In our business (we are a YouTube ads agency) we often deconstruct success of other brands. In this article, we're going to dive into the incredible success story of Dollar Shave Club and discover how their YouTube ad took them from zero to eventually becoming a billion-dollar company. 

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So, let's explore how Dollar Shave Club used their YouTube advertising strategy to achieve such extraordinary success. And the best part is, you can apply these strategies to your own e-commerce brand and potentially achieve similar results.

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Let's get started and uncover the secrets behind Dollar Shave Club's meteoric rise and how you can harness the power of YouTube ads for your business.

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The Genesis of Dollar Shave Club:

The Dollar Shave Club saga began with an unexpected proposition. 

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Mike Dubin, the founder of Dollar Shave Club, received a text from his old high school friend, Mark Levine, who had over 250,000 razor blades sitting in a South Korean warehouse. Dubin was trying to figure out how to sell the razors and discovered an opportunity to disrupt the razorblade market, which was dominated by giants like Gillette and Schick. He had a simple idea: offering high-quality razors directly to customers at an affordable price.

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This led to the creation of the billion-dollar company we have all heard of  - Dollar Shave Club. 

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YouTube Ads & "Our Blades Are F***Ing Great" Video Ad:

To stand out in a market dominated by established players, Dollar Shave Club needed a compelling advertising campaign. They also had one big problem - a shoestring budget. 

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Mark and Mike quickly found the best place they could stand out - YouTube. 

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They recognized that their target audience was young men, so they decided to infuse humor into their ads. A total U-turn from the traditional and boring approach adopted by other razor companies that focused too much on features no one cares about. 

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With a modest $4500 production budget, a script crafted by Mike Dubin's stand-up comedy background, and just one day for shooting, they launched their now-famous "Our Blades Are F***ing Great" video ad.

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Launching the Video Ad:

What happened next was beyond their wildest dreams!

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The ad went viral, getting over 25 million views and generating millions of dollars in revenue. Within hours of the ad's release, Dollar Shave Club's website experienced a surge in traffic, causing it to crash temporarily. 

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However, the overwhelming response led to a remarkable feat—selling out their entire stock of 250,000 razor blades in just 72 hours! People were captivated by the ad's humor and eagerly joined a waiting list, even if they couldn't place an order right away.

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The Secret To Their Success: An Irresistible Offer

It wasn't just the ad itself that propelled Dollar Shave Club's success—their offer was simply too enticing to turn down!

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For just $1 per razor and $2 for shipping, customers could have high-quality blades delivered to their doorstep, eliminating the hassle of visiting stores. Plus, Dollar Shave Club's subscription-based model ensured recurring revenue as customers renewed their orders automatically. 

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This model capitalized on brand loyalty and the tendency of subscribers to stick with a service once they've become accustomed to it.

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How Dollar Shave Club Leveraged Their Subscription Model

The subscription-based model played a crucial role in Dollar Shave Club's growth trajectory. It fostered brand loyalty among customers who received their preferred products regularly. 

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Additionally, canceling a subscription often feels inconvenient, leading to a high retention rate. 

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Raising $9 Million and Achieving Massive Growth:

Dollar Shave Club's remarkable success attracted investors eager to support their growth. The viral ad not only brought in a huge influx of customers but also helped the company secure $9.8 million in funding from Science Inc. 

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One of the reasons dollar shave club kept growing is because they focused on their customers and even talked to them to figure out their pain points. This led to creating a product that customers loved. 

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Customers found the product and the ad funny and this created a funny humorous brand but also extremely cost-effective. Plus it didn’t have any of the BS that comes along with bigger brands. On top of the products itself, they actually received The Bathroom Minutes (a monthly magazine) with every order, which increased their retention rate. 

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In their 1st year, they generated over $4 million, 2 years later they generated $150 million, and a few years later, they sold to Unilever for a billion dollars.

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It’s important to note they didn’t generate this kind of revenue from razor blades alone. 

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They asked their customers to find out what they wanted and one of the surveys revealed that many people wanted butt wipes so that's what they created. 

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One of the biggest secrets behind their success was open communication with its existing customers. They surveyed their customers to figure out what they wanted from their products, and that's how they came up with upsells. And now they sell all kinds of products including skincare products and what’s crazy is that most ecommerce businesses don't survey their own customers. 

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Literally, all they need to do is send out an email asking them what other products they want and the products that people want and figure out how to sell them to customers.

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Why YouTube Ads Worked For Dollar Shave Club And What You Should Do Today

Now, while it may be true that their customer acquisition costs weren’t as high since they launched over 10 years ago…what you need to know is that the core foundations of this ad are still working today. This is true for a lot of our Youtube ads agency clients as well - the thing that starts working often continues for years to come.

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You may not be able to get that cheap of a cost per acquisition but you should still be able to get a lot of customers as long as you're selling something where you can liquidate your cost for acquisition.

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When you think of ads, the first platform that probably comes to mind is Facebook. That’s why Facebook is often more overpriced than YouTube. Even today, YouTube ads for e-commerce are definitely underpriced compared to Facebook ads. Plus, when you factor in the compliance issues, and business managers getting shut down, it's really important to have other traffic sources. 

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The great thing about YouTube ads is that it has a similar conversion rate or even higher conversion rate than Facebook ads, while still being quite affordable; and in many cases, for our e-commerce clients, we've seen YouTube Ads outperform Facebook ads.

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Now, obviously, it would have been ideal to get into YouTube ads years ago when it was super cheap—but it's still an amazing time right now! The algorithm is a lot better, so it's better at getting customers (hey—when we started YouTube ads around 7 years ago, there was no algorithm). 

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YouTube is JUST much better at finding customers.

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