What plays would you call to scale a DTC business from startup to $10 million ARR?

Summary

MarTech Podcast ™ // Marketing + Technology = Business Growth

Episode: What Plays Would You Call to Scale a DTC Business from Startup to $10 Million ARR?
Release Date: January 24, 2025
Host: Benjamin Shapiro
Guest: Kelly Thornton, Founder and CEO of Tiege Hanley

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Introduction

In this insightful episode of the MarTech Podcast™, host Benjamin Shapiro dives deep into the strategies essential for scaling a Direct-to-Consumer (DTC) business from its nascent stages to achieving a remarkable $10 million Annual Recurring Revenue (ARR). Joining him is Kelly Thornton, the visionary founder and CEO of Tiege Hanley, a company renowned for its uncomplicated skincare systems tailored specifically for men. Together, they explore the pivotal role of subscription models in driving growth, balancing customer satisfaction, and ensuring sustainable business operations.

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The Role of Subscription Models in DTC Growth

Kelly Thornton opens the discussion by addressing a fundamental question: Are subscription models the best pricing strategy for DTC brands? She unequivocally categorizes it as a trend when executed correctly.

“If done correctly, it's great for everybody, it's great for the consumer. It's good for the brand and it's very good for the brand.”
— Kelly Thornton [01:54]

Kelly emphasizes that modern subscription models offer significant advantages:

• Consumer Benefits: Reliability and convenience are paramount. Subscriptions ensure that products are delivered when needed, which enhances the customer experience. Additionally, flexible options like pausing, changing addresses, or modifying delivery schedules cater to the dynamic lifestyles of consumers.

• Brand Advantages: For businesses, subscriptions provide a steady and predictable revenue stream. This recurring revenue model reduces the incessant pressure of acquiring new customers, allowing brands to focus on enhancing product quality and customer satisfaction.

• Economic Efficiency: Subscriptions enable companies to offer discounts, incentivizing consumers to commit long-term. This not only fosters customer loyalty but also optimizes operational efficiencies, allowing brands to scale more effectively.

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Balancing Consumer Convenience with Business Needs

While Benjamin Shapiro acknowledges the inherent benefits of subscription models, he introduces a critical perspective by playing 'devil's advocate.' He highlights the potential pitfalls from a consumer standpoint, such as:

• Over-Delivery Issues: Subscribers might receive more product than needed, leading to excess inventory and eventual regret.

• Subscription Management Hassles: Managing delivery schedules that don’t align perfectly with personal usage patterns can become a source of frustration.

“I love AG1, but I think I have two extra bags of AG1 because they deliver it every 30 days. In reality, I need it every 37 days because I don't take it every single day.”
— Benjamin Shapiro [03:04]

Benjamin underscores the importance of flexibility in subscription services to mitigate these issues. The crux lies in how DTC brands can innovate to accommodate the nuanced needs of their customers without compromising business growth.

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Designing User-Friendly Subscription Experiences

Kelly Thornton responds by emphasizing the necessity of viewing the subscription model through the customer's lens. She advocates for simplifying the subscription management process to enhance user experience.

“Figuring out ways to make it as absolutely painless as possible for a customer to manage their subscription is the name of the game.”
— Kelly Thornton [03:44]

Key strategies discussed include:

• Ease of Modification: Allowing customers to effortlessly pause, skip, or adjust their subscriptions without cumbersome procedures.

• Transparent Communication: Proactively notifying customers before shipments to offer opportunities for changes, thereby preventing overstock and enhancing satisfaction.

• Avoiding Complex Cancellations: Kelly criticizes outdated models where cancellation involves tedious steps, likening them to the cumbersome processes of traditional services like the Wall Street Journal.

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Implementing Modern Subscription Practices at Tiege Hanley

Benjamin expresses a desire for a streamlined subscription management system, reflecting common consumer frustrations.

