Building Genuine Trust in the DTC Market with Scratch Pet Food

Kristen: (00:42)

Good branding is not the same as customer trust. Scratch pet food has built their business on customer experience rather than metrics, creating the absolute best product and focusing on the lifetime of the customer relationship over quick hacks. Cofounder Mike Halligan wants to change what we expect from our dog food. A veteran of the fashion industry, he's all about bringing a new level of accountability and passion to the way we take care of our best furry friends. From amazing content approach to a, frankly, insanely flexible subscription plan, mike brings a ton of actionable advice to this conversation. Let's get into it. Hey Mike, thank you so much for being on this episode. So excited. How are you doing today?

MIke Halligan: (01:25)

I am very, very good. Thank you. How are you?

Kristen: (01:25)

I'm good. Just to start off, can you tell us a little bit about Scratch pet food and how you guys got started?

MIke Halligan: (01:30)

Yeah, sure. So yeah, the brand's called Scratch. We launched about 15 months ago now, so it was still pretty young and we're basically, we are subscription-only dog food only in Australia and you might be able to tell by the accent. And our whole thing is about making dog food you can feel good about.

MIke Halligan: (01:46)

So in Australia in particular, we don't really trust dog food brands, mainly because the transparency laws around dog food are really, really soft in Australia. So most of them are sort of giant corporations that make, the same companies that are making your chocolate bars are the kind of ones making most of the dog food, 80% plus. And yeah, most of it's pretty crap. And people sort of started catching on and I started catching on when my own two dogs, cocker spaniels, were starting to get old and then I was kind of put in charge with feeding them. And yeah, so we said there's a category like, we care about our dogs so much, yet the brands that we're kind of shopping from, one, they don't care about it. They don't know who the dogs are and they don't know who you are. They don't know the dogs are, they don't give you a voice to talk and make sure that hey, this thing is the right thing for them.

MIke Halligan: (02:39)

Or I'm experiencing this problem. Could it be the food? Could it not? Should they be eating this food? Should they be eating any of the 20 varieties of food on the shelf? So we kind of set out to create a brand and a recipe that kind of simplified all of that. You could go, all right, this brand has one recipe, they display this stuff super transparently. I know exactly who makes it. I can jump on live chat and talk to them and it's delivered free to my door on subscription. So it's kind of like taking out all the shock of what the hell do I feed my dog into a sort of a brand you can trust.

Kristen: (03:11)

Yeah, and I mean as a dog owner myself, that is such a big, it's a big hole of knowledge a lot of times for dog owners. We switched our dogs to a different kind of dog food three years or so ago. And it was, before I just sped them, what my parents fed the dogs and it was just a standard IAMS. And then when everything started coming out about, look what's in your dog food. I remember looking and being like, "How did I not know this?" And it really sparked a lot of distrust I think in the space, in the community. And so it's cool that you guys are taking that on because there is such a need for that information.

MIke Halligan: (03:48)

For sure. Yeah. And then it all comes down to the trust. So we kind of look at it as our job to earn trust. Just because you have nice branding doesn't mean you're entitled to trust and doesn't mean that all your marketing tactics and things like that will work straight away because you have to earn it first. You have to make [inaudible 00:04:04], you have to show up, you have to show you actually genuinely care and you're solving this problem. You're not just a business chasing a big market. And that's I think where, particularly in Australia, but I think in U.S. as well because it's got many of the same companies, that's kind of what's happening.

MIke Halligan: (04:18)

So yeah, I mean [inaudible 00:04:20] is perfect for something like dogs. I mean all of a sudden people who really care about what they're doing and want to do it properly and I happen to be as transparent as possible and bring people along the journey of how we choose ingredients and what's in it and what it does for their dog and those kinds of things. [inaudible 00:04:36] is perfect for that because you can, you have that completely tight knit relationship from start to finish from research through to the dog going from puppy food to adult food to getting into their senior years and getting all gray and wise and not so [inaudible 00:04:51] anymore.

Kristen: (04:53)

Hopefully not barking as much anymore. Right. That's the hope. Something really interesting though. I actually just learned it not too long ago. I was talking to someone else who's building a subscription brand in Australia. And I actually learned that the subscription space in Australia isn't very large. Kind of what I heard, it comes down to a little bit of cultural behavior. There's a lot of grocery stores in Australia. Most of the population lives in these urban areas. There's not, I guess not as much of a need or as much of an existence for subscriptions in Australia. So I'm curious why you guys decided to go from day one this digitally native route with the subscription knowing that it was going to be a little bit of a challenge.

MIke Halligan: (05:30)

Yeah, I think Australia is a bit different in that we don't really have his big media and cultural push towards new brands, new things, new, new, new. Which I think exists pretty uniquely in the U.S. with almost championing the new thing, the new box, getting a box full of new stuff. And maybe five, six years ago there was a lot of those discovery boxes, the box of new fashion choices for you once a month and those kinds of things. And they died out pretty quickly. They didn't last very long. I know they weren't funded to the point of being able to just make it work or kind of get really prominent. So subscription died here pretty early on for the majority of things. But I looked at dog food and said, "Hey, this is perfect." Because essentially the way we looked at is we're not trying to sell lots of dog food, we're trying to sell the overall promise of looking after your dog through from being a puppy through to being an adult.

MIke Halligan: (06:24)

So it's a longterm, we're really asking you to switch into longterm, not just to buy a box of dog food. So subscription is sort of we look at as a promise of what you're going to, you're selling a promise of what you're going to do over time rather than a commodity item, rather than seven and a half kilos of freshly made dog food. We're selling the freshest dog food possible that will help to undo a lot of the crap that mainstream dog food and crappy ingredients and all those things will cause. Because when you start looking at like that, it's like subscription makes a lot of sense.

