On the growth of Dollar Shave Club to $1BN acquisition
Like many others, I first learned of Dollar Shave Club (DSC) through their legendary product video back in 2012. DSC took a boring everyday topic such as shaving and created a witty, funny (and mostly shareable) video. As a result, early traction in the first 2 days included 12,000 new subscribers. Since then, the video reached +23M views on youtube and counting.
Within 4 years, DSC managed to created a brand of noticeable culture, lifestyle and attitude, and a company that is growing exponentially up until their acquisition by Unilever last week.
15% U.S. men’s razor cartridges market share in 2015. Second largest razor company in the U.S. (after Gillette).
Dollar Shave Club (DSC) was founded in 2011 by Michael Dubin and Mark Levine as a CPG company that delivers door-to-door high quality, cost-effective razors. Since then, the company expended to other personal grooming products all while sustaining up-and-to-the-right growth:
Within 4 years, Dollar Shave Club became a real alternative to retail chains, with +15% U.S. men’s razor cartridges market share and the second largest razor company in the U.S. (second only to Gillette).
But, how did they get there?
Using STEPPS to increase videos stickiness.
Since their viral video in 2012, videos became one of the key components in DSC’s marketing strategy. Adam Weber, Dollar Shave Club CMO, explains how they approach new videos:
“What we’ve really focused in on since our launch video has been all about finding which new stories to tell, to what consumers, and then finding the right distribution platforms to tell them”.
With this approach, DSC were able to use videos in order to increase user engagement and boost WOM (word of mouth). Using Jonah Berger’s STEPPS framework, we can learn more about the stickiness of these videos. For example, in the video ‘Let’s talk about #2' (See below), we can Identify a few strong characteristics that makes this video highly shareable:
The video includes many ‘inside jokes’ and easter eggs. Sharing the video makes the viewers look good, hence increase their social currency. They are in the know. They understand the inside jokes and references. It makes them look cool. Who doesn’t want their friends to think they’re cool?
This video is also a great trigger for keeping their brand top of mind and increasing sells. The video relates to something we all do every day (hopefully) - #2. There’s a good chance that after watching this video, next time you take this every day action, you’ll think of the video and might order their product.
Strong word-of-mouth: 50,000 people a month refer a friend to Dollar Shave Club.
Videos, as great as they are, are not the only way Dollar Shave Club is generating WOM. According to an interview with Michael Dubin on CNBC from 2014: 50,000 people a month refer a friend to the club. This didn’t happen by chance.
DSC wisely creates an engaging & delightful experience with the product that keep the brand top-of-mind and encourage users to share it with others. Take their transactional email for example (Image from 2014. Similar structure and content still used today):
50% of the email is dedicated for referral. DSC adds an incentive for users to spread the word by offering $5 credit for every new referred user. If we analyze this based on Nir Eyal’s Hook model, this is a good opportunity to ask for referral. The user just completed the purchase (‘action’ stage) and is in the anticipation mode while waiting for the package to arrive (‘reward’ stage). While at that stage they’re more likely to take another small action to get another reward, in this case $5 credit.
Another way that DSC is encouraging users to spread the word is through social engagement. One way they do that is by encouraging users to upload photos of their monthly box. The best photos are reposted by DSC and the users get a free T-shirt. Since the action requested (upload a photo) requires almost no effort, it’s more likely that users will be willing to do it. Moreover, by sharing the photo they’re not only rewarded by the brand (free T shirt), they are also increasing their social currency as members of an exclusive community.
Strong retargeting and Email Marketing for converting users to paying customers
Now that we’ve established how Dollar Shave Club is increasing awareness, lets look at the way DSC drives new leads to activation.
Last week, Iterable shared an interesting study focusing on first 21 days of user engagement. The user journey analyzed in the study is of a user that reach the DSC site and apps (iOS, Android), engage by adding a few items to the cart but don’t complete the purchase. Below is a summary of the actions and messages received by DSC in 21 days:
Based on the study’s findings we learn that DSC focuses on emails as the main promotional channel for converting users to paying customers. This is supported by push notifications, Social media and paid ads (retargeting):
- DSC sent a total of 8 emails in 21 days. However, only 1 email was triggered based on user behavior (abandoned cart).
- Total of 1 push notification in 21 days.
- 1 daily post on their social media channels - keeping their brand top of mind. Social media engagement was general and not related to the engagement through emails/push.
- Many Display and social media ads through out the 21 days tested.
Summary
Dollar Shave Club’s growth is a result of a great product & marketing: From building a lifestyle culture and a strong community around the brand. To increasing awareness & WOM through videos and delightful experiences with the product. To converting users through strong email marketing and retargeting ads.
The unique way in which Dollar Shave Club engaged with their users is evident that the traditional marketing methods used for consumer goods will need to change as well to fit the digital age.
