Bonus Episode: Subscriptions is a Performance Channel with Gina Perrelli

Gina is a long-time operator and advisor in the consumer industry.

She started her career in Email and Content Management and has since emerged as one of the industry’s most pronounced thought leaders on all things customer experience and retention.

5 years ago, she and her co-founder, Pierson Krass, set out to start a different kind of agency.

Lunar Solar Group was built on the idea that technology empowers e-commerce brands to scale.

Gina has worked on launching and scaling brands like Olipop, Super Coffee, Lemon Perfect, and many other leading e-commerce brands that you all know and love.

Most recently, Gina co-founded Stay Ai which is the subscription platform for modern e-commerce brands where she currently operates the company’s CEO.

In This Conversation We Discuss:

• [00:00] Intro
• [00:54] What is Stay Ai and what does it solve?
• [02:07] How Gina became passionate about subscriptions
• [03:59] Lunar Solar Group: Clients, solutions, evolution
• [05:18] Building and selling KnoCommerce
• [07:50] From an agency to building an app
• [09:42] Where Stay Ai came from
• [11:54] Acquiring Retention Engine
• [15:21] The advantage of being specific in your outcome
• [15:55] Always have an exit strategy
• [17:04] No one has gone public in the Shopify ecosystem
• [17:37] The sign of a mature entrepreneur
• [18:40] The 3 things that make Stay Ai unique
• [21:40] Subscription tips and tricks
• [22:49] Where to support Stay Ai

Resources:

• Subscribe to Honest Ecommerce on Youtube
• Connect with Gina linkedin.com/in/ginaperrelli
• Providing revolutionary subscription management software stay.ai
• Providing Ecommerce and digital marketing services that drive transformational growth for our clients lunarsolargroup.com
• The customer survey platform built for Ecommerce brands /knocommerce.com

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Transcript

Gina Perrelli  

I think that a lot of people just when they do build they're unrealistic about what different outcomes can be.

Chase Clymer  

Welcome to Honest Ecommerce, a podcast dedicated to cutting through the BS and finding actionable advice for online store owners. I'm your host, Chase Clymer. And I believe running a direct-to-consumer brand does not have to be complicated or a guessing game. 

On this podcast, we interview founders and experts who are putting in the work and creating  real results. 

I also share my own insights from running our top Shopify consultancy, Electric Eye. We cut the fluff in favor of facts to help you grow your Ecommerce business.

Let's get on with the show.

Hey everyone, welcome back to another bonus episode of Honesty Ecommerce. I'm your host, Chase Clymer. 

And today we're welcoming to the show, Gina Perrelli. She is the founder and CEO of Stay Ai, a new subscription platform. 

Welcome to the show.

Gina Perrelli  

Hey, thanks for having me. Excited to be here.

Chase Clymer  

Yes. Awesome. Alright. So quickly, at the top, I always like to talk about the product a bit so people have a little bit more  understanding of some of the decisions. 

So talk a bit more about Stay Ai and the problems that you're solving in the market.

Gina Perrelli  

Yeah. So I think... I will get into my background a bit but I love the retention space. I think that subscription was the one piece that really hadn't been innovated in a while.

It was very set it and forget it. And I think we spent so much time on acquisition. And now retention is getting this shiny light that acquisition isn't as easy as it used to be. 

But people are testing different things in Klaviyo, they're doing all this different stuff with your SMS list. 

And for me, I was like, "Why are we doing nothing with our subscribers? Why are we like excluding subscribers from the conversation?" 

Because people are so scared that they're going to unsubscribe when really, we have their credit card information. These are your super fans. We should be optimizing. 

So I really wanted to view subscriptions as more like a performance channel. See what [we can] test? What can we do with upsells? How do we increase AOV? 

And that's really the premise behind Stay: It's viewing subscription as a channel that you go into, you optimize. You don't set it up and forget about your subscribers. 

