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Today we're talking about Atlas Coffee, a company that's revolutionizing the coffee experience by taking you around the world without even leaving your home. Then, we’re going to jump into what it is doing great — and not so great — with its subscription retention strategy, wrapping this all up into a nice case study for improvements for your own brand.
The combination of a unique and superior coffee that no one else offers, along a with a creative delivery plan that can be personalized, has spelled great success in the specialty coffee market for Atlas Coffee Club. But is its retention strategy as unique and withstanding?
- Make your membership an experience
Memberships are good for business, but you have to put some thought into them. You need to add value and exclusivity so that your customers have a personalized experience.
Customers that purchase true memberships tend to have 20% higher average order value and 10%-15% higher retention than those who are simply on a subscription.
- Donation options increase retention
Donations help a lot with brand affinity, and customers who have charitable donations bundled with their subscriptions tend to retain at a 10%-20% higher rate than those who don't opt in to a donation.
Even if it's nominal, people feel more invested in the subscription and want to make sure they're still helping the world. It’s something that every brand should think of because it’s so easy to add and ultimately compounds well on multiple fronts.
- Offer sample packs
We’ve seen sampling work really well as a gateway to more permanent subscriptions. And in Atlas Coffee’s case maybe offering sample packs with smaller portions, or even one-cup coffee packs could help. Because it's already so focused on variety and curation, this may be a good way to boost average order value and long-term retention.
Atlas Coffee Club
"Coffee is a language in itself," said Jackie Chan. History corroborates that statement.
The deep, rich drink connects citizens from many nations in a universal language of the palate.
Since its legendary discovery in the Kaffa region of Ethiopia in the 6th century, coffee has been associated with the exchange of ideas. Its ability to raise energy levels became legendary by the 17th century when the drink made its way from the coffee houses of Persia, Egypt, Syria, and Turkey to Europe, where it quickly took over the continent.. Merchants, enthralled with coffee's potential, found that there were virtually no limits to the global market’s demand for beans.
Fast forward to the 21st century and the Atlas Coffee Club, a company with the goal of delivering coffee customers can’t find elsewhere to their doors on a regular basis. Atlas Coffee Club promotes global communication, and exploration, through the language of the coffee bean.
Michael Shewmake, a creative entrepreneur and musician, left a corporate job to assemble a band of explorers intent on discovering the world's most unique coffees. Co-founder Jon Miller was a rocket scientist (really!) and adventurer who now enjoys seeking out the best coffees and pitching in on the company's operations. Together with their stellar staff and featured contributors, these two shape the way modern coffee is delivered and experienced.
Brewing a cup of coffee may not be rocket science, but Atlas Coffee’s focus on adventure, discovery, and innovation in the way coffee is delivered rivals the aspirations of rocketeers. Subscribers of Atlas Coffee Club's delivery system will appreciate the out-of-this-world focus on customer experience.
Atlas Coffee's success
It has been said that the secret to success is to provide a product or service that's in demand and isn’t offered anywhere else. Atlas Coffee Club does exactly that.
Atlas Coffee Club provides cream of the crop coffee from sites well off the beaten path. And, it's not just about the unique and aromatic coffee varieties themselves. Each installment of a customized subscription not only includes tasting notes and brewing tips for that batch—it provides a ticket to a global experience, complete with a postcard from the coffee's country of origin with each shipment.
The combination of a unique, superior coffee like no one else offers with a creative delivery plan that can be personalized has spelled success in the specialty coffee market for this upbeat, creative enterprise.
A coffee shipment from Atlas Coffee Club is an adventure — a bit like discovering a delectable new bean on a wilderness hike in a remote region of the world. It's a sensory experience when you open a fragrant package, let your eyes wander over the enclosed postcard, and think about starting on that special project you've put off. Perhaps that first cup will finally inspire you to begin.
Atlas Coffee offers a choice of three roast types: light to medium, medium to dark, or a blend of each. You can request your coffee to be shipped in whole bean form or ground. You may select the number of bags per shipment and the frequency you receive shipments — monthly or twice monthly are recommended. Subscriptions may be altered or canceled anytime.
Atlas Coffee Club owes some of its over 100,000 recently converted customers to today's passionate search for more unique coffee experiences. As with fine wine, successful coffee branding today isn't just about exquisite taste.
The act of brewing a cup must also offer a hint of mystery, adventure, and connection to concepts that matter.
The specialty coffee movement has been scaling upward for some time. So far it shows no signs of slowing. Personalization is appreciated in today's mass-production world. As long as Atlas Coffee Club's explorations continue and its coffee-of-the-month surprise packages remain unique, the company's value should continue to climb.
Not everything's amazing about Atlas Coffee’s strategy, but there’s still a lot to learn from it. It does a great job of really leaning hard into its wide variety of customer personas. That being said, we need to remember: retention is key and an area where most brands mess up.
Why is retention important?
