[00:00:00] Andrew Michael: The single biggest driver of retention is a customer's onboarding experience into your product. I fully believe that. I did not know that when I started. I did not appreciate the importance of onboarding. And now that is without fail, something I work with every one of my advisory clients on right in the beginning. And it's often the thing that they think about last because they're trying to build the core product, but the on-ramps to that core product actually matter so much more.

[00:00:34] Andrew Michael: This is Churn.fm, the podcast for subscription economy pros. Each week we hear how the world's fastest growing companies are tackling churn and using retention to fuel their growth.

[00:00:52] VO: How do you build a habit-forming product? We crossed over that magic threshold to negative churn. The unique between advice and customer success, it always comes down to retention and engagement. Completely boosts the strategy, profitable and growing.

[00:01:05] Andrew Michael: Strategies, tactics and ideas brought together to help your business thrive in the subscription economy. I'm your host, Andrew Michael, and here's today's episode.

[00:01:16] Andrew Michael: Hey Adam, welcome to the show.

[00:01:17] Adam Fishman: Thank you for having me. It's great to be here.

[00:01:16] Andrew Michael:  It's great to have you for the listeners. Adam is the interim SVP of new products at Mozilla and investor with the 20 growth fund and a Reforge partner. Adam is also a growth advisor to several startups and is the show host of Startup Dad. So my first question for you, Adam is where did the inspiration for Startup Dad come from?

[00:01:42] Adam Fishman: I'm so happy that you asked me that question. So I started that show about a year and a half ago. I'm on 70ish episodes now I do one every week. And I think a couple of things, one, I'm a dad. So I have two kids, a nine-year-old and an almost 12-year-old. I also have built and worked at many startups. And I think the reason that I started it was because what I saw was very few dads talking about the tough job of being both a parent and a founder or an entrepreneur. And you see people go on interview shows and they ask them about, you know, kind of what we're going to talk about today. Like, tell me about the tactic or the strategy here. What was it like to scale this company?

[00:02:25] Adam Fishman: And they're like, oh, we're killing it and everything's great and blah, blah, blah. Meanwhile, behind the scenes, it's really frigging hard to be a parent. And so I wanted to, in some ways, put dads on the spot and ask them that question because nobody else was asking them. But people ask moms that question all the time who are also successful. And in fact, that's often the first question that they get asked. How do you do it all? And so I wanted to just flip the script a little bit and have a different kind of conversation. That's the one that I was happening. Yeah.

[00:02:54] Andrew Michael: That's a good conversation we're just about to have.

[00:02:56] Adam Fishman: Ah, well, but I mean, I love this. Would I have more subscribers if I had a different type of show? Probably. But you know, I'm building something that's really meaningful to me. And so that's why I do it. So, yeah.

[00:03:09] Andrew Michael: I was actually chatting with Marija last week's guest about this and essentially like with the podcast, well, Churn.fm and her podcast, we started off just something was like, we were just really genuinely interested in it. And it didn't start something like we have a plan to do something with or to make money with. And then that stuff just happened, like over time or naturally, organically, I think there seems to be a commentary. So maybe like the it's not where you want it or it should be today in your mind.

[00:03:36] Andrew Michael: But if you're doing what you love and you're doing what you enjoy. But yeah, I think it is like it's definitely one of those things that we don't talk about much. And like it's an incredibly difficult job to do both things very well. And yeah, so I definitely have listened to a few episodes. I'm a fan as well. And I think it's nice refreshing content for a change just to see how others balance things from that perspective.

[00:03:59] Adam Fishman: Well, I'm glad to have you as a listener and thanks for bringing it up on this show. Fun to talk.

[00:04:04] Andrew Michael: Absolutely. So today, obviously, we're not going to be telling our parenting, but we're going to be telling about churn and retention. And to some degree, there's some a lot of lessons you can think you can port over from one to the other. But essentially, the today like we were just chatting before the show, and I think you have some interesting experience when it comes to like time, it's Patreon and your time at Imperfect Foods as well, where you've had to deal with sort of the and what you want to call it churn beyond your control and starting to think about like, how do you go about doing this?

[00:04:38] Andrew Michael: And I think there's a very good episode we had actually with Emerick O'Neill where he basically made the case that you absolutely need to understand what's within your controls so that you can effectively go ahead and solve for churn and retention. Because a lot of times we see arbitrary goals then decrease it by 20%, but you don't even know, like maybe you're dealing with SMBs and 90% of your churners because they hang out of business. No matter what you do, you're not gonna keep them in business.