You really want to create this cohesive subscriber journey for them to go through and have them build that affinity to your brand.

Chase Clymer  

Absolutely. So I don't think many people wake up one day with such a passion for subscriptions. How did you end up here,

Gina Perrelli  

I would agree. Most people do not give a shit about subscriptions, but I do. I have been... 

So we'd like to take a step, take a million steps back. At this point, it was what it feels like. 

I have been in the retention marketing space for the last 10 years now. So really, after school, I ended up working in email marketing for this resort in New Jersey. And I was managing their content calendar across 12 different business units. 

I was doing everything from designing the emails, copyrighting the emails, sending them, scheduling them, building them, building that whole content calendar, and I really liked it. It was kind of fascinating to me that you could send these and it would go. 

And you would see some past sales and they would be like, "Nothing really going on." You send an email and all of a sudden, you see it skyrocket up. 

And I liked that you can manipulate that behavior and you can do different things to make people either spend more at different points in the journey. 

So I got into retention marketing there. From that job, I went on to work at a couple different agencies, I went back in house. 

And then eventually Pierson, my co-founder was like, "I want to start my own agency. Email is dead. Let's do acquisition, start Lunar Solar with me."

And I was like, "No. I'm too far in. And I'm a retention girl already at this point. I really like it. I see that retention is gonna be a thing. I want to do this." 

And this was like, I guess 5 - 6 years ago now. And really everyone was gung ho on Facebook still. Everyone was like, "This is it." 

And I was just like, "No, I'm a retention girlie." And I've kind of stuck to my guns ever since then. And we built Lunar Solar. And I ran our retention team there for a while. 

And I think just all the different stuff that you're able to do. I've been pretty passionate about and I've just really... I really like this space.

Chase Clymer  

Absolutely. So let's chat a little bit more about Lunar Solar Group, and the types of clients you're working with, and the types of problems you were solving there, and how that evolved.

Gina Perrelli  

Yeah, so when we first started Lunar Solar, we were actually a lot in the fashion and apparel space. So I was doing a lot of basic welcome series and abandoned cart.

And then we stumbled through relationships and whatnot, launching OLIPOP's and Super Coffee's Ecommerce retention program. 

So building their first welcome series from scratch, launching their SMS programs, and just being able to work with them and their teams. 

I think we did a really really good job there and it's what put us on the map especially in the "better for you" F&B space. 

And it just allowed us to work with so many different brands there. So I've probably touched well over 100, maybe probably close to 200 brands, building out their different email, SMS, subscription journeys, loyalty, rewards, everything that saves... 

Tying those things together... 

And I think what made the Lunar Solar program so special was, how close I love to being all those different tech stacks, understanding the integrations, how you could piece different things together, and then create these really unique customer journeys. 

It's [similar to] using Klaviyo's CDP to integrate everything into and then create these experiences for customers

Chase Clymer  

Absolutely. So with Lunar Solar group, you guys built one application and I know [you] had an exit from that. How did that come about with the agency? 

Just explain that journey a bit because that definitely sets the stage for basically round 2: What you're doing now? 

Gina Perrelli  

Yeah. So I think what you see most common and what we originally thought would happen was we'll build this agency, we'll learn a lot about brands, and then we'll build brands. 

And I think had you asked me 3 or 5 years ago, that's what I thought we were gonna be doing, I was like, "I'm gonna do a whiskey brand, I want to do a skincare brand..." 

I had all these like different brands I wanted to do. And the further we got into it, I think I just really realized [that] my passion was just more on the tech side. I loved advising for the different apps, I love…

I was a power user for all these different platforms. I love pushing it to see how far we could go. And it really... 

We started placing investments in some of the brands we worked with, then we started placing investments in some of the apps that we worked with. 

And we realized this interesting flywheel with apps where we would invest in them, we would test them with agency clients, and then we would constantly be advising on the product roadmap.

