Today on the More Cheese Less Whiskers podcast we're talking with Victor Vento Jr, and Victor has an agency that helps people with subscription services.
We had a really great conversation that flew by! I've got a lot of experience in this particular endeavor and recurring revenue is one of my favorite models.
During the call we dove deep into the specific things Victor is doing with one of his clients, but the examples we talk about don't really matter because the model of getting someone to try something for the first time, and then offering a way for them to stay and deliver a service to them month after month after month, it's the same underlying mechanics and psychology.
The motivations are the same whether it's a subscription to a software services or a newsletter, or information or coaching or anything.
Everything that we talked about is transferrable to all of these models, and so much of it is about getting the metrics right.
You're going to enjoy this episode, especially if you are working with or hoping to work with something that has a recurring element to it.
Want to be a guest on the show? Simply follow the 'Be a Guest' link on the left & I'll be in touch.
Download a free copy of the Breakthrough DNA book all about the 8 Profit Activators we talk about here on More Cheese, Less Whiskers...
Transcript - More Cheese Less Whiskers 143
Dean: Victor Vento.
Victor: Hey, Dean. How's it going?
Dean: Wow, that is a power name.
Victor: I appreciate that, yeah.
Dean: Do you say it with flavor? Victor Vento. That's serious right there.
Victor: Yeah. I've not, I've not. I wonder if I should split test that.
Dean: Well, it's such a power name. It makes me wonder if you made it up. Is that your real name?
Victor: Yeah. Yeah, I like to add in Jr there just to differentiate myself.
Dean: Victor Vento Jr. It just got better. What kind of a name is Vento?
Victor: Vento. Surprisingly I've looked it up,it is Italian, but my parents are from Peru, so somewhere in there, someone came from Italy and then this is us.
Dean: Okay, perfect. I'm getting some feedback on your thing. Are you on a speaker phone or something?
Victor: How's that?
Dean: Yeah, that's better.
Victor: All right.
Dean: Okay, good. I'm super excited. I always love doing these calls. You never know what we're going to get, but I want to hear all about the Victor Vento story and then see what kind of evil schemes we can hatch today.
Victor: Yeah. No, that sounds great, sounds great.
Dean: What's up with Victor? What do you got going on?
Victor: It's a great question, two things. I've narrowed it really down to two things. It's funny. I was introduced to you. I forget where exactly and then through-
Dean: Have we met before? Have I shaken hands with Victor Vento?
Victor: No, we have not.
Dean: Okay. I would remember that.
Victor: Yeah. I have not had a chance to be graced by your presence.
Dean: Okay. I was going to say, I would remember that.
Victor: Yeah. No, I think you were at one of the Council of Masterminds. That's where I've heard more of your name from in the recent year.
Dean: Got you. Okay, so with Nick.
Victor: Yeah, with Nick.
Dean: Okay, perfect.
Victor: That's how I've known about you for a while. I'm following his stuff for a cool minute.
Dean: Awesome. Okay, so what do you have going on?
Victor: The main thing we have, we're a service based agency really, working on lead-gen and customer experiences on the back end there. I work a little past the lead-gen stage to work a little more intimately with somebody there. That's our main thing and especially after reading the book here, one market at a time, right? The next venture would be the subscription box industry. That's been a growing trend. I've been watching it, so it's been something I've been looking to become more of an educational leader in that space.
Dean: The interesting thing, when you talk about being a lead-gen agency, what kind of companies have you been working with, and what kind of leads have you been generating?
Victor: That's a great question. Yeah, so at first it was all over the place. Then we really started honing in on coaches who have some type of high-level program and that's been our space, but we dabbled in a bit with local subscription style business models. That was very fun, lower ticket items, people love it, and once you have them, it's easier to keep them coming back and creating that how do we keep them coming back type of experience, which that's what led to me watching that industry and going in that direction.
Dean: What did you learn through that? What's your take of it, now having done it for a while?
Victor: The sub-box industry, honestly that's been I would say not even a year yet that I've really been watching it, but since like summer of last year, I would say is when I really started to pay attention to a little more, after a really fun experience with a client. I would say the biggest thing, it's more of an opportunity is really what it was. I see a lot of people wanting to jump on this bandwagon of, "Hey, we can get recurring revenue by having some type of subscription box service," or something like that. They have a great idea. They just can't ever launch it because they don't know how to create traffic, how to create an experience afterwards to keep people coming back. I was like, "Well, that's-
Dean: That's the interesting thing is that do you notice a difference between the subscription box model versus any other type of recurring revenue subscription?
