The True Power of Subscription with Chathri Ali from Recharge
As COO of Recharge, Chathri Ali works at the frontlines of DTC, helping the industry prepare for and respond to shifts in commerce in the 21st century. This conversation digs into in-depth examples from a ton of top brands, from FourSigmatic to Atlas Coffee to StitchFix. Kristen and Chathri talk about tracking ROI, building a better CX platform, figuring out shipping cadence, subscription vs membership, and so much more.
- Why the customer portal is so important for subscription businesses
- Creating an education focus on the backend of a site
- The importance of keeping things exciting for a subscriber
- “Subscribers are really dictating how the merchant is creating the subscription experience”
- The three layers of retention and why CX platforms tend to get overlooked
- What actions can customers take beyond pause, skip, and cancel? (Hint: try a swap button)
- Tracking AOV over time
- More on tracking data in retention with Taylor Holiday
- Here’s the portal example from Atlas Coffee and here’s Cocokind’s membership model in action
Kristen LaFrance: (00:42)
Let's talk customer portals. Do you think your customer portal could be doing more for your business than it is right now? Honestly, the answer is probably, "Yes. I have seen a lot of poor experiences in the portal." But really knowing what to do, is kind of difficult and I think we could all use a little extra guidance on a really nailing down this space. Recharge's COO Chathri Ali is a leader in subscription e-commerce for a good reason. She is all about making longterm relationships between brands and their customers as simple as possible. She talked me through her playbook for DTC success and our conversation is loaded with actionable examples from the front lines. Let's get into it.
Kristen LaFrance: (01:22)
Hey Chathri, welcome to the show. I am so excited to have you on. I obviously have a big love for Recharge, so I'm really excited about this episode. For people who don't know, can you give the listeners a little bit of background on yourself and Recharge?
Chathri Ali: (01:34)
Sure. I am the COO of Recharge, which means I oversee a few of our departments here, which include sales, marketing, customer success and people operations. So essentially everything except the dev team. Recharge is based in Santa Monica, California. And we have been around since 2015 and have essentially built a company that's all focused on creating the best billing and payments platform for Shopify merchants. So essentially, we focus on recurring billing across the web and mobile and we're used by over 10,000 businesses including Native Deodorant, Hubble contacts, Lola, Soylent, Billy, and tons more.
Kristen LaFrance: (02:17)
Yeah, some pretty amazing brands that you guys get to work with. And luckily for us that means that we get to work with them too. I'm curious from your perspective really, why do you love what you do so much? Why do you love working for Recharge?
Chathri Ali: (02:28)
Honestly, because we're trying to just keep up with the pace of commerce. You know when we started, subscriptions weren't really a thing at the scale that they are now. Right?
Kristen LaFrance: (02:39)
Chathri Ali: (02:40)
People had heard of BirchBox maybe purchased a couple boxes there. But really subscribe and save wasn't a thing until Amazon actually kind of supercharged that as a purchase option. So, I'm excited because I've been able to over the last five years watch how commerce has changed and evolved and conversely how our product has been trying to keep up with that pace of growth.
Kristen LaFrance: (03:02)
Yeah. And my listeners know that I have a deep love for subscriptions and I'm always kind of challenging brands to think of cool ways to add subscriptions. And I'm curious on your perspective, why is the subscription space really growing so rapidly? Why is it so powerful for e-commerce to add in subscriptions?
Chathri Ali: (03:20)
Yeah, I mean, honestly there's a couple of reasons why it's been growing. First there's two types of subscriptions that we really see. One is subscribe and save. So that's for a consumable like protein powder, something that you're using every day versus what we call more of the curation side of things. So, we call them box companies, right?
Kristen LaFrance: (03:40)
Chathri Ali: (03:41)
Some box of goods. So that curation, that's really kind of the BirchBox approach, right? They curate a couple of items. For us, we have a hot sauce company that we work with that creates or curates rather hot sauce every month. So really it's curation. It's really popular for Shopify merchants because of the sustainability side of things, meaning the recurring revenue that you're generating from having a subscriber. I mean, just completely outpaces any sort of one time purchase customer. So, the sustainability and that longterm relationship you get from a subscriber, being able to kind of be a partner in their lives and over time. I love the example of yoga club actually that you talked about a year ago, where they are a partner in changing your lifestyle.
