How To Build A Subscription Business From Ground Up | #198: Sep Advani

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Claus Lauter: Hello, and welcome to another episode of the Ecommerce Coffee Break podcast. Today we want to talk about how you can manage recurring payments in your store recurring payments recurring customers are very important for your customer lifetime value. And with rising Paid ads and rising costs in the e-commerce space, it's very important to get your customers back to buy more from you.

So that's the main topic today with me. I have Sep Advani with me on the show. He is a partnership manager at subify.info. He's also the co-founder of subify. And this is a leading subscription application developed by Hanham. And about two years ago, he joined the company. His educational background includes an M MBA from Sharif University in Tehran in Iran, and a master of intentional management from the university in Istanbul and Turkey.

He has built a successful career in e-commerce and FinTech over the last five years, and he has excelled as a business development and product manager since. So Seth, definitely the right person to talk about recurrent payments, and I would like to welcome him to the show. Hiep, how are you

Sep Advani: today? Hi, Claus.

Thank you. And thank you for having me here.

Claus Lauter: Seth, tell me a little bit about the different versions of recurrent payments that can happen in a online store. There's more than one.

Sep Advani: I would say that I can say there are three ways of payments. There's a replenishment that whenever you are out of some products you would order again, some for supplements or things like that, or cosmetics.

The other one is access memberships, , or access subscriptions that you would certainly pay for a service that you want to. Be a part of, maybe it's a kind of group that you want to join or there is special tiers of discounts that's there that you can join if you want to have maybe 20, 30% discount on buying the products.

The other one is curation. I would say that these three are. Out there to use, I would say. Okay.

Claus Lauter: Now most Shopify merchants use a sort of subscription model to get people back to the store to buy a specific product all over again.

This is obviously the most common one, and to make this work, there are certain steps that a merchant needs to follow to integrate that, to make it work. At the end of the day, what are the biggest struggles or problems that you see with merchants? By implementing a subscription model into their store, what?

What's the biggest problem there?

Sep Advani: From the time that Shopify itself introduced its APIs about two years ago many software developers tried to move into the industry and create meaningful softwares for merchants to use. And right now I would say that many softwares are out there.

Of course, As well, , are very good products to use and they're very easy to integrate, to start the process of, selling subs, subscriptions on your store. After that, I would say the problem would comes, when , you get new subscribers on your website. Of course they're Things that you can use to keep your retention on those customers.

But churn is always the problem that many of our own merchants are facing, trying to keep the customers around after 1, 2, 3 successful payments. Many softwares like Shopify integrate some tools that merchants can use in order to keep the customers, I would say maybe some cancellation reasons.

Trying to understand why customers are leaving the website or if they can incentivize the merchant's rights from when they are canceling. For example, giving them more discount, 20, 30% discount on other products if they want to stay. Many merchants can use the power of data in order to understand aside from the reasons that merchants, their customers are living, the fact that when they're leaving, for example, are they leaving after one successful payment, two or three so they can know when,, exactly when to Getting communication with their customers and give them what they need.

Maybe create extra value on the second payment so that they would stay and things like that. Yeah.

Claus Lauter: Now, a lot of merchants have heard about the churn rate when people skip off in tactics and strategies to make this work. But there's also another risk in there, and I think that's something that you have address addressed in your app.

That's billing management. Where there's an issue with the billing. Tell me a little bit more about that.

Sep Advani: Yeah, of course. So I was just reading on a report very regularly that merchants can get a lot of value by just emailing their customers if there are.

Payment failures. So what we do in Shopify as well is that we have an embedded feature that whenever a payment fails, for example, it's may be because of a credit card failure or there are not allow enough funds. That can happen. A lot of times it happens for me, of course. In that time, the system would after a couple of days, Send the billing again and tries it.

And in the meantime what Shopify is doing is to send both merchants and their customers email so that they can come back to the system because they may not know if there are not enough funds in their pockets. So we would notify the customers so that they can renew their card or add some money by that the payment and the contract will continue.

Merchants can say that. I want to do that three times, every two days so that they make sure their customers has come back in order to do that. I

Claus Lauter: think it's a very useful feature that you have there. I think it's called dining when people, , have an expired credit, there's no funds on it.

Do we have some numbers on how often that, or percentage on how often that really happens in the store? I think it's quite, high numbers, isn't it?