Victor: Not really.
Dean: Right. It's all the same, right?
Dean: The metrics are standardized, right? You're still looking for you've got to find people. You've got to get them to try it for the first time, and then you've got to keep them. That's really the bottom line. Everybody gets excited when they do the math on the growing. "If we just get a thousand members," you know. That's the thing. Without really realizing A, what it costs to get that first subscriber and the churn of what's going to happen, that you're not going to keep them all forever.
Victor: Yeah, exactly.
Dean: What have you found metric-wise with those in your observation of it? What's a healthy way to look at this or set of metrics for it?
Victor: I would say from that really fun experience that I had with one of the clients that we worked with that really got me into it to begin with was we noticed that once we everyone was onboard for breaking even for the first month, knowing that what we've done on the back end increased the churn or not increase. I guess that's backwards, decrease the rate of-
Dean: Retention, yeah.
Victor: Yeah, so our retention went from like three to five months, to like eight to 10. If we were to break even that first month, everything was golden after that.
Victor: Just because of what we did on the back end, and then how we got them in. That's why everyone allowed us to make everyone onboard for let's just break even. Even if we lose a couple bucks here in the first month, we're making way more on the back end. I think that's hard for a lot of people.
Dean: Yeah. I think you're absolutely right. I think where it gets even harder, like an interesting mind shift for people is that there's a saying that I use that it's less expensive sometimes to get somebody a result than it is to convince them to give you money to get the result, and result could be an experience, anything. The fact is, if somebody is going to subscribe to something, meaning on a recurring basis, whether it's a physical box you're going to get in the mail every month, whether it's a SAS subscription for a software service that you're going to use, or whether it's a recurring test control service or anything that somebody is going to do, it's the same thing. It's got to be about getting somebody to experience it for the first time. Right?
Dean: Once they experience it for the first time, they're either going to like it or love it or it's exactly what they were looking for or not. If somebody is leaning on the side of, we definitely lean and favor on the side of not getting involved in something, just because the friction of actually getting involved in something. Unless we're certain about it, we don't get involved in things. You know?
Dean: You have to overcome that apathy to new stuff because it's always. You know, historically people are in any kind of exchange of goods and services, somebody is always being asked to take the front end risk. Right?
Victor: Oh, yeah.
Dean: You're paying for something. There's a risk that it's not going to be what you like or it's not going to be for you, but you've got to pay to find out. Then you've got to cancel or opt out because anybody who's doing the subscription things, they'll get people in for a dollar or a reduced price to try and then set them up on an auto debit, so the hope is that they'll get in and then forget that they've signed up for it and just continue on, month after month. I think if we all look at our credit card statements, that they're full of things like that, that are just ongoing recurring stuff that we've subscribed to that it's just easier for that moment of frustration and saying, "Oh, I've got to cancel that." Then of course not getting around to canceling it and then again, it comes up again the next month, and that goes on for years sometimes. You know?
Dean: The idea, I get it, that the temptation is to just load up and get people on that way, but you start to think, "Okay, what on its own merits is going to get people excited about staying and sharing and referring and all of those things?" When you were doing it, what was the model that you would favor that you would find is the best in terms of your approach to building new subscribers?
Victor: You mean on the front end side?
Dean: Yeah, yeah.
Victor: That particular client was a food subscription. It was really fun because the problem that we saw was everyone coming in, the reason the churn was about three to five months, after about that time range, they were like, "Now what do I choose to eat?" It was a fit type of model, healthier food and whatnot, so what we ended up doing was creating some type of calculator quiz to say, "Here. Based on what you've told us, this is what we suggest." That simple change, that took that whole, as I've heard many times from you, separate the decision from the details, right?
Dean: Yes, right.
Victor: Just, "Here you go. This is your solution based on what we've learned from you." That simple change just doubled their retention. It was fantastic.
Dean: I love that, so that's good to hear. Yeah, when you start thinking through the experience, that's really the key to the longevity. It's nothing that you're doing on the front end that's changing the longevity. The longevity is where it all is, so you've really got to have the goods. You've got to have the experience. It's not even enough just to have the goods. If you've got the physical food, that just baseline has to be great. The core of it has to be great, but then everything around it is what makes all the difference, the user experience, the journey of it and the presentation of it from the way it's designed to the way that it's communicated. Everything about that makes a huge difference in the way it's perceived.
