This is a follow up story for Blue Coffee Box. If you're interested in reading how they got started, published about 1 year ago, check it out here.
Hello again! Remind us who you are and what business you started.
Blue Coffee Box was started by myself, Jon Butt, and my son Harvey back in 2017.
It's a “UK coffee subscription” that supplies new, rare specialty coffees each month from new guest roasters. Think of it as a continuing coffee discovery club.
The business was started to pay Harvey's way through University. He's now in his 2nd year and Blue Coffee Box is covering most of his bills.
Right now, we are almost double where we were this time last year in sales.
Tell us about what you’ve been up to! Has the business been growing?
Last year, we spoke just before December and we were shocked how many gift sales we had for Christmas. Most of there were pre-paid 3 and 6-month gifts. The staff struggled to get everything out on time and we learned all we needed to know about production efficiency.
We also learned that every holiday can give a sales surge if we plan it correctly. However, these gift subscriptions end after 3 or 6 months so, despite growing sales, we are constantly losing subscribers at the end of fixed terms. Our goals were adjusted to end of year totals, rather than constant monthly ones as it's easier to see real growth.
This time last year, we had two half-time staff. After a Christmas of adding a bunch of temporary helpers, they both went full time. Constant tweaking of our in-house order management system through the year has enabled us to get through this big Christmas sales surge by Harvey helping out in his holiday. In January, we will add a part-time staff member to the team.
In the middle of the year, we bowed to the inevitable and started Blue Tea Box, a “loose leaf tea subscription” in the Summer. The same designers, same coder, and same systems were used to set it up, although I'm sure it was no easier than the first time, lol.
Sales seemed slow to start. But, we had forgotten our early coffee days and were comparing it to current coffee success. The tea subscription is twice the size at the end of December compared to the coffee at the end of its first Christmas. Not bad at all.
In June, we moved out of our tiny rented premises into a much larger area on other business premises that I own. The other business had sent much of the stock out to a fulfillment service and that left enough space.
It took an afternoon to move the 200 meters with one van. However, a month later, the entire room looked full to the brim. Where did everything come from?
That gave us more packing space and more space for a couple of small machines (from China) to speed up the coffee filling and bag sealing.
As the business constantly needs to grow profitably with our own funds, marketing has to be carefully considered. This year, Google Ads and Bing Ads work well.
Facebook ads do work to an extent, but nowhere near as well as they should for the hype. And, we are quite advanced with our methods.
Our new find has been what used to be called Google DoubleClick (now Google Marketing Platform). It's a higher level display ads platform that most can't access due to the high spending required. You tend to see these ads on large blogs, news sites and big-traffic sites such as eBay, Vogue and The Telegraph.
We happened to find someone who consolidates smaller advertisers into one account. They are experts and run the ads for us. The results are great and the return on ad spend (ROAS) is way better than Facebook.
Our paid ads are used to enhance our blogger outreach, blogging, SEO, social media and giveaways.
It's all part of the mix along with email sign-ups, welcome email sequences that get sales, offers to those that cancel or finish a gift, and so much more.
What have been your biggest lessons learned in the last year?
Always be learning. That's one of our mantras.
Much of what we have done in 2019 is to consolidate what we put in place in 2018. Google Ads are a constant pain as the ad costs grow and competitors learn that your ads must be working and start to copy.
It's important to know how to run ads as agency fees can take away your profit margin. I've been running Google Ads successfully for 15 years.
It's also important to not follow the hype online. Nothing has really changed in all the time I've been online other than Google and Facebook constantly upping the prices as they make as much money as possible until authorities final understand what they are doing and break up their monopolies.
These platforms should be used to build profitable sales. But, if they are not profitable, don't run the ads.
We have concentrated on improving business efficiency and profitability. As we sell more, we have been able to buy larger orders of boxes at a lower cost. We have been able to order coffee bags direct from a manufacturer in China at a fraction of the UK price, and we have been able to find a decent saving on our postal service (as the UK allows a bit of competition in the post and that brings prices down for larger buyers).
