at all. I just I think I'm like you. Like I just really appreciate what they built and they were really ahead of the curve.

Now, like I don't know what the exact numbers are, but that there's a large percentage of retail stores that have some components of subscription, but in 2014, it wasn't that many. I actually remember being at, so Shopify Unite in 2016 in San Francisco and we have a subscription app and there was only like two ways to do subscriptions on Shopify US and there was one other subscription app, and I remember there was like a, Toby was giving a talk and CEO of Shopify and someone at said, is Shopify ever gonna support subscriptions natively?

And Toby's answer was. We don't see it as a core part of commerce. [00:19:00] It's a, it's kind of a fringe part on the side. And it is, you know, there's brands doing subscriptions and that's why we have an app store for the kind of like the edge cases of commerce. But when it becomes core to commerce, we will look at incorporating it into the core platform.

They obviously did now incorporate it into the core platform. They do have like a basic subscription functionality, but that's how ahead of the curve SubSummit was. Like Shopify saw it as subscriptions were an edge case,

you know,

Adam: Sorry Toby.

Quick, incoming memo. It's really difficult to make a business work when you sell something once in order to make it work you've gotta sell it multiple times over, and subscriptions are a good way to do that. So, yeah, Toby

doesn't often get it wrong, but in this case, yeah,

Jay: Of course, and it's no, no shade at Toby. They, he's one of the smartest guys I know. But I mean, the industry didn't even think so, like, , it was just not Toby, like e-commerce as a whole. People, I remember trying to sell our subscription app and people thought, ah, subscriptions, I don't know.

You [00:20:00] know, and so the, it was the entire industry didn't see subscription as a long as a why would someone want to subscribe? They just buy it anyways. So SubSummit was very, I think ahead of the curve on that, and you as well. And I want to get into maybe some kind of tactical advice that some of the subscription brands listing.

And then I want to get into Axis Brands a little bit. But it was funny. I just Googled your name plus subscriptions the other day. And a LinkedIn posts of yours came up that you were talking about different pricing strategies and , I think the title of it was the eight Core Pricing Models used by 99% Subscription Brands.

And I thought it was really interesting 'cause I usually, you know, usually you just think of like, well subscribe and save, like maybe give a little bit of discount, get a subscription. But pricing is so core to your growth strategy, your positioning, the lifetime value of customers, so many things. Can you, do [00:21:00] you know the post I'm talking about?

Adam: I do I think it's eight, I think it was called, eight pricing Models used by 99% of subscription companies

Jay: That's the one.

Adam: And there's a cheat sheet I think that I published with that post, which maybe you can link to

after the episode and happy to share that.

Jay: Yes,

Adam: Pricing is enough to put most merchants to sleep, but I guess your audience often very interested in pricing.

Jay: A hundred percent. Well, and without going through the whole, I will link it in the comments, but some of the ones you talked in there were about flat rate pricing, tiered pricing, usage based pricing, premium model timed discounts, bundling for subscriptions. I wonder if you could maybe say, what is one of the biggest opportunities you see for e-commerce subscription brands that they're not doing for pricing, that they could take it like they, they could maybe be speeding up growth.

Increasing retention. Reducing churn, because I think [00:22:00] the way you price can actually affect how long customers stay around. What would you like to see of those eight models? More subscription brands use in the e-commerce space

Adam: To the extent that e-commerce brands can create a paid subscription tier of some kind it's still underutilized, right? We call it fee for VIP subscriptions. You know, mostly we see it on the services side, right? Like everybody trying to copy the Amazon Prime Playbook, which is an example of fee for VIP.

You want to be a member of Amazon Prime, you gotta pay in you wanna be a member of Uber one.You gotta pay, you want to be a member of Instacart Express or Dash Pass. You've gotta pay. This is a fundamental shift away from Free Points programs and sort of free loyalty programs that have existed for, you know, [00:23:00] probably three decades now.