Chathri Ali: (04:30)
It's not just about clothing. It's about like, "Hey, you're trying to be a new you and your medium is yoga and here's a couple items to help you with your journey." So, that longterm relationship from a brand side of things. And then I would say lastly predictability for a merchant as well as the flexibility for the subscriber. So predictability meaning if you know that you have 500 active subscribers as a coffee merchant for example, in terms of inventory, you really have to plan for that fulfillment, right?
Kristen LaFrance: (05:01)
Chathri Ali: (05:01)
So having that kind of predictability and not really being out of stock because you know that that's something you have to fulfill. That's helpful. And then on the flexibility side of things, more and more, we're in this Instacart world, Postmates world, everybody wants flexibility and when it comes to subscription, you really as a merchant have to match a customer's wants and needs, and we enable that with some of the tools that we have at Recharge.
Kristen LaFrance: (05:24)
Yeah. And that flexibility I think is a really important point that we can kind of talk about. I know that you guys have invested a lot in building out a really nice customer portal for your merchants and it's actually one of the things I talk to brands a lot about when I'm doing kind of a customer experience tear down. One of the most notable things in subscriptions is when the customer portal is just not quite good enough and there's not much you can do from a customer standpoint. I mean, to me it's really obvious because I spend all my days looking at this and most people don't, so why is the customer portal really so important to be so good for subscription businesses?
Chathri Ali: (06:01)
Yeah, I mean for... I like to use the analogy of putting the subscriber in the driver's seat, right? Having them be in control. Because we come from a decade ago where you'd be locked into a contract, right, for your phone or you're locked into a meal plan with like a Nutrisystem or whatnot. And that flexibility was just not there. And so that's what we really focused on with the customer portal is, we want to make it so the majority of actions that are around a subscription, you as a subscriber are completely enabled to self service, your own subscription. So not empty to email or phone in for example.
Chathri Ali: (06:37)
So things like skipping an order, canceling your subscription, pausing your subscription, and as of recent in the last year and a half, the ability to swap your subscription. So if you were subscribing to a vanilla protein powder and you're just bored, you want to switch things up you're human. You could switch it up to the chocolate protein powder with a really easy one click button. And so ultimately giving the control to the subscriber means for the merchant that they're able to retain that person. So they're not just canceling because they're bored, they're canceling because they want to switch things up.
Chathri Ali: (07:13)
And so we've adapted the customer portal to really try to protect that subscriber for that merchant's business so they're not turning out and instead just continuing to have that relationship with the merchant over time.
Kristen LaFrance: (07:25)
Right. So, this makes a lot of sense to me as to why a really nice portal experience increases retention and helps retain customers. And like you said, keep that subscriber relationship active. What are you guys seeing on your side? Is really the... How much this impacts customer attention and why is it so important for retention?
Chathri Ali: (07:43)
I mean, truly that's where the subscriber is interacting with the brand. So, if you can just add more functionality into the customer portal, the more you're going to really enable and empower that subscriber. So I love this example of a company called The Flex Company. So Flux fits is one of our merchants and it's essentially a menstrual cup for women, right? And it's a little bit of a newer feminine hygiene product that there isn't a lot of education around. So what they found was, women were interested in trying something different, but there was a lot of apprehension. So what they did is, they went into their customer portal and added a lot of content. So educational content, FAQ content.
Chathri Ali: (08:26)
And so for them, it was less about just retention, it was more about education and making their subscriber feel safe. Right? And that's not something that you would necessarily see across all verticals, but that was an option. And we enabled that for The Flex Company to help educate their subscribers. Another example is Four Sigmatic, which is a supplement company all focused on coffee and some other supplements. They updated their customer portal to add the ability to add one item into their next subscription delivery. So we call that an add-on.
Kristen LaFrance: (09:04)
Chathri Ali: (09:05)
And it's great. Because they're subscriber-based. They're obviously just [inaudible 00:09:11] because it's a mushroom focused coffee. Their subscribers are a little bit more, I think excited about trying something new.
Kristen LaFrance: (09:18)
Chathri Ali: (09:18)
So having that ability to just one click, add a new item, like a turmeric powder or whatnot into their next delivery keeps things exciting for that subscriber.