MIke Halligan: (06:56)

But we also gauge the temperature. So we did a lot of surveying and sort of said, "All right, well we know subscription doesn't work, but does not it work for things that don't need to be in subscription?" Does not work for things that you might only buy for five months and then you move on to another brand naturally. Where something like dog food, you mentioned you changed dog food three years ago and have you been in that same brand for three years?

Kristen: (07:20)

Yep.

MIke Halligan: (07:20)

Yeah. Cool. So that's pretty common in dog food. So if you have something that a lot of people can't actually lift from the front door through to the laundry or wherever they store a big smelly bag of food. So there was like you've got a product that's inconvenient and that it's super heavy. It's a pain in the ass to go down to the store and buy it. You've got something that is overpriced at retail because if you're buying the same thing all the time then, and it's always on discount, then there's clearly a price disparity. There's something going on there that shouldn't be the case.

MIke Halligan: (07:55)

So if you can say, "Hey, we'll give you the same thing at a consistent price with better ingredients that's made fresher and it's delivered free to your door." So you don't have to get up anymore and go to the car. And then in some cases it's waiting for the husband or friend or whatever to come home and lift the heavy bag in. So we kind of said, all right, well we'll just wrap it up in like a, "Hey, we've got your back and we're going to earn your trust through showing up through great content, through great customer experience, through customer advocacy and we think that subscription will work then." It's not like subscription doesn't work in Australia, it's just bad subscription or fickle subscription doesn't work.

Kristen: (08:33)

Yeah. And I think that's really important. It seems like the U.S., we had this big boom of subscriptions and there was so many that got the VC backed money and it became this trend that people could catch onto. But in Australia, that trend didn't really catch on so much. And so, I'm sure that there's people who are a little bit weary of subscriptions and so it's cool that you guys are approaching the subscription, "Hey, we're not just here to send you a bunch of stuff that you don't necessarily need." The thing that you're selling is not the subscription itself. You're selling this, I like how you said the longterm, lifelong promise of we can take care of your dog. This is something you're going to care about, you know about your customers. They're going to care about their dog's health from the day that dog comes into their life until the day the dog passes.

Kristen: (09:18)

It's being able to sell that longterm relationship and that longterm trust with a brand, knowing that they're taking care of something that I care about so much I think is huge. So I'm curious kind of what have been the biggest challenges in actually convincing people about the subscription in a market like this?

MIke Halligan: (09:35)

Yeah, well day one's probably the biggest challenge because if you we're entering the dog food market saying okay, it's a challenge is to create a brand that people can trust. On day one you've got no trust. People don't know who you are. Even if you've done a prelaunch campaign and things like that, you've got gathered an email database, you've credited an email funnel kind of getting people familiar with the problem and recognizing kind of a really good solution. Even if that's the case, they still don't know if dogs like it, if it makes dogs sick, if you guys know what you're doing. As much as we can say that, people have limited attention spans. So once we kind of hit the point where we had this critical mass of customers who left reviews, who jumped on Instagram and told other dog owners, had told people, and would share it on a Facebook group when people are like, "Hey, what's everyone feeding their dog now? I'm looking to get my Frenchie and new food. What should they get?"

MIke Halligan: (10:34)

And then all of a sudden Scratch keeps coming up a little bit more and more. And you go to the website and as this kind of like, there's a five star rating, five star average rating from a hundred dog owners. [inaudible 00:10:45] going, "Okay, cool, now I can start to trust that brand." Early days you don't have any of that, so you might, you still might have to have a funnel if you're really good at nailing down a lot of your cold traffic stuff and have a funnel early and you can still get the same amount of traffic to your site. But what we found is that they were just skeptical. They were waiting until there was something that they can go off that said, "Hey, this is a marker of trust. I can trust these guys."

MIke Halligan: (11:08)

And some people jumped on it really quickly because they just completely recognize that, "Hey, I don't trust my dog's brand. I see the dogs working that for eight or nine years." They explain every ingredient has show exactly how much they included every ingredient. So I can get, there's no labor washing or anything like that on this. So some people jump on early, but the vast majority, they needed safety in numbers. And so riding that out and just having the shitty months where you're like, "Ah, we made a big mistake because it's not going to work." That was a hard [inaudible 00:11:41] for sure.

Kristen: (11:42)

Yeah. And I mean I also think it goes to show a lot that you guys are growing in the right way, that there's going to be those difficult months. But you're also looking at it and you're saying, okay, we could throw thousands and thousands of dollars at ads and acquire a bunch of users quickly. Or we could just kind of wait, we could do what we do, we can deliver on the value that we're promising and let that kind of organic trust build itself out before we then start really pushing marketing. Correct me if I'm wrong, but that kind of sounds like how you guys are approaching this almost not in a rush but in a rush to do it right rather than a rush to just get customers.

MIke Halligan: (12:19)

Yeah, exactly. Playing the long game. And we were really lucky in that we were the first people in Australia really to target, to create a direct to consumer kibble, dry dog food. And so, and we still don't really have any competition in that respect. So the startup world is a little bit different here as well. It's a little bit slower and really there's not much going on in consumer like this. There's a lot of cool small things, but not many that sort of combine data and e-commerce and branding and sort of package it all together really nicely. So we kind of took this calculated risk and said, "Hey, we think we've got the time to afford to do it properly and to play and to wait out at least 12 months until there is a competitor. So let's just not pay ourselves for at least the first year and we'll just commit to doing this no matter what. Keep showing up, keep building trust and trust the path. And trust that that will make dogs healthier and then that people will tell each other."

MIke Halligan: (13:16)

So yeah, we were fortunate. I don't know if we could've gotten away quite as well with doing that in the U.S. But yeah, we said and it's certainly been good for us here and it's been nice being able to build a business that is sustainable that doesn't require you taking shortcuts. It's been awesome.

