|
Editor’s Note: The following is an adaption of an article originally published in Family Business magazine (Spring 2000 issue, p. 20), republished here for RM readers because of its perspective on a familiar theme: how a small, independent business can compete with a large national chain. RM thanks Family Business for its gracious permission to excerpt and adapt this article for our rental industry readers.
Five years ago, Marty and
Louise Cox quit their corporate jobs and opened
their first coffeehouse, It’s A Grind, in Long
Beach, Calif. Today they operate five It’s A
Grind stores in the area and plan to open three
more before year’s end.
The ubiquitous Starbucks
chain already had secured a strong foothold in
Long Beach, with two shops right near the Coxes’
first outlet. But unlike many family business
owners who feel doomed by chain-store
competition, Marty and Louise have copied what
the chains do right, and leveraged what a small
family business can do better — unbeatable
service in a friendly, neighborhood atmosphere.
They surmised that if they
were to succeed, they would have to model
themselves on the big chains. They analyzed
Starbucks’ strategy and stores, then sought
the best legal and financial advisers to help
them get started.
After two years of study,
Marty and Louise began searching for a location.
Here they had two advantages. Louise had a
background in market research and demographics,
which helped them identify the critical factors
in selecting a location: lots of foot traffic,
visibility from the street, a good anchor
tenant, plenty of parking for morning commuters
and a family neighborhood with a median income
of about $50,000.
It was Marty’s familiarity
with the town, however, that enabled them to
find a location for their first store — a
place Starbucks had overlooked. With a native’s
instinct for the direction in which
neighborhoods are moving, Marty spotted a
promising storefront in an underserved area.
Marty and Louise wanted their coffeehouse to
have a friendly neighborhood feel, but also
wanted it to look professional, like Starbucks,
so they hired an interior designer.
The reality today is that
most small businesses face competition from
chain stores. If they want to play the game,
they have to do what the corporate players do.
More important than long
hours was the standard of personal service that
would become the couple’s trademark. Working
behind the counter, Marty and Louise got to know
their customers by name and remembered how they
liked their drinks prepared.
Marty and Louise also built
good will by providing complimentary coffee at
community events, such as Little League games,
AIDS fundraisers and church benefits. Marty says
customers respond differently to him and Louise
knowing they are a family-owned business. “A
lot of our customers feel loyalty to the local
guy. They’re always telling us they hate chain
stores, but I’ve never believed in bashing the
competition. If anything, Louise and I are
grateful to Starbucks for educating people about
specialty coffees. We wouldn’t have a business
without them,” he says.
As they expanded to new
locations, Marty and Louise repeated the same
décor in each store. Just as Starbucks has an
identifiable look, so do the It’s A Grind
coffeehouses. “We wanted the same consistency
of appearance that the chains have,” Marty
says. “Each store has the same selection, the
same merchandise. We want our customers to know
what to expect when they patronize our stores.”
While Marty and Louise copied
the professional look of Starbucks, they strove
to differentiate themselves from the chains by
what they call the customer experience. From the
start, they established the policy that
customers are not only right, they should also
be happy.
Between opening new stores
and worker turnover, training staff became a
full-time job. Drawing on her corporate
background, Louise designed a three-day training
program and wrote a manual. At the end of the
class, trainees take a final exam. As an
incentive to study hard, Marty and Louise offer
higher starting salaries to trainees who have
the highest scores. Louise’s daughter,
Danielle, age 16, works in one of the
coffeehouses on weekends. Like the other
employees, she had to pass the training course
before she was hired.
Marty and Louise knew that
before they could take the business to the next
level, they would have to sharpen their business
practices. From the time they conceived of
starting a coffeehouse, they have relied on
professional advisers to guide them. “When we
began,” Louise says, “we promised each other
we’d never compromise on quality. That goes
for the coffee beans we use and for professional
advice we get. A lot of family-run coffeehouses
fail because they cut corners and don’t get
the professional help they need.”