In addition, our coffee buying has grown and we now demand (nicely) very low prices. These savings in packaging a d coffee and postage are what allows us to spend on marketing. Margins are very important for survival.
I have always found that it helps to have worked in your business and to understand how the process works run real life. Every little tweak, from pricing to efficiency should pay off, even if you don't notice the incremental difference. If you can do more with less, you are more efficient.
What’s in the plans for the upcoming year, and the next 5 years?
The future is bright. There are no plans for fast growth or for building it to sell and, in an ever-changing digital world, it's not easy to make predictions too far into the future.
Marketing will get more expensive as we exhaust the current channels and the best-targeted people have seen our ads. We refuse to get caught in the forever chasing new, more expensive customers as that's when fast-growth companies run out of cash and investment and go pop.
For us, we need to build the tea subscription up to the coffee levels (tea lasts longer so is easier to stock than fresh coffee).
We also need a new product that appeals to a new market such as retail or high-end retail. That is a whole new ball game and I've been studying it quietly for the past year or so. It's not as easy as it sounds to get onto store shelves, and at a profit. There is much that is unknown to this of us not on the inside.
New markets make our future safer and anything that makes us less dependant on constantly expensive Google and Facebook ads is a must for future growth and survival.
There are a couple of ideas but none are stand-out amazing. Watch this space.
Have you read any good books in the last year?
Having read more business books than you could shake a stick at (I used to read one a week and review them on my Marketing For Owners blog), I have slowed my reading to re-reads and the occasional new book.
My favorite has been Never Lose a Customer Again by Joey Coleman. It's a customer service book.
I bet not many have read one of those, despite hearing the "it's far easier to keep a customer than gain a new one" phrase. Joey has worked at Zappos and guides us through the first 100 days after the sale, the most important period to convert from a one-off to a keeper. Keepers are rather important to a monthly subscription business.
I've known of Joey's system for many years but he never had a website or book before. It's an eye-opener and a must-read.
Advice for other entrepreneurs who might be struggling to grow their business?
Growing a business is a struggle. If you're not struggling, you must be lying to yourself.
Our problems have been faced by someone before. They may be smaller but someone has solved it before, so look, research, ask. The answer is there for the persistent succeeder and the rewards can be immense in both freedom and cash.
Look for a mentor or a sounding board - I've paid the same man a monthly fee for 10 years for that service. Look locally. Join a business group or Chamber. Don't pay some hyped up online marketing idiot who charges. Find one in real life who has run a business - any business. They may look old but will be wise and can guide you. I'm sure they will do it for cups of coffee if you just ask.
I've never followed hype. Personally, I think that Facebook ads and social media, on the whole, are like The Emperor's New Clothes - we are doing it because everyone else is and we are too scared to put our head above the parapet and say, "it doesn't work".
Yes, social will help enhance your online presence but it will not get you sales. It's not designed for selling. It's for socializing. Learn real marketing and spend 80% of your time on it.
To build a profitable business, margins are essential. All businesses are different, but if you don't have a 35-40% profit margin (margin, not markup - learn the difference), you will not survive in business.
I can hear some saying "but, I can't get such high margins in my business". I'm sorry, but if you can't make that kind of margin you will not survive. Tough love - sorry.
These basics have enabled us to build a $350,000 business from scratch, in two and a half years, in a totally alien market, and with just two staff.
Are you looking to hire for certain positions right now?
A part-time packer will be starting in January and we will always be interested in finding a part-time marketing manager. That's a UK-only home-based position and we would love to hear from the ideal person.
Where can we go to learn more?
We ship worldwide so why not buy something from us at Blue Coffee Box and see how we do it? Or, maybe tea is more your thing so check us out at Blue Tea Box.
If you have any questions or comments, drop a comment below!
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