Kristen LaFrance: (09:29)
Yeah, and I mean something that you said, I think that's really important to highlight is making the subscriber feel safe in the subscription. And I think that goes back to kind of what we were talking about at the beginning is, back when subscriptions started, it was very common to be kind of locked into a subscription. It was really hard to cancel. I'm thinking about the classic, like cable television situation where it's like the last task you ever want to do is try to call cable and cancel because it's impossible.
Kristen LaFrance: (09:57)
And I that that safety feeling feels really important for subscriptions to me because, even though we're a decade later, there still is that kind of weariness about entering a subscription because it's like that what if I get locked in or what if I have to call it, heaven forbid I have to call somebody to cancel my subscription or skip a month here and there. So I think that safety feeling is really strong and we tend to use the word, I tend to say, "Trust” a lot. But I think that making a customer feel safe is another way to look at it. And in an almost a better way that's a little less buzzy than the word trust that I toss around a lot.
Chathri Ali: (10:35)
Yeah. I mean, I think most people just want to feel empowered to do what they want to do. So, it's beyond just the trust that the merchant will actually let them do that. It's more that to me that the tables have turned and the subscribers are really dictating how a merchant is creating the subscription experience. So in the Flex Fitz example, people were canceling because they were confused about how to use it for the first time ever. They had to fix, right, that education side of things. Or for Hint water.
Chathri Ali: (11:10)
And I'm an example for a beverage company where it just might be too pricey to pay for shipping for that much of a beverage. Then they're going to create different promotions or deals to offer free shipping if you buy X amount. Right. So really at this point the subscriber base is going to dictate like how a merchant is really gonna evolve and adapt how they operate their business.
Kristen LaFrance: (11:36)
Yeah. And I love that and I think it's an interesting concept to talk about kind of content within the portal, because a lot of times we talk about customer portal and my brain goes straight to the can you skip, can you swap, can you make adjustments really easily? You don't always think about these extra little things that you can do top making that customer portal feel more than just kind of subscription management. It's also a place to really connect with your customers and get to know them and actually have kind of two way touch points in that area.
Chathri Ali: (12:07)
Yeah, absolutely. We actually have a really cool example from Atlas Coffee that, I'll share the link with you, but they encourage their customers to feel very engaged with their brand and detailing where in the world each coffee shipment of Atlas Coffee originates from. So-
Kristen LaFrance: (12:22)
Chathri Ali: (12:23)
... Yeah, so within their customer portal, they have the reward section, so you get points, they have share with a friend and then they have this coffee passport section, where you know they're talking about, "Okay, the last shipment you got came from the Hills of Columbia." For example. And they have like a little bit detail about the coffee of that month. So it's not just like the management side of the subscription, it's some details about what you're actually receiving.
Kristen LaFrance: (12:49)
Yeah, that's so cool. And we'll make sure to link that up in the show notes guys. So you can check it out. To me, this seems like, when we're talking about customer attention, I have this kind of analogy of that there's three layers that go into a customer experience. At the bottom layer is kind of like the operations of your business. Just how are things working? How are things set up? Are they set up in a way that's beneficial for your customers? And then the top layer being really the like branding and the tone of voice and all this stuff that's really fun to talk about and retention.
Kristen LaFrance: (13:20)
But then this middle layer is kind of this, I called it the last time I presented on this, I called it the CX platform. And that it's the tools and the things that actually make your subscription go and run. And it seems to me that a lot of times gets overlooked by brands that something is, it sounds boring as something as the customer portal is actually kind of your biggest ticket for retention. It's probably the most important thing. You can have amazing branding, but if the subscription experience is not good, it doesn't necessarily matter then at that time.
Chathri Ali: (13:56)
Yeah. And then I would also say the communication to get someone to the customer portal is actually just as important. So what does your communication look like? So, for example several of our merchants have not customized a notifications that get sent out. So, if you complete your subscription order, what is the email you get after that? How does a subscriber find the link that takes them to their unique customer portal? I myself, I subscribe to probably over eight brands that are powered by Recharge for subscription and each one has a very different experience and some are very intuitive in terms of how to get to your customer portal and others you're kind of lost, and you have to search and hunt for that one hyperlink.
