How One Subscription Coffee Company is Doubling Down on Relationships

By Tien Tzuo March 27, 2020

It sounds like last week’s post resonated with lots of people, so I thought I’d spend the next few weeks exploring how different subscription companies are doubling down on relationships during these strange and stressful times. The goal is to learn how companies are using their subscription model to successfully navigate the immediate challenges, and how they are re-engaging their relationships with employees, partners, and most importantly, subscribers.

Let’s start with Trade Coffee, a great subscription-based coffee bean delivery service. Last year their CEO Mike Lackman got in touch with me to talk about my book Subscribed, and in the process, he landed me as a customer. Here’s how it works: independent coffee roasters ship you fresh beans on a regular basis, and you can personalize the service along the way with simple up or down votes. After doubling my regular order last week (no more free coffee at work!), I decided to give Mike a call.

Here’s an edited version of our conversation:

Tien: Mike, what gave you the idea to start Trade Coffee?

Mike: We started out trying to do two things. First, we wanted to bring the best parts of specialty coffee to a massive, nationwide audience of people who are passionate about great coffee, but mostly don’t feel empowered to brew it well at home. And second, we wanted to bring a much larger market to the craft roasters, who are mostly small businesses who we believe should be the way most people get coffee at home.

Tien: And as a result, your business has two primary sets of relationships: coffee roasters, and coffee drinkers. Let’s start with your coffee roasters. How are you engaging with them right now?

Mike: Most of the roasters we work with are relatively small operations, which are in the basic business of buying lots of green coffee, and then roasting and shipping to their own shops or other retail outlets. Since over 70% of coffee dollars are spent outside of the house, you can imagine that their business has been disrupted thanks to the shelter-in-place situation, and roasters are reckoning with everything from how much perishable inventory they are holding to how to cover fixed costs. Our first step when this crisis hit was to start conversations and inform ourselves about what they were seeing, who needed volume and how we could use the demand at our disposal to help. We’re also currently donating $2 for every first coffee bag purchase towards roaster employees affected by the coronavirus.

Tien: So the financial stability from having a recurring revenue business really helps, and allows you to provide some stability to a supply chain that’s been severely disrupted. You also have a lot of usage and behavior data from your subscribers, tell us how that allows you to be much more nimble in terms of making immediate adjustments?

Mike: Yes, since our subscriptions are built on us finding the right coffee for people, our customers trust us to pick their coffee for them. That means we have lots of flexibility to forecast demand and move volume around to the people in the greatest need, who are also best situated to do the work well. Getting the right kind of volume to people who are ready to handle it well, and for whom it’s meaningful and incremental business, is a big deal.

Tien: It sounds like you guys are a real beacon of hope for these roasters right now. That’s awesome. So how are you doubling down on your relationships with subscribers like me?

Mike: Well with all the changes happening lately, I guess it’s not surprising that we’ve been seeing a ton of traffic to our website. You’re actually in good company in terms of upping your coffee intake.

Tien: And in terms of outreach, you haven’t felt the need to offer discounts and promotions?

Mike: No, we’re just reminding folks that a) we’re here and b) we’re still very much committed to our mission that serves both roasters and consumers: coffee from the country’s best roasters in every home. But what has been a huge asset is our ability to let our subscribers personalize and customize their experience. Perfect example: we just launched a feature that let’s existing subscribers find a coffee that can ship within a matter of hours if they’re running low. This helps consumers have more confidence that Trade won’t let them run out, and gives roasters another avenue to go get additional volume. On the whiteboard, they are really simple things, but keeping them simple and getting them right in production with multiple stakeholders is the hard part we’re always working to get right.

Tien: That’s super interesting. It’s another great example of how the best subscription businesses rely upon consistent consumption and behavior patterns. Anything else?

Mike: What’s interesting is that we’re seeing way more engagement with both basic product tools and editorial content. People are looking at their plans, making adjustments, dialing up, dialing down. While we’ve had some cancellations, we’ve had nearly five times as many people increasing their order frequency.

Tien: So people are basically re-evaluating your value proposition, the same way they’re doing with lots of other services right now. And since you’re not just selling beans to anonymous people in downstream channels, you’ve been able to respond quickly to this situation as well. You know your customers, and you have a lot of data about their behavior, so you can be smart and make adjustments.

Mike: Yes. And fortunately, both our roasters and our subscribes seem to be finding our service worthwhile. For the most part, they are re-engaging and re-investing.

Tien: So in terms of takeaways, I’d break it down as: reach out with concrete information or offers that only you can provide. Give people immediate ways to help. Double down on the stability of recurring revenue as a way to get through uncertain times. And don’t be afraid to remind people of your basic product features.

Mike: Exactly.

Tien: We’re all doubling down on our relationships, as well as our coffee. I know, one thing I’ve found important in the whole work at home thing is a routine, so my mind switches from “home mode” to “work mode,” and making my morning pour over has become that routine. So thank you Mike. Are there any other ways to help out?

Mike: Yes. If you join Trade between now and April 15th, we’ll donate to coffee workers in need, and you can also donate directly from our blog.

To aid in this global crisis, Zuora has joined the COVID19 Tech Collaborative, a collaborative of 25 Bay Area based companies, to immediately disperse an initial $22M in collective funding to those most impacted. The Zuora Impact Fund will issue $200,000 to provide aid in regions where the largest concentration of our ZEOs live and work. Read more about this commitment here.

 

For more insights from Zuora CEO Tien Tzuo, sign up to receive the Subscribed Weekly here. The opinions expressed in the Subscribed Weekly are his own, not those of the company. The companies mentioned in this newsletter are not necessarily Zuora customers.

And check out his book SUBSCRIBED: Why the Subscription Model Will be Your Company’s Future – and What to Do About It.