[00:05:01] Andrew Michael: But you've been in these situations now and you've actually been things that maybe were seemingly out of your control, but you found ways to bring those into control. So I'm keen to dive into that today and maybe we can get started actually just with Patreon. Like maybe just give us a quick overview of like when you're at Patreon, what they do and then we can dive into it.

[00:05:20] Adam Fishman: For sure. So I was at Patreon from early 2016 until mid 2020. I left right at the peak of the pandemic, a little after, you know, four or four and a half years of being there. And I had a bunch of different roles in my time there, everything from leading marketing to product growth. That's kind of where I ended up. What Patreon is evolved while I was there. The way that we describe it is a membership platform for artists and creators to engage and monetize their fans. So if there's stages of engagement with a creator, you can go from zero to fan. Like I've never heard of Churn.fm. Now I'm a fan of Churn FM or I'm a fan of Churn.fm. Now I'm paying them directly to fan monetization. We took care of that second part.

[00:06:13] Adam Fishman: So if YouTube and Spotify and the rest kind of do the first part, which is discovery and the algorithmic surfacing of content, we were once you're big or bigger, what do you do? How do you make money? And so we worked with a lot of creators that had huge followings, some that had very niche and specialized followings, and we helped them build membership businesses. So it was like a SaaS platform for other people to build SaaS platforms on top of. More akin to the equivalent of Shopify for retail versus Etsy or something like that. So that's Patreon.

[00:06:48] Adam Fishman: The company processes billions of dollars a year and sends hundreds and hundreds of millions of dollars to creators, billions of dollars to creators. When I was there, it was very small and we grew it to be very big. So I was doing probably 50 to $100 million of GMV. So like the total amount of money processed on the platform, about 50 when I joined and about a billion when I left in four years. So that's pretty good. I was excited and I wish I could say it was all due to me, but it's not, but I had a... So that's Patreon.

[00:07:21] Adam Fishman: And then the unique challenge that we had with retention is really, really interesting. So there's two types of retention on that platform. There's Patreon retaining creators, so the SaaS businesses, and then there's those creators retaining their fans. We call that pledge retention. So if I pay you money this month, and then next month I don't pay you money, well, I've churned. So we actually didn't have a problem with creator retention. As long as creators made at least a hundred dollars on the platform every month, they had nearly perfect retention. And I mean like churn on a monthly basis was like tenths of a percentage point, like so small, but the problem for creators and what made them not feel great was losing fans.

[00:08:18] Adam Fishman: And so, but the reality is we didn't control that relationship. And in fact, Patreon's stated goal and positioning was these are your fans. We're gonna get out of the way. We're gonna recede into the background. We just provide you the platform and the foundation to do what you do best. And so creators are also not all business people. They don't understand the drivers of churn. So in some ways I had to build the growth team that could be everyone's growth team on the platform, which is really interesting.

[00:08:55] Adam Fishman: And so we studied pledge retention really, really in depth. What drove it, all the different dimensions and segmentations, what creator behaviors contributed to people staying or leaving, characteristics, was it the type of creativity or it was the type of content you made, like, et cetera. And I think we learned a ton about it while I was there, which I can go into, but I wanna pause because I've just been saying words for a while now.

[00:09:25] Andrew Michael: No, no, for sure. It's very interesting. I'll let you go as well, because I think just getting like a full picture and understanding is that Patreon as a business, as you say, was like B2B2C by which like the C is like you stood out in the back lines and you let the businesses, the creators themselves like deal with those relationships. It's interesting like the creator retention was so high or chain was so low from that perspective, but then definitely see like from a business perspective, from like the GMB perspective, like needed to have that creator retention working with their pledges as well for the business to operate.

[00:09:59] Andrew Michael: So it's like you're stepping to the side and you're letting them deal with it. But as well at the same time, it has a big impact on your business. And you mentioned like you're building the growth team for Patreon, but you need to think about how do you do this now for every one of your creators? How did you think about going about doing that?

[00:10:17] Adam Fishman: Yeah. So one thing I just wanted to double click on. So the idea of pledge retention is what drove the NRR of a creator. So the net revenue retention of a creator, which meant that, you know, a creator could be retained and making money, but we wanted them to make more money over time because that's how we made money as a percentage of their transaction volume. So that's why pledge retention was so important. And some of the things that we did and studied.