Part of the thing that I've just recently found out about because I've always been an advocate for design. We know that design just intuitively makes a difference, and I've always been a pragmatist on that, too. I kept advocating for people to prove it, like to show the actual return on design is the way I was looking at it with these designers and encouraging them to prepare and do some kind of case studies to document the difference that design has made in something. I talked about it on one episode, and then somebody sent me a link to a study by McKinsey, the consulting company, where they actually quantified the value of design with a huge years long study with all the top companies to find that they quantified that the design-led companies, they did a study of companies over the last 20 years.
Excuse me, like the same good to great methodology of the testing, looked where they took a design-led approach, where design is a key part of the business. That design-led companies have a 32% premium revenue-wise over their peers, their cohort or their comparable category group that are non-design led and return over 50% more money to shareholders, so they're more profitable than companies that are not design-led. You've got now a real quantifiable case for investing in design. That makes a big difference. Design, in their approach to it, is not just the pictures and graphics and the way things look, but they take an all encompassing approach to design meaning the entire experience, user experience.
Victor: Yeah, that makes sense, like unboxing.
Dean: Yes, exactly, that whole thing. If you just put the glop in a box and ship it to them through the post office or something, the utility of the subscription is fulfilled that way, but it's not as emotionally fulfilling as the branded wonderful jewel box that arrives to reveal this week's or this month's selections. All of that counts.
Victor: That makes sense.
Dean: A lot of times, people want to begin with, "Let's get a bunch of new subscribers," because they feel that that's the way to drive everything. Then we'll figure all that stuff out later, but the reality is it's like throwing water into a leaky bucket. You got big leaky buckets. They put design first in the marketing that they're selling and presenting it with better, more sexier experience and design than what is actually being fulfilled.
Victor: That makes sense.
Dean: Yeah, so if they put a front end of they do great marketing and great convincing people to try it, but then that's where all the money is spent, is trying to get the front end, the before unit lined up, but the reality is that the investment in keeping everybody is a better investment initially.
Victor: Yeah, no. I see that. We're focusing more. At that point, you're putting so much tension on the back end. You get a few people in. They're going to self-promote anyway. They're going to be like, "You guys got to try this." They're going to say it to the people that they know it's going to be relevant to. It's not like us trying to find who it's relevant for, but it's more the customers, the subscribers that we've found, telling it to more people like them.
Dean: Yeah, so when you start to look that through now, that's got to be a big piece of it, but what kind of numbers were you finding and basing your things on if you're looking at churn rates? How would you define what those metrics are? I often find that in subscription and recurring models, that the metrics or the way people focus on them is different, can vary widely, so what kind of focus did you have on that?
Victor: First, it was really just to see. The initial test, that front end quiz, was really just targeted to unsubscribers, people that have left. We did that specifically to be like, I wonder why they left? Is this why they left because we were hearing a lot of that? "I don't know what else to eat anymore. I'm getting bored because I'm choosing the same things," where we gave them this quiz, and they're like, "Wow. This is my goal because my goals change, so my food will change." They could take it as many times as they need to, depending on how often their goals change.
I believe just the ability like that, really just to adapt, and we started with the unsubscribers to bring them back. We didn't have to do much on the front end as far as marketing, so once we found that that was working, we then put it on the front end and said, "Well, let's bring new people in this way. Let's let them have the experience like that." Now no one else is doing that. They're going to be the ones that are like, "Wow," that we've set the bar. They're going to expect if they go anywhere else to have something like that.
Victor: Metrics-wise, do you mean specifically numbers?
Dean: Yeah, percentages or when you're approaching this from a lead generation standpoint as an agency advising people who are looking to build their subscriptions, what kind of philosophy or approach or benchmarks can people use?
Victor: Okay. No, that's a great question. At first, once we brought it to the front end, we were looking just to break even, so the initial buy, I believe their first deal was like a $115 buy-in. I feel like at first, personally I felt like I don't know if I would spend that much for something that I've never eaten before, so we created something that was $25, a six-meal pack type of deal. We were like, "All right, let's do this, and we'll adapt to this, whatever, the meals according to whatever they get." That was a much easier buy-in. You're probably going to spend that on a night going out anyway, so that gives you like a week's worth of meals. That right there allowed us. We wanted to say we're willing to spend up to $30 to get someone to buy that $25 because we know what happened with the unsubscribers. They came back on.