Kristen: (13:30)

Yeah. And so how we talked about it, first you're battling this acquisition channel, getting customers who aren't really savvy on subscriptions to opt-in on one. And now that you are having to work a little bit harder to get these customers because of the cultural differences, now you have to work really hard to keep these customers around. So how are you guys approaching retention as your kind of building up a customer base?

MIke Halligan: (13:55)

Yeah, good question. We definitely, strategy over tactics. I think I said to you before we look at the human outcome over metrics, so we're not really, we never really sat down and said, "All right, well this is the figure we want to hit for annual retention." We had predictions of what we thought it would be because you need to work out when to order and how much the order and all those kinds of things. But we, in terms of customer service, we never said all right, we need to hit this mark or otherwise we're over-investing in customer service or whatever it might be. We've just said, all right, cool. Well we think the average customer we can keep for five years. And so playing it, thinking about it that way and thinking about that again, that longterm promise that we're making to a person and their dog, how do we approach decisions?

MIke Halligan: (14:40)

So that's the way that we sort of lens, we look at things. So we're not, I don't think were incredible at tactics, but I'll explain some of the things that we do do to kind of bring that strategy longterm strategy to life. But yeah, we started and we sort of looked at the journey from day one of being a customer.

MIke Halligan: (14:57)

So day one, they're super nervous about trying new food because like I said, two or three times in a dog's life they might change foods. So that's not very often. And it's a big deal. It's like, "What if they get the runs? What if they don't like it? And I just spent $70 on some food." Yeah, all of these things, and I'm sure you're familiar with having the three dogs there. But that, and then that's the route to maybe if you got on Scratch as a puppy, then maybe through to then the dog becoming an adult and stop growing so much. And then that journey of all right, how much do I feed the dog as they're growing up and that's changing. Or if it's an old dog and then they'll pick something new and it's like... So we thought we mapped out the whole life cycle of getting a dog the from the beginning as a puppy or rescuing a dog through to the dog hitting old age. And we sort of mapped out what that product would look like.

MIke Halligan: (15:49)

And then we sort of went about creating customer experience to cater for that nervousness, the sense of excitement, the love of your dog, the investment you've made in wanting to be the best pet parent you could be. And so we sort of really, there's four ways that that sort of comes about. So one, we invest in the little personal touches and I'll explain what that some of those are in a sec. But two, we try to offer an incredible experience, not just a one-off experience, not just, oh, they were great at the start and then they go, crap and they stop caring about me. But if where, again, we want you to be around for five years and maybe if you get a second dog in the family, we want you to be able to trust us for the second dog as well. So again, continue to invest in incredible experience, the whole way through.

MIke Halligan: (16:37)

And a third one was, a big one I think is continue to be what you promised because there's so many brands that marketing and longterm customer experience don't quite match up. And so immense value in just continuing to be awesome to our customers and with our customers. And it's more enjoyable that way to be honest anyway.

Kristen: (16:57)

Yeah, definitely.

MIke Halligan: (16:59)

Yeah. It's not too much fun being an asshole to someone because you think it's more exciting to get a new customer. If someone's sending me a photo of their dog and they've been around for two years as a customer it's just as good as if a brand new customer sent me a photo of their dog. And it's like eventually we run events now and stuff, we get to meet them as well. So having, it makes it more enjoyable knowing the dogs, knowing the name when it pops up in live chat, et cetera. And having that history is pretty fun.

MIke Halligan: (17:27)

And then the fourth one is about continually being interesting because I think so much about it is, and so much about marketing and business is maintaining some level of intrigue and interest and majority, product like ours where, 15 months into the business and we've got two SKUs, two or three now, three products. And for first year we only had one recipe, one product. So that's not that interesting. But as a brand we had to be interesting because otherwise you could very easily, there'll be a new brand that comes along and they're talking in a different way and they're being interesting and proposing a new way of thinking about the category and all of a sudden Scratch might look stale.

MIke Halligan: (18:07)

So whether it's new products, whether it's [inaudible 00:18:10] labs, whether it does really good communications that are really aligned to the purpose and the promise you made. We always look for ways to be interesting as a brand. And a lot of that comes down to events and stuff. So like we run, every year we run a Valentine's Day event for single dog owners to just have drinks and meet each other and maybe the dogs get along and the parents get along as well.

Kristen: (18:33)

That's amazing. I love it.

MIke Halligan: (18:36)

Random things are different from the core thing of making dog food that just interesting and keep you thinking Scratch gets how the dog fits in my life.

Kristen: (18:45)

Yeah. Yeah. It's, what I'm hearing is a lot of you guys are really good at aligning the product with the entire customer journey and really, you're really talking about it holistically, the fact that you went and mapped out, okay, what would it be like for someone from the day they get a dog or adopt a dog to the day that that dog gets in old age? And it sounds like you guys really sat down and thought about not just what the customer goes through on kind of a surface level, but really how all those things mean to the customer and why it's so important and why they care and why they would stay with a certain pet food. And then how you broke it down in these four ways you kind of look at retention. I really love it because it all kind of comes back to this lens of yes, we can do all these things, but are we doing it in a way that's creating a really great experience for the customer?

Kristen: (19:30)

Is it keeping them engaged? Is it building a community? And really kind of putting it up to that lens of what you said, looking at human outcome over metrics, which I love, and I've already tweeted that quote out because I'm obsessed with that. That's the way I think that retention needs to happen in 2020 so I'm excited.

Kristen: (19:50)

Now, I know you said you guys, you kind of prefaced this with maybe we're not great at these short term tactics, which is actually really cool that there's not, you don't have something here that you're going to say, "Okay, try sending this email on day 30 and that'll boost your retention by X percent."