Chathri Ali: (14:41)
So, I think that's the other component that some merchants don't tend to think about is, "Oh wow, I have to customize the experience." Not only within the customer portal, but it's all the steps leading to reaching that point.
Kristen LaFrance: (14:52)
Yeah, really looking at it as kind of this holistic journey. And one of my top recommendations for brands is always like, "Go buy your own product and experience that onboarding and see how it feels." Because a lot of times you may be surprised that like, "Oh gosh, this email is actually not that great." Because we just assumed that it was probably good enough at this stage. So I think we've covered like a lot of really good tips and thoughts on the customer portal. But do you have any just kind of quick takeaways, top tips for ensuring that customer portal is really set up to prevent churn?
Chathri Ali: (15:24)
Oh gosh. Yeah. I mean making it easy to swap an item I think is probably the number one thing that a merchant can do to enhance that experience. Because, obviously the pause, skip, cancel, that's already there, it's what are some other actions beyond that, that they can do? It's usually that behavior of I either have too much product or I'm kind of bored with the product. Right?
Kristen LaFrance: (15:47)
Chathri Ali: (15:48)
So, how do you kind of use that emotional trigger and churn that into perhaps another transaction? So, I would say the swap button is crucial.
Kristen LaFrance: (15:58)
Yeah, that's big time in any subscription that I've been on except for the only one that's not applicable for this is Chewy. And that's because I can't change my dog's food every few months.
Chathri Ali: (16:09)
Kristen LaFrance: (16:10)
Every single subscription I'm on, MeUndies and Ugly Drinks being the two that I actually just did this yesterday for both of them. I went in and swapped my products for both just because I wanted a new flavor of drink. And then for MeUndies was, they selected a certain print and I wanted a different one. If you have that ability as a subscriber, it just allows you to keep adjusting the subscription as your life goes and as your behaviors change, as your interests change. I think it just gives the merchant a better chance to kind of go with the punches of life of their subscriber because they're not locking them into one product.
Kristen LaFrance: (16:45)
And that's also where kind of that add on comes in too, where it allows your subscribers to then try different things without feeling they have to commit to a whole other subscription.
Chathri Ali: (16:54)
Exactly. And it's interesting, because there's a lot of a commitment phobia right?
Kristen LaFrance: (17:00)
Chathri Ali: (17:00)
When it comes to subscribing. So however much you can reduce that anxiety the better.
Kristen LaFrance: (17:05)
Yeah, absolutely. Now, talking about data is something that especially around churn and retention can get a little wishy washy. I'm trying to figure out how to track and measure retention is really difficult. Trying to figure out how to track and measure churn is really difficult. So what data points should subscription companies really be looking at to measure churn and retention and feel like they have at least a good idea of what they're dealing with?
Chathri Ali: (17:30)
Yeah, I would say that there's a few. Definitely you know, the high level bird's eye view of all sales made within a particular period. Looking at your active customers but also the subscription creations and cancellations and tracking the changes in a given period. Showing each of those and then the overall net effect that, I would say sales per charge or another way of saying that is your average order value and how much each customer is charging or being charged on an average within a given time period.
Chathri Ali: (18:02)
We've actually talked about this before in regards to add-ons, right? Like if you add the ability to create an add on or add within the customer portal, what does your AOV look like before and after and kind of really AB testing that. And then obviously in terms of churn, I'm looking at your cohorts over time. So for example, if you had a black Friday cyber Monday sale for subscriptions, which by the way subscriptions are actually not a big thing on black Friday.
Kristen LaFrance: (18:32)
Chathri Ali: (18:33)
But we did see some folks offer some promotions and looking at the cohort of November batch versus let's say, January where things have kind of normalized, what does the churn look like for that November cohort versus January? Usually you see that a bunch of people will subscribe to get the promotion and then churn out. So really dialing in on your cohorts is also pretty key.
Kristen LaFrance: (18:58)
Yeah, and we've talked about this. We talked to Taylor Holiday not too long ago on the show about cohorts and that conversation was really interesting. I'll put that in the show notes. If you guys missed it, you should definitely listen to it. And something that I actually, I had not really thought that much of that you brought up, was the idea of tracking average order value over time.