And we were like, "Wait, if we're doing all those pieces, why don't we just try building some apps. And that split us into building KnoCommerce, which is a post purchase survey attribution tool. So we built that out and it... 

We learned a lot (laugh). We learned a lot of lessons with Kno about just  when you're building a SaaS company, how all these different things like average contract size and how you get customers on, what the freemium model actually means... 

And things that like in the beginning, you're kind of looking at certain metrics. You're like, "Oh, we have excellent people on the platform." And like, "Oh, we did this much in revenue." 

But when you go to raise, all of a sudden all the metrics that you think are good, people are like, "Oh, well no. But you don't have this. You can't raise money. And the cap table is structured like that." So we learned a lot of lessons building out Kno. 

And while it wasn't the right thing to go out and raise for it was a great app to be acquired into a roll up. So we talked to a lot of different companies and ended up selling it actually to WeCommerce. 

And just going through that process, understanding what's involved in an acquisition,  all the different paperwork, the legal of this and that set us up really well, when we had the idea to start and say... 

And I'm sure we'll talk about it. But we've acquired another company and merged in. I'm just like, really grateful for the Kno experience. I wouldn't have known anything about that had we not gone through that.

Chase Clymer  

Absolutely. So talk a little bit about how the ideas for those 2 companies bubbled up and [how it] became something you felt like it was worth investing your time in.

Gina Perrelli  

Yeah, I would say have a really unique... Maybe it's not that unique.

Maybe this is like how most successful co-founders work. But I'm really grateful for the co-founder relationship that I have with Pierson, we play very different sides of  what founders need to be where I am typically a bit more in the weeds. I’m pushing things. 

I like to get my hands dirty, work with product. I'm very vocal if I don't like something. I love to complain. Where then he is the big ideas. 

He's like "Well what if we did this? And I think that he will... If he sends 99 ideas at me, 1 is... I'm like, "Wait, I can work with that. That's actually... That's a great one." 

And a lot of them I'm like, "No, we're not doing that." 

But it kind of came from that where we were doing a lot of different things. I would complain and be like, "Well, I can't figure this out. I can't do this. How can I not do this?" 

And he'd be like, "What if we built an app that did this?" And sometimes the ideas were just bonkers crazy. But then no one was... 

It was good. It was good. And we were really fortunate Jeremiah and Taylor were working for Lunar Solar at the time, the development team, and they were both like, "We want to build applications. We worked at building Shopify VMs." 

And it was you kind of just like had this element of luck and magic at the same time where all the pieces were there. 

And they were like, "We'll just... We'll build it." 

And we were like, "Oh, well okay. If you'll build it then we'll tell you the ideas." 

And that's how Kno really got started. And then after we sold, Jeremiah was able to step up and take it and just run with it. It's been an incredible CEO there.

Chase Clymer  

Absolutely. Yeah, that's been a fun ship to watch to shoot off there. I need to get them on the show. I'm sure you'll connect to me after this. 

Gina Perrelli  

Yeah. 

Chase Clymer  

So where does Stay Ai come from? What planted the seeds for that?

Gina Perrelli  

Yeah. So Stay... I knew at some point. I think I have stepped up. 

I was Lunar Solar COO. I just didn't love it. It didn't feel like a forever plan for me. I think I love the retention side of things. I love building. 

But the COO role at an agency wasn't the right fit. So I think Pierson and I just had a lot of honest conversations of "Alright, what do I do next?" 

And at that time we were like, "Maybe we'll do a venture studio. We're going to do a lot of these apps that we spin out and sell in a couple million under $10 million range. And that makes a lot of sense for us. And maybe you'll go run that division or you'll run that studio." 

And then there were some changes in the Shopify ecosystem where Shopify had opened up this subscription API. We've seen a couple other new players rush into the space. 

And I was just like, "Ugh, if there was ever a time to really mix things up, and to get inspired, and to change the way that people think about subscription, now's the time." And nobody was doing that. 

