Dollar Shave Club | How to grow a $1BN and (maybe) lose it all

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INTRODUCTION

Want to create a brand worth $1BN in just five years? How about one that grew so fast that it terrified a global corporation? And how about making some kick-ass creative work along the way that racks up millions of views in one day? Well, forget everything you think you know about Dollar Shave Club. Here is the strategy that made them a world-beater. Ok, let’s break it down…

#1 OLD METHODS & NEW TRICKS

‘Growth marketing’ is a funny thing isn’t it? This clever rebranded job title often claims that their skill set is widely different from ‘traditional’ marketing. They also love to point to Dollar Shave Club (DSC) as a prime example of how radically different growth marketing is. Now don’t get me wrong I have a huge respect for growth mareters who achieve incredible things with very little budget. However, let me show you how DSC is in fact fairly traditional in its marketing approach & in turn how growth marketing isn’t anything widely different. And before all your growth marketers reading get mad at me, please just trust me, it will be worth your time.

In order to do this we must offer up a simple & clear definition of marketing. In truth, there is a lot of confusion online when it comes to marketing. Many talk about marketing when in fact what they are really referring to is one small facet of it (i.e. SEO/Content). In truth, marketing is far broader in scope. It covers price, promotion, product & place. Once you understand this traditional definition you will see that, in fact, DSC is fairly traditional in its approach.

Dollar Shave Club’s Price
Whilst DSC did many things brilliantly it was its focus on price that allowed it to dominate & grow so fast. When DSC first launched in 2011 it entered with a monthly price point of $1 or one-fortieth that of the market leader Gillette ($40). Even when newer direct-to-consumer shaving brands like Harry’s entered the market, they were unable to win on price, coming in at $12/month. How did DSC manage to do this? A few reasons. First, they have a highly streamlined distribution process that massively reduces costs. Second, they sold directly to consumers which allowed them to remove the costs added on by big retailers. Third, they didn’t spend money on expensive traditional advertising (more on this later). So taking a step back we can see that DSC used traditional marketing methods (competitive price point) but leveraged new tricks (DTC via the internet) to make it highly effective.

Dollar Shave Club’s Place
When it comes to building a brand there are two essential things you need to always aim for, mental and physical availability. The former is about ensuring you are top of mind when people are ready to buy. The latter is about ensuring you are easy to buy when people want to buy. Now when it came to shaving one of the biggest issues facing consumers was the clunky purchase process. Men would have to go into town to buy their razors and often they would get caught short, forgetting to stock up on razors in time when they were running low. DSC brilliantly tackled both of these problems head-on with their approach to ‘place’. They made it easier to buy (i.e. directly online) and they helped men never get caught short again(i.e. subscription service). So once again DSC used traditional marketing methods (place) but leveraged new tricks (selling online) to make it highly effective.

Dollar Shave Club’s Product
One of my favourite sayings in marketing is ‘Nothing kills a bad product quicker than good advertising’. The inconvenient truth is there is little point in nailing price, place & promotion if your product is terrible. DSC completely understood this and whilst they won on price they never comprised on product quality. How did they manage to do this? Well, they went to the very same manufacturers Gillette used to create their razors. This allowed them to provide a product with equal quality but at a far greater convenience and cheaper price point. In fact, their product was so good that P&G (the owners of Gillette) got scared and tried to sue DSC for copyright infringement in 2015. Yet as the founder of DSC, Michael Dublin states, they didn’t really have a foot to stand on

So once again DSC used traditional marketing methods (product) but leveraged new tricks (sourcing directly from manufacturers) to produce a highly effective approach.

Now taking a step back we can see that DSC isn’t some radically new or magical approach to growth marketing’ In reality, they use traditional marketing methods (price, place & product) but leverage new tactics brought about through the internet. This example also reveals how most of the time growth marketing is in fact just marketing but with a new fancy name. Want to know the inconvenient truth? All marketing deals in growth, not just growth marketing. That is not to say ‘growth marketers’ should not be admired, they 100% should. Many of them do amazing things with little to no budget. The only real difference is that growth marketers work in startups & scaleups with smaller marketing budgets. Perhaps, therefore, a better job title would be ‘challenging marketing’ or ‘low budget marketing’….but I guess that has less of a ring to it.

Wait a minute. What about promotion Will?! I hear many readers saying. Well the promotion aspect of DSC is so important to their success story that I want to give its own section below.

COMMUNITY SHOUT OUT

Before I move on to Dollar Shave Club’s promotion, it’s time for Growth Club to do a little bit of promoting too. Each week we shout out one member from our community who has taken the time to share this newsletter online. We are trying to build the best marketing community online but, as you can imagine, it isn’t always easy to cut through the noise. That’s why I rely on you lovely readers to spread the word. This week I want to a shoutout to Lara Mulady for her amazing post below on Linkedin.

Want to get a shout-out to over 3,000 CMOs, CEOS & founders next week? Simply post this link on your LinkedIn or Twitter, tag me and write a few words about why you recommend Grow Club.

Anyway back to Dollar Shave Club…

#2 A MEDIA COMPANY

Perhaps the thing that DSC is best known for is its disruptive and breakthrough content marketing. When the brand broke through in 2012 its approach to promotion felt radically different from anything that had come before it in the shaving category. It was also hugely effective. Only one day after its first film launched on YouTube the company gained over 12,000 new customers at $1 per month - creating $144,000 in annual recurring revenue overnight. How was it so successful? Let me break it down below.

