In 1913, five investors each contributed $100 in cash to a new enterprise. Each also brought a special skill to the enterprise. There was a salesman, accountant, miner, banker, and lawyer. After forming the company, they raised $75,000, which is just shy of $2 million in today’s money. The founders hoped to create a super-concentrated bleach that had industrial and government applications, such as being used in municipal water plants. The product was known as Clorox Bleach.
Despite making an excellent product, sales were a meager $8,000 in the first year. The company struggled because it had no marketing expertise. On the verge of a catastrophic collapse, William and Annie Murray, a couple who owned a local grocery store and had invested in the company’s $75,000 raise, took action. William was hired as the general manager while Annie pushed for a less concentrated version of the bleach that could be sold to household consumers. To prove her idea, she handed out 15-ounce samples at their grocery store. The benefits of cleaning with this amazing chemical mixture soon spread by word of mouth.
Since the product was still fairly new, the firm expanded how to use the product by printing up instructions. They even printed the instructions in a wide range of languages so new immigrants to America could learn how to use the product in their native language.
Most businesses in the 1920’s did not hire women, but not Clorox. Not only did they hire women, but they also hired single mothers decades before the rest of the nation even considered such actions acceptable.
It was not an easy ride for Clorox, but they made it through the Great Depression without a single layoff. They even refused to reduce the quality of their product during World War II when raw materials were hard to come by due to shortages. Even though their competitors reduced the concentration of the cleaning agent in their products, Clorox refused to compromise on quality. Instead, they just sold it in smaller packages to compensate for the supply shortages.
For the next two decades, the firm continued cranking out huge profits for shareholders with a small workforce of only 300-400 employees. Then, in 1957, Procter & Gamble bought the company and made it a wholly-owned subsidiary. P&G understood their market was housewives. They became a major sponsor of serial stories on the radio and the new medium that was TV. The sponsor spot became synonymous with the stories and was soon known as a “soap operas.”
Here are some lessons small businesses can learn from the Clorox story.
First, make sure you have all of the essential personnel and skills covered before you start. Even though the founders represented a good cross-section of technical and business skills, they neglected to include an expert in marketing and this gap almost doomed the company.
Second, be willing to pivot when you see that you are on a doomed course. Clorox was willing to change from a business-to-business (B2B) to a business-to-consumer (B2C) business model even though their original target market was industrial factories.
Third, give away free samples of a new or unfamiliar product to create powerful word-of-mouth marketing.
Fourth, understand your customer segment and cater to their unique needs. Clorox accomplished this goal by communicating with their customers in their native language.
Fifth, understand that your employees are your most precious asset.
The sixth and final lesson is to never skimp on quality even if your competitors are.
What lessons from Clorox can you apply to your business?