Marty had read an article
about a Long Beach retail consultant, Bob Phibbs,
who calls himself “the retail doctor.” He
has helped some 60 small, independent businesses
in Southern California cope with chain-store
competitors. Like any good doctor, he is most
effective with clients who are willing to change
old habits. “It’s not the big who will kill
the small,” says Phibbs, “as much as the
creative who will devour the passive. Too many
small, independent businesses blame all their
problems on the chain stores. They keep crying
‘poor me’ but they don’t change how they
do business.” One way to survive is to find a
niche the chains don’t fill. Phibbs is
currently writing a book, Just Because You See
Icebergs in the Water Doesn’t Mean You’re on
the Titanic, that sums up his consulting
philosophy. It boils down to focusing on three
areas: facility, marketing and sales.
“Marketing doesn’t have
to be expensive as long as you know your target,”
he says. “The best place to start is with your
customers.”
Marty and Phibbs are now
gearing up a new promotion to increase the
business’s name recognition. They’re
printing It’s A Grind bumper stickers. License
plates of cars spotted carrying the stickers
will be posted in the stores and the vehicles’
owners will receive free coffee for a week.
Simultaneously, Phibbs
revamped It’s A Grind’s sales methods. “Marty
and Louise had established lots of policies,”
Phibbs says, “but what was missing from the
training was teaching the staff how to sell.”
Phibbs says this is a common mistake among
service businesses, which become so focused on
providing good service that they forget about
salesmanship.
Phibbs began with more
advanced training for all of It’s A Grind’s
85 employees. “A lot of college students don’t
know how to talk to people,” he says. “I
tell them that all selling begins with a
relationship. You have to greet the person first
as a friend and then as a customer. If a mother
comes into the store with kids in soccer outfits
trailing behind, ask her ‘How was the game?’
before taking her order. And don’t say, ‘May
I help you?’ to her. Instead, ask ‘What can
I make for you today?’ That makes her feel
special.”
Phibbs preaches that selling
is nothing more than a transfer of feeling from
the salesperson to the customer. When the
salesperson is enthusiastic about the product,
the customer is likely to be, too.
At the end of each month,
Marty totals employees’ average sales from the
computerized cash register. Those who score the
highest on sales per transaction win prizes,
which vary each month. “The employees like the
competition,” says Marty. “It gives them
recognition. It’s also a reminder that the
business is a sales organization, whether the
employees think of it that way or not. Bigger
sales mean more money for the company and bigger
tips for the staff.”
Marty attributes a good
portion of It’s a Grind’s 28 percent
increase in sales last year to Phibbs’
guidance. Sales were even up in January,
traditionally the slowest month. But as
important as the specific changes have been,
Marty says the best thing Phibbs has done for
him is to hold him accountable as a manager. In
the past, if an employee wasn’t doing a job
properly, Marty would step in and do it himself.
“Bob got me out from behind the counter. I was
so caught up in the day-to-day ordeals of
running a business that I didn’t have time to
think about the big picture.” It wasn’t that
Marty didn’t have new ideas. If anything, he
was generating too many ideas and going in too
many different directions. Now when he comes up
with a new idea, Phibbs draws a bull’s eye
target and they talk about where the idea falls.
If it falls in the center, then he knows it is
worth pursuing.
Success, of course, comes
with its own costs. Since opening their first
coffeehouse, Marty and Louise have had little
time for much of a life outside the business.
They were on call 16 hours a day. When employees
got sick or didn’t show up to work, or there
was a problem at any one of the stores, they had
to take care of it. They have since delegated
those responsibilities to a regional manager and
an assistant manager. “We realized we couldn’t
do it all,” Louise says. “There’s no price
tag you can put on preserving your sanity. I can’t
stress enough the importance of having employees
you can trust.”
Expanding further will add to
the demands on their time. Marty is seemingly
indefatigable. Louise, however, had reached her
limit. After working seven days a week, 52 weeks
a year, with no vacations for five years, she
wanted to cut back. “I was mentally and
physically exhausted,” she says. “We had
nothing to talk about but the business. We
needed some other input in our lives.”
Marty and Phibbs continue to
meet for a half day once a week and talk by
phone several times a week as questions arise.
With Phibbs as his coach, Marty has someone
other than Louise with whom he can talk about
the business.
That outlet, along with
Louise’s more reasonable 35-hour week, has
helped reduce the stress on the couple’s
marriage. With their life and business more
under control, Marty and Louise feel confident
that having Starbucks as neighbors will not
affect their business. “We’re not worried,”
Marty says. “We do a great job. Yes, Starbucks
does the same things we do, but we do them
better. Besides, we like the competition. It
gives us something to measure ourselves against.” |