Kristen: (20:03)

Sending this email on day 30 and that'll boost your attention by X percent. You and I have talked a little bit about the tactics that you guys have, and I love them. And so I'm going to just kind of let you go through them.

Mike: (20:10)

Yeah, sure.

Kristen: (20:10)

If you want to share some of the tactics that you guys have been working on.

Mike: (20:13)

Sure. So sign-up starts with you telling us about your dog. That's each of you dogs. So that's name, age, breed, whether they're overweight, whether they're hyperactive or whether they're a little bit lazy. And then from that we calculate how long a box will last your dog. So a lot of subscriptions, as we know, are really clunky. A lot of gaps, a lot of software, a lot of under-investment in kind of bespoke experiences. But other ways of buying dog food are like, "Would you like us to deliver it every three weeks or every six weeks?" Ours is, "Kristen, all right, your three dogs will go through a box every 17 days." We'll send you a freshly-made box every 17 days.

Mike: (20:54)

And because it's on subscription and we know when your dogs are going to need it, and they eat the same amount every time, we'll make you the freshest box possible. So we made food on Thursday, for instance, and now it's already being shipped on Monday to be preserved. Which for dry food is pretty ridiculous because it's like, make 20 tons of dog food, chuck it in a warehouse, and then eventually it'll go on a shelf, and then the big bag will go in the laundry, and whatever. So ours is started off with a promise of personalization, and that personalization built into the checkout. And it also takes out the, "Right, how much should I feed it? And how long will a box last?" It's like, that takes care of that.

Kristen: (21:29)

Yeah. So you've got kind of the customized schedule specific to... I mean, the end customer is really the dog. So we're saying you're customizing the subscription all the way down to the dog's needs, very specific needs-

Mike: (21:41)

Exactly.

Kristen: (21:41)

... which goes way above and beyond, I think, any really other pet subscription right now out there. Being able to customize it, in almost any other subscription in general, customize it down to that specificity of usage is huge and really cool. And then like you said, it gets ahead of those questions, those, "How do I use it correctly? And what should I do?" And all these kind of weary things in customer's heads when they take that first order. I think that investment you guys have put on the front end really just answers those questions for customers and builds a lot of trust. And when they get that first package, they know what to do with it.

Mike: (22:15)

Yeah. Yeah, exactly. Because it is such a big thing. And especially being a thing that you don't change very often, there are so many questions. Like you mentioned it's been two or three years for you. You'll probably notice the next time you actually go to change dog food. And you start to think a little bit like a novice again. And because every food's different. Or if you're a kind of category-defining brand and really proposing something quite disruptive as well, that in and of itself leads to different questions.

Mike: (22:46)

Yeah. Having an experience that was completely kind of like we designed from scratch, so to speak, that was super important as a first step. And then second step, hopefully about two days later, your first box arrives at the front door. And that box has your dog's name on it with a sticker. So it's a fresh box of Scratch made for... What are your three dogs' names?

Kristen: (23:08)

Well, we've got Toby, Finn, and Cooper.

Mike: (23:10)

Oh, cool. So you get a box saying, "Hey Toby, Finn and Cooper, get that beach bod ready, your fresh box of Scratch is here."

Kristen: (23:17)

I love that.

Mike: (23:18)

Yeah. And we change that up all the time. So for Christmas, I think it was like, "Hey, Santa, hands off these biscuits, they're for Finn." But yeah, we just keep that... We just play around with the copy and just be a little bit cheeky.

Kristen: (23:30)

Yeah. I do have to note, you guys have some of the best microcopy I've ever seen. You go through your site and you see it here and there, and it's just amazing. I have to give you props for that.

Mike: (23:41)

Thank you. Well, that's my partner is actually a ridiculously talented copywriter. So I got very lucky with that one from a multitude of reasons, but yeah, she's an amazing copywriter as well. So that's definitely having access to great words. And we really value the power of really good written word through the whole experience, as I'll sort of allude to.

Mike: (24:01)

And so you open up that box. The first order includes the scoop. It also includes a magazine that we made about dogs, basically. So as a really flickable but with a few meaty, good articles in there, basically about dogs. And some of it's super visual, some of it's really good educational content. And it might be about how to think about food, about the pet industry, might be about treats. But then there's stupid things like the average price of ridiculously expensive breeds. Or blurred out images where you have to guess what the breed is from a really blurred out image and you have to go online then to find it. Or dog horoscopes, which my partner Kirstie had a lot of fun writing as well.

Kristen: (24:42)

Oh, that's sounds so fun.

Mike: (24:45)

After the call I'll grab your address, I'll send you out a copy because it's-

Kristen: (24:48)

Oh yes, please, I need to see this.

Mike: (24:51)

Yeah. So that's actually links through to, you would sort of look at it as a retention thing, but we've got a content arm of the business called Off The Leash. Which is basically a dog magazine, which that's the print version that we include in the first box. But it's also an online magazine as well. So yeah, we kind of include that loop in the first order. So they sit down, they flip through, they have a laugh, they learn a bit more about the brand.

Mike: (25:16)

And then they get the scoop, which includes the personalized feeding instructions and saying, all right, well, Finn needs this much and your other dogs need this much, and right. So you go out and feed them. And then two weeks after that you'll get a phone call. So either myself or Stu, who's our full time customer service guy, one of us will call you and just say, "Hey Kristen, how's it going? I'm Mike from Scratch. I was just checking in to see how your guys went with their new dog food." Like completely unexpected, out of the blue phone call just to like, "Hey what's going on? How did the dogs find it?"