You spend half of your budget and time acquiring customers, but to be successful, you need to keep them. The beauty of the subscription model is that the relationship with the customer is baked directly into how you make money. If that customer is happy, they'll keep buying from you in the long term. If they're upset or not seeing the value, they'll cancel — quickly.
Plus, money talks here. Subscription ecommerce companies using the tactics we're going to talk about have 2x the customer lifetime value (LTV), 2x the average order value, and 3x higher growth rates, because they're not worried about plugging a leaky retention bucket.
To highlight the importance here, let's look through Atlas Coffee's retention strategy and break down what they're doing well, and not so well, so you can learn for your own DTC business.
Retention has three parts:
- Active churn, which are customers who are actively choosing to cancel your product.
- Expansion revenue, which are your existing customers that buy more product.
- Delinquent (or involuntary) churn, which are customers who's credit card or payment has failed, which sadly is one of the largest single buckets of where you're losing money.
When we look at Atlas Coffee's active churn, there are so many reasons why a customer may cancel—some you can control, others you can't. We want to make sure Atlas Coffee is not only setting up their customers for long-term retention in the initial purchasing process, but that they're also collecting information on why someone's cancelling, if they so happen to, in order to get a clean cycle of retention improvement.
Atlas Coffee does a lot of the fundamentals really well, but there’s still room for improvement. One piece we did love was the membership aspect. When you’re dealing with a commodity like coffee, you not only need good quality, but you also need to add something to keep people coming back. I loved how Atlas Coffee’s Club helps you explore the world of coffee and shows you additional perks that come with membership. It makes the entire experience a journey that goes beyond just the product itself. You may think this is too gimmicky, but you’d be amazing at how these moments of delight keep people coming back.
It definitely elevates the brand. I also love the celebration they give you with the membership after an order goes through. It really made me feel like a special customer and entangled me further into the brand. The big takeaway for brands watching is to take a step back and go through not only your membership, but also your order flows and interactions to ensure you’re inserting these experiential moments. You don’t need to be a big brand to have a “wow” factor.
Another great aspect to Atlas Coffee’s strategy was the onboarding process. It’s a perfect example of a brand including a user quiz that’s simple and quick, but has high impact. Remember, you want to know something about your customer in order to get them to convert and keep coming back for products.. Atlas Coffee takes my preferences into account to make sure I get the right coffee and flavors. It also saves me the leg work that goes into choosing what flavors I want and doing my own research. Like we saw with Bespoke Post earlier this season, curation is important for your retention rates.
It imbues trust into the brand, and brands watching should realize it doesn’t have to be complicated.
One area that Atlas Coffee needs improvement on is its offboarding process. It has a great start and includes more than a lot of other brands have, but it’s clunky.When you’re designing a cancellation flow, you want to make sure you ask 1-2 questions about why the person wants to leave and then make sure you curate offers based on those reasons, whether that’s a pause of the plan or even a salvage offer.
In the case of Atlas Coffee, every option leads to a 50% discount in an offboarding page that's off of the main site. Instead, it should move this offer to the main site and also customize salvage offers a bit more. Guide me into the proper salvage offer by figuring out who I am as a customer and those 1-2 questions.
Again, though, the brand is at least doing something, which is better than nothing. For the rest of you, the reason this is so important is that we've found that those companies that properly utilize salvage offers tend to save 15%-30% more customers. This finding was based on a study of just over 1,000 DTC subscription companies.
Expansion revenue is crucial, because your existing customers are more than willing to buy 3x more from you—you just have to make sure to ask. Plus, those customers who have at least one add-on or additional purchase tend to have 18-54% higher lifetime value, meaning they're paying you more over the life of the subscription, but they're also sticking around longer, because they're more ingrained within your product.
Let's look at Atlas Coffee's expansion revenue prowess. Expansion revenue is crucial because your existing customers are more than willing to buy more from you — you just have to make sure to ask. Plus, those customers who have at least one add-on or additional purchase tend to have 18-54% higher lifetime value, meaning they're paying you more over the life of the subscription, but they're also sticking around longer because they're more ingrained within your product.
Right off the bat, I think Atlas Coffee would benefit from throwing a donation into the mix. It already has the message of clean, locally sourced, and socially conscious coffee, so it makes sense to attach the brand to a cause and offer up a donation feature.
Donations help a lot with brand affinity, and customers who have charitable donations bundled with their subscriptions tend to retain at a 10%-20% higher rate than those who don't based on a study we completed on just over 30,000 subscription customers. Since so many DTC brands have a social component, it's a great element to add on to the onboarding flow.
Even if it's nominal, people feel more invested in the subscription and want to make sure they're still helping the world. It's a great tactic that's also great for the world. It’s something that every brand should think of because it’s so easy to add and ultimately compounds well on multiple fronts.