Dean: Yes, so there's what I'm looking for here. That's an interesting thing, so you were willing to spend up to $35 to get somebody to give you $25. Let's look at it that, first of all, what was the cost of that $25? What was your hard cost on delivering that $25?
Victor: I think it came out to about $15 or so.
Dean: So your margin was that you make $10?
Victor: It was a smaller margin. Yeah, something like that.
Dean: Okay, so is that pretty typical for the box industry, that it's about a third margin?
Victor: It's usually about 30. Yeah, we want something around 30%, but I think what they were delivering for that six-meal at the time, they were going through some packaging differences, so they were looking at how to adjust a few things. At that time, it was like $15 or so.
Dean: $15 cost to deliver it, including getting it to them.
Dean: Okay. Is that including mailing it to them?
Victor: No, so mailing it to them, that was an additional, so because it was a local place, they started with a pick-up or a delivery with a charge on delivery.
Dean: I got you. Okay, so pick-up, that's great.
Dean: Excuse me. That's the ideal, so the metrics were to give somebody a $25 option that you would make $10 on. It cost $15 to deliver it, and they were willing to spend $35 to get that person to give you $25, so if we were to take things in bundles of 100, so if you got 100 people and you've spent $3500 to take in $2500 of which you would get to keep $1000.
Dean: Is that the right thing?
Victor: Yeah. What we saw? Yes, that was our baseline. That was what we set. We saw people buying more than that. It felt so hyper relevant after that initial quiz, that they were like, oh, so the initial purchases were averaging like $78, $80.
Dean: Oh, that's perfect to give people options on that.
Victor: Yeah, exactly. That's initially where we were at.
Dean: How many people would it take you to get somebody to... What was the actual conversion rate? What would it take to get somebody to do that? You were spending $35, but what does that mean in terms of how many people you had to give the offer to that would turn into somebody paying you $35 or somebody paying you $25? Sorry.
Victor: Off the top of my head, I don't remember, but it was a pretty good conversion rate. Let me see if I can. Yeah, off the top of my head, I don't remember.
Dean: This is one of the things where the game that you're in is really 100% about the math of this.
Victor: Oh, yeah, absolutely.
Dean: Finessing that math, so if you're saying that out of 100 people that took you up on the $25 offer, let's just go from there. How many of those would then reorder, would order again?
Victor: I would say like 80 to 90% of those.
Dean: Okay, so you would say that or is that what it actually was?
Victor: No, it was around there. It was like 83, something like that. It varied from month to month but it was between 80 and 90.
Dean: Yeah. Okay, perfect. Then they would stay, but after three or five months, then it would drop off? That's really what happens, kind of thing?
Victor: No. We improved that to eight to 10.
Dean: Eight to 10 months. Okay, great.
Victor: Yeah. It used to be three to five, we first tested on the back end doing that.
Dean: Wow, awesome. What did the lifetime value end up? Do you use metrics like that to track the migration of the whole list of subscribers?
Victor: Yeah, so it would vary month to month what they purchased, but again, it averaged to about $80 a month that they would repurchase. It was easier for them to buy the $115 package, though, at that point, so most people did that with a few people buying in their first month at like $60, $70, so it brought the average down to like $80 something like that, but most people when they re-signed up were like, "Let's do the $115." It made the $115 easier now, right?
Dean: I got it, yeah.
Victor: That's how we kept it. On average, people would order one to two times a month because the $115 I think was about two, two and a half weeks’ worth of food. We'd have about half the people order the $115 and then the other half do it double. They had a bigger household or something.
Dean: Yeah, yeah, so overall in this business, in a way with our GoGo clients and our Money Making websites and GoGoAgent, those are all monthly recurring SAS things. One of the metrics that we measure is the lifetime value, which is now the rolling thing of what the aggregate of lifetime value of all of the people that are in now with you. You get a number that gives you a sense of right now your new subscribers can be worth with your current system, X dollars or whatever that amount would be. Did you get a sense of what that customer value was?
Victor: Yeah, about $1000 to $900-ish, a little over $900 to like $2300 depending on how often they ordered in a month but in that range. At the low end, it would be like $900.
