Dollar Shave Club Business Model and Marketing Strategy

The Dollar Shave Club has one mission: to take over your bathroom. This company, which was launched only in 2012, is now forecasting to have over $60 million in annual revenues. The Dollar Shave Club business model was actually born out of frustration because the razors that were needed couldn’t be found anywhere. The founders, Mike Dubin and Mark Levine, decided to do something about it.

What they eventually created was a SaaS business model that incorporates buzz marketing principles to generate ongoing revenues. They’ve also expanded their presence into other related products, including shaving creams, after-shave, and moisturizing wipes. This business says that they will forever change your life. They might not be wrong.

What Can Be Learned From the Dollar Shave Club?

The Dollar Shave Club opened for business in July 2011. It started as a simple subscription service that would ship out specific razors to customers on a monthly basis. This saved their customers time because they wouldn’t have to go to the store and they could get their preferred razor. They even stocked those crazy little plastic razors that people could get for $1 per month if that’s what they really wanted.

The premise worked and the subscriptions began to increase. What drove the business into the stratosphere, however, was a buzz marketing campaign that went viral and has stayed viral for them. With a video and commercial that advertises their subscriptions in a unique way that has been shared millions of times through social media, the subscription levels have exploded for the Dollar Shave Club.

And then, just like every good business should do, the Dollar Shave Club business model incorporate new products to go with their subscription products to increase and diversify their revenues. It is definitely working.

It’s All In the Relationship

There are many subscription clubs that are doing pretty well for themselves today. Many entrepreneurs are trying to start their own versions of the Dollar Shave Club, in fact, but with products that range from coffee to potato chips to laundry soap. The difference in the Dollar Shave Club is that they kill it on social media.

Their content engages people and makes them want to watch videos or read their sales pitch. They interact with their customers, respond quickly to concerns, and don’t just talk about razors or peppermint butt wipes. They build real relationships with people that come across as important, meaningful, and not just about the dollars.

Those relationships help to build up a loyalty to the brand. That loyalty helps to keep subscription rates high as people continue their shipments, even if some razors or accompanying products can be found a little cheaper elsewhere. The buzz marketing campaign has helped to create a community of “believers” that engages with each other as well, furthering the value of the brand.

Besides – how can you not love a company that has the slogan “Shave time, shave money?”

Referral Marketing Has Also Helped the Business

Many businesses offer customers the chance to earn free products or services when they refer a friend. Hulu Plus, for example, offers 2 weeks of unlimited streaming for every referral, up to a full year for free. Dollar Shave Club gives customers $5 in credits for every friend that signs up, whether they pick the dollar razor or the $9 razor. To help promote this, each customer is given a specific link to share on their social media feeds. When people click it and sign up, rewards are handed out and customers feel even more brand loyalty.

The final benefit of the Dollar Shave Club business model is that they work hard to keep everything pretty simple and straightforward. Emails are precise and to the point. Navigating the site to sign up is effortless. The only trouble, in fact, might just be the fact that it costs $2 to ship a $1 razor to someone every month.

Every opportunity to upsell is also included in the business model. Opportunities are even included with each monthly shipment that is received. Reminders that a subscription can be upgraded are frequent, but also with a sense of humor. The official membership card says that you can’t really present it to any bar to get a free drink – please don’t drink and shave.

Buzz marketing, quality products, and a sense of community – the SaaS community is on notice. The Dollar Shave Club business model is taking over.