5 Things You Can Learn About Subscriptions from Dollar Shave Club
Dollar Shave Club launched its business with a phenomenal YouTube video that went viral and got them their first 12,000 subscribers in just two days.
By the end of 2012, the company had made $4 million. In 2013, they reached $19 million, only to grow to $64 million in 2014. This year, they are projecting up to $140 million in earnings.
The company currently has over two million subscribers, and knows that their list will keep growing next year.
This makes Dollar Shave Club one of the most successful subscription-based eCommerce businesses out there. So, we thought that there were some good lessons that other subscription businesses could learn and implement.
Know how to position yourself in a unique way
There are hundreds of companies selling razors, including giants like Gillette, that spend millions on TV ads and hiring celebrities to endorse their products.
It’s tough to stand out in this market if you don’t know how to position yourself in a unique way.
How Dollar Shave Club positions itself – there are a gazillion places where you can buy razors. You can even buy them online and get them delivered to your door.
However, there is no other place where you can get a subscription service that delivers cheap razors (starting at $1/month) straight to your door each month.
Understand what problem you’re solving – with Dollar Shave Club, the problem was very simple – quality razors are really expensive in stores.
Additionally, it takes a hell of a lot of a time to buy them. You need to drive to the store, park and find where the razor fortress is located in the store.
And it’s locked. You need to find the guy with the key to unlock it.
So, people waste a lot of time buying razors. They could save this time by having someone deliver those razors straight to their door.
The third problem that the company solves is infrequent blade changing. Customers don’t like shaving with dull razors, but they often do so because they forget to buy new ones.
By having a service that delivers high-quality razors at a low price straight to your door, you solve three problems each month:
- people save the time they would have spent buying them
- they save money
- they always have sharp blades to use
Create a launch campaign
The day after their launch, The Dollar Shave Club had 12,000 subscribers and had sold every single blade they had in stock.
Mike Dubin, the founder of Dollar Shave Club, had to ask friends and family for help to be able to package and deliver all the orders.
Have a launch plan – when Dollar Shave Club launched, they knew that they didn’t have the budget to advertise on TV and use celebrities as promoters.
Instead, they decided to invest in a single YouTube video to deliver their message and attract the audience they wanted.
It didn’t cost them much either. Just around $4,500 and one day to shoot.
In the first month, the video generated 4 million views, which would have cost a fortune with traditional advertising.
Align everything – Dollar Shave Club announced their $1 million in seed investment the day their YouTube video was launched. They purposefully delayed the news to time it with the video launch and their new website.
This allowed them to get more leverage and have more stories to tell when pitching to the media.
Create a unique customer experience
When you join Dollar Shave Club, you’re not just subscribing to a monthly delivery of low-cost razors.
Instead, your whole grooming experience is about to be changed and you feel that you’re part of something really cool.
This is how Dollar Shave Club manages to create a unique customer experience for its subscribers:
Welcome email – the moment you become a member of Dollar Shave Club, you’re welcomed with a really nice email.
Packaging – the packaging is another aspect that Dollar Shave Club uses to deliver an excellent experience. All razors and blades are packed in a beautifully designed and branded box.
The funny quote on the razor’s box — “I like shaving with a dull razor” — reminds people to change their razors more often, while also helping them to remember the brand.
Inside the box, you’ll also find your member card with another funny note stating that you’ll get a free drink in any bar with it (really?).
Leverage referrals and word-of-mouth
Around 50,000 people a month refer a friend to the Dollar Shave Club, according to a recent interview with Dubin.
Many of them do so because of their love for the product.
However, there are a few additional tricks that Dollar Shave Club uses to maximize referrals and word-of-mouth.
Encourage your referrals with bonuses – within the welcome email itself, Dollar Shave Club offers free months to its members if they refer their products to friends.
Dollar Shave Club provides each member with a unique referral URL that people can share to sign their friends up.
Nowadays, creating such referral links is super easy with tools like ReferralCandy, which is also officially integrated with ReCharge.
Additionally, Dollar Shave Club rewards social shares with free gifts.
When members share a photo of their monthly box on Instagram or Facebook, the brand reposts their favorites, and then rewards that member with a free t-shirt.
Focus on increasing your customer lifetime value
Dollar Shave Club makes the majority of their revenue from repeat customers. This means that they need to make some extra effort when it comes to increases their average customer lifetime value.
Here’s how they do it:
Put effort into keeping your existing customers – this comes partly from delivering exceptional customer service and a great customer experience, as we mentioned before.
If people are happy with your service, they’re likely to stick with it.
But Dollar Shave Club is more than that – it’s a community of men that value humor and having fun. It’s not just about the blades, it’s about being part of the club.
And everyone who has the same values as the current members will want to join it.
Cross-sell and upsell – Dollar Shave Club states that, for $1/month, you can get high-quality razors delivered straight to your door.
However, the company has its ways of convincing you to spend much more than that the moment you decide to sign up.
First, you’re presented with three different blade options:
As the brand-name states, you can get a razor for $1/month, but why not get a better one for $6/month or $9/month.
Studies say that if you present someone with three options — least expensive, middle class and an expensive option — the majority will choose the middle class. After that, people will choose the most expensive option, and a lesser amount of people will choose the cheapest product.
When it comes to building a successful subscription eCommerce business, the key points you should learn from Dollar Shave Club are as follows:
- position yourself in a unique way and stand out from the crowd
- know which problems you’re solving for your community
- create a launch campaign; don’t just build your store and wait for clients to come
- ask your best clients for referrals and give them bonuses
- upsell more expensive products to grow your business
Why do you think Dollar Shave Club turned into an overnight success? What do you think are some of the key things you can learn from them about running a subscription eCommerce business? Let us know in the comments below.