We live in an era when subscription-based businesses are all the rage. Consumers are signing up in droves to get boxes of items dispatched to their doors every month, packages filled with items from categories as diverse as clothing, groceries, shaving supplies and beauty products. Even a dog or cat can get boxes of treats packed just for them.
Among all these offerings, it’s hard to imagine a product better suited to be served up on a subscription basis than coffee. It travels well because it’s lightweight and doesn’t require refrigeration. People consume it regularly, often on a daily basis. And the fresher the beans, the better the coffee tastes, so scheduled deliveries of recently roasted beans easily outshine stale grocery store fare.
That’s why two years ago, Toronto-based Parachute Coffee seized the opportunity to get into the direct-to-consumer coffee business. I spoke to founder and CEO Michael Potters to find out how Parachute Coffee has managed to capture the taste buds of so many coffee-lovers.
“We’ve developed a sophisticated supply chain,” Michael says. “The ecommerce infrastructure allows us to manage demand, and most importantly, we’ve built a brand that speaks to a lot of people. It speaks to coffee lovers, it speaks to moms, it speaks to Millennials, it speaks to grandparents. Coffee is a universal experience that a lot of people share. And it was important to us to build a brand that really tapped into that.”
Michael Potters, who started Parachute Coffee together with Jake Van Buskirk and Yehia Elkhouly, has nurtured a passion for coffee since he was just a youngster. “I started very early. Both of my parents are Dutch. It’s a big part of our morning ritual to have coffee, and it’s a ritual that carries on throughout the day.” As he grew older, he began to delve deeper into coffee culture to explore different roasters, producers and tastes. These days, he drinks three to four cups of coffee per day.
Michael explains that setting the stage for an at-home experience which rivals coffee found in cafés starts with a sharp focus on freshness.
“The coffee that’s been sitting on the shelf at the grocery store has been there for months,” Michael says. “There’s a reason why those big incumbent coffee brands don’t print the roast date on the bag. It’s because they don’t want consumers to know. The most important piece of information is missing.”
I asked Michael—do people really take notice of the roast date?
“Some people do care about it, but certainly not everyone. I think what people do care about, though, is taste. And when you taste fresh coffee, you immediately know the difference. On that first moment of truth when a customer of ours tastes the coffee and they taste the difference between fresh coffee and stale coffee, they don’t necessarily need a roast date printed on the bag. It’s evident in the quality and the taste that they’re experiencing in that moment.”
According to Forbes magazine, subscription-box businesses first started trending in 2010, starting with Birchbox. Since that time, hundreds of companies have emerged to employ this business model. Consumers love the convenience of having products delivered right to their homes, and they enjoy the fun surprise that comes with opening a box of goodies selected especially for them based on their preferences.
With all that competition in the marketplace, subscription-based companies must have something special that sets them apart from the pack. Part of the recipe for Parachute Coffee’s success has been studying their target market in great detail. Last October and November, they conducted a comprehensive qualitative and quantitative consumer research study designed by Nielsen. When Parachute Coffee learned what features are important to their customers, they integrated that feedback into their ecommerce experience. They also collected comments from customers about what coffee and taste profiles they preferred.
“It’s really important first and foremost that you understand who your customers are and why they would buy from you,” Michael says. “What are their problems and what are you solving for them? We took a laser-focused approach and invested a lot of resources in understanding the answers to those questions. Not every company does that. Some build a product based on their intuition. In our case, we wanted to be sure we were doing it right from the get-go.”
Michael says the information gleaned from the Nielsen surveys and the focus groups gave the company a clear path towards earning customer loyalty and retention.
“The aim is to understand in a granular way what pain points our customers are experiencing in their coffee ritual. How can we build a better solution for our customers? That was the first step. We realized what features they needed, and built our ecommerce experience from there.”
For one thing, Parachute Coffee’s leaders have learned that customers want choices when it comes to their coffee consumption. Initially when Parachute Coffee started, the company shipped just one bag and one type of coffee to their customers each month. Now the company will send any number of bags chosen from a selection of three different kinds of coffee. Delivery can be scheduled once or twice a month. Customers have full control of their subscription as well, and can easily modify, skip or cancel their subscriptions anytime.