[00:10:49] Adam Fishman: So one, creators cared very deeply about losing even just a single person, even if that person was only paying them a dollar. So there was like a huge emotional attachment to like, oh, my fan, this fan doesn't like me anymore. What did I do? So the first thing that we did to just sort of like study this problem was we started doing exit surveys for patrons. And so if somebody canceled the pledge, we would ask them, why did you cancel? And choose from these reasons.

[00:11:21] Adam Fishman: And it was things like the creator, you know, stop producing stuff that I liked. My tastes have changed. They didn't deliver the things that I was expecting, like, et cetera. And at one point we would actually ask them, we also wanted to know, do people come in with an idea of how long they're going to be a pledge to this creator? And so we started to ask people upfront. They would make a pledge and then we would immediately ask them, how long do you expect to be a patron of this creator?

[00:11:49] Adam Fishman: And some people would tell us, you know, oh, five months, six months. And it turned out that that was actually a pretty good predictor because people had a sense of like how long they were gonna support that creator. But the other things that we learned in asking patrons was that the consistency of production. And so the idea that you're getting something every month, every handful of weeks was really important to a patron's retention. And I see this as a sub stack newsletter writer and as a podcast publisher. When you stop, this is why they talk about the content treadmill.

[00:12:30] Adam Fishman: When you stop and then you start again, you usually churn out a bunch of people because they forgot about you or you know, whatever. And so we, one of the things we encourage creators to do was to be consistent in their in their production. And made it easier for them to do bite sized rewards and value delivery to fans. So that was sort of one thing. The other thing that we learned was that as a creator got bigger and bigger, they got more and more stuff that they were distributing to the world and new patrons, especially had a hard time navigating that because they would sign up and they would get exposed to just an explosion of back catalog and like all kinds of stuff.

[00:13:20] Adam Fishman: And so we really had to steer them to value so that they could navigate it and be like, oh, I've just unlocked all this stuff. Here's where it is. Here's how it's organized, like, et cetera. So connecting them to that really quickly was very important. And so that was something that we actually did have in our control. We could change the post pledge experience and how you're... once you became a patron, what your consumption looked like and things like that. So that was sort of a second thing.

[00:13:48] Adam Fishman: And a third really big thing was how quickly you felt engaged with as a patron. And so again, challenging when you're a creator who's signing up hundreds of new patrons a day or a week or whatever, or thousands in a month. And so we built relatively turnkey ways for a creator to quickly engage with their fan post pledge. So for example, we hooked up this thing and the, the merch company, fourth wall, which I use for my merch store does this really well. When you get a new purchase or pledge, we made it easy for a creator to quickly record something and then send it to that person as a thank you.

[00:14:39] Adam Fishman: And so the creator would get a ping, they would open up their app, they would just record like a 10 second thing, and then off it would go to the patron. And that WIC engagement had a huge improvement in the likelihood that a patron would stick around because they felt seen and paid attention to. They're like, oh, this money that I'm giving you matters to you. I can see it, you know? And of course, creators were super, super appreciative of getting a new pledge.

[00:15:07] Adam Fishman: But they didn't have an easy mechanism in the beginning to go and acknowledge that. And so that was really important. And then we helped kind of teach creators foundational psychological hooks on habit formation. So another good example was teaching creators to do shout outs and dedicate pieces of content to some of their fans or put the name of a set of fans in the credits of a video or something like that. If you have a post or a piece of content that is dedicated to you as a new fan, and they call you out by name and say, hey, Adam contributed to this or Andrew contributed to this, there's a very low chance that you're gonna turn around and cancel your membership in a subsequent month.

[00:15:55] Adam Fishman: And so we saw that also directly connecting to the longevity of someone on the platform, which is again, this feeling of like, I'm seen. And then this kind of feeling of FOMO of like, well, shit, if I cancel, like people are going to see that I'm not a, like, I'm not a patron of this person anymore. This is a little bit of this sort of guilting people. And so, you know, I say this all in hindsight that these like all seem super obvious, but at the time, you know, this took place over the course of years of experimentation and years of trying a bunch of stuff that didn't have any bearing on pledge retention.

[00:16:31] Adam Fishman: And so we narrowed in on these types of things and then you try to exploit those as much as possible. But that was our approach and it worked really well and we ended up moving pledge retention up by like tens of percentage points. Which is fantastic, yeah.

