Economic headwinds are creating uncertainty for all types of business, leaving companies to strategically position themselves to weather the impending storm. For e-commerce businesses, one of the most efficient mechanisms to normalize revenue streams and increase the lifetime value of customers is to implement subscriptions to drive predictable, recurring revenue. Smartrr is a subscription app for Shopify that allows e-commerce merchants to integrate robust subscription options into their stores seamlessly. The app supports bundling, sequential subscriptions, gift subscriptions, and flexible durations through a feature-rich customer account portal that’s designed to be frictionless for customers while encouraging retention with automated reminders, rewards, and referrals. Merchants are given an advanced analytics platform to track subscribers, revenue, retention, and cohort analysis as well as other key indicators. As social commerce is an additional channel that brands must consider, Smartrr is designed to support influencer, creator, and community-based campaigns. The app starts at $99/mo with an additional 1% fee of the gross merchandise value of subscriptions. Brands using Smartrr are seeing a 5x increase in lifetime value.
AlleyWatch caught up with Smartrr Founder and CEO Gabriella Tegen to learn more about the business, the company’s strategic plans, latest round of funding, which brings the company’s funding total to $17M, and much, much more…
Who were your investors and how much did you raise?
$10M Series A led by Canvas Ventures, with participation from lead seed investors, Expa and Nyca.
Tell us about the product or service that Smartrr offers.
Smartrr is the leading next-generation subscription app for Shopify brands. Built with the end customer in mind, Smartrr transforms one-time buyers into long-term brand champions. Using Smartrr’s comprehensive solution, Shopify brands can offer customizable subscriptions, bundles, loyalty programs, rewards, early access to new products, and discounts to delight customers and maintain recurring revenue. Preferred by the likes of high-growth brands such as Slate Milk, Neuro, Starface, Stix, and Jolie, who have seen an average of 5X more sales over the lifetime of a subscriber.
What inspired the start of Smartrr?
As brick-and-mortar brands began to shift towards e-commerce after the pandemic, I conducted market research interviews to uncover white space in the Shopify ecosystem. According to 98% of the founders I spoke to, subscriptions were their biggest pain point. In that moment of realization, Smartrr was born.
How is Smartrr different?
Smartrr’s top differentiators are our customizable subscription programs, superior customer account portal built to increase LTV for brands, and our unrivaled customer support. These three offerings set us apart from the competition in the subscription space. Philosophically, Smartrr is always building with the end consumer in mind. Our thought process is if we can turn buyers into not just “subscribers” but brand advocates, our brands win. Our main goal is to elevate the post-purchase customer experience so brands can build deeper relationships with their loyal subscribers.
What market does Smartrr target and how big is it?
Currently, Smartrr is targeting the $30B Shopify subscription market. Smartrr’s focus on driving LTV for brands expands their audience to the greater group of repeat purchases, which is valued at $100B.
What’s your business model?
Smartrr is a B2B SaaS company with 3 different pricing tiers at varied monthly fees, plus a 1% GMV Fee.
How are you preparing for a potential economic slowdown?
DTC brands are being faced with numerous challenges, from increasing acquisition costs to a potential economic slowdown. Smartrr’s product offering helps eCommerce brands prepare for, and more importantly, survive both. Smartrr empowers DTC brands to lean in on their loyal customers like never before, driving improved retention and ultimately customer lifetime value. Smartrr has evolved from a subscription app into the first comprehensive LTV platform in the Shopify ecosystem at a time it’s needed the most.
What was the funding process like?
This might be obvious, but the fundraising environment has changed significantly over the past year. We found investors to be more thoughtful in their due diligence than ever before, digging in to our product, speaking with brands, and becoming true experts on the space. The process was extremely rewarding because we had many thought-provoking conversations, and in the end, couldn’t have found a better partner.
What are the biggest challenges that you faced while raising capital?
While being pregnant during this raise came with its own challenges and controversial questions, the biggest challenge we ran into was introducing a new category around LTV. Given the economic climate, investors are hypercritical and less comfortable with open questions making it a difficult time to introduce a new concept. Ultimately, being born out of the already existing subscriptions category helped us shape the narrative; “We’re going beyond subscriptions”. But we had to iterate that message and come to the table with more supporting evidence than we initially anticipated because we had to prove there was a market for an all-encompassing LTV tool.
What factors about your business led your investors to write the check?
At Canvas, one of the categories they’re most excited about is GTM software that helps businesses sell, understand, or engage with their customers in new and more thoughtful ways. While Smartrr got its start in subscription management, they really see Smartrr as the leader in an emerging “post-purchase operating system” for DTC brands. Beyond subscriptions, Smartrr can power a brand’s loyalty rewards, upsells, gifting, and referrals. Smartrr helps brands reduce and rescue churn at key moments in the brand/customer relationship by integrating these different product modules.
What are the milestones you plan to achieve in the next six months?
Some milestones we are looking forward to in the next six months include doubling our customer base, launching our new memberships feature, and growing the team!
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
First and foremost, fueling a company is not easy, no matter your path. That said, the VC route is not the only source of capital out there. There is an all-or-nothing perception in the startup ecosystem either you get the VC round, or you’re out. This simply is not the case. There are alternative financing providers like Capchase, business loans you can take via a traditional bank, private equity options, and the often overlooked bootstrapping route. As a leader of your organization, consider all options to determine what makes the most sense for your organization.
As far as advice goes, I would tell them exactly what we tell our brands. Look to your most loyal customers. Aim to grow your business from your existing customer base outwards and focus on retaining the customers you do have. Treat them like the VIPs they are, earn referrals and reviews, and ensure they are seeing success from your product or service in an effort to retain them longer. Leaning into our most loyal customer base and staying hyper-focused will put you in a better position than overspending on acquiring net new customers to stay afloat.
Look to your most loyal customers. Aim to grow your business from your existing customer base outwards and focus on retaining the customers you do have. Treat them like the VIPs they are, earn referrals and reviews, and ensure they are seeing success from your product or service in an effort to retain them longer. Leaning into our most loyal customer base and staying hyper-focused will put you in a better position than overspending on acquiring net new customers to stay afloat.
Where do you see the company going now over the near term?
We now find ourselves with a product that has revolutionized the e-commerce post-purchase subscription experience. Brands using Smartrr are seeing a 5X increase in revenue over the lifetime of a subscriber. Everything we’ve built to date has proven to deepen the relationship between customer and brand for better subscription revenue, AOV, and retention over time. We’ve raised the bar on the standard subscription experience and made it feel more like an all-exclusive VIP experience. Thus, making us an organic fit to expand our offering beyond subscriptions and into membership. We are very excited to be spearheading this new initiative, particularly at a time when brands are looking for new ways to lean into their loyal customer base and combat rising CAC costs. Adding memberships to this robust lineup of features will evolve Smartrr into the first comprehensive LTV platform in the Shopify ecosystem equipping brands with everything they’ll ever need to build lasting, long-term relationships with their loyal customers.
What’s your favorite restaurant in the city?
This is an impossible question to answer, but I’ll throw Bird Dog in the hat for this one!
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- Source: https://www.alleywatch.com/2023/02/smartrr-subscription-technology-platform-shopify-app-gabriella-tegen/
