How do you disrupt a well-established, low-differentiation category?
Eric Ryan and Adam Lowry, founders of Method Home, would know. In 2000, the childhood pals sought a way to reinvent an unsexy segment: cleaning products. After years of struggle, Method is now a $100 million company thanks to the popularity of its eco-friendly soaps, detergents and cleaners.
In 2011, Ryan and Lowry shared the secret to their success in The Method Method: Seven Obsessions That Helped Our Scrappy Start-up Turn an Industry Upside Down. The book offers entrepreneurs a candid look at what it takes to compete—and win—against established companies. For consumer packaged goods companies, Method’s success is another reminder of the transformation of the industry. Evaluating Method’s success could help big CPG brands learn from the same organizations threatening to steal their market share: nimble and hungry upstarts.
Here are five lessons CPG companies can learn from Method’s story.
- Look for emerging but unfulfilled needs.
Entering a mature, low-margin industry like soap may turn off some companies, but that’s not the case for Method. “There are challenges when you launch into categories with a low margin, as our categories are,” Lowry explained to Greenbiz.com in 2011. “They're dominated by really big companies because the only way to compete in low-margin commodity spaces is to have tons and tons of scale. That's also one of the reasons it's so ripe for innovation—because people haven't invested into making the product more sustainable and more beautiful.”
- Communicate why you do what you do.
Method found a big following by having a clear set of values and being transparent about them. “We want to show that business can be an agent of social change,” Ryan recently told Entrepreneur. According to Ryan, the company’s purpose shapes everything the company does, from product innovation to marketing to customer support. Ryan’s advice to companies? “Don’t sell a product. Start a movement.”
- Be open to change.
Method wouldn’t exist if established CPG manufacturers were more nimble. “Big businesses are often successful because they have a way of doing things that is very difficult for them to change,” reveals Lowry to Greenbiz. “It gives you an opportunity to use those legacies against your competitors by doing something unique and different.”
Speed and innovation are crucial to Method’s success. The company brings new products to market in a matter of weeks—while big corporations take years.
The company also aims to “get better everyday” and continually improve its business and its processes. Lowry adds, “I am 100 percent confident that we can continue to compete with our competitors because they have a way of doing things that's really, really, really hard for them to change.”
- Invest in good design.
Asked about what they think motivates customers to give their product a try, the Method founders say a huge part of it is design.
“Leveraging design has been a really powerful tool for us to create change in the category,” Ryan offers. “You may not understand right away what our laundry detergent is about from the environmental perspective, but what you do notice right away is a beautiful little form sitting there on shelf.”
- Understand the many reasons why customers would want to buy your product.
While sustainability is an important part of Method’s value proposition, the company knew it needed to provide more in order to convince customers to give its product a try. Here’s Lowry’s explanation to Greenbiz:
In our book we use this phrase, "Making it selfish." It's kind of tongue-in-cheek but what it means is, if you can make sustainability part of the product that you're selling, and then make the product better for all of the other reasons that they buy it—convenience, price, value—then you're creating a layer of reasons why that consumer would want to buy that product. You're creating multiple entry points into that product.
Method’s story perfectly illustrates the disruption happening in CPG. The company’s approach is a good reminder that CPG companies today need to be more agile and take a page out of the startup playbook. Today’s empowered customers wait for no one, and they won’t hesitate to switch if they find other brands with values that align to theirs and that offer something different. Companies that fail to act faster will lose to upstarts who are eager to please customers today.
Photo credit: methodhome.com
Learn more about new threats facing the CPG industry and discover what it takes to thrive. Join Joel Warady, chief sales and marketing officer of Enjoy Life Foods, and David Sevitt, vice president at Vision Critical, in How to Win Back Fickle Customers: Lessons from the War Between Big CPG Companies and Small but Powerful Upstarts, a live webinar on May 7, 2015. Save your spot today.