Dean: Got it, so then you look at that. The $35 is going to be what you're willing to spend to get potentially $900, right? Knowing that about 80% of the people who order once are going to continue on, which is a high number, so all the convincing is happening before they make the first order. They're already convinced that this is something that I want, and you are delivering on that because it matches what they were expecting, shown that 80% of them are going to renew, 20% didn't work out or whatever.
When you look at that, that's a pretty healthy thing. What would be an interesting number to look at, though, is the actual percentage of people that you have to show that offer to to get somebody to convert. Like if you sent 100 people through this mechanism, how would you? You're going from cold traffic? How are you introducing this to somebody? How are you getting in front of people? How are you picking who you're presenting this to?
Victor: It was cold. We were using Facebook ads. Yeah, we used a combination of ads with messenger bots to handle the quiz side of things and automation. Those were like choose your own plan, type of deal. This is what we recommend afterwards.
Dean: Okay, perfect. When you look at that, it would be valuable to know even anecdotally what you thought. Just from your memory even, do you think you could Price-is-Right guess without going over, just from what you know about what was happening, how many people would? What type of ad were you using, exposure or an outcome? Were you linking traffic to the quiz?
Victor: It was a conversion, actually, to the quiz. We pixeled inside the bot. What we were seeing was about $20 per person to take it. Again, I don't remember off the top of my head the actual number after that, the conversion of how many people took it to how many people bought, but we were seeing-
Dean: It seems like that would one in three if your cost was $35, and it cost you $20 to get someone to take it. A third of the people who take it would roughly turn into an order, right?
Dean: Yeah, so then the question would become then, how many people did you have to show that to get them to take the quiz thing? I just wonder about the outcome there because when you look at it, you wonder how many people do you have to expose it to to get down to the ones who are interested enough to take the quiz. What was the idea behind the quiz? What was the motivation for them to take the quiz, yeah?
Victor: Yeah. No, great question. Like I mentioned, at the end. We started from the back end first of the unsubscribers. What we found was people leaving because they didn't know what to order anymore for their goals. They had fitness goals and health goals and all this stuff, and they didn't know what to order. To react to that, we came up with something that would pick and choose for them. It didn't fully, I wouldn't say. It wasn't like fully customized. It was customized enough to the point where it felt more custom for your goal. Does that make sense?
Dean: Yes, so that was what the offer was. Was quiz the word you were using?
Victor: Yeah, so it was a quiz that asked a few questions here and there based on your goals, your lifestyle, how they normally eat and stuff like that. Then it's like, "This is what we recommend to reach that goal." We put the carrot in front of the horse there and said, "This is where you want to go. This is how you get there." Then we offered that $25 deal package.
Dean: Got you. Okay, so that then looks like if we're going from cold traffic, that this is the first time they're being exposed to you, they're seeing, and they have to be all the way down the road here on this mindset of I'm ready to subscribe to some food prep service for me, right? Is that the-
Victor: Not necessarily. When we brought it to the front end, it was positioned as a way to eat healthier. We were really targeting busy people, so eat healthier without having to really worry about eating healthy. It's just done for you, and see what that's like. That attracted enough people so that we kept it. Then that allowed us to start really seeing the results of people going through it. All right, cool, so this offer at the back end, the smaller offer to opt-in was working.
Dean: Got it. Then when you're showing them, here's the options for you, and by the way, we can deliver this right to your door, or you can pick it up or we'll prepare the food for you.
Dean: Try it out for $25.
Dean: That's essentially the offer. Okay, I got you. The other polarity of that then would be to go to the realm. How were you targeting people initially? Were you targeting by any specific interest or letting the algorithm find the right people?
Victor: We split tested both. We did a local area and then we did a little more targeted to specific individuals. For example, like moms was one of our main targeting interests and more business professionals. We found the type of person that are a little more management, and we targeted them through interests there. We found the results to be very similar. The algorithm did it, so after about a couple weeks, we just let the algorithm take over and do its thing.
Dean: Yeah, so it's interesting that that's the thing. Only the people who took the quiz would ever know that ultimately you have a food delivery or food prep service, a done for you healthy eating option?
Dean: That would be what would. Yeah, because the ad itself was all about how to eat healthier without worrying about eating healthier.
Victor: Correct, yeah.