One thing I thought of that I think could help Atlas Coffee’s expansion efforts is to offer up sample packs somehow with smaller portions — maybe even one-cup coffee packs. We’ve seen sampling work really well as a gateway to more permanent subscriptions, and since Atlas Coffee is already so focused on variety and curation, this may be a good way to boost AOV and long term retention
I actually think this is a great idea. Your brand should also consider this, especially since it’s relatively straightforward based on all the sourcing and shipping legwork you’ve already done.
Credit Card Failures
Now let's talk about the sexiest topic in the world—credit card failures. We know you don't wake up sweating in the middle of the night thinking about credit cards—that's our job—but here's why we obsess over things like this: just under 40% of the customers that leave you are leaving you because of failed payments. To get these folks back, we want to make sure Atlas Coffee is treating these folks like a marketing channel, sending them messages before the point of failures, all the way to after the point of failure through email and text messages.
Atlas Coffee actually did okay with its payment failure strategy relative to most subscription ecommerce companies, and that’s the first time I’m able to say this 16 episodes in. That being said, there’s still quite a bit we’d optimize. So first up, I love how they used plain-text emails instead of the markety emails we often see. However, the copy itself comes across as a bit pseudo-markety when it should be more personal and seem like it’s from an individual. Atlas Coffee also needs to make sure customers are getting the right number of emails. It’s as simple as this: keep the plain text and personalization in the emails, but make copy less markety and send them out over a 4-5 email drip sequence.
I am way more likely to take action when I think it’s a person on the other end because I feel more obligated. It’s harder to ignore a person vs. a robot that doesn't have feelings.
Next up, Atlas Coffee should consider its credit card update form. It doesn’t make me login, which is great, but I’m directed to this generic form which just looks super scammy and makes me feel reluctant to update my info. This page should look like it's actually Atlas Coffee, not just some generic page. This should be on a branded marketing landing page and not some generic form. We’ve seen time and time again that these types of pages are better than forcing a login, but can result in lost trust.
Last, Atlas Coffee had pretty weak retry logic. It at least retried the card, but only retried it a few times, which means the company is probably missing out on a lot of customers who reactivate their card after a few weeks. Instead, Atlas Coffee should be optimizing its retries and making sure it actively alerts customers in a 4-5 email drip to update their credit cards. It’s just not sophisticated enough here.
So overall, Atlas Coffee’s doing above average compared to what we see from other subscription ecommerce brands. There are some highlights there, but also some lowlights. If it wants to take on this multibillion dollar industry and win though, there are some key changes that need to be made.
Let's revamp. First though, why do we feel we have any authority to even talk about this? Roughly 20% of the entire subscription market is using ProfitWell, so we're sitting on more data than anyone else. Simply put, we have the data to know what works and what doesn't, and we care more about this problem than anyone else out there.
Let's walk through what we'd steal and what we'd change immediately about Atlas Coffee's retention strategy, so we can all learn for our own brands.
Membership as an experience
There’s quite a bit brands could learn from Atlas Coffee’s membership and coffee club features. A lot of brands end up creating glorified subscribe-and-save memberships and don’t put enough thought into actually making the membership an experience. Here Atlas makes you feel a part of the club with personalization as well as copy that’s super approachable. I loved it.
Keep in mind these memberships are good for business. Customers that purchase true memberships tend to have 20% higher average order value and 10%-15% higher retention than those who are simply on a subscription. This finding was from a study we did on five-thousand subscription companies. For your brand, consider adding some exclusivity or even just adding a stand-alone membership to supplement your existing subscriptions.
Optimize offboarding & credit card failure strategy
Atlas Coffee needs to improve its offboarding process. It at least has something (which is better than other brands), but it could improve on design and user experience. It could also better collect more information when customers leave to provide tailored offers.
Not all customers who cancel are lost. Sometimes it’s timing or a vacation or a whole list of things that have nothing to do with you. Instead, offer up a smooth offboarding with a 1-2 question survey on why they’re leaving that leads to a salvage offer or pause plan. It’s not a ton of friction, but it’ll reduce some churn and not hurt the long term possibility of reactivation.
We’ve found that those companies that properly offer up salvage offers and a clear offboarding experience tend to save 15%-30% of cancellations — this based on a study we completed studying just over 1,000 subscription ecommerce companies. Again, to be super clear, Atlas Coffee at least has the basics here, but it should upgrade this to gain even more loyal customers.
Credit card strategy upgrades
Lastly, Atlas Coffee needs to optimize its credit-card failure strategy. It is doing an okay job with plain-text emails and not making me log into an account, but the copy needs work. The company also needs to get more sophisticated in terms of retries and credit card forms.
It also needs 4-5 plain text emails that go out in a drip after a card was declined.. The emails should also be plain text and avoid any HTML or markety design. I would also love to see it implement SMS messaging to alert customers of a failed payment. Based on this setup, it looks like Atlas Coffee could improve its recovery rate by 30-50%.
Who's up next?
That's it for season four of Boxed Out!