Direct-to-Consumer (DTC) companies are the gold standard of growth marketing today.
Dollar Shave Club, Warby Parker, Casper, and a zillion other brands have mesmerized us with their effortless growth. New brands sprout up every day and reach tens of thousands of customers in a blink of an eye. How do they do it?
I recently listened to Mitch Joel, agency founder and blogger at Six Pixels of Separation, on The Smart Agency Podcast. He provided a theory that explains the success of DTC brands.
Mitch said DTC brands excel at three things:
- They have a strong purpose
- They’re great storytellers
- They’re masters of first-party data
But these traits aren’t just reserved for DTC companies. Any growth-minded business can learn from this formula. Let’s look at how the top DTC brands are deploying these strategies to figure out how you can do it, too.
Have a Strong Purpose
Dollar Shave Club is one of the original DTC brands of the modern era. They entered the world at a time when men’s hygiene was dominated by two or three massive players. Dollar Shave Club is the antithesis of those brands.
If Gillette is, “The Best a Man Can Get,” then Dollar Shave Club is “just good enough” (and also 10x cheaper). They made this stark difference their purpose: They stand for the guys that don’t want to pay $30 for a pack of razors.
Purpose doesn’t necessarily have to be something charitable, or even all that noble. Purpose is simply something you believe in. Dollar Shave Club believes in not getting ripped off for shaving equipment. Apparently a lot of guys feel the same way.
But sometimes the cause is noble. Warby Parker believes that designer eyewear should be affordable for everyone all over the world. Inspired by Tom’s Shoes, Warby Parker gives away a pair of eyeglasses for every pair sold.
I’m a two-time Warby Parker customer and have fully bought into their purpose. I love when my dollars go towards helping the greater good (AND help me look good).
Though wildly different, these two companies share something in common: They believe in a different way of doing business. They say, “Here’s the status quo, and here’s how we’re going to f*ck it up.” That’s a pretty powerful purpose.
Let’s imagine that 10 years ago, Gillette saw the untapped market for low price razors and decided to address it. What would their marketing and product launch look like?
First, they’d spend millions on new packaging and prime real estate in grocery aisles and drugstores. Then they’d buy a Super Bowl spot, full-page newspaper ads around the country, a few hundred billboards, and a new, hip celebrity spokesman.
And inevitably, their low-cost razor would just become another thing on a shelf. No one would care.
How does this compare to Dollar Shave Club’s “launch strategy”? Let’s observe:
In summary, they spent a few thousand dollars and one day creating a hilarious video. Twenty-six million views later and, as they say, the rest is history.
In fact, the video was so popular that it sparked a global marketing phenomenon. Every company wanted to create their own viral video and cash in on the trend. Obviously it’s not that easy.
The lesson here isn’t to create a viral video. It’s to learn how to tell a great story. At the end of the day, that’s all a viral video is: a story that resonates with your target audience.
Most importantly, a viral video (like all great stories) puts your purpose front and center for the audience.
Here’s a more recent example:
Naadam is a DTC apparel company that creates $95 cashmere sweater. I recently came across one of their ads on YouTube. It was almost 3 minutes long.
Typically I can’t wait to hit the skip button on these things, but I have watched this entire ad multiple times. It’s funny, interesting, and even a little suspenseful. Check it out.
Truth be told, I couldn’t even remember the name of the brand while writing the first draft of this article. But I remembered the story. That’s what’s most important.
So how do you tell your own great story?
First, you start with your purpose. Then turn it into a manifesto.
A manifesto is a grievance, plus your purpose, plus what you’re going to do about it. For example:
Dollar Shave Club’s manifesto:
Shaving razors are too expensive. We believe razor should be affordable and easy to purchase, so we’ve created a subscription razor service starting at $1 a month.
Cashmere sweaters are expensive and the supply chain is full of no-good-doing middlemen. We believe cashmere sweaters should be affordable and ethically made, so we purchased our own farm in Mongolia and give back to the local community. Oh yeah, we also created a great cashmere sweater for under $100.
Warby Parker manifesto:
Designer glasses are way overpriced because the market is dominated by one to two massive companies. We believe designer eyewear should be available and affordable to EVERYONE, so we’ve created designer lenses starting at $95 and a Buy One Give One program.
All manifestos pretty much follow the same formula, but they never lose their power. Manifestos are as old as humankind and trigger powerful emotions in us all. Find your purpose, then your manifesto, and make that the central theme of any story you tell.
Use First-Party Data
I have a small side business selling journals for a super niche audience (cocktail enthusiasts). I sell a few dozen a month, a couple hundred a year. It’s a nice source of income, but hardly a standalone business.
The other day, my business partner suggested we run social media ads leading up to Black Friday. “We could build a lookalike audience using customer emails,” he said. “We’ll be rich!”
There’s only one problem: We sell our journals on Amazon.
And guess what we don’t get from Amazon? Customer emails, the most fundamental piece of customer data.
That means we can’t create a lookalike audience on Facebook using our existing customers. So much for that new Bugatti this year.
This story of my small brand in a tiny corner of the internet illustrates just how much leverage DTC brands have over their wholesale-first competitors.
Not only are DTC brands collecting customer emails, but dozens of other data points across the entire customer journey. In a world where everything is becoming more personalized, first-party data is the most powerful force on the planet.
Here are a few ways DTC brands leverage first-party data:
- Beta test new products. Instead of relying on abstract market research and customer surveys, DTC brands can literally ask their current customers what they want next. The book ASK by Ryan Leveque provides an excellent framework for asking these types of questions.
- Launch new products. Remember Gillette’s hypothetical product launch for a low-priced razor? They would’ve spent tens of millions on promotion. How much does Dollar Shave Club have to spend to launch a new product? Exactly $0 if they really wanted to. All of their customers are just an email away.
- Optimize the Customer Experience. With my Amazon business, I only see the moment a customer purchases a journal. How they got to the page, and what they do after purchasing the journal, is a complete mystery. DTC brands own the entire customer experience, from the first contact through repeat purchases and cancellation.
How can your business own more first-party customer data?
First, if you’re selling on someone else’s platform, start making the migration towards selling on your own (I recognize that this is easier said than done. We’ll save that for another article).
If you can’t sell on your own platform, then do the ONE thing that will give you 75% of the benefits: Build an email list. Few things are as important in today’s platform-driven world than owning a direct line of communication to your customers.
Marketing Like a DTC
Ironically, many DTC brands end up selling through traditional wholesale channels. Today you can find Dollar Shave Club products and Casper mattresses at Target. Native Deodorant, another DTC brand, is now sold at Walmart, Target, Walgreens, and on Amazon.
Does that mean these brands are no longer DTC? Quite the contrary.
DTC is more of a philosophy than a strict business model. It starts with a strong purpose and great storytelling to reach your audience. Then, instead of giving your audience away, DTC companies own the relationship and control the brand experience.
Any business can follow this strategy for success. Try experimenting with the DTC marketing playbook and see for yourself.