NOV 8, 2023

Meet Matthew Barnes.

He's a mechanical engineer who knows DTC subscriptions inside-out. Brands like Jot, Earth Breeze, and Fat Snax hire him to scale & optimize their business.

His key insight? Focus on lifetime revenue, not just new subscribers.

Why? Think of a bathtub. New customers are water flowing in. Churn is the drain. To fill the tub, you need more flow in vs out.

Eventually, churn caps growth. So get new customers while minimizing churn.

In this episode, Matthew reveals marketing strategies that thrive. And why others flop.

Join host Ben Fisher to explore customer behavior, optimizing revenue, and subscription fatigue risks.

Matthew's insights will shake up your thinking. And show how to spark growth.

Topics

  • Challenges and misconceptions surrounding subscription-based businesses
  • Introduction to Matthew Barnes and his company Proteus
  • Proteus' expertise in working with DTC brands
  • Proteus' range of services including development, reporting, and conversion optimization
  • Frustrations with focusing solely on subscriber numbers as a KPI
  • Impact of investor expectations on growth strategies
  • Analyzing customer base to identify segments and quantify value
  • Strategies for increasing perceived value and optimizing for lifetime value
  • Common mistakes in creating new products
  • Impactful strategies in the industry and skepticism towards certain tactics

Links and Mentions

Connect with Matthew

Connect with Ben

Show Notes

[00:03:48] Subscription is a proxy for lifetime value

The Power of Subscription:

"We [as brand operators] say we want "subscription." What we really mean is we want more marginal dollars in the bank account and subscription becomes a proxy for lifetime value, which is a proxy for lifetime margin."

— Matthew Barnes

[00:07:25] Obsession with KPIs and subscriptions for financial gains.

The Obsession with KPIs and Subscription Models:

"Sometimes the brand's goal is to do less in revenue and do more in margin, so we don't have to raise around.

Or it's to increase a metric that we know is near and dear to the heart of the person who is loaning us the money or something like that.

You just have to know what the North Star is."

— Matthew Barnes 

[00:11:25] Different ways to slice it, aligning incentives.

Unlocking Growth Potential:

"You have multiple businesses within your business.

You may have a great subscriber business, you may have a great individual purchasing business with a great lifetime value, right?

And then you may have this other part of the business which is the part where you have the deadbeats and stuff."

— Matthew Barnes 

[00:19:11] Incentivize good behavior, avoid giving freebies. Focus on purchase modality and upsells. Starting new categories requires separate business approach.

The Key to Increasing Perceived Value:

"I think pulling back and figuring out how to increase the perceived value of the product and really lean on and leverage that is the thing."

— Matthew Barnes

[00:22:11] Shifting products to boost sales and clear stock.

Customer Behavior and Lifetime Value:

"In playing around with the data of one brand, we found the people who come in and just buy a sample pack are deadbeat customers. They're pulling down your average super hard."

— Matthew Barnes

[00:31:07] Brands add extras to increase product value.

Increasing Revenue and Customer Satisfaction:

"We won the game on lifetime value because those people had a better chance of finding a flavor that they liked and purchasing it on the long tail."

— Matthew Barnes

[00:35:16] "Strategizing discounts to incentivize and retain customers."

Effective Customer Filtering and Brand Growth:

"I'll sacrifice conversion rate for AOV if I know I'm filtering for a better customer that's going to help the brand."

— Matthew Barnes 

[00:40:28] Digital goods subscriptions are inconvenient and expensive. It's better to buy shows or products individually. COVID made subscriptions popular.

Incentivizing Good Behavior and Business Growth:

"Try not to give away money or margin for no effort and unearned discount because you just let all of the just deadbeats into the door and then a post-purchase upsell that makes you go deeper in the ecosystem."

— Matthew Barnes 

[00:48:48] Aligning incentives is complex, but alternatives exist.

The Power of Incentives in Online Shopping:

"In Q4, I'm focused on how to find people that need a greater incentive when they kind of expect it and just encourage them to go as deep as possible, knowing that I want to hang on to them later as a good customer."

— Matthew Barnes 

[00:55:15] Conversion rate optimization platforms optimize and deploy JavaScript, CSS, and HTML to affect the client side of a website, targeting a specific percentage of users for analytical purposes.

Conversion Rate Optimization:

"What is a Conversion Rate Optimization platform really doing, right? Because you really got to think about this."

— Matthew Barnes