Chathri Ali: (19:16)
Kristen LaFrance: (19:17)
A lot of times when you think about average order value, it's, "Okay. This order how?" In general how much are they paying? But looking at it from a subscription standpoint and saying, "Okay, is the average order value slowly increasing or is it decreasing?" And being able to track kind of longterm customer behavior, that's such an important insight to see. I think it shows a lot about the relationship between a company and the customer. If the OVI is very flat, then it's not a bad thing.
Kristen LaFrance: (19:46)
It's they're a consistent customer, but then are there ways that you can go in and make that relationship deeper? Vice versa, you see it going down slowly. That can be a kind of a trigger to say, "Okay, there's something going on in this relationship." I really like that. I actually hadn't thought of that piece of data, so thank you for teaching me something today.
Chathri Ali: (20:05)
Kristen LaFrance: (20:06)
That's why you're here now. I think that you probably have seen a lot of ways that merchants are actually working on retention and I'm excited to dig into it. This is what the whole show is about, is digging into these cool retention stories and creative ways that brands are actually mitigating turn. Do you have any really fun or creative examples that you've seen people at brands really working to improve retention?
Chathri Ali: (20:30)
Yeah, absolutely. It all goes back to testing, I would say. So kind of not only making tweaks to their site or to their customer portal, but actually tracking that. So one thing is definitely leveraging our enhanced analytics dashboard to analyze the customer behaviors and then tracking things like actions, rather tracking actions such as product swap skips and really seeing what the likelihood is for those customers to turn. And we've had specific merchants who kind of taken it to another level, to really track those behaviors, and start to get a bit more in tune with those actions and how it relates back to churn.
Chathri Ali: (21:11)
And also, one of the simplest solutions we've seen is merchants dialing down their product frequency, to match a customer's needs. So what I mean by that is, instead of just offering the one month, two month, three month option, kind of figuring out the average number of charges before someone actually churns and seeing should their delivery interval between to match their need. So I found myself, I subscribe to Perfect Keto for example, it's a collagen powder that I add to my smoothies. I never use my product fully in a month ever.
Kristen LaFrance: (21:48)
Chathri Ali: (21:49)
I think it's probably down until let's say 51 days, I don't even know the exact number, but if Perfect Keto were to just cut out the one month option because it's just too much product to actually use in a month. Right.
Kristen LaFrance: (22:03)
Chathri Ali: (22:03)
And to say, "We're only going to offer two months option." So, 60 days and 90 days it's one of those two. A simple solution just removing that 30 days and all of a sudden you don't have all these people canceling because they have too much product. Right?
Kristen LaFrance: (22:17)
Chathri Ali: (22:17)
And then experimenting to see is our hypothesis true or not? And the hope is that with the right product and the right interval, you reduce your churn by keeping that retention high.
Kristen LaFrance: (22:30)
Yeah. The point on testing is so important because I feel like, a lot of times I will ask brands, "How did you do this?" And the answer is always, "Well, we tested it." But we don't talk a lot about what it means to test, especially in retention, it can be hard to think about retention tests, but actually testing something and then going back and looking, "Okay, how did this impact churn? How did this impact retention?" And kind of pulling out these little stories, I think is what it ends up being as pulling out little stories of customer behavior and then figuring out how to apply that to the rest of your customers.
Chathri Ali: (23:07)
Absolutely. One of the things we found too is, there's intent and then there's execution, right? So many of our merchants have the intent to be more data-driven. However, they don't have someone who is focused on it and we have merchants who have teams of three to four people simply focused on analytics and making those data driven recommendations to the leadership team of their brand. What we have seen as almost just a miss on the merchant side, is that when you don't dedicate time to really diving in, you're just blindly right.
Chathri Ali: (23:46)
And it's really easy for most brands to kind of continue doing that because, frankly they're usually a product focused company. And I definitely read, and you've probably have too Kristen, a lot about should these DTC brands really be considered tech companies? Right.
Kristen LaFrance: (24:03)
Yeah, that's an interesting point. It's something that I've talked about actually quite a bit. Coming from kind of a tech marketing background, I have a lot of knowledge and kind of the SaaS tech market. And what's interesting is that I found that every time I'm giving some sort of retention outline or try this for customer attention, customer engagement, a lot of it is me just repeating what I used to repeat for the SAS market. And I think that e-commerce is starting to really follow those trends is, "Almost yes. You're delivering physical products, but you're also delivering a digital experience and that needs to be really honed in on."
