Expanding the brand
Ridge’s first expansion moves were designed to find additional opportunities to spread the sales of WD-40 by establishing new markets and increasing the channels in which the product was sold. He prioritized the expansion into countries that offered a lower cost of entry in order to deliver a quick turn to profitability.
“I would wait until the new channel became profitable before expanding again,” Ridge says. “That was usually six months.”
To plot his moves, Ridge used a decision-making grid populated with data gathered by his team. The team began by mapping the market, looking at where competing products had market share and where those products were distributed and exposing the gaps that WD-40 could fill.
He avoided mistakes by knowing that his mapping data was accurate and by meeting potential business partners face-to-face.
“By going to their place of business, I show them that I have both passion for the business and that I care,” says Ridge.
He verifies his data by checking out the situation on the streets.
“I like to use what I call the ‘Columbo technique’ for validating mapping data,” says Ridge. “Most CEOs would fly in to town, go to their hotel and then the distributor would meet them for dinner there. The next day, that CEO flies out of town.
“I arrive in town, check in to the hotel and hit the streets. I’m out verifying the data in the heat or the rain 130 to 150 days per year, kicking the tires and going store to store. If a distributor tells me that he has space for the product, I want to see it. If I understand that automotive retailers do not have a similar type of lubricant on the shelf, I want to see it for myself.”
When expanding into new outlets within your channel, you also have to be prepared to explain the strategy to your existing customers.
“One of the obstacles to channel expansion is that the people within your existing channel relationships don’t like it when you begin offering your product elsewhere,” says Ridge. “You have to be able to take the heat.”
Ridge says he has honed a three-pronged formula for success in channel expansion.
“Start with the right product to open up multiple trade channels,” says Ridge. “Be able to cope with the pressure your existing trade channels will put on you and continue to provide a strong value proposition for them, and learn from your previous mistakes.
“In some places, we also had to unseat a competitor. We weren’t the market leader in Germany when we started. Today we are.”
The numbers suggest that more than a few competitors have fallen. In the nine years under Ridge’s leadership as CEO, WD-40 product sales have increased 80 percent.