Sep Advani: It is quite high. It's one of the reasons of churn. I don't have the exact data. On that. But, the thing is that some of the things that some merchants told us is, they are some repeated actions of their customers on this area for, if they didn't have enough funds, was the fact that they didn't continue the contract.

So this is one of the main reasons of churn as well. So if there are not already an embedded system that recharges the payments, Merchant the customers would easily leave.

Claus Lauter: Okay. Now, when a merchant has implemented a subscription obviously needs to match the look and feel of their store, how flexible is your solution to be integrated in a existing ux?

Sep Advani: This is the one thing that we've worked a lot so that we have. Enough options for merchants to use. Whenever our customers download Shopify and integrate it, , our widget would come automatically come to their product pages, the pages that the products they want to sell.

They would say that they can change the color, change the names, change the wordings, everything. And if they want another languages, they can even change the language of the template. And the one thing is that many of the merchants that we talk to, they want some customized widgets as well.

And we have a dedicated customer care team for that. So anytime. Merchant asks for some specializations or a special widget that they want on their website. We easily do that if they want to change the overall page as well for the product page that they're using. We have a team of experts.

That work with us, that they can do that on projects. So it would be as customized for the mission as possible because that subscribe page, subscription page sells on its own. So we want them to easily be accessible, but the tone of merchants. Yes.

Claus Lauter: Okay. Now, obviously a lot of stores do have only specific products that they wanna offer on a subscription based basis.

How do you match a product to Sify? How does that work?

Sep Advani: So we have an embedded AI system as well that's sees the tone and color of the page. Whenever the widget is going to be implemented, it'll take whatever the product page is. Many of the match we have in our panel, , merchants can change everything that they want.

So many of them go on there and besides from changing the shape of the overall digits, they would change every small things on there as well. And the one thing is that, our customer care whenever someone creates, its his first user, first rule , on subscription rule is Creating a selling plan for a product.

So they want to sell it on a weekly basis. There the ticket goes to our customer care team and they get notified that someone created a rule. Some new merchant created a rule, so they would go on their product page directly and see if the widgets. Looks the same as the overall page is, does it look good enough?

If it's not, they would contact the merchant and say that if you do want to do some customization on the page, so that it would have the feel of the, brand. Yes.

Claus Lauter: When it comes to reporting, we already spoke about a churn rate. Are there other KPIs that merchant needs to look.

Into, when it comes to subscriptions,

Sep Advani: The fact that both us and , merchants play in the same industry, I would say the subscription industry, gives us a leverage so that we can tell them, what we've learned in the past year and a half. A year and half ago that we've started Shopify.

At first we didn't know what metrics to follow or maybe the cas how much is the C a C or the L T V or the churn rate. So throughout the year, we realized how to bring down our c a C by trial on error testing keywords, maybe checking special categories to use. Going live in here and they're doing email marketing better, social media marketing better.

So we brought down our cac, but after a while we realized that in order to get a better L t V lifetime value, we need to focus on churn as well. So as we talked, we tried to focus, how we can understand why merchants are living or what are their reasons and how we can use data to lure that number.

What we did that we have a dedicated customer success team as well. So everything that we've learned so far, we put them all in our help tech and academy. We have certified academy for our merchants. As many of the merchants that are joining us or they've just started their business on Shopify.

They've just learned how subscription business is. we have many tickets that they say that someone in the industry is selling well in subscription. We want to be like that, we have those cases studies, we tell them, you can have this widget or this size or that size.

Your costs should not be higher than this, or your term rate should be that this amount, or you should follow this and that metric. So our customer success team would follow all these metrics for our merchants. So to make sure. Everything goes according to their plans as they grow, we will grow with them.

And some of our best merchants are actually the ones that started with us. they just, come into the Shopify. We've even teach them what Shopify is so they can, get on onboarded we just grew alongside with them. Yeah.

Claus Lauter: Okay. Now with all the data that you're collecting, do you have any APIs where you exchanged this data to, I don't know, email marketing software or something like that?

What kind of interfaces do you offer?

Sep Advani: we have integrations with Clavio, with MailChimp, and we have an integration with some bundle apps so that we can as merchants want to increase their AV average order value as well. If at some time they realize that , even though their churn is lower or their CAC is low, they don't , have enough revenue at the end of the month.

Bundling is one of the features that we've added. There are customers that when they're going to check out, they could add their products so that they can add the bundles on the weekly basis or monthly basis. And of course, with the email marketing of clay and MailChimp customer, our merchants would've an easier communication, tools with their, customers.