[00:16:48] Andrew Michael: Yeah, that is amazing. Yeah, I think there's obviously like a lot of similarities in different products and services that you've seen, like some of the things you mentioned as well. I think definitely like as a creator, the content sort of like hamster wheel is a real thing. And it's like, once you're on it, on the treadmill, like as soon as you get off, it's done. And I think as well, like from a subscription, especially on a pledge perspective, like I knew this was real, like because we deal with social networks and there's algorithms and we need to be feeding the algorithm to get our content seen and out there, but it probably makes you more so when someone's actually paying you money. It's not the algorithm now.

[00:17:23] Andrew Michael: It's like, okay, I'm paying you, I'm expecting something. And if you're not delivering, like why am I paying you sort of things? I think it's very obvious having that one, but it's more obvious in the context when like you're actually paying money from that, the other end. And then it sounds like a lot of these sort of little things, a lot of them, you're playing on the psychological aspects and like creating empathy, making people feel heard, like belonging as well, like creating that helping foster like a community and then facilitating these with just sort of these like micro tools that enable creators to do more and facilitate their time.

[00:17:56] Andrew Michael: So what was seemingly out of your control is that okay? We what can we do really to help them do a better job with this sort of stuff is if you actually take a step back. There's a lot of little things that you can do to make people's lives easier to be able to deliver this content to be able to create these relationships or moments of wow I think for their pledges. So... amazing.

[00:18:17] Adam Fishman: Super powerful super powerful stuff. Yeah

[00:18:20] Andrew Michael: Hmm. You mentioned was like a series of four years was anything that you like was certain was going to work when it came to an experiment and like completely surprised that it didn't.

[00:18:30] Adam Fishman: This by the way, this is one of my favorite interview questions to ask candidates and interviews because it I like to hear their humility their lessons in humility. Yeah, that's a really good question. Yes, there obviously were hundreds of these. I think one real pertinent example was remember when I was talking about like connecting creators to or connecting patrons to the value as quickly as possible?

[00:18:53] Adam Fishman: One of the things that we attempted to do was after you pledged, we would basically redirect you back to the creator's home experience and we would pop up an interstitial that was like, here's what you just pledged for and like here's where it is and stuff like that. And I was pretty certain that, oh, this is, of course, this is going to make it easier for them to navigate and things like that. That actually had no impact at all on the likelihood of retention. In fact, even just redirecting them back to the creator's main feed was just as effective.

[00:19:33] Adam Fishman: And yet we built this whole, like tested this whole interstitial of like organizing and kind of giving you next steps and things to consume. And we found that like that didn't do much. Actually didn't do it. I don't know that it was negative on retention, but it was just a big nothing burger. I almost prefer to run experiments that are negative on retention, because at least you got a response from somebody, even if it's the wrong response.

[00:20:00] Andrew Michael: And you can learn something as well from it.

[00:20:01] Adam Fishman: Exactly. The nothing burgers were like... What we found was most people, when that interstitial thing came up, they were just like, yeah, yeah, yeah, close. People were so used to closing that stuff that they just didn't even bother to engage with it. They thought it was just some sort of marketing speak or like, you know, generic helper tool or something like that. And so we're just like, yeah, yeah, yeah, forget about it. That or people would be so excited to like click around on the creator's page that they'd immediately go click to another part of the page and that thing would just close. And so it ended up being good in theory, but the wrong execution of it. And yeah, it ended up being kind of a big nothing burger.

[00:20:43] Andrew Michael: I think these often like those interesting experiments as well as where you say like, good in theory, but just the execution is the bad. And I think these are things I've experienced as well firsthand where like, I experienced something work in the past and then I was certain just replicating that was going to work and then just like nothing burger as all. But when you actually look, when I looked into those sort of cases, it was always like the experience was slightly different, maybe it was slightly worse. And like, I think there's such as ideas, like good idea for experiment, but not good execution.

[00:21:12] Andrew Michael: And then just, I think knowing and understanding when to push into things and when to step away is also a challenge.

[00:21:19] Adam Fishman: I can give you one more really interesting example too. And this is how a creator structures their page. So when I first got to Patreon, we had, I mean, we're signing up thousands of creators. Now it's, by the time I left, it was hundreds of thousands in a month, right? And one of our theories was, oh, maybe there is something about the structure of a creator's page. The length of their description, whether they have a video, whether they do this, this, or this thing that drives activity. And some of it was retention, but a lot of it was also just conversion, like what would convert fans to patrons.

