Crown Affair
Crown Affair's founder and chief executive Dianna Cohen.
- Before starting her company, Dianna Cohen, a first-time founder, spent years working on ways to bring in customers at Away, Harry's, and Outdoor Voices.
- She's making a key strategy change at Crown Affair, a startup that makes hair-care products and ships direct to customers. Cohen said the venture-backed company will not spend millions of dollars on marketing and sales costs.
- Crown Affair's strategy relies on building community instead.
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Crown Affair is a new startup that could be described as Casper for hair. Or Warby Parker for hair. Or Quip for hair.
The rise of companies that sell direct to customers has promised a better alternative in every consumer category, from mattresses, to makeup, to razors, sneakers, bras, and luggage. The newest entrant, Crown Affair, makes products like a brush designed to promote healthy hair and an oil that reduces frizz, and sells direct to customers.
But there's one major difference between Crown Affair and the profusion of other direct to consumer startups, says founder, Dianna Cohen.
Her company's business plan does not call for spending millions of dollars in outside capital on sales and marketing, says Cohen, a first-time founder who hails from Away, Harry's, and Outdoor Voices. Crown Affair just raised $1.7 million in funding to hire a staff, but Cohen said there's a possibility that the startup never needs to raise venture capital again because it could take in enough profit to offset the cost of goods.
"I actually feel really bad for a lot of my peers who have raised tens of millions of dollars on the expectation that they can sell through paid marketing, because paid marketing is expensive now," Cohen said. "It's not as sustainable."
It's not cheap to acquire customers
Crown Affair
Crown Affair has a business model that should require some paid customer acquisition to jumpstart growth.
The goal of almost any business is to make money. Still, lots of consumer companies invest their gross profit on sales and marketing costs to accelerate growth. That's because these brands can't rely on people discovering their products in the wild, said Julian Shapiro, the founder of BellCurve.com, an agency that trains marketers on growth.
For example, Intercom, a startup that makes solutions for customer support, has exposure to potential customers every time they visit the website of one of Intercom's customers and see a pop-up saying, "Hi! How can we help?"
"Only some products can inherently get away with not having to spend on paid customer acquisition, and others are at the mercy of it," Shapiro told Business Insider.
Crown Affair has a business model that should require some paid customer acquisition to jumpstart growth.
Its founder is familiar with the strategy.
Bebeto Matthews/AP
Flamingo is a direct-to-consumer razor brand for women.
Cohen started her career in 2012 as an intern at Into The Gloss, a widely read beauty blog created by Emily Weiss, who later founded Glossier. There was a brief stint as senior manager of partnerships at Away, where she worked on products born of collaborations between the luggage startup and mainstream brands like Madewell and West Elm. As a contractor, Cohen helped bring to market a female-focused razor brand, called Flamingo, that was spun out from Harry's and also built Outdoor Voices' network of "micro-influencers" who promote its products on social media.
Looking back, Cohen said many of the strategies around getting new customers involved spending millions of dollars on ads, promoted posts on social media, and sponsored content from celebrities.
"I would never do that again," Cohen said. "That's not how customers are responding anymore. Working with a mega-influencer with millions of followers doesn't mean the same thing anymore. And I think people question a brand's authenticity, and question the influencer."
The cost of acquiring new customers on channels like Instagram and Google is also getting out of control, Shapiro said. The channels set their rates based on how many eyes they get, and the demand from advertisers.
happydancing/Shutterstock
These days, more businesses with similar branding and similar packaging are competing for clicks, which means paid customer acquisition is becoming more expensive at the same time it becomes less effective as a strategy.
A low-cost strategy to grow the business
Crown Affair's strategy relies on smart content marketing instead, Cohen said.
Its first campaign, called Good People, features short profiles of women with great hair. They answer questions around their hair routine and sources of inspiration on the blog, and appear in professional photography on Instagram. The campaign will have a mix of friends of the company and lesser-known influencers, including a comedian on "Saturday Night Live," the chief marketing officer of Squarespace, and a startup founder.
Here's Juliana Salazar, a stylist and creative director, looking windswept on Instagram.
Cohen said she wants to show photos of people on social media, instead of just product, with the goal of starting a conversation around hair care.
"Everyone is the expert on their own hair. We live in a world where it's been like, professionals and hair stylists telling you how you should do your hair. But for us, as we build our community, it's so people can see themselves in other people and realize that like, 'Oh, that might also work for me.'"
Crown Affair has something else going for it.
The profit margins are "insane in beauty," Cohen said. The products are meant to be used and replaced, and consumers tend to shop a beauty brand they trust, which brings down the cost of acquiring customers.
"We're lucky to be in a category where there is a very clear road to profitability," Cohen said.