The reason that I think it's compelling for businesses to take a look at is this sort of element that we call skin in the game. If you have a customer who is willing to invest $10 a month, $20 a month, you know, a hundred dollars a year in the case of Prime, to get access to more of your brand, be it discounts events, you know, early access to sales, exclusive content, exclusive products a visit to your headquarters, to the extent that you can package this up.

Gate it behind a paywall, you should the results of these programs are very compelling and a big reason why CEOs are trying to copy frankly, the Amazon Prime Playbook, right? If you think about it, paid loyalty you've got a, an engaged customer, you have someone with skin in the game, they're more likely to engage with your product, your service before looking at [00:24:00] substitutes because they're paying in to that particular loyalty program.

This is on top of course, the steady stream of recurring revenue and predictable revenue that you're getting from those members.

So highly engaged extremely high usage, high quality cohort of customers. Conversely. You know, a non-member or someone that's, you know, just collecting points. These points programs are terrible. From a consumer engagement perspective, most people don't, you know, pick your favorite, I don't know, air miles like loyalty program. Tell me how many folks that are signed up to any of those loyalty programs are engaged. Use those programs frequently, talk about those programs to their friends or colleagues. Feel like they have a relationship with that particular brand.

Honestly, the usage numbers are extremely low. Breakage is off the charts. You know, these companies have mass amounts of [00:25:00] points listed as liabilities on their balance sheet, which they have to book as liabilities because. You know, in which case they're redeemed at some point in the future.

You know, that's an accounting exercise that's nightmarish for most companies at scale. And the results are the opposite, frankly, for any paid loyalty or fee for VIP program. You know, Tinder Premium is another example that comes to mind. I mean, there's so many but to the extent that you're a brand , that you have this potential to create a paid subscription tier, you should,

Jay: I love that is the one that you chose.

Adam: And it's not on the

oh, is it not even

Adam: It's not even on the sheet. I don't think

Jay: Louis. It's bonus

Adam: it's,

Jay: That's why you have to listen to this podcast. I couldn't agree more and I think we're actually. We're actually solving, trying to solve for this from, for, from a product standpoint, for e-commerce. Because like, you know, when you said to the extent that you can do it in the right, in the beginning, it is [00:26:00] hard to do. It is hard to do. I agree. And we have a number of apps that when you connect together, you can do things where when a customer subscribes, you can give VIP pricing. So we have a customer pricing app that traditionally it's been used a lot for wholesale pricing.

VIP Gold, spend $500 or more, get x pricing. But we started having a lot of subscription brands asking, Hey, can I use this app with my subscribers? So when they subscribe, they get VIP pricing and we said, oh, sure, that's a great idea. Actually blind Barrels, who was at, they were the runner up for the, at SubSummit two years ago for the, what's it called?

The Cube. Not the cup, but it was the pitch competition door. Door Envy. Front door Envy got first anyway. They got second. They're using our subscription app and they just implemented, they sell whiskey and they have a whiskey club and you know, it's like 39 59 or [00:27:00] 159, depending which one you get.

But they also have all these bottles that they also sell. And so just a couple months ago he, and we're gonna actually do a live podcast on this at SubSummit, so another reason to come, but he wanted to implement member pricing to give VIP pricing for people when they're part of a subscription.

And he's seen incredible success with it. Like it's really been a huge value driver for buying a subscription because even I often say, you know, if the subscription is only about the product, as soon as you hit subscription fatigue, like you might get tired of. The whiskey. Maybe one month you don't drink the whiskey, let's just say, or maybe someone else gives you a bottle of whiskey and now you've got two whiskeys in yourself.

This could apply for anything. As soon as you have a couple boxes of something, you start to think, oh, I should cancel my subscription. But if now counseling your subscription means you're gonna lose your VIP pricing, you're gonna lose your custom access to products [00:28:00] that other customers don't get.

You're gonna lose your, whatever those other benefits are. You are less likely to cancel. It becomes more sticky. Right? Lower breakage. Like it's I couldn't agree more. I think that's such a a big one. And, sorry, I just wanna add one more thing to it. 'cause two years ago I won't blame you if you weren't there, but were you at the talk I did at SubSummit?

