Why DTC brand Harry’s needs to think like a publisher

Last week, direct-to-consumer (DTC) shaving brand Harry’s teamed up with Boots in a move to widen its distribution channels and routes to market. The idea isn’t new – I took a similar approach more than 20 years ago for Sky, distributing set top boxes and subscriptions through retail and shopping centres.

There are a few lessons today’s DTC marketers can learn from this move. But this strategy needs to be accompanied by a plan to convert buyers into subscribers, as someone picking up a razor in Boots won’t necessarily have the same relationship with the brand as a potential subscriber.

To build this relationship, it’s worth going back to the roots of subscription economics. Subscriptions were pioneered by publishers centuries ago who have been operating in narrow, competitive environments for decades.They have also been collecting, analysing and applying their own data in an effort to win a greater share of advertiser budgets. With that in mind, there are three lessons that publishers can pass on to the emergent subscription economy.

Lesson 1: Don’t build your house on someone else’s land

For several years, publishers were lured by broad audiences and easy clicks provided by global platforms such as Google and Facebook, spending millions on platform audience development. But the platforms’ algorithms, initially unbiased were reweighted to favour, in Facebook’s own words, “friend’s” content, tightening the spigot on audience traffic.

Publishers turned to subscriptions because they realised they couldn’t rely on ad revenues alone and platform-driven traffic. This led them to digital subscriptions, effectively reviving their traditional business model. Doing so, they learnt how to build closer relationships with readers, which made those readers a more valuable audience for brands as well as loyalists for the publishers.

Now, subscription-based DTC brands face their own dilemma. Like selling subscriptions through external channels, third-party platform data can be seductive. It is seemingly 1:1 and granular, promising advertisers opportunities to find prospective customers for pennies. But bought clicks are no substitute for genuine brand interaction. Long-term business success comes only via owned properties.

Brands have worked with first-party data via CRM platforms for years, but the result has been blunt instrument messaging — mainly via email. If DTC brands are going to survive and thrive, they’ll have to work harder to keep customers engaged on their own turf, using data to customise messaging and deliver relevant content based on users’ behaviour – in effect acting a lot more like a publisher.

Lesson 2: Getting into the data is hard—but rewarding—work

Publishers are moving to more sophisticated, personalised customer experiences and dynamic paywalls that use data for targeted messaging in order to improve subscription and retention rates. By applying machine learning models, data-savvy publishers can predict the likelihood of a given reader becoming a subscriber with up to 90% accuracy. Brands can use similar tactics to segment audiences into cold, warm and hot, test messaging and improve results by using their consent granted first-party data.

Many brands, particularly smaller ones, will need to work with data specialists to comb through analytics and look for trends. Brands may also have siloed data from disparate sources that must be brought together on a single DMP. A single user identity is mandatory. An internal champion is needed to manage the customer relationship and use data sources and actionable insights to manage them along the customer journey from purchase, registration, subscription to retention.

But finding this champion can be hard with competition for data scientists fierce, so plugging into out of the box data management platforms with plug and play capabilities like data integration and lookalike modeling mean that the champion doesn’t necessarily need to be a data scientist – just passionate about the power it delivers.

Lesson 3: Content isn’t king, it’s accountable

‘Peak Content’, a term coined for the glut of content that made it difficult for writers and producers to get paid well for their work, meant that consumers had lots of places to go for free content. Premium publishers have responded by building brands with strong reader ties, that deliver personalised content and invoke a feeling of inner-circle membership.

That said, publishers and other media companies like Spotify and Netflix have a distinct advantage over most brands: customers regularly return to their sites, often several times daily. Brands don’t tend to have such relationships. Even DTC brands which have strong emotional connections with their customers don’t expect them to visit their website several times a day or even week. Instead, they have to rely on building great apps to get onto people’s home screens via notifications.

A strong content strategy can remedy that problem. One example is subscription spin brand Peleton which has generated $400m (£308m) in sales, via a mix of sales of its extremely high end proprietary bikes, which cost over £1,500, plus monthly subscriptions of £30 a month for unlimited classes. The content that Peleton produces, fourteen live Peloton classes streamed each day, alongside an on demand database of 5,000 additional classes, is more than enough content to cause an enthusiast to return to the brand several times a week, baking in far more loyalty than a Gym membership for example would have alone.

The need for subscription brands, like Harry’s, to turn the retail consumers they gain via the Boots partnership into loyal subscribers, is more and more necessary as we approach ‘Peak Subscription’. According to McKinsey, the subscription economy continues to grow, with myriad subscription services competing for wallet share, whilst consumers are looking more critically at the subscriptions they’ve already accrued. Those with a data-driven, truly personalised, content-led relationship will be the ones that leverage paid distribution channels to deliver sustainable customer lifetime value.

David Gosen, CCO Cxense