[00:22:00] Adam Fishman: And this is an example of like correlation versus causality. So we saw, yes, several successful creators did these types of things on their page and they were successful. And we said, okay, cool, let's guide everybody to do this. And let's test this out. And so we did, and it didn't matter. You know, it didn't matter the number of words you add on your page. Like, and also a creator could be just as successful with like three sentences than with full paragraphs. And a lot more of it had to do with how well they were communicating off the platform and less of what was actually on that landing.

[00:22:42] Adam Fishman: Now there were some eventually that won there, but we spent a lot of time trying to get creators to craft like the perfect page and again, negative impact, no impact. It's like lots of experiments that we just flushed right down the drain. And again, what you did didn't cause you the structure of the page didn't cause you to be more successful. It was more correlative in hindsight.

[00:23:09] Andrew Michael: So, yeah, I think it's like intuitively. I was thinking as you were talking that also it felt a little bit like it could not be up to the creator's personality type as well and stuff. Some will be a lot more verbose on those pages and it transcends into who they are and how they communicate versus others more abrupt and short. As you were talking though as well earlier, I had sort of this and I could see a lot of comparisons to the way Patreon works is the way these food delivery companies work where they make money when the food, when the companies that they deliver for sell more goods, it's out of their control.

[00:23:47] Andrew Michael: And then at the end of it, like they need to figure out what are the little tools they can do. So they instrument photography and all sorts of little gimmicks to help these stores sell more and produce more and whatever. And obviously like Imperfect Foods was not that exact thing, but in that space. So I'm keen to maybe like switch gears now, dive a little bit into your experience there at Imperfect Foods. And just give us a quick overview of like what they did and then we can dive into it.

[00:24:14] Adam Fishman: Yeah, so Imperfect Foods is now merged with Misfits Market, but what they do, and they still exist, you can navigate it. They're basically the West Coast version of that and Misfits is East Coast. They started as a company that sold essentially imperfect produce and usually cosmetically imperfect, not like rotten or anything, but you know, a carrot that might have looked like it has two legs or a weird, you know, dented mangled looking red pepper or something like that. And it was just a cosmetic imperfections. And, but it's the same, but it's the kind of thing that a grocery store won't put on the shelves because they have a very certain aesthetic that they have to adhere to.

[00:25:02] Adam Fishman: So Imperfect Foods bought that from farmers at a discount because the farmers would otherwise just throw it away or through a landfill or plow it back into the fields. It's hugely wasteful, bad for the environment. So Imperfect Foods said, hey, we'll buy this from you at a discount and then we'll turn around and we'll sell this to consumers at a discount. And so that was the business model. And then over time, it expanded into more own brand kind of products, more other imperfect things.

[00:25:31] Adam Fishman: So an example might be in a chocolate factory, they're making chocolate bars and there's a bunch of broken pieces that end up there. Well, those are delicious. There's the same chocolate, but they can't fit them into a bar. And so we would like have them bag that and we would label it as like, you know, imperfect chocolate or something like that. And we would sell that. And so we got it more into our own label stuff and eventually Imperfect basically morphed into, especially driven by the pandemic, into more of a full service grocery delivery service, but on a subscription basis.

[00:26:08] Adam Fishman: So not like Instacart where you are a flip cart, where you are ordering whenever you want and it's very transactional. We said, hey, every week or two weeks, we will recreate a box of grocery items for you and you can indicate ahead of time, the types of things you want to see. And then we will give you an opportunity to edit that. But if you don't, or if you do, it will ship to you on a certain schedule unless you cancel it. And so that was a business all in the U S but we covered like 80 to 85% of the United States at some point, which is pretty big. So that's the business.

[00:26:50] Andrew Michael: Nice. It's definitely interesting. Obviously I think we have Misfits here. We are based in Cyprus, but they probably just stole in the name and not stolen the name, but called it here. And, but they do something similar as well with the fruits, which that's why it's like the stuff that's not sold in supermarkets. And it's interesting you took that into like another level as well with different types of products and, and so forth.

[00:27:12] Andrew Michael: Chatting before you mentioned sort of like, there was the, again, like these reasons for churn beyond the control and figuring those out and then figuring out how you can pull back control on some of those, what were some of the reasons for churn when it came to these boxes?

