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"The definition of insanity is doing
the same thing over and over and
expecting different results"
Benjamin Franklin
 
So it’s summer and yours is one of those companies reporting “down BOR.” The only real surprise is that anybody would have expected to gain following six months of mostly bad economic news plus the usual turnover and resulting lack of interest among troops and customers alike. If it’s time to readjust 4th quarter projections, it is also time for a reality check. You know: If it’s Such a Great Idea, Why Isn’t it Working? The following are a few things that bear close inspection. You may want to eliminate some altogether. After all, in rental - as in love, war, and other forms of politics - sometimes it’s what we don’t do that counts most.

CHEAP GOODS RENT BETTER
If you believe this, you probably like the Daewoo stereo in your living room and you’re seriously considering a good used Kia sedan for the family vacation. There are three things wrong with relying on low-end goods to drive sales:

1. Customers can buy the same thing at yard sales or thrift stores and it won’t take 78 weeks to pay for it

2. Revenue is a multiple of cost but overhead increases incrementally

3. Our business is not about price at all, but the value a customer places on the services and benefits we provide.

If you don’t offer anything that a customer can’t get elsewhere, whether it’s Ooo-aahh product or Wow! service, be prepared to outspend everybody else to get the same number of folks in the door.

Do your own market research by visiting Circuit City or Best Buy and noticing what draws the biggest crowds. Find a way to add some of whatever that is to your lineup. So what if it’s different - so are the crowds. Just be sure to charge enough to make your customers believe it’s worth the money (Curtis Mathes figured this out years ago when they advertised “The most expensive television made, and darn well worth it”).

Lazy purchasing that merely replaces whatever is paying out means buying goods that everybody wanted 18 or 24 months ago. In retail, that’s a lifetime. Have the guts to buy for tomorrow. Retailers have already created demand; now all that your customers lack is access.


LOOSEN CREDIT TO KEEP BOR
First, remember that this acronym means Balance On Rent. If the customer isn’t paying, how can it be on rent? Maintaining consistent opens and closes gets harder when we change course every six weeks. “Which are we working this week, Boss: sales or credit?” The best way to maintain BOR is to give customers a reason to pay. That means being consistent in what you expect and consistent in the service and quality you provide. Most companies can weather seasonal slowdowns with good cash management. That can’t be accomplished by ignoring what works the rest of the year. It’s certain that some hardnosed boss will ask, “So what about all those pickups?” The smart manager will reply, “Well ma’am, we generally don’t pick up people who aren’t past due.”


SLASH COSTS
If there’s enough to slash, you have a larger problem. But a little trimming never hurts. Don’t look for big sinkholes. Instead, search out the little bugs that nibble away at margins almost unnoticed. You probably carried some in months ago, with that Last Great Idea. And now they’re still chewing away, long after we’ve forgotten the objective. Just a few of these bugs can eat up a substantial share of the profit when a store drops 20 or 30 BOR. Sit down with the P&L and expense journal or cancelled checks and ask everybody some hard questions. Can we stay in business without this? If we eliminated this today, could we still rent, collect and provide the same level of service? Wherever you hear a Yes, kill it today. The really hard part is resisting the temptation to take all that money you’ll save and buy more advertising. We’ll talk about advertising later. But nothing can be sacred, not even the boss’s Last Great Idea. Sometimes the best idea is to kill Great Ideas.

 

LET YOUR ASSETS DO THE SELLING
No, this isn’t another goofy self-help theory. It’s simply the way that many small businesses manage to hang around for years on ad budgets that are a tiny fraction of what the chains spend. First, find something you can do that you absolutely know they can’t. This is what separates you from them. Bring it to life in whatever advertising you do. Eliminate all those other claims that nobody believes anyway, including lowest price (how can you charge less and give more?).

Then, use the assets you already have. Every single business day, a good number of people pass your store(s). Your delivery trucks pass hundreds or thousands, and park on their streets. Every employee visits fast food outlets and grocery stores; they buy gasoline, dry cleaning, or laundry services. If each worker personally hands ten people a week a coupon for a free one-week trial of a big screen television or other product, and talks in earnest about what they know best (your business), good things happen.

If your store is one big huge sign with all the clutter and non-selling messages removed, and everything inside is absolutely spotless, and if your trucks are squeaky clean with big signs and big bold telephone numbers - with drivers who can actually fill out a rental order…well, you get the picture.

Don’t worry about all this free rent you’ll be passing out. It can never exceed the cost of having excess idle piled in the backroom and stacked out front, and excess employees not delivering any of it. The thing is, you’ve already paid for the building and the trucks and people. Now put them to work selling for you. Most stores send mailers. But when was the last time you drove a truck full of new goods onto a parking lot or construction site and showed your wares to new prospects? Or knocked on doors with a handful of sales brochures? Or…well, you get the picture. It’s easy to forget that Mary Kay Ash sold enough cosmetics to get rich - and make others rich - without opening a single store. Speaking of money, paying your people a spiff for each order they personally produce has to be a better idea than spending more money with some advertising doofus who still can’t get the phone to ring.


SINCE THE COLOR OF THE SOFA DIDN’T CHANGE, MAYBE WE DID
Most companies have some kind of telemarketing plan. Some even work. But who’s talking to the customers we already paid to get? Focus on calling the accounts that, according to statistics, are two weeks away from sending back their product. Are they happy? What can we do better? Is there something else they need? How’s the baby? The best way to prevent returns is to remove the causative agent (if this too frequently turns out to be a key employee, it could be a good time to reexamine your value system). People usually find the money to keep the things they want most. So pickups are less an indicator of economics than of changing wants and needs - and our ability to meet those.


ARE WE SELLING OR JUST FILLING ORDERS?
New customers usually account for only about a third of all deliveries. Just compare the number of new file folders used to the number of deliveries made (marketing geniuses call this the “Duh!” factor). Two thirds of our customers close their own sale (marketing geniuses call this the “Impulse” factor). And this leads to lazy salesmanship. The shoppers who ask more questions and demand more of our time and attention end up walking out. Many store employees don’t mind this, as it frees up more time for all that paperwork they have to do - like this week’s report on why sales are down compared to last month.

Of course those pesky shoppers take a lot of future referrals and second rentals with them when they walk. So your pool shrinks instead of widening (even marketing geniuses know this isn’t good). Set weekly goals for getting new customers who have not used our store before. We’re already getting the others. Reward anybody who gets a brand new customer and play it up big when it happens; they are your future. Ring a bell in the showroom. Get the manager over for a big smile and a handshake. And find ways to stay in their life for at least another 78 weeks, with birthday cards, sales announcements, and “Hello” calls (marketing geniuses will claim they thought of this).

Make selling easier by slimming down price sheets and providing everybody a simple FAQ sheet (“frequently asked questions”) explaining the features and benefits of key products. If our people give away a lot of free First Weeks, so what? If you are good enough to close the deal properly, you will get the second payment on time, plus another 77 or so.


SELL PRODUCT, NOT PRICE
Why tell people up front they can’t afford your product? Remember that we have a narrow market to draw from. Prospects may not understand what they get for $24.95 a week. But they know that’s a heckuva lot of money. Sell your product and services first. Talk cost only when the customer has already decided he wants your stuff. This takes guts and not everybody can do it. That’s what the competition counts on.

If none of this works and you don’t reduce pickups to about eight percent of BOR and increase deliveries by fifteen or twenty a month, you obviously need more help than is available here. Go find a marketing genius.