“I wish there was a system that was easy, where it was a check with me. Hey, your subscription's coming. Click here to confirm or cancel and then manage it.”
— Benjamin Shapiro [04:49]

Kelly Thornton proudly reveals that Tiege Hanley has already embraced such practices:

“We actually notify everybody and say, hey, your orders are coming up in three days. Let us know if you want to pause, change or otherwise cancel.”
— Kelly Thornton [05:05]

By integrating these customer-centric approaches, Tiege Hanley not only reduces the risk of over-delivery but also fosters a trustworthy relationship with its clientele. Kelly highlights that such transparency and flexibility are not only beneficial but also crucial for long-term customer retention and business scalability.

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Conclusion and Key Takeaways

As the conversation wraps up, Benjamin and Kelly reiterate the central theme:

“Just focus on keeping your customers happy.”
— Benjamin Shapiro [06:57]

Key Insights:

1. Subscription Models as Growth Engines: When implemented thoughtfully, subscriptions can propel DTC businesses toward substantial revenue milestones, such as $10 million ARR.

2. Customer-Centric Design: Prioritizing ease of use and flexibility in subscription management is essential to prevent consumer frustration and churn.

3. Balanced Revenue Streams: Recurring revenue from subscriptions provides financial stability, allowing businesses to reinvest in product development and customer service.

4. Transparent Communication: Proactive engagement with subscribers regarding their orders fosters trust and reduces the likelihood of overstock issues.

5. Operational Efficiency: Subscriptions streamline inventory management and forecasting, enabling brands to optimize their supply chains effectively.

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Final Thoughts

This episode underscores the transformative potential of subscription models in the DTC landscape. By aligning business strategies with customer needs, brands like Tiege Hanley exemplify how technology and innovative marketing can drive significant growth. For DTC entrepreneurs aiming to scale their businesses, the insights shared by Kelly Thornton offer a roadmap to harnessing subscriptions as a powerful tool for sustainable success.

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Connect with Kelly Thornton:

• LinkedIn: [Link in Show Notes]
• Instagram: @tiegehanley
• Website: teege.com

Subscribe to the MarTech Podcast™:
Stay updated with daily streams of marketing and technology knowledge by subscribing through your preferred podcast app.

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This summary encapsulates the pivotal discussions from the MarTech Podcast™ episode on scaling a DTC business, providing actionable insights for marketers and business leaders alike.

Transcript

[Podcast Announcer]

The Martech Podcast is a proud member of the I Hear Everything Podcast Network. Looking to launch or scale your podcast, I Hear Everything delivers podcast production, growth and monetization solutions that transform your words into profit. Ready to give your brand a voice? Then visit iheareverything.com.

[Benjamin Shapiro]

From advertising to software.

[Kelly Thornton]

As a service to data across all.

[Benjamin Shapiro]

Of our programs and clients, we've seen a 55 to 65% open rate.

[Kelly Thornton]

Getting brands authentically integrated into content performs better than TV advertising.

[Benjamin Shapiro]

Typical lifespan of an article is about.

[Kelly Thornton]

24 to 36 hours.

[Benjamin Shapiro]

If we're reaching out to the right person with the right message and a clear call to action, then it's just a matter of timing.

[Podcast Announcer]

Welcome to the Martech Podcast, a member of the I Hear Everything Podcast Network. In this podcast you'll hear the stories of world class marketers that you technology to drive business results and achieve career success. Here's the host of the Martech Podcast, Benjamin Shapiro.

[Benjamin Shapiro]

Welcome to the Martech Podcast. I'm your host Benjamin Shapiro and today we're going to discuss D2C marketing. Joining me is Kelly Thornton, who is the founder and CEO of Tiege Hanley, which is a provider of uncomplicated skincare systems designed specifically for men, equipping them with essential skin care tools to confidently tackle tackle their day. All right, here's my conversation with Kelly Thornton, the founder and CEO of Tiege Hanley. I want to move on to pricing. Let's go through an exercise called trend or Trash. Are subscription models the best pricing strategy for DTC brands? Is that a trend or is it trash?