We about sunk cost.

Adam: No. But the one you did on referral strategy, which we could talk about later with the viral

coefficient,

Jay: Right? That's, that was a

Adam: a big one.

Jay: Right. Well,

Adam: I was at this one.

Jay: so, I believe in what you said so much actually it's always neat hearing different people. Talk about a similar concept and how they approach it. The way I've always looked at it is I believe there's different psychological reasons people buy, right?

Like, we don't, we buy, buying is an emotional action. We don't necessarily buy because we need a new shirt or we need something. It's emotional. When you're shopping like, there's been tests, there's [00:29:00] endorphins released in your brain. It's a dopamine hit when you check out.

It's people scroll and they buy when they're drunk, they buy when they're in bed. And it's, anyways it's not so much like, I need these things. I have to buy it. They buy for other reasons, right? So they buy there's fomo, there's fear of missing out. Like that's why these drops work really well.

There's only 300 shoe drop they buy for social. Connection. Like we buy a certain outfit because we want to look a certain way. It's not because we need a new shirt, it's to whatever. I think another big reason people make decisions is what's called the sunk cost fallacy. And I've talked about this on the podcast before, but sunk cost fallacy applies to a lot of areas of life.

It's like, it's not just why you buy something, but it's, it might be, I was talking to someone earlier it's why 80% of the clothes in your closet you don't wear, but you still keep there 'cause you paid for them. Some people say it's why people stay in a marriage longer than you should. It's a morbid way to look at it, but like, well, you've invested this much [00:30:00] time and but there's an irrational bias towards sunk cost versus future potential.

And I think that's why your example of like the air miles points. If you paid Delta a thousand dollars a month for a Fly Anywhere membership or something like that, fly anywhere Continental us. Now if you go and you book a flight with United you, you feel like you're losing money. But if you just earned points at both of them, it's not that you feel like you're losing money with Delta, you're just not earning your points.

Right? And so it doesn't have the same psychological thing. And so sunk cost is a big reason people make decisions and I think retail brands haven't really had a good way to tap into that. They can tap into urgency and fomo and it can tap into all these other reasons people buy. But membership, specifically, recurring membership or paid loyalty, whatever you wanna call it, I think is [00:31:00] a great mechanism to tap into it.

And personally, I think you're for sure onto something. And I think at the head of the curve, and for brands listening right now, if you can tap into that, I think you'll be ahead of a lot. Because I think, you know, five years the concept of like being a paid member you know, Amazon Prime was a pioneer in it.

Restoration Hardware in 2016 was a pioneer in it. All these people were like pioneers launching their membership program, but the brands now are not pioneers. They're copying all the other ones, and it's gonna become a normal way people interact with a brand paid membership, paid loyalty.

Adam: So we can double down on this notion, take it one step further, because there's a lot of psychology at play here, and I know we're deviating from the whole pricing conversation a little bit, but it's important.

So the other thing that we should double click on is. Something you said that your subscription is way more than just the [00:32:00] product. It's way more than the product of the service, let's say.

In effect, the most successful subscription companies on the planet have tapped into this idea of experience, right? The most successful subscription companies, frankly, our experiences and the most successful membership or fee for VIP programs that exist or will exist in the future, will take this experience to a whole other level and tap into the psychology of status. Ultimately, my thesis based on what I'm seeing, is that everyone wants to be an influencer. Even customers that aren't influencers want to be influencers.

They wanna feel like they're important and they want to feel like they have something interesting to share with other people. And so if you can make your brand. Your membership or your subscription, something that your member or subscriber can talk about to their friends or colleagues [00:33:00] at the office or at the water cooler. That's incredibly powerful because now you're tapping into deep consumer psychology.

Like I always highlight the old use case of Dollar Shave Club and what made that use case really successful early on beyond the viral video. It's the fact that like, this was something cool that guys could talk about at the water cooler.