Kristen: (25:54)

Yeah. I love that, because it gives that super, super personal touch of like you were talking about building trust. Getting a phone call from an actual person who is saying, "Hey, we made your dog food. How's it going for Finn?" That super personalized thing. And especially for dog owners who like me are generally pretty obsessed with their dogs, most of the time spend more money on their dogs than they do on themselves, things like this.

Kristen: (26:18)

And so I am curious, how did you guys end up on the phone call versus maybe like an SMS text or a really deep email? I'm curious because it's 2020 I think there's going to be some people who are like, "Oh my God, you're getting on the phone and calling customers?" How did you end up to decide that you know what we need to do is we need to take this even bigger step and actually call somebody and get them on the phone.

Mike: (26:42)

Funnily enough, it was just because we didn't want everything to be this lifeless tech-based conversation. We thought a relationship can only be so deep if it's a text which you're immediately, as soon as you get a text from a brand you're like, "Oh, it's just an automated thing." Or if I get an email from, even if it's plain text, and it's like, "Hey, it's Mike from Scratch. Just wanted to check in. How are you doing with the new dog food?" Like, "Oh, okay, well, everyone gets that."

Mike: (27:10)

And maybe I'm being cynical, but there is that. It's a pretty disposable method of communication. Whereas picking up a phone call saying, Hey, I really value that you've taken the chance on a new dog food brand, and I just want to make sure that it's doing what we said it would be. And so we did that early on, one, because we believed in it. But then we thought, all right, well, without a scale, without a huge amount of customers, when there's going to be so much feedback that we might miss. And some of it might be about the website UX, some of it might be about what the product's doing, is the product working? It's a very hard thing to ask in an email and get a really genuine human response that's thought out.

Mike: (27:49)

And then thirdly we said, all right, it'll help us if we can get on the phone with someone and just have a really, sometimes it's a really short conversation. Like, "Hey, yeah, doing great, thanks for checking in. Have a good day." Sometimes it's a 20 minute discussion about their dog's history, everything about them, what they've liked about us, what they weren't sure about. And we thought that that would reveal any potential churn. So, for instance, we were finding early on because there were a lot of people with disillusion with the dog food industry that they would trust Scratch. So we got a lot of early adopters who go through a lot of foods and their dogs are really picky. Or they're specifically searching for every type of food possible because they're trying to get the right thing. And so they're more likely to churn than others.

Mike: (28:32)

So we thought all right, well, if we can get on the phone with them, at least we can work out what are the things that they might churn. So that might be the dog's not used to dry food, it's eaten raw all its life. Or it's coming from wet foods so it's not used to the texture of dry food. Or maybe is it fine for old dogs? There's a million reasons why someone could potentially churn, but together have a really open conversation lets that come out rather than a really templated response.

Mike: (29:02)

So we learnt pretty on little things that how it was improve our UX, or improve the content that we were giving people, or the advice. Heaps of different things. You talk to customers and you just give them the room to talk with a really open question, and you just learn so many little things. And then you actually start to know the names of people. Then you'll see them at events, like I mentioned, you see them at events later on. So it's quite funny how many people that you end up just having a chat with.

Mike: (29:29)

And you feel better about your business because it really does remind you, it's not just a figure in the sale line for the day. It is a human being who's really invested in this, who is really quite nervous about this. Or whose dog had bad digestion for six months, the vet's not sure, it's had on chicken and rice, and the dog's not happy, and like, "Please, I really hope this works." You get all sorts of stories. And so it really makes you appreciate the importance of what you're doing. It'd be very easy, I think, if we just hid behind really automated processes and words, just to forget that they're real humans with real beautiful animals who have problems that this food is trying to solve.

Kristen: (30:16)

Yeah, I love that. Yeah, I love that. It's such a deep connection that you're building with customers, where it's a great churn prevention, it's a good proactive retention tactic. But really at the end of the day, it's amazing that you get to sit and talk with customers and hear firsthand feedback. And I really want to point out to listeners that you can send these surveys and emails and texts and all this stuff, and like you're saying, Mike, you'll get answers, but when you get on the phone with someone, you're going to hear a lot more. It's going to be a lot more genuine. You're going to hear the tone of their voice, and if they're excited when they're talking, if they're nervous when they're talking. It's really cool that you get that chance to do that with your customers.

Mike: (30:57)

For sure. I mean, like 100% it helps. Well, it helps in two ways. One, it helps our retention because we are able to spot if, for instance, an example might be a dog isn't used to dry food or struggles with the texture and then we can give really good instructions or advice on how to transition a dog to a new texture of food. And so instead of that person just churning straight away, maybe they stick around for five years, like I said. Just from a 10 minute phone call and those kinds of things.

Mike: (31:26)

Or we can flag that in the customer's notes, so next time we have a question come up from them, we know that their background of that customer. So again, like, "Oh, Hey, how is Harvey going with his food? I know last time we spoke they were having a problem that he was struggling to eat it." And then your next customer experience is so much better.

Mike: (31:46)

And the other one we noticed, actually early on, the more that we got on the phone, like if we had really busy weeks where we just didn't pick up the phone and call everyone, we were too busy working on something else and we'd just like, "Ah, we can get away with it because they're not expecting it." We noticed that we got less reviews when that happened. And we didn't ask for reviews, but we just noticed organically, it seemed that people would review far more frequently when that 21-day review request came in. People would review far more frequently if we'd been really consistent with our phone calls lately. And that's something we've still see to this day. So it helped heaps in terms of getting the number of reviews up, really.

Kristen: (32:28)

Yeah, that's amazing. Because I think what it does is it really solidifies that trust. If someone's kind of right bordering on the edge of, "I really like this company and my dog really likes the food, everything's going well." You get that phone call and then I feel like it's that moment where a customer is like, "All right, I'm bought in. I'm staying here." Let's go leave a review. We're here, it's public.