[00:27:28] Adam Fishman: Yeah, that is, it's a great question. So obviously you're shopping on a website and then you submit your changes and stuff like that, and eventually a box shows up on your doorstep. Now, that box might have frozen goods in it, meat, fish, eggs, almonds, all kinds of fruit, vegetables. If you open that box up and your eggs are smashed, or it took too long to get there and the frozen meat has thawed and is kind of gross on the inside. That's a bad experience. You're gonna churn. You're gonna go, well, maybe one time I allow it and I get a refund.

[00:28:11] Adam Fishman: But if this happens to me again, I'm out. Or I'm just gonna change the type of food I trust Imperfect Foods to bring to me and so my basket size is gonna shrink until eventually it doesn't feel like an essential service for me anymore and then I'm just gonna cancel. And so this experience of actually the logistics of receiving your grocery delivery was super important in whether or not you were gonna stick with the experience. And weird things could affect it.

[00:28:43] Adam Fishman: What if it's a really hot day outside? What if you're not home and that thing sits on your porch for several hours? What if you forget to cancel or postpone for that week because you're out of town and we deliver a thing and then you come back and you're like, I hate you imperfect foods. This has been sitting on my porch for five days cancel. So there's like a lot of that, that is fundamentally felt like it was out of the control of the digital product organization, that people are working on driving subscription. So yeah, so that's, that's an example of some of the stuff that could cause somebody to cancel that felt out of our control.

[00:29:20] Andrew Michael: It's very interesting because I think like, even though this is the context of like a physical product in the real world, a lot of those same reasons exist in digital projects and in software. And a lot of times we think we have more control over the reasons for churn. And in actuality, there's probably a billion things that can happen to anybody at any given moment that can cause churn. That's not going to show in your data and you're not going to be able to figure out. And it's just going to be life as it goes.

[00:29:47] Andrew Michael: And yeah, I'm interested to hear a little bit though, like obviously logistics being a big area and that's like your logistics versus your tech side. How did you go about starting to figure these things out then? And how did you go to start to try and reduce the churn from the seemingly uncontrollable?

[00:30:03] Adam Fishman: Yeah. Let me go back to the point you just made before that for a second, which is how this translates to SaaS businesses. A perfect example of this is, let's say you're using an email tool, something like used to be like report of or something like that, that would give you sales data or information about a contact. One of the main reasons people turn from that product is they got a different job. And they go move somewhere else and they would forget to reinstall the toolbar thing.

[00:30:34] Adam Fishman: And so like that's kind of out of your control. Like if somebody loses a job or, you know, company shuts down in the case of a small business, like what are you going to do? So, so that is a very strong parallel. But back to your recent question around like, what did we actually do to understand this behavior? The first thing that we did comes back to, again, like talking to customers of various levels of satisfaction. So I talked to, personally, as the chief product officer, called customers who gave us 10 out of 10 NPS to understand, like, why are you so excited about this?

[00:31:13] Adam Fishman: And I talked to a ton of customers who didn't give us scores like that, or were on the precipice of churning or what we saw, we're serially pausing their orders and things to ask like what's going on? Because a serial pauser is somebody who's very likely going to churn, right? They're just sort of kicking the can down the road. So the first thing was qualitative conversations with people.

[00:31:36] Adam Fishman: The second was quantitative, the ability to make it easy for people to submit feedback in real time around what was your experience like? What was your unboxing experience, things like that. And in some of those things, so obviously like, my eggs are broken, I can't control that. But we had to make changes to our logistics and our operations and our warehousing and packaging to kind of get there. But there were certain things that did emerge. And one of those was, and this is true of almost any product, but in this world, it was expectation setting with the customer.

[00:32:13] Adam Fishman: So what do I mean by that? Well, when you're shopping for fruits and vegetables and products, and you're looking on a website, if you say an avocado and that avocado looks like it's a certain size or shape or whatever, and it shows up or we call it a medium avocado or something like that, and it shows up and it's the size of an egg, people are going to be kind of ticked off about that because what they saw on the site is not reflective of what they got in the box. And so that actually is something that you can control if you're the digital product team and you're in charge of merchandising and stuff like that.

[00:32:50] Adam Fishman: And so one of the things that we started to do was improve the accuracy and the sort of matching of our photography from, we have a generic image of an avocado and that's what whenever we sell avocados, that's what you get to an actual, like more realistic picture of the thing and trying to put it in context so that you could see the size relative to maybe another object or something like that. So that helped a lot with that particular line of feedback.