No one was talking about shopping for razors at Walgreens or CVS or Shoppers Drug Mart. If you're in Canada, that's not a cool experience. That's not something to talk about, right? But signing up to this sort of like Dollar Shave Club thing where you get a razor at your door every month that you're paying 99 cents for, that's something cool that guys can now talk about. So to the extent that you as a company can kind of package or reposition your brand, your membership, your fee for VIP as something exclusive that elevates [00:34:00] the status of your subscriber, Is a huge unlock.

A huge unlock.

Jay: And I would say probably a good comparable for this, like when I think about wine, for example, if you don't know where the wine is from or how it's made, like if you just buy a $30 bottle of wine and you don't know all the details of it, you don't have, versus if someone tells you, you know, a sommelier comes up to your table and tells you about how it's made and the certain elevation that the grapes are and the farm bur who owns the land and it just, everything that makes it what it is.

You appreciate that wine. Differently than if you just bought off the shelf and didn't know anything about it. Someone just said, try this wine. Right. And you're probably more likely to recommend that wine to a friend or tell someone about it because you understand it, you know more about it. I think one of the big misses that brands do is they think when someone subscribes that they've [00:35:00] got the customer that they've they're a subscriber now, but what they really have is they have a lead.

They have someone, they now their job.

Adam: one transaction.

Jay: yes. Their job is now to educate them about the product, about the company, about the mission, the values, the founder, how it's made, how it's ethically sourced. Everything that makes it, who is like, that's, you know, the job isn't done. I forget his name, Robert Scobel, I wanna say.

He speaks sometimes at SubSummit. He had this great example that he shared. I might be saying the toss name wrong, but anyways he talked about his experience with Charity Water. So Charity Water is a organization that builds wells all over and, but it's a subscription business. You subscribe like $40 a month as a donation, but then it helps bring clean water to people.

And so anyways, you go through the site, you learn about all the good they're doing, bringing clean water, how people know about it. And that's, you know, something in, in you is you're compelled to commit to $20 a month or [00:36:00] $40 a month. You select your donation, you go through checkout, do you enter your credit card?

Everything. And you would think like, okay, I am, I'm bought in. I'm subscribed, I'm donating. That's a win, right? Then on the thank you page, when you're, as soon as you're done, your subscription is this video from the founder of Charity Water, talking about all the good that they're doing, the wells that they're building, and then your mind goes to like, well, why are they showing me this?

I just decided to subscribe. Like, you don't need to reeducate me on the value of Charity Water. I have already I've already subscribed. But what they know is that they have to continually educate the subscription donors on the value that they're bringing, the wells they're building. Otherwise, people don't stay subscribed.

They if they don't perceive the value, there is no real value. It's like there's billions of dollars of value in Netflix. I don't know if you added up the cost of every movie in there. If you were to buy every movie in Netflix, every show, I don't know what it would cost. [00:37:00] There's billions of dollars of like tons, right?

And I don't know what a Netflix subscription is nowadays, like 15 bucks a month or something, but yet some people. Say, oh, I'm gonna cancel my Netflix subscription. It's too much. Well, logically it's not too much at all. But the problem is if you don't watch Netflix for a couple months, you don't perceive the value.

You're not using it, you don't understand it, you go to cancel it. Right? And so, I was talking to Robbie, good friend of both of ours, Robbie Baxter one time, and I loved it. She said, when someone goes through checkout, at the point they hit checkout, like this peak moment of excitement, there's a half-life of excitement from that point on.

So you have this opportunity, like when someone checks out on your website, you could probably send them three emails in the first hour and they'd be okay with that. 'cause like they're excited. Like you could send them an email about the product, educating it. Here's how you use it.

And if it's your gut vitamins or whatever it is, here's how you're gonna start feeling in a week. And then the next day send two emails, then [00:38:00] one. But by the time they've got their. Protein shake or whatever it is they ordered. They've got so much education that you've basically, like, I love what you said, everyone wants to be an influencer, so it's the brand's job to arm them with the knowledge of the product.