Mike: (32:47)

Yeah, for sure. And I think it's such a big juxtaposition between what you're used to, buying something off Amazon or Chewy or from going to a store, to the founder of Scratch calling up to ask about your dog. And then next time you post a photo of your dog on Instagram and tag us in it, I'm like, "Oh awesome. How's he going with whatever?"

Kristen: (33:09)

Yeah.

Mike: (33:09)

Yeah. I think it's a mind-blowingly different experience in what is... It's a really low bar. Pet food is a horribly low bar. They suck. Pet food companies suck at marketing and customer service so much. And they completely rely on retail, so they don't even know who their customers are to start with. But yeah, we just wanted to blow people away with just a completely different experience. Especially because we didn't have that trust early on to fall back on. We just said, all right, let's just go nuts. Because it's more fun for us, we'll learn a time and it'll build trust, again, just by showing up. And then we just like, "All right, this is how we like to do it and it seems to work. Let's just do it. Keep doing it."

Kristen: (33:48)

Yeah, yeah. So it sounds like there's... some of the tactics we've reviewed, these phone calls, really personal cute experiences like the dog's name on the box; the content arm you guys have, which is amazing and super entertaining for especially dog owners who love to read about these things and love to engage with this kind of content. And then what I'm hearing a lot is just this really intense dedication to customer service above all else is what it sounds like.

Mike: (34:15)

Yeah. I think being unreasonably flexible in customer service is kind of how we'd probably term it. So if someone missed an order reminder and they forgot about it and they were charged to ship food that they don't need, just take the return. Wear the 20 bucks it costs. You know, those kinds of things. Yeah, sure, you're not going to make profit on a customer that month. But again, it's a five-year thing. And again, when you're taking that mindset of Hey, this is a customer that I know, I've called them up, I know them, I respect them and it's a longterm promise we've made them; you're happy to do things that you lose 20 bucks on. Whereas we both know the amount of companies that we've been to who seem so unreasonable because one little thing we asked from them, they push back on.

Kristen: (34:56)

Yeah.

Mike: (34:57)

Yeah. So that five-year lens and that five-year promise helps us think really nicely around being unreasonably flexible in customer service. And again, it definitely adds up. The amount of people who reference myself, my business partner Doug, our customer service guy Stu, that mention us by name whenever you see someone tag us on Facebook and say, "Hey, Scratch really are the best. Speak to Mike and Doug and Stu." Or "Thanks so much, Stu." And the reviews mention us by name and those kinds of things, you realize that that is working. It matters.

Kristen: (35:32)

Yeah. I mean, if we can say strategy over tactics, or the human outcome over metrics, to put it in your words, it's those little things that maybe we don't look at it as data, but it actually is really qualitative data that says people are recognizing us as people and they're going and talking about it in their reviews. That's a huge data point. That's a big metric to say, okay, we're doing right by our customers if they're recognizing this.

Mike: (35:57)

Yeah. And then we extend on that a little bit more in saying, all right, well, this whole being a human thing, let's extend that to all of our copy and our customer service tone. So we don't speak like clunky customer service departments. We speak super casually. We write... we don't dumb topics down, but we really focus on using great bits of microcopy to make you smile. But also then to educate on a really complex thing. Kind of like if you were talking to a friend who really knew an area, we want our website to convey all that information in that same sense. And all of our emails.

Mike: (36:35)

At basically every touch point, we want to be super casual. So again, you feel like you're talking to Mike and Doug. And you can reply back to that email, and we'll reply back in the same tone that the email was written. And then when we call up, then again are with the same tone. And all those little things, the little one-percenters of consistency, add up for sure.

Kristen: (36:53)

Yeah. That kind of giving an exceptionable touch point every single time and also keeping it very consistent to the brand. Because like you said, especially in this industry, trust is so important. And so having that consistency I think really builds trust. One just little thing that I saw a couple times on your website that it's, you read it and you're like, wow, these people are really dog people, they understand it. Because multiple times on your website you reference runny poos, which is one of those terms that if you don't own a dog-

Mike: (37:23)

Yeah, if you know, you know it.

Kristen: (37:24)

Yeah, if you know, you know. If you have a dog, you've used that term before. If you don't, you probably haven't ever said runny poos in your life to another human being and felt normal about it.

Mike: (37:33)

Yeah, exactly. And next one I think is arguably our most important one, probably second after just valuing customer service, is we put a ton of work into our account page in our subscription flexibility. So it's pretty much completely custom. And I know with most subscriptions it's the most painful thing in the world. And it does lead to more customer service questions and assistance than is needed. And it's just a pain in the ass for a customer if they very quickly want to do something and they can't quite do that specific thing that they want.

Kristen: (38:05)

Yeah.

Mike: (38:05)

So, yeah. We built on WordPress and WooCommerce in the beginning, because I used to develop and design sites and that so I knew it. And I knew it's open source so you can do everything. And I'd seen how clunky the shelf-off buy ones were out of the box and how hard it was to customize. So we said, all right, we're going to go open source from the beginning because one of our key kind of points of difference is an exceptionally easy and flexible subscription service. If subscription is a pain in the ass, we need to completely go the other end and go, all right, subscription is so easy on Scratch. I didn't realize how easy subscription could be.

Kristen: (38:40)

Yeah.

Mike: (38:41)

So yeah, that whole experience. So we send you a seven-day email reminder, it's got a button in there saying send ASAP, which instantly sends an order. It's got a button saying delay seven days or delay 14 days, which takes you through the website, automatically opens a pop up with seven days filled in or 14 days filled in. And you can change it to any number of days you want. And to delay an order, you can change the frequency yourself. So let's say, all right, we originally said 17 days between your three dogs. Let's say, all right, now Kristen you want to mix feed, so you're only feeding them Scratch at night and maybe there you're feeding them something else in the morning, so you want to change that to 34 days. You just change the number and then that from that point it does that.