Because, the subscription industry is a relationship between merchants and their customers. So we realize that the more loyal their customer would be, the better business that you would have. It's, Not like a one time purchase, a custom would come that you have to incentivize to come back.

So many customers, when they subscribe to something and you bring value to them on a weekly or monthly basis, they would stay with your business for a long time. We have some of our merchants, we know them as long as we've been in Shopify. They know our business, we know them, we know how important the communication is.

So that's why The CLA view integrations is so important that merchant would be constant, communication with their customers so that every customer would have enough information to stay on board. Because at some time, if a customer realizes that they're paying too much for some product or they're getting too much of a product, they would easily get out of that business.

If merchant continuously talk to their customers, they would stay for a long time.

Claus Lauter: I think that's a good point that you mentioned there. If you people get too much of a product, so if they get it in a certain interval and they don't use it fast enough, then the next arrives and then it might be annoyed.

Is there a way for the customers to manage their subscription? For instance, if they go on holiday or something like that? How does that work?

Sep Advani: So we have added a feature that merchants can now reschedule their orders. For example, if They have a list of deliveries for the upcoming week or upcoming month, and they can reschedule it and communicate it.

It'll be automatic communicated with their customers as well. , because till about two weeks ago merchants and customers could only skip the next product. So if they wanted, they didn't want the next delivery or on the customers on the panel, or merchants on this side, they could click on some button and make sure there would be.

Kind of skipped, but right now, we've released it about a week ago that merchants can reschedule. They can put any time they want. So if they're out of time for a month or they are their inventory didn't come for some reason, they can skip the products for a month and communicate that with user easily.

And this way I would say customers are on the fact that merchants do that. Customers would understand. The problem that we see, sometimes that, the customers would leave is that there's a lack of communication. So as long as there is, even though there are skips or here and there, everything would go according to plan.

Okay. Now I think

Claus Lauter: that's a very useful, , feature that if you go on holiday, then you just put in a new date and the next one comes as a merchant, you're not losing the customer. So from the implementation, obviously the Shopify app what kind of steps are involved with the implementation, with onboarding?

What kind of timeframe do I need to calculate for that?

Sep Advani: Okay, so for a new mention, as we realized that many of the. Merchants that are joining the program are new. For example, today merchant joined us that didn't was even on a trial on Shopify. So it's less than a week that they joined the program, then they install.

So we created the onboarding process extremely easy so that merchants are good to go like in five minutes. , the onboarding is we have a 25 minute demo on panel, but you don't really need that. So to get onboarded, just a few clicks, you can create a rule and the customer care would come and see the vision is fine.

And everything really looks well. You can, get your subscriber, in a blink of an eye. So I would say in five minutes, you're good to go.

Claus Lauter: Okay. No, that sounds great. Tell me a little bit about the pricing. How do you charge the merchants for using Shopify?

Sep Advani: Okay. We have, three tiers of pricing right now.

The pricing changes, , every month as the new feature comes, or we see that specific requirement from the merchants, but right, right now there are three tiers. They're $9 39 and 99. And the fact is that the when you go to the higher tiers, the care of the customer care system would be much higher.

So if we have an dedicated account manager , when you're in the $99 program, and, they would be in constant talk with you in order to make sure that the metric that we've talked about are, better and better. is your kind of marketing cost high or is your channel rate, high?

So if that's the case, we would send articles, send our help doc even get in the meeting, to make sure that you are building your subscription plan and subscription business as you want. Now

Claus Lauter: makes total sense. One feature that really stands out for me with your app is the billing management, Dunning management.

I think that's , a huge help in having a control over what's really happening and not losing people from the subscription. Where can people find out more about Shopify?

Sep Advani: Of course they can find us on Shopify Apple Store if they search for Shopify. And we have a website, shopify.info in which that's alongside from everything that goes around in our app.

We have a partnership program that agencies and in technical partners can join. We have a blog. Dedicated to businesses that are growing their business in starting to grow their business in Shopify and subscription and following that articles as we are doing multiple articles per week would definitely help them get to know, how they can grow their subscriptions.

Claus Lauter: Awesome. I will put the links in the show notes and you just one click away and people can find you easily. Seth, thanks so much for your time and giving us a bit of an overview about how to create recurrent revenue with your business through subscriptions. I think it's a topic that every merchant has on the list and definitely should check out your app.

Thanks so much for your time.

Sep Advani: Thank you, Kraus. It was a pleasure.