Progressive Rentals April-May 2007

Furniture Futures by Geoff Williams and Dee Dee Yelverton
The Price Cap Trap in Rent-to-Own by Ed Winn III
Backing Up Your Data: What You Might Be Missing by William J. Lynott and Dee Dee Yelverton
Postcards: Big Results from Small Mailings by Phillip M. Perry

Furniture Futures
by Geoff Williams and Dee Dee Yelverton

Twenty years ago, rent-to-own furniture was almost a fluke—a peripheral product offered at some of those “out there” stores. Today it makes up approximately 40 percent of the RTO business. With mumblings of increased imports, company consolidations, factories moving overseas and the growing consumer interest in electronics, what will the future hold for furniture in rent-to-own? What are some of today’s trends and predictions for tomorrow? In the last few years, home improvement shows, design magazines and design gurus like Martha Stewart and Christopher Lowell have driven the high-end scale of the furniture market and created an interest in environmentally friendly products that combine the “green” factor with style and functionality. Think green and think organization. Consider thinking beyond the traditional in functionality. Most of us appreciate products that help us stay organized or that can do double duty.

If you can offer an ottoman with a storage unit or a bed that has shelves built into the headboard, chances are, your customers will appreciate that. Joe Carroll, publisher of Furniture/Today, the weekly business newspaper of the furniture industry, says, “There is a consumer move toward green products. For example, they are now making mattresses out of natural latex. Young people are flocking toward environmentally-friendly products and I think we’ll see more interesting green items in 2007.” Carroll also sees an increased interest in design pieces focusing on style and fashion. “Specialty niches—of which rent-to-own is one—are growing,” he says.

Joe Rutter, president, chief executive officer and, as he puts it, the “chief bottle washer” of what he describes as a “small mom and pop” five-store California-based chain called Family Rental Center, gives his customers a wide selection. “I’m a big believer that if you try to offer the gamut of family-oriented furniture, like sofas, love seats, recliners, tables, lamps, things like that, then you’re going to have a successful year,” he says. “We have big sectionals, for instance, and everybody likes leather. But I’m hesitant to buy anything that seems too trendy. It’s been the basic meat and potatoes for us for years.” Furniture rentals, as Rutter notes, are often a matter of impulse as much as they are a necessity, and you may make a rental easier if you can quickly tap into that psychology, in effect saying to your customer: This solves two issues—how to sit and recline comfortably, and where to put some of your unwanted clutter.

Tastes and styles will vary by region and may change more slowly in some areas than others, but it is never a bad idea to know what trends are on the horizon. In that spirit, you can allow your store to be as trendy as any outlet when it makes sense. Jan Arnett, vice president of operations at Best Rentals in Florida, says he keeps up with style trends in a variety of ways. “We’ll look at high-end magazines and the big leaders to see what’s hot with them,” he says. “But also some of it is instinct or what I like. Ultimately, our customers dictate what we carry. They’ll tell us what they want.” When they first started carrying furniture in 1982, Arnett says the furniture was either urban or contemporary. “Now, we carry everything from a $499 bedroom set to a $4,000 bedroom. Sometimes you take a chance on something trendy and it works,” Arnett says. “I recently ordered several red leather living room sets that I liked but my staff told me we’d never rent them.

They were the hottest thing in the store. You just have to keep your fingers on the pulse of your industry and be out in the mix,” he says. In addition to green, “think brown,” says Kerry Lebensburger, president of the upholstery division of Ashley Furniture. “We’ve sold so much light colored fabric, so much mocha and tan colors, that I think everybody got tired of that,” he says. “And the last time I remember brown selling in volume was the mid-1970s, and so it was a thirty year cycle, that finally came back.” Has it returned because Generation X-ers remember seeing it as a kid, or Baby Boomers are yearning for the simpler days of their youth? “No, it’s probably nothing that deep or complex,” says Lebensburger. “I think it’s a whole bunch of people buying brown, because they’ve never seen the color on furniture, except in leather. It’s just finally time. For quite a while, brown was only for the high-end furniture consumer, but now it’s doing very well with the masses.”

Rutter agrees that browns are in now, as well as “mainly earth tones” but adds, “Not to be facetious, but whatever color you don’t have— that’s usually the color our customers want.” William McCrae, an audiologist who also owns Buzz’s Rental Purchase, a chain of six rent-to-own stores in Texas and Louisiana, says his customers like the traditional. “We don’t get too cutesy. People are conditioned to know what a living room looks like. You walk into a living room; you see the sofa, chair, end tables, lamps, possibly rugs and that’s the basic staple. If you can present that to them in a way that they can visualize in their own home, they’ll probably have a high interest in renting.” Keeping up with style trends and the next potentially hot product is important, but what about the bigger picture? Where are profit margins headed? What is the future for imports and what impact will they have on the furniture market?