[00:33:22] Andrew Michael: Yeah. It's almost like the marketing site selling one thing and the product delivering another thing, similar thing in like in SaaS again. And it's really important that marketing cannot be like ahead or overselling things and then under delivering on the product end. There needs to be good alignment between like the marketing and the product fits for its work. In this case, it just happens to be like avocados that you're looking forward to eating and then getting extremely disappointed when you pop it out the bag to realize it's the size of an egg.

[00:33:52] Adam Fishman: Exactly. So that was a huge example and kind of bringing that in line with people's expectations. The onboarding experience was also something that we had pretty full control over. And so one of the big confusing points, again, down to expectation setting was people wondering, well, how much should I order? What's too much? What's not enough? What's the general like size of the box and offering? So what would happen is people would order way too much food and they would get this box and then they wouldn't be able to eat it all and they would end up throwing it out. And that's a problem when your whole business is predicated on reducing food waste.

[00:34:32] Adam Fishman: You're actually contributing to it. And people would, a lot of people would sign up for Imperfect Foods cause they were, you know, eco warrior type folks and they, that was really disappointing to them. And so eventually what would happen is they would be like, hmm, this isn't worth it. I'm going to cancel. So instead what we did in onboarding was, and again, this is like not an overnight thing. We learned a lot about this through talking to customers. We tried to get a better sense of who the customer was and who they were buying for so that we could recommend the right amount and we could explain to them servings, quantities, or you're feeding a family of four. Is this your primary grocery shop?

[00:35:15] Adam Fishman: Is this like a complimentary one or augmentation? We could essentially recommend you a box size and a structure of that box. Ask for your preferences around like, do you want to like meat? Do you want dairy? What are the things? We basically collected as many inputs as we could to better recommend something to someone and that had a massive impact on first order retention. So the rate at which somebody would order, get their first box and then go on to stay in the subscriptions one to two massive because it changed.

[00:35:50] Adam Fishman: I mean, I'm talking like double digit overall absolute percentage point improvement, like at least 15% because we were doing such a better job of telling people what was going to show up, managing the expectation, managing the size of it and getting them engaged in the process of curating their order.

[00:36:12] Andrew Michael: It's a very interesting one as well because it's a little bit content to growing that average order value in these typical type of companies where that's again how you're generating revenues. But actually pushing the boundaries too much on that, you actually end up having the inverse effect where things get thrown away and people start to churn. I think definitely on sort of like the eco side of things, people take this into consideration, especially like the nature of the product, the Imperfect Foods, that concept. It actually around me as you're talking, like I was recently speaking at a conference in Bucharest, the How to Web, and I was staying at a hotel and they gave us these like they were called eco-friendly cards. They were wooden cards, but they would never work.

[00:36:52] Andrew Michael: So like literally I was there for four days. And every time I went up to my room, I'd have to come back down to get the card made again. And I surely like the electricity that I'm spending going up and down these flights, like every time to reprint this card is not eco-friendly at all. But it's a similar notion as well. Like you're coming to this point and like the same thoughts pops into their heads as well as ultimately, like if we're wasting this food, like we're not being eco-friendly and this is not what we signed up for.

[00:37:18] Adam Fishman: So your point on average order size, like, so of course over time we wanted you to increase your basket size, but the reality is you really don't earn the right to do that until you've become a trusted brand or partner for people. So even starting small, even if our recommendation was like, you should get the smallest box that maybe is intuitive to, you know, the margin that we're going to make in the beginning. But if you keep people around, it ends up being much more long-term valuable because they do eventually add more stuff and they increase their box and things like that.

[00:37:59] Adam Fishman: And so you have to play the long game when you're thinking about what's, and again, it's all about what's right for the customer, helping them on and what they're gonna get and the expectation setting, like that's your job. If you try to shoehorn them into something they don't wanna do, they're gonna cancel. And so that was a valuable lesson that I learned there.

[00:38:20] Andrew Michael: It's like the land and expand and they come to you for the specific use case. And like you just trying to throw everything at them, it's not going to work, but figuring out what that is. And over time you can encourage them different things that they can be using your product or service for and suddenly like scaling their value. Yeah. I always love how like you can see these different similarities across products and across domains even very nice.

