BarkBox, the ecommerce subscription company catering to the canine-loving set, has “some pretty aggressive goals” for 2013, according to its Head of User Acquisition Marketing Rob Schutz. For one, the company wants to double its member base, which sits at 55,000 subscribers today. (Schutz says that if that subscriber-base hits the 1 million mark by the end of the year, the team is promised a trip to space. Otherwise, they’ll settle for the targeted 100,000.)
Founded by Henrik Werdelin, Carly Strife, and Matt Meeker in December 2011, BarkBox raised $1.7 million in seed funding in early 2012, which was followed by an additional $5 million in Series A financing this April. Now at 26 team members, BarkBox has built a business around a cause and gives 10% of profits to local animal shelters.
Beyond the staple BarkBox product, which is mailed monthly with treats and toys to subscribers beginning at $19 a month, the platform is rapidly expanding through a digital BarkPost community and new BarkCare wellness program for 24/7 talk, text, or video access to veterinarians.
Schutz sat down with AdExchanger to talk about BarkBox’s strategy and how the platform reaches customers and prospective subscribers:
ADEXCHANGER: What are the benefits and pitfalls of running an ecommerce company with a subscription-based model?
ROB SCHUTZ: I think for now we’re very focused on B2C or, as we say, B2D (business-to-dogs.) It’s nice, as a business, to have a recurring revenue stream. It’s nice not to have to sell on a continual, daily basis. The pitfalls of that are you do need to be really active on the renewal (and) retention side… recurring subscription ecommerce is great because you get to retain those users and grow, but you are also combatting churn on a monthly basis. We’re working hard and adding a lot of people, but you do need to put an emphasis on win-backs and retention of the customers that you have. Even going from 50,000 to 55,000 subscribers is not adding 5,000 subscribers. It’s usually adding 7,000 people to combat some of the churn.
Where are you making the most investment in terms of your data strategy?
On the paid side, Facebook is our biggest channel at this point. As a strategy, BarkBox likes to plant a lot of seeds in a lot of different channels, so we’re always testing and we’re always trying new channels and pushing the envelope to see where there’s traction. Where there is traction, we kind of turn the chair a little bit and say, “Let’s put some thoughts, design resources, and some money into teasing this out” to see if this is a good, scalable channel for us…we’re more concerned about, “What are the big opportunities that we haven’t tried yet that are going to bring in hundreds of new dog parents per day?” It’s a lot of tests, and in all user acquisition, it’s a lot of trial and error. An important part of your strategy is understanding what does work, what doesn’t work, and we’re much more comfortable now knowing our best channels are where we can show pictures of the dogs with our products.
Has there been one channel you thought would work but it fell flat?
Search has been interesting. When I first came in, I was like, “I’m optimizing our landing pages!” “We really need to plug away at search!” and there are wins there. We bring in users from search, but it’s the type of thing where even if we got it to the perfect configuration, it wouldn’t be nearly as successful as some of our other channels. Our philosophy is, it’s so important what you prioritize and spend your time on more than money. You can’t get caught up in these small channels and spend so much time trying to make them work, when the potential of wins are very small, especially for a small team and startup. You have to be always on the swivel and be willing to cut the cord on a channel if it’s not working for you.
Is your mobile app a replication of your site experience, or does it have its own form and functionality?
I think right now our app is more of a companion app, so users who have a BarkBox account get a lot of value out of it. You can see what your subscription plan is, and you can see what was in [the last box you received]. We’ve gone through some iterations where [we’ve allowed you] to order products from previous boxes through the app. But we haven’t done a ton yet for ways to engage non-customers, and I think that’s something we’ll be taking a look at. Mobile is kind of forcing itself to the front of our priority list to look at with analytics. So many people are coming from mobile. We’re even looking to optimize the conversion funnel for mobile specifically, which recently came up, and we’re kind of doing a full redesign of the mobile experience to help optimize that as well…tablet has really started to grow for us as well. We see better conversion rates off of tablets sometimes than even desktops, so we’re looking for different ways to get access to tablet users who are prequalified as dog owners and explore ways we can get BarkBox in their hands.
From a user-acquisition standpoint, what are you up against?
The first challenge I’m dealing with now, that we’re close to closing the loop on, is attribution. Because we’re doing so many tests of so many different channels, we’re often relying on vendor reporting to say, “This is how many users you brought in” or “This is your CPA.” And while there are certainly good intentions on that, it’s usually not skewed in your best interest. If you’re doing display ads, it always includes view-through conversions to a CPA. And I don’t have a strong level of confidence that a lot of our display is contributing to conversions, so we’re in the process of implementing Convertro (and I’m not endorsing them yet), but they seem to understand the attribution problem pretty well and you’re able to see who has seen your ads even if people aren’t clicking on them. You can see which channels are contributing to overall conversion.
That is a big challenge for us because we’re doing so many tests and you don’t know what the true effect is until you have this type of tool…we want to know, net-net if something’s a positive or negative, and that’s kind of how we approach a lot of our channels. If you see some wins are possible in channels…that’s where you spend more time and money. We want to do better on the attribution side.
BarkPost, one of your products, has become this user-generated content pool of sorts for you. Has it opened up new doors of opportunity from a data standpoint?
BarkPost has grown into its own product at this point where we have people approaching us saying, ‘How do we get access to this community of dog lovers? Our founders are doing a good job of trying to separate (the products) a little bit. We don’t want to just be talking about BarkBox all the time, or saying, “Try our new Care product” on a content site. We do get some complementary benefits out of that. We see some great opportunities there without being too pushy to do a little bit of cross-promotion if our email list continues to grow there.
I think we’re close to 130,000 subscribers there on the email list and that gives us the opportunity to use something like Facebook Custom Audiences or Lookalike Audiences to get access to people who are prequalified to enjoy this type of content and if they’re enjoying that content, they probably either own a dog or know someone who has a dog and would be interested in some of our offerings as well…there are softer ways you can promote your products than using an email list to send a blast.