What will the economic landscape look like as some companies close, consolidate or expand? “Profit margins are lower today,” says Carroll. “But the real problem is that there is so much competition and we have trained the consumer to buy cheap—it’s sale, sale, sale,” he says. “We’ve trained the consumers that furniture doesn’t mean anything. Like any painting, it should be viewed as a work of art—something for the workmanship, design and quality.” As for competition, Carroll says he can now identify 77 channels including Kroger and the military Post Exchange, more commonly known as the PX, for selling furniture—and the list keeps growing. Rent-to-own stores are one of these 77 channels. “When I was a kid, there were probably three places to buy furniture,” says Carroll. In 2004, total furniture sales were $77 billion, according to Carroll. In 2005, furniture sales were $79 billion and last year, they were $83 billion. “A $4 billion increase last year was reported as an OK year,” he says. “Traditional furniture stores grew 2.3 percent while other channels grew 5 percent.

That means that non-traditional furniture outlets grew two and a half times faster than the traditional furniture stores.” Why the change? Carroll attributes it to several factors. “People don’t entertain as much as they used to,” he says. “It’s a purchase that people can postpone, so it comes last on the list. Also, people see it as a momentous decision and rather than take the time—they put it off.” Increased competition and imports have brought the prices down, so more outlets that are non-traditional are adding furniture to their product line. “Now you are seeing stores like Crate & Barrel, Pier 1, et cetera adding furniture,” says Carroll. “It’s been successful because they have the traffic. It’s a better value for the consumer and it’s very good quality furniture.

The irony is that people think that furniture is so expensive, but it’s cheaper than it’s ever been,” he says. Almost 47 percent of imports are from China but Vietnam is growing. “The U.S. put a lot of tariffs on imports of bedroom furniture from China,” says Carroll. “What that did was move the market to Vietnam. They are very meticulous in making furniture, so Vietnam is the hot country for imports now.” What does all of this mean, ultimately, for sales and rentals? Experts in the furniture industry look at four economic indicators to determine if sales will be good: interest rates, new home sales, unemployment and the consumer confidence index, commonly referred to as the CCI. “Anything over 100 on the CCI shows that people are confident,” Carroll says. At the time of this interview, the CCI was at 109. “Interest rates are low, home sales are still doing well; unemployment is the lowest it has been in 30 years and the CCI is at an all time high, so it looks like 2007 will be a good year,” says Carroll. But, will it be a good year for everyone? “I believe that the ones who will be successful in furniture are the ones to find a niche,” says Carroll. “Rent-to-own does that and they do it well.”

Carroll thinks that we will see more consolidation in 2007. “We saw several go out of business in 2006 because it is too tough to compete,” he says. “I think the big will continue to get bigger. We could see rent-to-own get so big that they hire their own people to go to China, have their own warehouses, or make a deal with big manufacturers to provide faster service.” One secret to success is having an outstanding management team. The second is access to capital. “The money to grow and quick delivery is really important,” says Carroll. “I believe we’ll see a return to more furniture being made in the U.S. because consumers want instant gratification. Ashley Furniture, the number one furniture retailer in the U.S. right now, recognizes how important quick delivery is,” he says. “Ashley invested in technology and they recognized that people want fast delivery. This is a key point, so they have distribution centers around the country and they have their own trucking fleet. They can have a new sofa back in the store within a week. You can’t do that if you are waiting on a delivery from China.

Their distribution is incredible.” What role, if any, will the Internet play in the future of furniture? “I don’t see it becoming a tool for buying but it has been a tremendous tool for pre-shopping,” says Carroll. “I think that whoever has the cleverest or cutest site that is the easiest to navigate and then tell the consumers where to buy or rent, will be the most successful. Women pre-shop online more than men do. They will have already picked out what they want to see. The Internet can be a very effective tool in that respect,” he says. Having a well-trained, front-line staff is critical to the success of any business.

But good training goes beyond simply learning how to close for the night or place an order. “The number one need is for good sales training,” says Carroll. “When people come into the store, the associates should listen first. Ask the customer what styles he or she likes and then make suggestions,” he says. “The consumer has to know the associate understands his or her needs in price, style, construction and fabric.” Carroll suggests having the manufacturing representatives come by the stores regularly to be teachers. “If you can explain that ‘this print is based on an 1803 Thomas Jefferson portrait,’ or something similar, people will be more likely to rent the item. People remember stories.” There are numerous challenges for today’s successful business owner, including keeping up with the competition and knowing what to do next. “The market is moving so fast; smart companies are the ones studying marketing,” says Carroll. “Don’t get complacent. Study your niche and give your customers what they want. Concentrate on doing what you do well,” he says. “You can’t have the entire market. RTO knows its niche and knows what it is good at.”

Geoff Williams is a freelance writer based in Ohio. He can be reached at gwilliams1@cinci.rr.com.