[00:38:44] Andrew Michael: I see we're running up the own time, Adam. So make sure I ask you a couple of questions. I ask every guest. The first one is what's one thing that you know today about churn and retention that you wish in you when you got started with your career?

[00:38:55] Adam Fishman: Yeah. The single biggest driver of retention is a customer's onboarding experience into your product. I fully believe that. I did not know that when I started. I did not appreciate the importance of onboarding. And now that is without fail, something I work with every one of my advisory clients on right in the beginning. And it's often the thing that they think about last, because they're trying to build the core product, but the on ramps to that core product actually matter so much more.

[00:39:27] Adam Fishman: People are willing to put up with a lot of crap if they have a good white glove experience when they're setting it up the first time. So that's something I definitely believe today. And I've seen it play out a million times.

[00:39:39] Andrew Michael: Yeah, 100%. I think that's definitely like the top most disgusting on the show. I think often when people go to churn and retention, the first thought is like, let me go and find out what are the reasons people are churning and then figure that up. And naturally, it's like you need to see who you're the most successful. What did they do? And it's normally what did they do during that onboarding experience? It really made that difference to them. So nice. What's one thing because you speak to other people, you give a lot of advice. What's one thing that you wish more people would ask you, but they don't.

[00:40:12] Adam Fishman: Oh, that's a great question. I think I wish a lot of people ask me for specific tactics and things, examples of things that worked, didn't work, et cetera, but they very rarely ask me the follow-up question, which is why. And so I wish more people would ask, and I usually get there on my own, but I wish that more people would ask, seek to understand the underlying the reasons and psychology and behavior behind something rather than just trying to kind of cargo cult the thing that worked at X company and bring it to Y company.

[00:40:56] Adam Fishman: Because I find that's very rarely successful. And only when you like really dig in and try to understand from a first principles perspective, like why is something happening? Does it start to be successful? And so that's what I wish people would ask more of is like one or two levels deeper. Like help me understand why that tactic works, not just the tactic itself.

[00:41:19] Andrew Michael: Yeah. And I think this is the biggest like missed opportunity, especially when like setting up experimentation programs and like you get the win and then you move to the next thing, but really like spending the time in the work, if it's the win or the loss or whatever. Like, and that's why I think earlier, when you said it's disappointing when like, it's a nothing burger, because like, it's very hard to figure out like why things haven't changed when they haven't changed, but it is easier to like really dive into understanding those things where the value and the goal comes in to inform the next idea and the next iteration.

[00:41:50] Andrew Michael: Adam, it's been an absolute pleasure to you today. Is there any sort of final thoughts you want to leave the listeners with? Anything they should be aware of to keep up to speed with your work?

[00:41:58] Adam Fishman: Yeah, I mean, a couple things to keep up to speed with my work. I have a newsletter, fishmanafnewsletter.com. It's my last name, my initials and then newsletter. I'm on Substack. I've got about 11,000, 12,000 subscribers to that. And I try to publish every week although a little bit less so with my role at Mozilla right now. And then, yeah, if you're a parent, check out the podcast, startupdadpod.com. And you can always find me on LinkedIn. That's probably where I spend the most of my social media energy and effort, Twitter/X to a lesser extent, but I'm on LinkedIn. And then I'm Fishman AF on Twitter. Those are a couple of places to stay up to date to what I'm thinking about.

[00:42:37] Andrew Michael: Awesome. Well, for the listeners, we'll make sure to include all that in the show notes. So you can pick that up there and we didn't get around to asking you about the new role at Mozilla, which I was definitely intrigued by, but maybe there's a future point in time. We can pick that conversation up. Thanks so much for joining in today. And I really appreciate you being here.

[00:42:55] Adam Fishman: Andrew, thanks for having me. Appreciate it.

[00:42:57] Andrew Michael: Cheers.

[00:42:58] Andrew Michael: And that's a wrap for the show today with me, Andrew Michael. I really hope you enjoyed it and you were able to pull out something valuable for your business to keep up to date with churn.fm and be notified about new episodes, blog posts and more. Subscribe to our mailing list by visiting churn.fm Also don't forget to subscribe to our show on iTunes, Google Play or wherever you listen to your podcasts. If you have any feedback, good or bad, I would love to hear from you. And you can provide your blunt, direct feedback by sending it to Andrew at churn.fm. Lastly, but most importantly, if you enjoyed this episode, please share it and leave a review as it really helps get the word out and grow the community. Thanks again for listening. See you again next week.

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