Chathri Ali: (24:40)
Absolutely. I think a good example of this is Stitch Fix and there's a great HBR article about how Stitch Fix actually does consider themselves a technology company. And beyond that, a data focused company. They have, I believe the number is 20 people on their data analytics team.
Kristen LaFrance: (25:02)
Chathri Ali: (25:02)
Simply just fine tuning the Stitch Fix algorithm to help them get their curated items delivered, like just spot on to that person's taste profile. And the better that they can fine tune it, the better their customers are going to be happy and therefore highly retained, and it's been working for them. So I definitely recommend checking that article out as well.
Kristen LaFrance: (25:25)
Yeah, we'll be sure to link that. I'm thinking back to a conversation I had with the ancient nutrition team actually and we talked a lot about their data analysis and how deep they go into it. And just the story they told me they pulled out, basically they went and looked at all their data and they used it to figure out which campaigns and promotions led to the highest retention. And that was something that you can't find out of a kind of a gut feeling. A lot of times there's subscriptions I feel like it's easy for a merchant to say we've got this recurring revenue, we've got our customers, I feel good about this decision and this feels like it's what's right for the customer. And then there's that challenge of like, "Well, can you prove it? Can you prove that a customer who has talked to customer support is more likely to be retained in six months or so?"
Kristen LaFrance: (26:13)
And I think that this intent versus execution thing is big and that it feels like a lot of brands are trying to do the right thing and thinking in the right way, but going back and then actually looking at the data and seeing how it, how it impacted your most important metrics, which for the sake of this podcast right now we're talking retention and churn, which are obviously huge metrics I think is a really, really good point and something that everyone listening, if you're a subscription brand, absolutely start thinking about how you can make your data go a lot further for you and tell you more. kind of using data to tell you your customer stories I think is how we're looking at it.
Kristen LaFrance: (26:50)
I know you guys have done a lot of data kind of on churn rates and you, you have a lot of data to work with. Are there any verticals that churn in general faster or slower? Is there a vertical that has a really high amount of churn, a vertical that has a lower amount of churn and do you see any reasoning for that?
Chathri Ali: (27:08)
Going back to the beverage idea or beverage vertical rather that I mentioned earlier with Hint Water, we're seeing beverage companies have pretty high product churn. To us, our hypothesis, it's flavor fatigue. So again, if you don't have that often to swap, it's just how much of watermelon water do I actually need? I mean we all need to hydrate, but sometimes just again, going back to the fact that we're human, most folks want a variety of flavors when it comes to their personal taste. And if a beverage merchant doesn't offer that much variety of flavors, customers will pause their subscription and that'll lead towards higher churn. Right?
Chathri Ali: (27:45)
So for you with Ugly Drinks, you just spoke about that, about your customer action that you took yesterday with regards to swap. And then also to, for beverage it tends to be a higher AOV and therefore when you get that email notification that you're about to be charged $114, you kind of get that sticker shock. Like, "Oh shoot. Do, I actually need $100 worth of watermelon juice." Right. So.
Kristen LaFrance: (28:13)
Chathri Ali: (28:14)
So we're seeing there, I would say second is the curated side of things. So there's a lot of novelty items that are on the curated box side. So for example, one of our largest novelty boxes is Pusheen the Pusheen Box, which, have you ever heard of Pusheen?
Kristen LaFrance: (28:31)
I have not.
Chathri Ali: (28:32)
Oh gosh, this... Kristen, you've been missing out.
Kristen LaFrance: (28:36)
Chathri Ali: (28:37)
How dare you, I mean Pusheen would be offended, but it's a cartoon cat that became really popular in, Oh God, 2014. It started off of Tumblr and then kind of got popularized with a bunch of cat memes. And now it's just a cute chubby cat and there's a box of Pusheen goods. So, I am so curious about the folks who have 10 subscription charges with this company.
Kristen LaFrance: (29:07)
Chathri Ali: (29:08)
They love Pusheen. But the novelty definitely wears off over time. So you do see often a bit more churn on the curated side of things.