Mike: (39:22)

Or if you've got a puppy, and this is a big one looking at the customer life cycle, was if you've got a puppy and let's say you sign up one of your dogs at two months old. And then at three months old they're a lot bigger, five months old they're hell of a lot bigger. And as they go it's like, "How much should I be feeding this dog as they're growing?" Particularly because every food's a little bit different. You metabolize different energy depending on different ingredients. So you can update your dog's weight in there, or their body shape, or any number of things, and it will automatically recalculate on the spot a feeding guide and a new frequency for you.

Kristen: (40:02)

Wow. Yeah.

Mike: (40:03)

So-

Mike: (40:03)

feeding guide at a new frequency for you.

Kristen: (40:03)

Wow. Yeah.

Mike: (40:03)

So again, taking out that guesswork particularly if you're a first time dog owner and these are like, "I don't want to get it wrong" kind of questions.

Kristen: (40:10)

Yep.

Mike: (40:10)

You can just log in before your next order's due, once a month, whenever you feel like it, update their weight and they might go, "Okay, well instead of feeding them that much, now I should feed them this much." Little things like that. I think our website makes it super easy to switch foods as well. We just released a new treat, and literally, you'll get an email, in that seven day reminder, it's got a button, "Would you like a treat with your next order?" You click on that button and it automatically adds it to your next order without having to go to another page, confirm, and all this kind of stuff, which is super frictionless.

Kristen: (40:45)

Yeah. Accidentally add it to your cart and not to your subscription, then you have an abandoned cart email coming in but you're like, "No, I have a subscription."

Mike: (40:51)

Yeah. Yeah.

Kristen: (40:51)

I have experienced these things.

Mike: (40:56)

All those little pain in the arse things. So, that website flexibility is a huge one, we improve that really frequently. Like tomorrow, I'm going to put my coder hat back on and get back in there and do a big round of updates for that as well.

Kristen: (41:08)

Yeah. I mean that's huge, especially for this kind of customer. What I'm really hearing ring true in everything you're saying is this deep knowledge and understanding of the customer, this customer journey and understanding the changes that are going to happen. Being able to step in front of them and say, "Okay, if your dog gains weight, it doesn't mean you have to start doubting your food subscription here. We can actually just help you right away." Without even needing to actually get involved with the customer, which is huge for building trust.

Mike: (41:36)

For sure. It gives you the opportunity to be unreasonably flexible in customer service if your systems are so good and the customer doesn't really need to contact you. It's great, very exceptional when they do. They shouldn't need to contact you all the time, because that's a sign that eventually they're just going to go to the store and pick up dog food on the way home from work.

Kristen: (41:57)

Yeah.

Mike: (41:58)

If you don't do these things and there's so many, every category... The trial subscription will have their own version of what's annoying about that category or whatever. With dog food, because it takes up a bit of space, and we're promising freshness so we're promising a fresh box every 17 days to you. For instance, if the food starts piling up and then you're like, "Oh, do I pause it and when's the next one due? I've already got a box and a half left and I'm just going to go to the store, it was easier this way. You promised ease and that's not what I've got." We wanted to make sure that it would just streamline the whole way through so that we could afford to spend a great time on customer service when someone needed to contact us.

Kristen: (42:37)

Yeah, and I'm really glad you brought this up because this is something I've been talking about recently is these hierarchy of levels of customer experience where the top is really this branding and what it looks like in the unboxing and a lot of the fun retention stuff. The bottom being very operational stuff like your warehouse and how you do fulfillment, how you manage all this and then this middle section of, what I'm thinking of the customer experience platform, which is things like how subscriptions are managed, where is your account, is it easy to access, how is customer service going back and forth? That's the area where I think a lot of companies, and especially subscription companies, tend to miss the mark because it feels like, okay, we can just set it up and it's going to be good enough because convenience of a subscription is good enough.

Kristen: (43:23)

I don't believe in 2020 good enough is going to be a thing anymore because just a plain subscription, things where touchpoints aren't quite perfect or they're not on brand is going to become really, really evident to consumers. This area that you guys are focusing on, it's really cool on my end to hear that you guys have so much going into this factor because it plays so heavily into customer experience without really customers being able to pinpoint like, "Oh, the experience was bad because the subscription was hard to manage or because I got this dunning email that made me super uncomfortable." It's really hard for a customer to put that into words, so it's our job to actually just make it so they don't have to complain about these things.

Mike: (44:03)

Yeah, for sure. I have one more thing, tactic, that we do and that is we actually think product matters in this respect because I think it's pretty easy to lose that new, I'm the best dog owner feeling. And so, for us being able to release, have a consistent, not too frequent that it's all about a new thing and you're getting people addicted to new stuff, but for us it's having new treats that we release on a semi frequent basis, let's say every three or four months. Every new treat that we release, they can put in their next order, keeps that unboxing magic still alive. I'm the best dog owner because I'm feeding my dog a treat and it's new and I can say that it's got absolutely zero chemicals and it's all natural made and I know where it came from and how it was sourced and all those kinds of things. So yeah, product and being really smart with the types of products, the price points, the functionality of those products that is as well.

Kristen: (44:57)

Yeah, I love that, that feeling of I'm the best dog owner really is something that you know you like...

Mike: (45:03)

It's a real thing. Right?

Kristen: (45:04)

It's a real thing, right. Every time we go on a hike with our dogs and we see them running off leash, it's that feeling that keeps us continually doing that. It's why we go on a walk every single day. That was such a dangerous thing for me to just spit out.

Mike: (45:17)

[crosstalk 00:45:17] in the background.

