Catch-22
Subscription “locks” a customer in. But for high-consideration brands that may be a problem.
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DTC CPG brands have, largely, focused on elevating a common household good with thoughtful design, better quality and a brand that ties more to lifestyle and emotional chords than rational and practical needs.
When this strategy is employed, a brand is attempting to turn a low-consideration category into a high-consideration category. If successful in doing so, they win.
An example: Natural deodorant.
As a category, deodorant sales are estimated at $4.9B in the US.
In 2019, the average price of a bar was less than $5 for 7 out of the 10 largest brands. None of those brands are natural deodorants, though, and the two leaders in that space—Schmidt’s and Native—are double, even triple the cost.
Yet, in 2017, Native sold to P&G for $100M and Schmidt’s sold to Unilever for nine figures.
While the two employed different distribution strategies (Native, DTC; Schmidt’s, omni-channel), they were alike in that they were both focused on getting people to think twice about what they were putting on their armpits.
So, yes, the playbook is there.
In fact, if you want to read about the playbooks employed by Schmidt’s and Native, there are some good reads on that.
Notice, though, that when it comes to retention the focus in both cases was on product first. Native was on version 24 of its product two-and-a-half years in. In a recent Twitter thread, Chris Cantino called product “the star of your business:”
Younger brands launching with a high-consideration category playbook, though, seem to have shifted retention strategies from being product-first to being subscription-first.
That leads to a Catch-22: While subscription “locks” a customer in, it also removes consideration from the purchasing equation—something that’s of heightened importance for a high-consideration brand, both for the brand (in terms of learning) and the consumer (in terms of validating the decision to move upmarket).
For the segment of customers who have formed a habit around a brand’s higher consideration offering (or, at least, have a formed a habit around the higher consideration category), subscription makes sense. But as we’ve discussed previously, that level of loyalty is nearly impossible to force (perhaps especially so when we begin to talk about premium goods within an existing commodity-dominant category).
By pushing subscription too early and too broadly, as opposed to leading with product and acquisition principles, brands run the risk of creating a noisier environment when they’re searching for quantitative signals on product usage, repurchase rates, and consumer sentiment—signals that pay dividends when it comes to reaching scale.
In other words, brands may be trading the education needed to better convince a broader segment of consumers to accept a high-consideration product for front-loaded spend from a smaller segment of the market.
If you’re looking to follow Schmidts and Native, is that the best trade?