Kristen LaFrance: (29:17)
Yeah. And then on the flip side, is there any vertical that has the lowest level of churn, any that is just naturally really good and kind of retention feels built in?fsdf
Chathri Ali: (29:27)
Yeah, we do really well with what I call items that would be in your kitchen or your bathroom, right? So these consumables that you cannot do without. So, you already talked about your cats food or your dog food, for us, bath and kitchen goods always have the lowest churn. So it really goes back to health and wellness. You don't want to change up your lifestyle. Usually when you're set with a particular washing detergent or toothpaste for example, you don't usually switch up and try new brands. So we see pretty low churn there. And ultimately the staples in your daily lifestyle.
Chathri Ali: (30:05)
Again we've been asked about, "What happens if the economy turns? Will subscriptions be effected by people having to choose which basket of goods they keep?" Right. So for us, again, the items that are staple need for consumers, that their subscriptions are going to probably outlast, let's say the curated items.
Kristen LaFrance: (30:25)
Yeah. And that really just makes sense with kind of customer psychology and I think that can help inform your retention plans and your retention efforts where no, if you are a curated box, you're going to have to be thinking about different ways to engage a customer to keep them really interested and excited about things versus a replenishment where it's a deodorant or it's a face wash or something. The retention tactics are going to be a totally different approach there.
Kristen LaFrance: (30:53)
And I think it's really interesting having these, I'm not a super big fan of benchmarks, but having these ideas of in general, if you're running this kind of subscription, you can kind of expect one thing or the other. So I think that was really helpful to kind of tear those down. Just to wrap up, I've got a few questions for you. First, because you said you have eight plus subscriptions. I got to ask, do you have a favorite one?
Chathri Ali: (31:18)
Do I have a favorite one?
Kristen LaFrance: (31:19)
It's like trying to ask you to pick a favorite child, I feel like.
Chathri Ali: (31:24)
Well, Okay. I do have a favorite, but it's not a Recharge merchant. So, but that's okay.
Kristen LaFrance: (31:28)
Chathri Ali: (31:29)
Yeah. I'm a Rent The Runway subscriber for their update membership, which is essentially you get four pieces every month and it's kind of that Netflix style approach where you can get a designer item and then ship it back and you get four more the next month. And for me, I love that. Not just because A, I'm saving money because I'm not going to a Nordstrom's to buy something new to keep my closet fresh. But honestly, just from a sustainability side of things, it actually is awesome because if you've ever read into fast fashion and how much that affects just everything from labor abroad to just the cost of clothing once you're bored of your clothes and you send it to goodwill or donate those clothes go somewhere. So for me, if myself and let's say 30 women across the country are all using this one particular designer dress, I'm okay with that. I'm okay with that not being in my closet forever.
Kristen LaFrance: (32:32)
Yeah. I love that you brought that up because I've been considering joining Rent The Runway. Now I feel a little bit more motivated to do it.
Chathri Ali: (32:39)
There You go.
Kristen LaFrance: (32:40)
There we go. Okay. What are you most excited about for Recharge in this upcoming year?
Chathri Ali: (32:46)
Really, we have some really interesting creative subscription builds that we are seeing that are in the works. There's two themes that I'm seeing. One is the theme of membership models really taking off.
Kristen LaFrance: (33:02)
Chathri Ali: (33:02)
And so it's really fascinating actually, beyond just the typical e-commerce commerce world. We're seeing companies like Volvo launching a subscription product, which is essentially for $750 a month. You get your car lease, maintenance and insurance. So essentially all the bells and whistles you would need to drive a car, it's all wrapped into this $750 bundle pricing. And that's what you subscribed to. And I believe it's a three year commitment. Right?
Kristen LaFrance: (33:32)
Chathri Ali: (33:33)
So yeah. So that's Volvo, that's a car membership essentially. And then we're seeing some really interesting brands like Coco kind, which is based in SF. They're a lifestyle personal care brand. They are actually launching, they've launched a membership where you get free shipping on every order, a kind of fun gift with purchase and access to unique Coco kind products before everybody else. And you pay a fixed monthly fee for that membership access. And we saw them launch and they're now up to probably 300 plus members all within less than two months.
Chathri Ali: (34:09)
And so the idea that you're becoming a member to a brand and that's you opting into this relationship, we've seen that grow over the last few months. And what I'm excited about for 2020 is, I really see this dipping into the fashion world. We're pretty good partners with the team that built a site for a very large fashion influencer in New York. And I was talking to their principal about what if there were a members only area for her massive fan base where they could get access to her pics on the first of every month. And they loved that idea. So, I can see for the fashion side of things that there's this membership aspect to fashion moving forward.