Right. And that I think is like, we just think, well, once they bought it, they must understand that. So like, I love the way you phrase that, and I hadn't thought about it that way before, but that's so good.

Adam: I'll give I'll give merchants the brands other, another way to think about it. So your churn risk is highest earlier on in the customer lifecycle because that's when the customer is the least confident. Yes, they're excited, but it's new.

It's novel. It's that first transaction. If buyer's remorse is gonna creep in it's gonna creep in earlier on in the lifecycle.

It's like dating. Every touch point you have out and into the future builds the foundation of that [00:39:00] relationship builds on that foundation. You know, your first date probability of you marrying that person is the lowest

Jay: Right, right.

Adam: As you have more and more dates out into the future, that your probability of marrying that person increases or being with that person forever increases. So like companies and consumers have a relationship just like any other relationship, the more touch points, the more meaningful touch points you have, the more important and meaningful that relationship is gonna be over time. So, to your point, you know, can you over message and over communicate?

Maybe, but it's very critical and important to do so early and often in the first 30, 60, 90 days.

Jay: Yeah. And consistency. I think there's some people that are, I've heard this sentiment that, well, I don't wanna message my subscribers too much. It reminds them that they're subscribed. You know, they've got a gym membership

Adam: Can I just [00:40:00] important point about that, if that is the thinking that you have as a CEO or stakeholder in your business, your value proposition is too weak, plain and simple. Like, if you are concerned that a text message or an email reminder is going to be a subtle hint that they're still being billed and therefore there's a risk, they're gonna cancel because, oops, they've forgotten about the subscription.

Your value proposition isn't good enough. Plain and simple.

Jay: Yeah. Yeah. There's an underlying problem that it will surface at some point.

Adam: A hundred percent.

Jay: Yeah. What would you say are some of the biggest mistakes you see subscriptions brands make when trying to grow their subscription business?

Adam: So overemphasis on acquisition, probably obvious to many.

Prioritizing new signups while neglecting strategies to retain subscribers. That'd be number one. Ignoring or mismanaging churn. So failing to track, analyze, proactively address [00:41:00] churn.

And there's two types of churn, right? Very important to distinguish between voluntary churn, which is a customer service slash operations issue. And then involuntary churn, which is payments. That's the payment side of the business. That's a whole other issue.

Both of those problems require very different solutions. Important to highlight that. Poor onboarding or user experience, right. Neglecting that initial period where that value perception is established. And then I'd say lack of referral strategy is another one. You've talked about this many times at conferences.

That's a huge miss, right?

Acquisition is a big theme. Retention is a big theme. There are teams associated with both of those sides of the business. But very seldom do I come across companies with one, a robust referral strategy in place, and two, a team that's actually managing that

Jay: yeah.

that

owns it.

Yeah. Okay. I wanna shift into Axis [00:42:00] Brands,

which is. Kind of outside the subscription space a little bit or completely. So, which is I find super interesting. We could probably talk for hours on subscriptions, but I wanted to highlight this is a bit of a new venture for you.

Born from, you've been working with brands and you listening and hearing pain points that they're going through. And I don't wanna speak for you 'cause I don't know the exact story, but I know that's a little bit of how Axis Brands was formed. So tell me about it. Like, what is it and why did you start it?

Adam: Sure. So, it was sort of birthed by accident, but basically the story is we were working or have been working with a lot of e-commerce brands, online brands for many years now. They usually enter through the scrapper based front door. Let's say they've got a subscription commerce business or they've got an interest in building a subscription or membership model or they have other issues related to customer retention or churn.

They needed to fix it. And so that was sort of core to what we were doing under Scriberbase. But as a consultancy you know, you start to [00:43:00] listen to what is going on in these particular businesses. A common theme related to brands was that they hated their agencies.

That was that just consistently came up. Whether it was their, you know, their paid search agency, their, you know, meta media buying agency, their email marketing agency their content agency, whatever they consistently complained that their agencies were charging too much money, taking, you know, hefty percentages of their media spend. And they had no ROI to show for it.

