Dollar Shave Club: Viral Marketing and Subscription Sales

I’m on a start up company trend right now. It might be because college graduation is fast approaching, and I’m coming the realization that if I can’t find a job I might have to create one. Regardless, I few weeks ago I found PowerCoco… this week it’s Dollar Shave Club.

Dollar Shave Club ships razors directly to consumers on a monthly bias. It’s a very simple business model. Customers can simply go to their website and select 1 of 3 razor options. Dollar Shave Club offers…

• 5 cartridges of 1 blade razors for $1 per month
• 4 cartridges of 4 blade razors for $6 per month
• 3 cartridges of 5 blade razors for $9 per month

In the first few seconds of being on their website, you begin to notice the image of the brand. They like to use humor. Almost every element of their website incorporates humor in some way. I courage you to explore their website and find them for yourself. The main focus of their home page is a YouTube video that describes their business.

I really like their use of a viral marketing. Viral marketing uses social media to produce brand awareness, increase sales, introduce promotions or to achieve other marketing objectives. Viral market, such as Dollar Shave Club’s YouTube video, creates word-of-mouth advertising because their message is spread by others via social networks. People love to share this kind of stuff. Dollar Shave Club also adds to the word-of-mouth by offering incentives if you sign-up a friend. For every friend you sign up you get one month free. Again they use humor to promote it.

Now, this advertising concept is not original to Dollar Shave Club. This ad seems like a rip off of Old Spice, but nevertheless this will effectively spread the word at little cost to the company. Dollar Shave Club is also very active on Facebook and twitter. I feel they use these sites very well.

The danger in using humor in advertising, is making sure your message comes across. Not all companies do this well. In my opinion, the more simple your business model or product is, the easier it is to use humor. For example, Bud Light could use humor, whereas, Boeing could not (see what I mean?). I think Dollar Shave Club has done a really good job of using humor to get their message across. I think their message has 3 parts…

1. Our blades are high quality
2. Our product is convenient
3. Our product will save you money

They claim their blades are f***ing great. I can’t say from first had experience that they are. I image they are, or they are at least comparable to other razors (overall I think their are some good razors out their). Not sure this is a good selling point.

Convenience might be a better selling point. It would be nice if someone shipped me everything I need. Since Netflix the number of home subscription business has really taken off. I think the reason for this is because you are adding value to the customer. You bundle the product along with the convenience of having it delivered directly to your door. However, some people may hesitate to commit to something that is that long-term.

Dollar Shave Club is a money saver. I use the Gillette Fusion razor. It’s a 3 blade razor that I have found to be rather effective. The handle costs about $8, and Gillette sells refill cartridges in packs of 8 for about $27. I use on average 3 cartridges per month, which cost me approximately $10.125 per month ($27 ÷ 8 cartridges x 3 cartridges per month). Dollar Shave Club would see me 4 cartridges of 4 blade razors for $6 per month. That would provide me with an additional cartridge per month and savings of almost $4. Over the course of the year that would be 12 extra cartridges and a savings of $49.50 ($121.50 – $72). Sounds like a great deal. Dollar Shave Club may have found a significant competitive advantage compared to it overhead heavy competitors. Sense Dollar Shave Club doesn’t have storefronts or retail locations and operates exclusively online they operate very efficiently. Much of the savings are passed on to the consumer. It will be interesting to see how they can manage their costs as the business grows. I feel it’s risky to enter a market as a low-cost provider, because then that’s what people expect from you.

Overall, I think this is a cool company. I’m interested to read what you have to say.  As always… comments are welcome and email subscriptions are strongly encouraged. Also check out @AfterThePeriod and find us on facebook.

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