Chathri Ali: (34:55)
And then secondly, the thing that I'm most excited about is bridging the online and offline experiences. We've seen a lot of merchants who are essentially creating these in person events or popups that will bring together their community and really create that buyer reality both through word of mouth as well as the shared content that comes from those offline experiences. So, we have a couple of brands like Succulent Box, which is a box of succulents really, having a popup where they're selling plants here in LA and creating a fun home environment through these long lasting plants. That's an idea that I would have never thought of two years ago.
Kristen LaFrance: (35:40)
Chathri Ali: (35:41)
And likewise we have tons of fashion brands that I'm sure you have heard of in terms of creating popups around LA and New York. But more and more we're seeing these consumable brands really try to meet with their subscribers offline.
Kristen LaFrance: (35:55)
Yeah, those are two of the trends I'm most excited about too. The membership trend is really exciting to me. Kayla, Maura and I did a podcast last season. We did an episode where we took a bunch of brands that didn't have subscriptions and tried to come up with really creative ways of that they could employ a subscription. The ones that were not a clear replenish able thing, pretty much all of them we kept coming up with these creative membership ideas and it's really exciting. One of the brands that I first heard of them actually at the Recharge summit last year was freshly picked and how they do a really interesting membership program, which I've talked about before.
Kristen LaFrance: (36:32)
So listeners, I won't make you listen to me tell that whole story again. I just think it's really cool to see creative ways of doing subscriptions and that it's starting to evolve into something that doesn't have to always be this 30 day, 60 day, 90 day replenishment and becoming a whole new way for people to connect with brands. I am really excited about that and we will make sure to check out the ones that you mentioned and linked to some of the stuff in the show notes. And I feel like we kind of covered this, but looking at the next few years, what are you really wanting to see from, from DTC brands as the space evolves?
Chathri Ali: (37:07)
Ooh, good question. What do I want to see from DTC brands? Well, I've seen a couple of DTC brands do this really well where they, just going back to the offline component, being where your subscribers are. So for example, Soylent is one of our merchants. They are now offered in 711 around the country. So in between your subscriber, your subscription delivery, rather you could pop into 711 and describe a Soylent if you didn't have enough on hand or for Flux Fits they're now in CVS is across the country. So, these are personal care and consumable items, but even if it's a more of a lifestyle brand, I would say being where your subscribers are, is really important because frankly, we're not all in front of laptops all day long. Right?
Kristen LaFrance: (37:59)
Chathri Ali: (38:00)
Like, I mean, that's the hope.
Kristen LaFrance: (38:03)
I hope not everybody is in front of their laptops as long as I am every day.
Chathri Ali: (38:06)
Exactly. I see really cool... Just again, going back to the popups and what's really happening in malls, right? There's this mall and I think it's Plano, Texas, that is testing eight different popups of various brands. Like Harry's, Warby Parker, Casper, et cetera. They're out in a mall now, getting creative where it's not just going to be about an Instagram video ad that inspires people or creates that curiosity that it's, "You know what? We're going to be where you're also at in an offline world."
Chathri Ali: (38:44)
So to me, I think malls are shrinking for sure. But I think that there's definitely a place for a digital brand to have a physical footprint.
Kristen LaFrance: (38:53)
Yeah, I love that. Such a good answer. And also I'm from Dallas, Texas, so I'm going to have to go check this out because I know all the mals in Plano.
Chathri Ali: (39:01)
Oh there you go.
Kristen LaFrance: (39:01)
So now I have to go look at it. Oh, thank you so much for being here today Chathri. This is such an incredible talk. I talk so much about subscriptions, but hearing the expert herself come on and share all your insights with the listeners is amazing. Before we head out, where can people find you if they want to connect with you more after this conversation?
Chathri Ali: (39:18)
I am on LinkedIn. So typing the name, Chathri, there's not a lot of Chathri's, definitely not in the world of subscription and I'm also on Twitter just @chathri is my handle.
Kristen LaFrance: (39:30)
Perfect. Thank you so much Chathri.
Chathri Ali: (39:32)