Dean: Which are the right foods for you, just that kind of thing. It's on their mind. Okay, and then did you bookend that and test the exact other end of that with what I often call it, refer to it as a horse for sale ad? Sometimes the best way to sell a horse is with a sign that says, "Horse for sale." If you were to test something that said exactly what that busy person would be thinking, "I wish somebody would just fix healthy foods and deliver them right to me here locally."
Victor: We do not, presently.
Victor: Yeah. It's funny. As soon as you started mentioning it, I was like, you know what? That's something we did not. I didn't even think of because everything else is working pretty well. That's funny, huh?
Dean: When you look at it, but it's like this elegant way. Ultimately, if you're trying to sell a horse, you're going about it by offering people what kind of recreation is fun for you, or what's the best way to have fun without, you know? Then when they go, "Surprise! It's a horse." That's the thing, so you're only attracting people on what you think is going to be the precursor to them wanting a horse.
Dean: Right? Where you're saying it's related. It's healthy eating and the best foods for you and then, "Surprise. We've got a meal delivery service that we can do these and prepare them for you." It's just the same way.
Victor: Right, so we've overcomplicated the process.
Dean: Right, where it might be worth testing. "Winter Haven. Get healthy meals delivered right to your house, six meals for $25. Try it today."
Victor: Yeah, that's so funny. I can't believe it, but I feel sheepish right now, pretty much.
Dean: Victor Vento, what kind of subscription agency are you running over there?
Victor: Oh, gosh, a complicated one.
Dean: That's okay, Victor. That's why I'm here. That's why I'm here. That might be the best way because when you think about it, there might be people who are too busy to take a quiz and figure out what to eat. "I'm not going to prepare anything. I'm not going to." You know what I mean? If that's the thing, people who are interested in healthy eating or wish that they could eat healthier but don't have any time or have any interest in preparing their food, what you maybe have inadvertently been attracting are the people who are conscientious about eating healthy and love to prepare the foods in advance and the people who are attached to or excited about meal prep Sunday for Instagram. Get all my stuff and cook all my meals and get my little bento boxes together and take it up on Instagram. All those people who do it themselves but are just looking for options, other healthy choices kind of thing, looking for ideas but not looking for a service. You know?
Dean: Inadvertently, you may have been attracting that motivation more than the core motivation of, "Don't even worry about it, we've got you covered."
Victor: Yeah, because I know we had a lot. That's probably the people that didn't. That's probably where the majority of people that didn't buy it were. The other people, it was like, it looked like we were getting a lot of the people that I don't want to put them in this bucket, but they're kind of sad followers. "We want to do it, but we can't stick to it because it gets too crazy. We jump 200% in and then two weeks later, we can't keep up with it." That's what I saw the majority of the people coming in that converted, but yeah, I agree that probably also in that was the combination of the people that are aware. They've been doing this for years already themselves.
Dean: Yeah, so they're just looking for ideas, right?
Dean: Then when you take that to the next level, then you start to think. You would always want to bookend that because you were having a blind related offer that then progressively then revealed the service ultimately that you have, so definitely you would want to test the straight up offer, that if people knew that there was a food delivery service or a food prep service that could either deliver them or I could pick them up right there and I don't even have to think about it, and it's right here in Winter Haven, that would be super exciting. You know?
Dean: Okay, so that level, I would definitely look at, but then you can experiment with the offer of the $25 to start thing, or you could start with an offer, a $25 gift card for people so that your cost could be offset, so that you're spending the $15 that it costs for the food anyway, but what you're giving up is the $10 that you would get in profit in the margin there, but it's costing you because the people who are... First of all, you get three to five times more people would take you up on the gift card offer to try it for the first time. Right?
Victor: Yeah. That's interesting.
Dean: That way you've got now a visible prospect that you can try and win over or win again back if they try it and leave or send them somewhere else. That would be, do you have relationships with other people who offer a similar service that you could sell those unconverted leads to?
Victor: Perhaps. I don't think so. I'm sure I could ask around.
Dean: Buy you could find.
Victor: I can find, yeah.
Dean: Then when you look at it, now your cost of it, when you start to think about the influencers, if you start thinking about the currency of you've got these $25 gift certificates that the cost to you is going to be $15 for it. You're happy to spend $35 to get a new client, which seems super reasonable and low to me, actually, so I don't know whether your recollection of the numbers. Is that the raw, that's the total cost to get somebody who's paid you the $25?