Parachute Coffee offers its subscribers a 10-ounce bag of beans (whole or ground), complete with brewing tips and tasting notes for $17 or $18 CAD, with free shipping. Customers can also select from a dark roast, medium roast, or a seasonal single origin roast that changes every monthly. Parachute Coffee doesn’t keep inventory on hand. Once they source their beans from the coffee growing belt, the green coffee is sent directly to their coffee roaster. They roast it fresh each week, and ship out what Parachute Coffee calls “airdrops” to customers every Tuesday.
Developing social proof from the experiences of happy, satisfied customers was another key component in Parachute Coffee success strategy. They chose Judge.me to serve this purpose.
“It was an easy decision to make,” Michael told me, “because of the integration potential with the other apps we decided to use with Shopify. We’ve integrated Smile, Recharge and Judge.me as our ecosystem of apps. And it was important that they all communicated to one another and that it was seamless. Judge.me was the only reviews app that had that capability at the time. It was pretty customizable as well. It an easy decision for us and I think the results speak for themselves. The social proof is hugely important for our brand, and Judge.me allowed us to build that.”
A look at Parachute Coffee’s reviews show the appeal of their fresh approach.
“Never having to worry about running out of good coffee is much needed peace-of-mind for us coffee drinkers. Thanks for parachuting a little happiness into our lives, one bag at a time,” gushes one reviewer. Another is captivated by the delicious scent of the delivery: “so fun when it arrives in its way-cool packaging. I love it when my mail smells like coffee. It's a gift to myself ... one sip and my cares are melting away. I so deserve this!” The sensory impact created by a shipment of aromatic fresh coffee is one of Parachute’s most pleasing attributes, as another Parachute fan attests: “smelt amazing when I opened up the box, that wasn't even the bag yet!! The taste is even better, smells awesome when brewing too.”
Like most new businesses, the route to success hasn’t been a smooth one for Parachute Coffee. They have gone through some turbulent times. In 2018, for instance, the company weathered one of the biggest unforeseen challenges a subscription business can face—rotating strikes staged by the staff at Canada Post, Parachute Coffee’s shipper of choice. This caused unavoidable delivery delays.
“It was a huge learning experience for us,” Michael says. “We learned that proactively communicating to our subscribers that there might be a delay is better than no communication at all. We sat on that information because we weren’t really sure what to do. It turns out that wasn’t the best strategy. It’s a matter of proactively communicating to the customer if there is going to be any impact on the product or the experience.”
Despite that tactical blunder, Parachute Coffee made it out of its temporary state of turmoil without significant long-term consequences to the company.
“Luckily we got through it without too much damage to the brand,” Michael says. “For those customers who did experience delays, we were pretty generous in offering discounts and full refunds. If the experience isn’t up to their standard, or our standard, or the standard we agreed on mutually around the brand, then they deserve a full refund. That was an expensive hit for the business, but we learned a lot of lessons from it.”
And it’s this litany of lessons that Michael thinks about when he looks back at this journey he’s traveled as a co-founder of Parachute Coffee.
“The learning curve is steep as an entrepreneur, and you’re going to make mistakes. I would never consider them regrets or catastrophic misses. They are things that you learn as you go and your approach to these things changes as you go along.”
In other words, It’s important not to get stuck spinning in regrets or contemplating could-have-beens. These are assessments that tend to become clear only with the perspective of hindsight.
“You can think all day and night and reflect on all that money that you burned during that period, but those are lessons that every entrepreneur learns as they go along—what to do and what not to do,” Michael says. “It was never wasted money. That money was well spent in terms of the lessons we learned. And we learned them early enough that the cost of that money wasn’t catastrophic.”
Michael thinks this is especially important for first-time entrepreneurs, and that their journey can be eased by working with the right people.
“Don’t be frustrated by some of the complications early on. There will be a lot of headaches sorting out all those logistical issues. But if you find the right partners, then you will all be aligned on the importance of delivering the promise to the customer. Make sure all the stakeholders are aligned with that specific North Star. You should get there. You will get there.”
Having built out their operations and making them water-tight, Parachute Coffee is now hyper-focused on growth. Their biggest initiative in 2019 is to expand to new markets around the world, but Michael wouldn’t give me any more details. “Keep your eyes peeled because some big things are coming,” Michael concluded.
We’re looking forward to working with Michael and his team for a long time to come. If you want to learn more about Parachute Coffee, or even sign up for some of the freshest beans in North America, head to parachutecoffee.com, and check it out!