Host Ken Courtright discusses nuggets of wisdom based on quotes from successful businessman JC Penny. He sheds light into the importance of marketing in business, and how we should spend more resources into it. Listen to the episode as Ken shares very valuable insights into having a more successful business.
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JC Penny Nuggets
I’m calling this episode JC Penney. JC Penney was one of the greatest business people of all time. He left us with a couple of pretty amazing nuggets of wisdom. The first one he said was. “I had $55 in the beginning. I put $50 in inventory and $5 into a wooden sign. If I had to do it over again, I would have put $5 in inventory and $50 into a much bigger fancier wooden sign, and I would’ve put signs all over the town.” What he’s saying with the first nugget is, he had a bunch of inventory, but as people were walking and driving by the store, they never saw his little sign. If he had someone at the cash register, he couldn’t be out there by the door trying to sway people to come in because they physically couldn’t see him. What was driving him nuts is nine out of ten people that were walking in and driving by on their horse, buggies or automobiles, they would not even physically see him.
What is the lesson? He says, “If I had to do it again, I would have had 10% of the inventory and I would have multiplied my marketing efforts by tenfold.” Have you ever stopped to think that maybe you’re putting 99% of your energy into your product and 1% into your marketing? Have you ever thought that maybe that whole thing could be backward? Do you know that most great companies, they do the marketing before they make the product? Most great companies, they will physically build a sales funnel and they’ll sell a product sometimes 10 to 1,000 units before they’ve even made the product. They want to test the market by physically testing the market.
It’s an amazing concept. With virtual inventory, it can be done. The point of this is, maybe once a year, all entrepreneurs should reflect and say, “What about what JC Penney said? Should we be taking a portion of our time and energy budget and thrust it into marketing and get it off the vision of the product itself?” A lot of companies go out of business because they do move inventory and they found out a way to move that inventory and they get stuck in that same marketing concept and that marketing concept is going to change. A way to market in 1985 is not a way to market necessarily in 2016. The second nugget that JC Penney left us with is, give them way more they would ever expect to get for less than they would ever expect to pay.Most great companies actually do the marketing before they make the product. Click To Tweet
I want to give a lesson. I drove out to Willow Springs, Illinois to meet my brother Michael. Michael purchased one of our old family restaurants that we closed down a few years ago. My Uncle Bill and aunt Rebecca had a restaurant called Courtright’s for twenty years, and they retired. They’ve been trying to sell the property for a couple of years and finally said, “This property is so expensive.” It was so well built and it’s built into this beautiful hill and the property’s so amazing. They said, “Why don’t we call on our nephew, Michael and see if he wants to buy this on contract and open up the restaurant.” Sure enough, the second Michael took the call, he’s like, “I’m in. No problem.”
He had investors right away and literally within a day or two, the paperwork was signed. Now, it’s time to open up a restaurant and it has to be a new restaurant because Michael is not my uncle Bill and aunt Rebecca. Michael was asking, Kerri and I a lot of questions. I was completely thinking that JC Penney’s model of, give them way more than they would ever expect to ask for less than they’d expect to pay. I said, “Mike, here’s the deal. Let’s look out the back of the restaurant. This is built into a hill. Grandpa, who funded the restaurant paid two times more for the retaining wall than his first home.”
This property is so gorgeous and there are massive twelve-foot solid one-piece windows. There are four arching windows that look out into this gorgeous hill where the deer come right down to the windows and watch you eat. I can’t describe the beauty of this place. It’s amazing. I said, “Mike, there’s this beautiful walkway up this hill into a gazebo area. What would happen if everybody that walked in right in the front door when they’re met, they’re handed a small little note and it says, ‘Your first treat is out the back door, up inside the gazebo.’ When they get there, there’s a man or a lady in a tuxedo and they get handed a small glass of champagne while they’re waiting for their table. What if they have this beautiful meal and at the end of the meal, the waiter or waitress hands them the dessert menu and says, ‘Have you heard about our dessert tour?’”
In the basement of this restaurant, it has a 30,000 bottle wine cellar with all these spectacular rooms in the basement. I said, “Mike, what if you make these incredible rooms and you do like a place in Tampa called Bern’s, where there’s a dessert tour in the basement. In the basement, they get met again with a lady or a man in a tuxedo and they go down and there’s this incredible dessert-like row of tables. They can get a little bitty thumb full of cheesecake or a little bitty piece of this or a piece of that and there are a little wine and cheese station where they could buy another glass of wine and get some cheese and grapes?”
You could see my brother’s face light up. The whole concept is, Michael was viewing the restaurant as the main floor, they come in, they buy a drink or two before they go have their meal at the bar and they go have their meal. It’s a regular event. What I did is, I opened up Michael’s mind to, “Is there something you could give them before the event or before the purchase of the product as a sample?” Is there something that you could leave them with after they’ve even paid and they’re not expecting when they walk out?
I said, “Mike, the thing is, could you build this in a way that when they get home, they can’t wait to get on Facebook or call their neighbor and say, ‘You’re not going to believe this new restaurant. When you get there, you go through this incredible building, then you walk up this incredible gazebo. They start you off with this incredibly unbelievably quaint, but incredibly delightful appetizer and small drink. You have your meal in this beautiful place. When you think you’re done, nope. There’s more. They ask if you want to go on a dessert tour in this beautiful wine cellar and in this beautiful set of rooms in the basement where you sample some desserts.’”
He’s like, “I so get it. Nobody’s doing that now.” The question for you reading is, what is your product like? My brother, Michael’s product is going to be a steak and wine. Is there something you could add on the front end of your product and/or on the backend of the product that your competition would never think to do? Quite frankly, your competition’s model might be so built, they could never do it. Is there something like JC Penney says, where you could expand the view of your product and give people more than they would ever expect to receive for even less than they would expect to pay? I hope this helps. Take care.