Victor: Yeah. I feel like it may have just been the city. I'm not sure, but it was a local, so I know local is usually different from national. It surprised me to see how low our conversion costs were. Since it works, that's probably why I didn't think. I was just like, "Well, let's keep improving what's working," and I didn't look elsewhere.
Dean: Got you. You know, part of it, it might be worth thinking about locally if you've got other, whoever could be advocates for you, personal trainers, existing clients. The benefit of having an offer where you start out with a $25 gift card that they get to experience it for free essentially the first time, or they might use that $25 and upgrade their order to $75 or $100. They still get the option, but the worst case scenario would be that they use the $25 gift card to get that six-pack and then leave, that that's all they do. Right?
Dean: That's the worst case scenario there, but part of the thing, another metric that you want to look at is a multiplier. We use something that we call a Subscriber Multiplier Index where if you look at when you bring on a new subscriber that in the first 30, 60, 90 days, the goal is to entrench that new subscriber into full membership, that they're renewing and they renew again. In 60 days they've had three shipments, in a way, or three deliveries or three cycles, let's call it, in 60 days. The goal that we measure in there is not only the conversion to a new customer, a new subscriber, but the multiplication of that. If it's a local service like you're going to their house to provide a service, that you start to look at things that would go, how many referrals or neighbors can we get on the service in that first 60 or 90 days while you're there?
If you look at it that if you're coming to somebody's house and delivering something, that there's a good chance that their neighbor might like the same service since you're already there or that the friends. Like everybody who tries a new thing for the first time, they're going to be talking about it the most then. If you start thinking about if you were to send a golden ticket to everybody, three golden tickets, three gift cards that they can give to their friends, that when they start this service they're going, "Oh, you know what? I tried this new meal service. They're delivering meals right to my house. This was delicious. Oh, here. I've got a gift card for you. You can try it, too." That becomes now a multiplier, right? You start-
Victor: I see what you're saying, so that one subscriber, you just turn into three.
Dean: That's exactly what you're trying to do is you're trying to get that and any orchestrated effort to it. We look at on the real estate side. With the realtors, we have a Listing Multiplier Index that every time a real estate agent gets a listing, they've got five opportunities to get extra commissions on that. The five opportunities are that the listing gets sold, and they're going to get the listing side of the commission. They find the buyer for the house, and they're going to get the selling side of the commission. They've got an opportunity to find a buyer that buys another house that they met because they inquired about that one but didn't buy it. They've got the opportunity to get another listing in the neighborhood because of one of the other neighbors that they met while they were selling that house, and they've got opportunity to get a referral from the seller before the transaction is over.
We look at that that's the target is to get those five things and to measure a rolling metric of the last 10 listings that you had, how many extra commissions did you get? Your goal would be and our clubhouse leaders in that are over 3.5 on an index, so every time they get a listing, it turns into 3.5 transactions currently right now. If you're saying that every time we give away a $25 gift card, it turns into some number of new subscribers, you know?
Victor: No, that makes sense.
Dean: There is so much richness to the way this recurring model works, you know?
Victor: Yeah. It's very interesting. Again, I focused a lot personally on the front side, but we do a lot on the retention side. We like to start there first before we start anything with paid traffic, and this goes with any client, really, just because it makes sense to maximize what you already have. It's easier to keep someone coming back once they've bought it then get someone new.
Dean: Absolutely, that's what it's all about. That's where all the equity is.
Dean: It's the critical thing about recurring revenue is that it recur. In order for it to recur, you got to keep it recurring.
Victor: Right, yeah.
Dean: You've got to put the ing in recurring income, right. That's funny. Well, what's your takeaways here? We've talked about a lot of stuff here.
Victor: Yeah. We really dove into that one client of mine.
Dean: It went fast, didn't it?
Victor: Yeah, we had some good stuff here, but I guess one of the things here is I would say my biggest takeaway would be that the subscriber maximizer that you were just talking about, something I've not thought of in the past is how to maximize when someone converts, how to immediately get that, multiply that.
Dean: Yes, and that's the thing is when It sounds like and I know that you were looking at this, you're interested in doing this as an agency type of service for other recurring revenue things.
Dean: I know that that's the thing, so it felt like we were talking all about that one client, but the truth is, it doesn't matter what that one client was.
Victor: Oh, yeah.
Dean: By talking about that one client, we're talking about every client.