Everyone was kind of just like looking at Recharge and the platforms that existed. And they're like, "Oh, we'll just build another version of this. We'll just build like a faster, quicker, a better version," 

And I was like, "Why is it better if it does the same thing?" 

I was like, "What if we really treated this the way that people look at Klaviyo? And what if you're able to A/B test things?" 

"The amount of attention to detail and hours spent in the Facebook Ads Manager, why are we not doing that for retention? Why are we not caring about our subscribers, once they become subscribed?" 

We just accept what the LTV is,and we just hope and pray that it stays the same instead of actually testing things to see if we can make it better. 

Where I think like, I've done that so much in email and with all these other programs. And it was something where I just had felt locked with subscription in the past where I was like, "I want to do this, if we can put the experience engine at the base of the tech and this ability to A/B test and build these different journeys." 

And we scoped it out, and we talked to Taylor, and he was like, "Oh yeah, we could do that." 

And I was like, "Well, if we can do it, let's do it." And that's kind of where the idea for Stay came from.

Chase Clymer  

Absolutely. And you mentioned that you acquired a business during this journey?

Gina Perrelli  

We did. So most untraditional... I thought at one point, our investors are gonna shoot us.So we raised a pre-seed on the SAFE note. And then we went out and we raised another round. We didn't... 

The first 3 SAFE notes that we had raised, I feel like we didn't do them properly. But whatever. We go out, we raised a second round that's like a pre-launch, I guess, more of a traditional seed. And then we meet with... 

We've noticed, "What are the different acquisitions? What are the different outcomes that could happen for us?" And I think that's something that I know a lot of people think of early on. 

And yeah, sometimes people just build to build and they don't care about the outcome. But for us, we were like "What... Who would stay if we were to sell it? Who would buy something like this? What other acquisitions have even gone on in this space?" 

And we looked at it and Paddle had bought a company called ProfitWell and Chargebee had bought this other post purchase survey app. 

And there was one left in the space called Retention Engine. And we had run to... 

So we've noticed that piece. We had seen "Okay, there's acquisitions going on around like churn reduction software in the subscription space. Interesting." 

Then we looked at what are the other pieces in the tech sector. When you migrate people over, there are things that we have to integrate with that people will not leave Recharge or another platform without. 

And Retention Engine was one of them that had come up a couple times in the sales process where they were like, "You need to integrate with Retention Engine." 

So we met with the Retention Engine team and we just really vibed and liked them. And they liked what we were doing. And then we realized that they had actually set out on a different mission. 

They built all these different machine learning models and then stumbled into product-market fit in the subscription Ecom ecosystem, but they had all these other models where they were just using a fifth of their tech, which is like the churn reduction survey. 

But they could power all these other things. And we were like, "Wait, what if we took this model you have and we plugged in the experience engine we did proactively, turn stuff  before somebody even goes in to hit the cancel button?” 

“Could we predict that Gina is on order number x and has this product and has done these actions before this person churns or not?”

They're like, "Oh yeah. That's already built."

And I was like, "Oh. Well, what if we wanted to do a product recommender?" 

"Oh yeah, product recommender is already built." 

So we were like, "Wait a minute, if we could take all this tech and plug it into our existing app, now all of sudden these features we've built can be powered by these models that you guys have built out." 

Also their models who've been trained on the exact profile of brands that we're looking for because they were a Recharge plugin. 

So they've been running on the 300 top brands that do Ecommerce subscription. So for us, we were like... 

At first Pearson was like, "We're going to do this." And I was like, "You're crazy, we're not going to do this." 

And we went back and forth on it for a while and decided that it made sense to acquire them. So we went through the whole process. And it was a lot of legal back and forth. 

But I'm so glad that we did it because it really just put us just lightyears ahead of anything that we could have built.

Chase Clymer  

Absolutely, you skated over something that I really want to highlight here. A lot of people just build to build, but you guys were very specific in the outcome you wanted? Why do you think that was an advantage?