[Kelly Thornton]

Trend. If done correctly, it's great for everybody, it's great for the consumer. It's good for the brand and it's very good for the brand. It's very good for the consumer if it's done correctly. If you consider yourself a modern day subscription, which we do, it's very good for the customer. Why is it good for the customer? It's reliable. It's delivered to them when they need it, when they want it. Modern day means it needs to be flexible. You need to be able to change things. You need to be able to change addresses, you need to be able to pause, you need to be able to do all kinds of stuff. Once you get it dialed in for a customer, it's super convenient for them. They can save a lot of money by doing it that way. We offer very significant discounts for people that do choose to subscribe to us because it helps us run our business more effectively. We can run our business More effectively than we can offer a lower price point for that service.

[Benjamin Shapiro]

I'll be devil's advocate on the side of the consumer. I understand for the D2C brand why subscription models are great. Reoccurring revenue consistency. Right? You just know what you can depend on and you don't have to continue to find new customers to sell your products. Goes without saying. Every time I've had a subscription, maybe not every time, but most of the times when I've had a subscription, the volume management becomes a problem. I love AG1, right? Take it every day. But I think I have two extra bags of AG1 because they deliver it every 30 days. And in reality, I need it every 37 days because I don't take it every single day. I forget sometimes and I always regret it. Love me some ag1. But there's the subscription management that becomes something that gets put on the consumer, or you end up with too much product and. And then it becomes a headache. As a DTC brand owner, how are you working with your customers to make sure that you are flexible with them?

[Kelly Thornton]

That is the core of being a good subscription company is putting yourself in the shoes of the customer and thinking about every single step that they take and how can you make it easier for them. I mean, I'm sorry to say, I think generally speaking, people are kind of lazy. And maybe they're not just lazy, they're just busy. They just have a lot going on in their lives. And the last thing on their mind, they've taken care of their kids. They're picking them up, and they're going to basketball this weekend. They gotta play tomorrow night, and they're picking up groceries on the way home is like, holy crap, I've got too much ag1. Great product, by the way. I need to go online and manage my subscription. So figuring out ways to make it as absolutely painless as possible for a customer to manage their subscription is the name of the game. And the easier you can make it. The antithesis of that is like the Wall Street Journal. You know, to cancel, you got to call, wait on hold for an hour, confirm your birth date and your firstborn, and then go through a whole series of why you're doing this, and then all these offers as to why you shouldn't do it. I mean, it's just the antithesis of it. So as easy as you can make it for a customer, the better it is for everybody.

[Benjamin Shapiro]

I wish there was a system that was easy, where it was a check with me. Hey, your subscription's coming click here to confirm or cancel and then that manage it. But obviously that doesn't make much sense for the DDC brand because all that's going to happen is people are going to be like, no, I don't want it anymore.

[Kelly Thornton]

Actually we do that.

[Benjamin Shapiro]

Do you?

[Kelly Thornton]

We actually do that. You're not required by law to do that. We would rather be a modern day pain in the ass subscription and deal with knowing that the customer has too much product and not ship it. Then to ship a product and the guy say I got too much, I don't want it and I want to return it. So we just notify everybody and say, hey, your orders are coming up in three days. Let us know if you want to pause, change or otherwise cancel.

[Benjamin Shapiro]

Good on you. And that wraps up this episode of the Martech Podcast. Thanks for listening to my conversation with Kelly Thornton, the founder and CEO of Tiege Hanley. If you'd like to get in touch with Kelly, you can find a link to his LinkedIn profile in our show notes. You can DM him on Instagram. His company's handle is Tiege Hanley. That's T I e G E H a n l e y. Or you can visit his company's website, which is just teege.comt I e g e.com if you'd like a summary of this podcast, or if you'd like to apply to be the next guest speaker on the Martech podcast, head over to martechpod.com you can also find our video clips for the martech podcast on YouTube, Instagram and on X. And if you'd like to contact me, let's connect on LinkedIn. My handle is Ben jschapp b e n J S H a p and if you haven't subscribed yet and you want a daily stream of marketing and technology knowledge in your podcast feed, hit the subscribe button in your podcast app and we'll be back in your feed tomorrow morning. All right, that's it for today, but until next time, my advice is to just focus on keeping your customers happy. Foreign.

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