Kristen: (45:19)

Yeah. I know nobody woke up to that one. Good. Normally I have to spell that out, but it's that true tangible feeling that I think you can only understand if you really know your customers and it's cool that you guys think all the way down to product and how can the product continue to evolve without changing actually the real hero product that they came on to. We don't need to change that. Can we just do little things of delight here and there that keep that really important feeling going?

Mike: (45:44)

Yeah, for sure. Product at the end of the day, product's king. There'll be new brands with shoddy marketing and a new way of describing things. Like I said, that we're tending to the dark side every now and then so we just got to be clever.

Kristen: (45:58)

Yeah.

Mike: (45:59)

That reminding and appreciating on that journey of being an awesome owner.

Kristen: (46:04)

Yeah, I love that. And really celebrating what matters most to the customer. So, just to wrap up, I got three questions for you. First, and I'm sure you've got some good stories because you're selling to dog owners and dog owners always have great stories, can you tell us one of your favorite customer stories from building Scratch?

Mike: (46:22)

Well, the one that comes to my mind right now is actually... I don't know if you know, if you're into surfing much at all or know Mick Fanning but he's a three time world champion surfer, Aussie guy. He got on Scratch maybe a year ago for his dog Harper. That started out with literally him asking a question about how it helps dogs with skin allergies because Harper had skin problems her whole life. Then that completely turned around, stopped flaking, stopped itching all the time and was a completely transformed dog. That was really cool and that ended up turning into him investing in the company a few weeks ago.

Kristen: (46:59)

Wow.

Mike: (46:59)

Which is pretty cool. So, right now I'm pretty happy with that one.

Kristen: (47:02)

Yeah, that's exciting.

Mike: (47:08)

Aside from that, I remember the very first customer phone call where the customer took me in a five minute conversation about their dog's poop. That was the very first time that happened and I was like, "Wow, this open question really takes you in all sorts of strange directions." It turned out that was the common theme to all of our customer feedback for the first year was just like, " Oh my God." They start giggling and you're like, "Oh, I know what's coming." If you look at our reviews on our website, the amount of reviews that I have about the dog doesn't stink out the house anymore and their poo, their nuggets are so great to pick up now. We even ran, it inspired some ad copy, for our best performing Facebook creative, which was dog food that'll make their number two smell like number five, relating to Chanel number five. That was all born out of all these customers reviewing and talking about their dog poo.

Kristen: (48:07)

Oh, I love it. Only dog owners will spend five to 10 minutes talking about their dog's poo. It's a real thing, it's the thing we all do.

Mike: (48:13)

It is.

Kristen: (48:16)

Where do you see the brand in say three to five years?

Mike: (48:19)

I'd love it if we were Australia's most trusted pet food brand by that point. We're still small, we're a really good sustainable business in the millions of revenue now but we're still small and the majority of Australians don't know about us, they've never heard about us. I think we spend 4,000 US, probably $3,000 on marketing last month, which admittedly was a quiet month because we knew people would be focused on themselves and Black Friday and Christmas but we still have a small marketing budget. We do think super organically, we're aligned, great word of mouth. So, we're still pretty small but we want to be Australia's most trusted dog food brand. That doesn't mean we'll be the biggest in terms of sales by any means because I think you have to sacrifice things at that point. With a real natural product like dog food, that means you're getting dodgy meat or unethically sourced meat. That's a whole different conversation but we want to be Australia's most trusted and have a really good sustainable business with staff that love working there. My business partner and I just want to still keep meeting dogs and loving what we're doing and help dogs basically.

Kristen: (49:28)

Yeah, that's an amazing answer. I love that the focus is becoming the most trusted company. Maybe it doesn't mean the biggest sales, but you guys know what you want to build and that's a long standing business built of trust and relationships and connecting with people, which is just such a powerful sentiment to hear. So, just last question, what's something that's really surprised you as you've grown?

Mike: (49:50)

I thought I probably listened to too much data, say Twitter and all those kind of things and overestimated how easy it would be to get media for a brand new startup with a really good looking credit around dogs like, "Oh, it's a start up, it's got ridiculously beautiful dogs, it's actually improving a known pain point, it'll be easy to get payoff." In Australia, it wasn't the case because we don't really have this business media championing new things and talking about, "Hey, these are the hot new consumer startups." Consumer startups aren't a thing, a term that's on anyone's radar. The media is different here and there's no journalist you can build up a relationship with who covers this kind of stuff.

Mike: (50:35)

It's like, the weatherman has five spare minutes so they'll put in a random article about dog food. Whenever a recall comes up, it's that kind of thing. So, we couldn't rely on the media and I wasn't talented enough at PR to build the media into our early success but I thought we'd get a lot of PR, didn't get any and that sucked. The other one was how much trust came into it. It's one of those things you know, but until you experience barren months where you're signing up 40 new people and you'd thought you'd sign up 200. People go to the site, the checkout's great, getting there, the process isn't a problem. You're talking to people, you're getting your ad and you're doing all these things and you just realize that you haven't earned their trust yet. You kind of know it but until you experienced the pain, all those kinds of thing. So, it was a big surprise, I think for sure.

Kristen: (51:32)

Yeah, I bet. Well, it sounds like you guys are on your way to building an incredibly sustainable, amazing business. I just want to reiterate how amazing it is, how connected and invested you guys are in your customer and your customer experiences. Thank you so much for coming on today, this was an amazing episode. Thank you for coming with such really strategic tactics. We're going to break them down in the show notes so you guys can see that. I'm sure we'll come out with more content around this because you have just such a really good way you approach retention and so I want to keep pushing that message for people. Thank you so much for spending your time with me today.

Mike: (52:07)

No worries, thanks for having me.