Gina Perrelli  

So I don't want to say that... I'm definitely not like, "Oh, build to get rich and do whatever." At the end of the day, I'm super passionate about the space and doing something that I like. 

But I think that a lot of people when they do build, they're unrealistic about what different outcomes can be. 

They see somebody like Mark Zuckerberg and be like "Oh, I'm gonna build a tech app and it's going to be worth billions of dollars." And I think... 

Chase Clymer  

Mm-hmm.

Gina Perrelli  

You need to be realistic. We also saw a lot of apps in the last two years raise at these really crazy valuations and then get themselves in serious trouble because there is no…

If you're not going to go public, what else are you going to do? Who's going to buy you for billions of dollars? What company does that? So I think that was how we thought about it. 

I was like, "Let's be smart about this. Let's not be another tech company that goes out and just raises money endlessly without some type of exit strategy. Let's make sure that we don't spend 10 years and then have this crazy valuation and just get stuck." 

So I think that was the mindset of "Let's make sure that this is something that we could potentially see an exit or get to profitability and take distributions or something where we're not just gonna get stuck."

Chase Clymer  

Absolutely. And for anyone out there that's... 

This is something that comes up on the Twitterverse a lot in our little pocket of the Ecommerce space. 

And it's not just Ecommerce. It's just a lot of people raising these crazy numbers. 

There's a lot of businesses that over-raised it, literally they cannot sell because of just how the math worked out with the decisions they made when money was a lot cheaper back in the day. 

And by that I mean 2 years ago.

Gina Perrelli  

Now. Yeah, I think  we just saw a lot. And also there's rumors that Klaviyo will go public. But to date, nobody's really gone public in the Shopify ecosystem. 

And Klaviyo is also not just a Shopify app. They do support other channels. But I think for us, we were going to build in the Shopify ecosystem. 

We had to be really realistic about the pricing of each of our rounds, about where we could go. 

And did I want to go out there and say, "We're gonna be a multibillion dollar company. And we're gonna go public doing subscriptions to the Shopify ecosystem,", no. 

I didn't think... That wasn't enough. So yeah. 

Chase Clymer  

I think that this is a sign of a more mature entrepreneur. You know exactly what is possible and how to do it. And it almost makes writing that plan just a lot easier.

Gina Perrelli  

I was able to run so much faster with Stay than when we were with (Lunar Solar). We went from 0 to over 40 employees in a year, which is crazy. 

And I think a lot of people are like, "Oh, that's nuts. Did you ever hire? Did you build a lot? How did you make them stay?" 

And it's like, "Yeah, but we bootstrapped Lunar Solar. And we went from 0 to 80 in 3 and a half years," Which yes, it's slower growth, but like that was our first real go at something like that. 

And we learned a lot just about how to hire, how to interview, how to run those processes, and finding the right talent... 

And I think that  there's so many things about being an entrepreneur you learned for the first time. 

And going through it with Lunar and then seeing other pieces with Kno, it was a huge cheat code to building another app.

Chase Clymer  

We talked a lot about the journey getting here and we just glossed over the app a bit. 

I definitely want to give you an opportunity to let the app shine and some of the features and functionalities that you think position you guys as a unique player in the marketplace.

Gina Perrelli  

Yeah. I think there are 3 main pieces of the app that I think are different from other stuff in the space. And one is our customer portal. And I think that's something we really pushed for and pioneered. 

And we're seeing some other people jump into it: Creating a customer portal that pushes for positive interactions. 

I think that in the past, people would only go into their portal to take negative interactions. They would skip or cancel. Nobody was really actively using the portal. 

Yeah, you're getting occasional swaps or stuff like that. But people weren't going into a portal gifting things to their friends, adding additional [one-off] products.

There weren't any fun announcements in a customer portal where I was like, "When somebody comes in here, even if they come in with a negative intention, we want to do everything we can to see if we can get them to do something else. So if they want to skip can we get them to..”. 