Dean: The big lesson of this is rather than obfuscating the real offer, to bookend it with a crystal clear, the horse for sale option of it first, to see, just to build that presence and awareness of it so that people know. "Oh, yeah. I've heard about that." Like right now, there are in any market for anything when you come out to the market to something, there's a group of people who are just waiting for it.
Victor: Oh, yes.
Dean: They already know that if that existed, they would buy it. I've got in my hand my reMarkable tablet. Have you seen those? It's like an iPad but imagine a Kindle that you can write on?
Victor: Oh, yeah. You can write. Yeah, I've seen that. Those are fantastic.
Dean: It really is, so literally I bought that reMarkable 45 seconds after I knew it existed, before the minute and a half video telling me about it was even over. I knew that I wanted it.
Victor: That makes sense.
Dean: That's really the thing where if somebody had been going, taking an approach of obfuscating it or making it peripheral and saying things like 10 ways to take better notes or those kind of things where now it's like how do you take notes? Do you like to write things? Ta-da- here's the reMarkable.
Victor: Yeah. No, I get what you're saying.
Dean: Right. Being in front of that with the exact thing is often a great way to start it. Then that gives you a baseline to see, but then the other thing is and it takes a little bit of courage to convince somebody to try this, but when you limit it and say, "Let's try it with 100 people," that you're limiting your downside with it per se, but you'll see a clear enough differentiator to say that sometimes it's less expensive to get somebody the result than it is to convince them to give you money to get the result. Once somebody understands and experiences that this food tastes great, this is healthy, that was easy, it came right to me, I am going to continue with this. It's different than having to evaluate it and make a decision because people are far less attached to future money than present money, you know?
Victor: Yeah. No, that makes sense. Okay, yeah. Then a lot of good ideas here to definitely test a more direct offer in that space. I've just not seen. Coming from the high-ticket clients, I've not seen that ever really work as well, but that makes sense. It's a completely almost different industry. Most tickets, it's what does it cost? Impulse-buy type, yeah, that makes sense.
Dean: Well, certainly it's a utility. There's a utility element to it, right? There's a utility buy.
Dean: That they're actually getting something, so that makes a difference.
Victor: That does. Okay. I'm just taking notes here while listening.
Dean: Yeah. You're going to hear it different. It's interesting. It's a good thing it's all recorded, but you were probably in a trance for 30% of it because you're hearing something and then your mind is like, "Oh, wow."
Victor: Yeah. You start making ideas.
Dean: Yeah, you black out.
Victor: I get what you're saying.
Dean: You're going to hear it differently when you listen again, but I enjoyed it. You certainly got a power name for any service you want to provide.
Victor: Yeah. No, definitely.
Dean: Who do we work with? Victor Vento, Jr.
Victor: Oh, man.
Dean: That's awesome. Well, I had fun. Maybe we'll meet. Are you down in Florida for Nick's?
Victor: Miami, yeah. This weekend, yeah, I'm here.
Dean: Okay, cool. I may pop in.
Victor: If you're coming down-
Dean: I'm not coming down, but I may pop in through the magic of Zoom or something. We'll see.
Victor: Oh, yeah. No, that would be fun to virtually shake your hand this time.
Dean: There we go, for real.
Dean: Awesome. Okay. Well, welcome to Florida. Have fun, and maybe I will see you virtually this weekend.
Victor: That sounds great.
Dean: Thanks, Victor.
Victor: All right. Thanks, Dean. Appreciate it.
Dean: There we have it, Victor Vento Jr. What a power word, so that was really exciting. I think he's got a lot of great potential there. You know, so much of having success in any recurring revenue endeavor is to really understand the math of it and really understand the metrics, the micro metrics that are at play and the psychology of what moves those dials, so we had a lot of great ideas there.
I'd love to have more conversations about recurring models, so if you've got something that you offer on a recurring model or you offer services to recurring models, let's get together and do a podcast episode about it. Just go to MoreCheeseLessWhiskers.com and click on the Be A Guest link. Tell me about what you're up to, and we can get together right here.
While you're there, you can download a copy of the More Cheese Less Whiskers book. If you'd like to see how the 8-Profit Activators that we talk about apply to your business, go to ProfitActivatorScore.com and see which ones are either growing or slowing your business right now. That's it for this week. Have a great week, and I will talk to you next time. Bye-bye.