The first thing to note is context. In truth, DSC had a first-mover advantage when it came to launching a brand on YouTube. In 2012 the majority of YouTube content was still pretty low quality. The platform was still filled with cat videos and teenagers playing video games. Second, there was simply less content being uploaded to the platform too. In 2012 ‘only’ 72 hours of content was being uploaded to the platform every minute. Compare this to over 500 hours of content being uploaded per minute in 2021 (over 600% more). In truth, it would be a lot harder for a brand to ‘win’ on YouTube today than when DSC launched.

Whilst it is more competitive than ever, it is not impossible, however. You only have to look to Liquid Death, who launched in a similar fashion only a few years ago, to see how effective YouTube can still be for brands. But why do DSC & Liquid perform so well when so many more fail? I’ll unpack this for you below.

First and foremost the work is disruptive. To be blunt both the shaving category and bottled water pump out some of the most generic ads around. Most shaving ads tend to follow a predictable formula of; good-looking guy x looking in the mirror x uses new razor technology. The water category also tends to follow its own formula too; refreshing water x bottle x mountains. The reason both DSC & Liquid Death’s content performs so well is that they adopt a bolder attitude that helps them cut through in a sea of sameness. However, there is much more to their success than this alone. Let’s break this down below.

The second reason for DSC’s success is they didn’t create ads. They create bloody funny content that has a far greater chance of being shared. Look I’ve been lucky enough to work at some of the top advertising agencies in the world and even I admit that 99% of ads made today are terrible at best and forgettable at worst. DSC understood this and created content that was better suited to the YouTube platform. The third reason for their success was they got to the point faster. When creating online content your biggest enemy isn’t other brands it’s attention. You are competing with the 500+HRS of content uploaded to the platform, every single minute. So you need to hook people in with a provocative statement or deal they cannot pass up on, in seconds. DSC understood this by proclaiming “For $1 a month, we send high-quality razors right to your door” in the first ten seconds of the film. They also have a clear CTA that pushes people to their site in seconds too. DSC does this by repeating twice in the first 10s of the film “Hi, I’m Mike, founder of DollarShaveClub.com, What is DollarShaveClub.com?”

DSC’s launch film, however, was just the beginning. The brand went beyond YouTube and began to behave more & more like a media company. Specifically, they went on to develop MEL magazine. A weekly newsletter that was the closest thing men had at the time to a ‘wellness magazine’. Long before it became acceptable to talk about men’s mental health issues, they were leading the way. Not only did this yet again cut through a sea of generic shaving ads. It also enabled the brand to develop a more deeply engaged fan base.

So similar to the first chapter we can see that DSC used traditional marketing methods (promotions) but leveraged the power of the internet (content) to great effect.

#3 RED FLAGS

In a previous edition of this newsletter, I wrote about some of the watch-outs and warnings ahead for Blank Street Coffee. It was popular and so I want to do the same again today, for Dollar Shave Club.

Whilst DSC has done many things in the marketing mix brilliantly, there is for me a big elephant in the room. They never really took the time to define a proper brand strategy and positioning. Now some readers may say “…but Will, does this even matter?!…i mean look at how successful they have been”. Well, whilst they may have started out very successfully in recent years things have taken a turn for the worse. In fact, following their acquisition by Unilever for $1BN the brand has been in steady decline. As Unilever themself admit…

Whilst there are undoubtedly numerous factors at play here, I do think a lack of brand strategy is a major issue for them. You see whilst a lower price point, superior place and solid product served them well in the beginning…it wasn’t a defensible moat in the long term. The truth is ten years after the launch of DSC the shaving category is radically different and more competitive than ever before. Many brands have now entered the market with equally cheap & convenient products. Furthermore, even their once-loved promotional aspect has dipped considerably since DSC first launched. The brand no longer makes the stand-out content it once did on YouTube and sadly MEL magazine was sold off years ago. Why was there a lack of brand strategy to blame here? Let me explain.

Ref #5 DSC content is nowhere near as good as it used to be.

The most successful long-term brands have a clearly defined POV on the world. Oatly is ‘Milk made for Humans’, Nike empowers everybody to ‘Just Do It’ & AirBnB helps everyone ‘Belong Anywhere’. Dollar Shave Club never spent the time to do this. This in turn saw the brand lose its way when it was bought up by the far bigger Unilever. It also didn’t give the brand guard rails for what it did and didn’t stand for. And it unfortunately led to the brand to defaulting to fairly watered-down and cringe-worthy new ads.

CONCLUSION

DSC offers us a brilliant case study in how a brand can apply new tricks to old marketing methods, to disrupt a category and secure rapid growth. However, it also reveals one of the biggest mistakes I see scale-ups making time & time again. Relying too much on growth tactics and not spending the time to really figure out a powerful brand strategy. A strategy that would have clearly defined DSC’s point of view on the world, allowed them to stand out from the competition in the long term & helped to prevent its promotions from being watered down by its big corporate owner, Unilever.

That’s why at Defiant whether we are working with a scaleup or bigger brand, we always begin by crafting a kick-ass strategy.

Many thanks,

Will Poskett,
Founder of Defiant