“Because they have too much product, can we have them send it to a friend, to a parent, to somebody else?" 

"They're already getting a discount. They're mentally prepared for the charge. Can we get them to..." 

And that also taps into referrals. "Can we get them to gift it to a friend?" 

"Also when somebody logs in, they see the same portal every time. What if there's a banner that brands change out once a month, the same way you update different campaigns for marketing?" 

"What if that was just part of your marketing routine where once a month you refresh the banner in the Customer Portal and you didn't need a developer to do it?" 

The marketing team, the same way that they swap out the creative and email could go in there. And that way, it's fresh, and you're cycling through. 

"And then on top of that, what if you built promos?" That way, every month, there was a different experience for subscribers where they were like, "Oh  this month, I get this for $5. This month, I get 20% off that." 

When you go into a store and all of a sudden you leave with these different upsells and whatever, I'm a sucker for that type of stuff. So there's gotta be other people like me. So I think the Customer Portal was one. 

It was a lot of different small things that maybe when you go in, you look at it versus another platform, you don't notice it right off the bat. But as you start to  click around, you'll see everything is really targeted around like different upsell opportunities and keeping things fresh. 

Then the Retention Engine which I think is key. The ability to A/B test different things when somebody goes into cancel a subscription, what different offers hit different ways? Are you able to test if there's a video playing? That's a key piece. 

And then the Experience Engine which sits... It shows different things in the Customer Portal. But on the upcoming order notification, which is where you see a lot of people churn, it allows you to test different things in there. 

And it allows you to say, "If somebody's on order number 2, let them know they're gonna get a free gift. If somebody is on order number 3 and they have this product, let them add this product for $5." 

And you create these  really unique experiences and journeys with the Experience Engine. 

Chase Clymer  

Absolutely. 

Gina Perrelli  

So those are the 3 things of what set us apart. There's like a lot of other smaller things. But those are my 3 favorites.

Chase Clymer  

Absolutely. Now you are a self-proclaimed "subscription girlie". What subscription tips and tricks can you kind of leave our audience with today? Is there anything we didn't cover?

Gina Perrelli  

So I would say definitely test things. I think every brand,and everyone's different, of course. 

We've seen the biggest impact is offering a free gift on the second order and letting customers know they're gonna get it, especially in the upcoming order notification. So I think that that's important. 

If you've never run some type of tests like that, definitely do it with a control group. You don't want to just give away something that's expensive and have it actually have no impact. 

I've had customers test it on order number 4 and see that there's no impact at all. So we don't want to just throw money away. 

But most brands do see a good lift. And they see less skips, less cancels on order number two, if they're offering a gift. 

And I would also keep the customer portal fresh. Don't let it get stale. Go in there, swap out banners, see if you [can] just change the colors or stuff around so people get excited. 

Make sure you're [experimenting with] different portions or different add ons. 

Chase Clymer  

(laughs)

Gina Perrelli  

And use Stay Ai if you're not. (laughs)

Chase Clymer  

If  I'm interested in demoing the app... 

This is a great transition right here. If I'm interested in [using] the app, where should I go? What should I do?

Gina Perrelli  

Yeah. So you can just go to the website at stay.ai and just fill out a form there and we'll get in touch to schedule you to walk through a demo. 

Yes, you can go into the App Store. But I think it's best to hop on and actually learn [the] tools. 

And there's a lot of different ways that you can set up your subscription program and we'll kind of help you figure out what the best way is for your product catalog and for your brand.

Chase Clymer  

Awesome. Gina, thank you so much for coming on and sharing your story. 

Gina Perrelli  

Yeah, of course. Thank you so much for having me. This is fun. 

Chase Clymer  

We can't thank our guests enough for coming on the show and sharing their knowledge and journey with us. We've got a lot to think about and potentially add into our own business. You can find all the links in the show notes. 

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