And, you know, that just kept coming up. You know, I come from the e-commerce world, sort of pre scriberbase grew a D2C couponing company to north of 15,000 subscribers, you know, understood e-commerce and online. From many different angles and sort of just putting on my operator hat saying, you know, I know this world. I know paid media. I know how this [00:44:00] works.

We also know a lot of good people. We can try and steer our clients in the right direction. So we started to do that, and then it got to a point where we said, you know, we have people on our bench we can help directly and start replacing these agencies and start adding value in these different areas.

Whether it was Amazon or Shopify, you know, Walmart marketplace and beyond. So built up a steady bench, I wanna say over the course of a year plus. Initially rolled out this kind of mini agency with a bunch of successful use cases. It was called D2C-in-a-box, which was a terrible name. But had to go with something.

And so we started incubating this sort of on the side as a side hustle, and then it grew and more and more clients came on board. And we rebranded earlier this year to Axis Brands basically for the sole reason that, like I said, wasn't happy with D2C-in-a-box as a brand. But we. Want to and are now in the process [00:45:00] of acquiring companies in the D2C space.

So if you're thinking of selling your business, please contact me.

And two, incubating and bringing to market our own brands and then scaling them on Shopify, Amazon, and beyond, because we have this playbook that has worked so well on a fee for service model. And let me just be clear our positioning, frankly, since day one has been the agency. So we're not agency people or business owners who've operated businesses in the e-commerce space at scale.

We have great expertise, deep expertise in Amazon Shopify and beyond. And put our money where our mouth is. And we don't take a percent of media spend from any of our clients, even those that are on fee for service. We have no lock-ins. We have no long-term retainers of any kind. You like us, you work with us we're producing for you. Great. We're not you. Fire us. That is what's worked so far and we haven't lost a.

Jay: I love it. I love it. So you, you don't, they're primarily [00:46:00] Shopify brands, but you help them get into other channels such as Amazon and like, someone might listening might say, well, anyone can sell on Amazon. That's not hard. I can list my products on Amazon and there's apps that connect it, but it's a whole different beast getting your products on Amazon, which is easy.

Anyone can do that versus actually. Doing well, growing, owning, positioning on Amazon, and explain to me the difference, because someone might be thinking like, well, I could just get my products on Amazon too.

Adam: So there are differences, right? Like if you're a Shopify business, it's a pure D2C play. You own the customer you own the customer data. That is not true for Amazon. So if you start selling on Amazon, you don't own the customer Amazon does.

That is the main distinction. That said, Amazon is a great diversification play away from just pure D2C.

With lower cac and better unit economic potential. And [00:47:00] obviously it's the largest shopping mall in the world. And if you can sell your product at scale on Amazon, why not do so? A lot of premium brands shied away from Amazon in the past. They thought it sort of downgraded their brand equity not so anymore.

It's become for us, like, what we've seen is a necessary pillar for a lot of brands that are diversifying. But to your point, Jay, like Amazon is a notorious complex web to navigate. It is very complicated. Yes, you can set up an Amazon store, but good luck managing the entire process and business at scale.

There are so many elements to this thing. If you can do it yourself, great. Fantastic. You don't need us. That said most of the brands we talk to, even very large established brands have not made Amazon successful just yet. And that's where we come in.

Jay: Fascinating. Is there a certain type of brand that works really well? Sorry, not even like, maybe it's more product mix that works really well for Amazon,

Adam: yeah. So supply side, [00:48:00] yes. You know, high gross margin businesses with low cost of goods that are ship friendly are

very,

Jay: Like smaller physical

Adam: yeah, exactly. Shipping friendly, lighter weight you know, heavier the product, the more expensive it is to ship. Mass marketable categories or mass market appeal tends to be where Amazon plays best. You know, I always say subscription friendly because you've got the potential for Amazon subscribe and save. And to the extent that you can exploit that, you should,

So I think beyond that though it requires a bit of a predictive analytics game, which we do for every client by the way. But we can almost with 95% certainty predict whether something will be successful on Amazon.

And we don't touch anything without going through that exercise first.

Jay: So if someone listening is interested in finding out if their product mix might be a good candidate, they can connect with you and you do a bit of an assessment.

Adam: We do a free we do a free audit actually right [00:49:00] now we're doing free audits, which are pretty extensive. And we look at demand side. We talk about trending search terms. We look at, you know, category demand what's working on Amazon, what's not and why their product is li likely to succeed or not. And then provide them with actually a 12 month p and l with hard numbers right down to, you know, ebitda frankly, for each and every product that we intend to bring to market. So, yeah, pretty detailed stuff.

Jay: That's amazing. That feels. Like a no brainer to go through. So can I put that out there to our listeners and share, share like a, I don't wanna overwhelm you, but that seems like, I mean, a, an exercise that everyone should maybe go through because I think I agree with you a hundred percent. It's even, you don't even hear the narrative from Shopify anymore.

It used to be that Shopify was arming the rebels against Amazon, and it's not the, I mean, it's another channel. And even if they did, you have to not listen to that. Like you, some of our biggest brands we work with like Liquid Death, [00:50:00] great example. They actually did something really interesting where they were selling subscriptions on their website using our subscription app.

And one day I noticed they weren't selling subscriptions anymore and I thought, oh, did they uninstall our app or did they stop selling? And I went on their site and a case of liquid death was 1999 on their site. And then they had a. picture of the same case that said 1699 buy on Amazon. And I thought, why the heck would they drive someone to Amazon when they're paying 15%?

You know? Obviously for those who don't know, liquid Death, probably one of the most successful beverage companies, fastest growing in the world. But one of, specifically with Amazon, their whole strategy was to drive their D2C traffic there, boost up their rankings, get their products ranked first, second, third.

And I think now if you search like mineral water sparkling their, like they, they own the search box or whatever you call it, the top SKUs. And now then it's a snowball effect, [00:51:00] right? Like once you own that, then it's ring. So, it's, I think a Im important part of strategy. It's not to say that you're not selling on Shopify, but I think it's worth exploring and understanding, and this audit process that you mention sounds like a really good place for brands to start

Adam: And for those that want

to contact me directly, they can do so on LinkedIn. That's the only place I hang out on social media. So happy to connect with folks either directly through your channels, Jay,

Jay: Yeah, I'll put it

Adam: or on LinkedIn.

Jay: Awesome. And I'll make sure to include it all in the show notes. Adam, I know we went over, over time, it seems like that just flew by like this. And I think I got through a third of the, a third of the questions on the list here, but we I, which is how it goes.

But I know for sure we're gonna do this again because you are a wealth of information and I just really thoroughly enjoy our conversation so much every time we talk.

So, where do you want people to go? You mentioned LinkedIn. I know you are one of the best people to follow on LinkedIn, so I definitely highly encourage people to follow Adam. But where else do you want people to go to learn about, like a scriberbase, Axisbrands.com, whatever they gimme the details.

Adam: So Axisbrandsgroup.com is for everything e-commerce operations related,

you know, Amazon, Shopify, and beyond. Axis A X-I-S brandsgroup.com, Scriberbase.com for anything subscription commerce related. But everything is underneath my personal umbrella on LinkedIn and folks can connect with me there. Adam Levinter. I believe I'm the only Adam Levinteron on LinkedIn and if there's an additional Adam Levinter, it's a fake profile,

Jay: Yeah someone's stealing your clout.

And I'll throw in this there too. If you don't have this book already, get this book probably just on Amazon. It's probably available everywhere, I'm assuming.

Adam: yeah,

And you gotta, and Jay, you gotta come back on the podcast. We gotta do a round two entrepreneurs expose and continue this conversation

there

Jay: up. I would love to. Adam, thank you so much. It's been a pleasure.

Adam: Jay, it is a lot of fun. Thanks for having me.