The Price Cap Trap in Rent-to-Own
by Ed Winn III

What do prices do? “Prices impose the most effective kind of rationing—self-rationing,” according to Thomas Sowell, author of “Pricing 101,” published in the National Review Online, February 21, 2007 (www.nationalreview.com). “Why is rationing necessary? Because what everybody wants usually adds up to more than there is. “It doesn’t matter whether you are talking about a capitalist economy, a socialist economy, a feudal economy or whatever. Resources are limited but desires are not. That is the basic and defining problem of economics. “Prices force you to limit your claims on what other people have produced to the value of what you have produced for other people. Prices force you to limit how much of product A you buy because you need to keep some money to buy product B. “While prices convey these limitations, they do not cause them. No economy—capitalist, socialist, feudal or whatever—can keep consuming more than it produces. Producing more of product A means using up resources needed to produce product B. “Simple and obvious as all of this may seem, politicians blithely ignore it when they promise to make the prices of housing or health care or other things ‘reasonable’ or ‘affordable.’”

Despite the futility of government efforts to correct various perceived societal ills and inequalities by fixing prices, governments continue to do it. The notion has an undeniable, albeit illogical, appeal to many people, especially consumers. It especially appeals to people who do not have to make payrolls and who otherwise favor big government as the answer to society’s shortcomings. The latest example of price fixing in the rent-to-own context comes from California. California rental dealers ultimately acquiesced to this scheme because they were being threatened with ruinous litigation from the attorney general in the state and from the plaintiff’s bar as well. California is hardly the first state to deem price controls an appropriate response to the perceived abuses of rent-to-own. The very first state rental purchase statute, enacted in Michigan in 1984, imposed a price cap on the total RTO price of 2.2 times the cash price, and the history of state regulation of rent-to-own ever since has been a battle over, among other things, RTO pricing, which opponents repeatedly insist is “too high.” There are two different levels of prices that have been fixed here and there in the RTO industry: the cash price and the total RTO price. Politicians have seen fit to fix both.

Early on, when negotiating state rental-purchase legislation, rental dealers resisted the mandatory disclosure of cash prices at all. Dealers argued that they never actually sold any merchandise for cash and that the cash price was irrelevant to the RTO transaction. Opponents argued that the cash price was an important disclosure to allow consumers to comparison shop and to understand how much more than retail the RTO transaction cost. Disclosing the cash price was an issue for rental dealers, but it was never the issue for rental dealers. Getting legal recognition of the transaction was always the issue for dealers and in exchange for that legal recognition, dealers agreed to make numerous disclosures, including the cash price of the merchandise in most states. To date, only 10 of the 47 states with rental purchase statutes do not require a cash price disclosure or some variant of it (“estimated fair market value” in Georgia; “retail value” in West Virginia).

Every state rental-purchase statute, on the other hand, requires disclosure of the total RTO price and the industry has no quarrel with making this disclosure. Merely disclosing this amount is not enough, however, in 10 states where the total RTO price is fixed by law. These are the states with price caps on the total RTO price: California, Connecticut, Hawaii, Iowa, Maine, Michigan, New York, Ohio, Pennsylvania and West Virginia. Most of these states have fixed the total rent-to-own price at two times the cash price (although in California it is at 2.25 times the cash price; in Michigan it is 2.2 times the cash price; and in West Virginia it is 2.4 times the cash price). Rental dealers in those 10 states face a Hobson’s choice on some items in their stores. Suppose, for example, that the market rental rate for an item is $100 per month.

That means that the RTO marketplace is a competitive one with several rental stores in the trade area all battling it out for customers, the item is a popular, readily available one and rental dealers are charging, on average, $100 per month for the item on an 18-month agreement. In order to write this agreement, a dealer would have to set the cash price for the item at $900 by law (in a two-times-cash-price state). The dilemma for the dealers is that $900 may or may not approximate the real cash selling price for the item in that market at that time. Sometimes, with rapidly declining retail prices for certain electronics, the real cash selling price among retailers may have declined significantly below $900.

This can occur because the price cap inserted by the politicians is a wholly artificial one and has never borne any necessary relationship to real prices in the marketplace. Nor can it ever because the legislature swooped in to fix prices once 20 years ago in some cases and the price for some electronics is changing monthly, sometimes more often than that. Rental dealers, then, either must drop rental rates below market, which they cannot do for long without going out of business, or they must disclose an artificial cash price with the potential ill-will such inaccurate prices can cause. The goal of the price fix was to help consumers by holding down prices in RTO stores. The result, which is the result every time the government steps in to fix prices, has been skewed, inaccurate pricing information that is as likely to mislead consumers as it is to make products more affordable for them. Unfortunately, there is no market fix once the legislature has done its damage.

The only fix is to go back to the legislatures that thought it was such a good idea to fix prices in the first place and persuade them to unfix them so that the marketplace can do its job. Fixing the total RTO price has not been enough for some states. Four of the 10 have also determined that fixing cash prices in RTO stores would further the cause of consumer protection in those states. The first state to fix cash prices was West Virginia in 1994. Maine and Hawaii followed suit shortly thereafter, and most recently, California. All four states limit cash prices to a percentage over the rental dealer’s wholesale cost. There is no uniformity among the states regarding where cash prices in RTO stores should be fixed. Politicians have not agreed as to the level at which RTO cash prices should be fixed, only that they should be fixed by law. The chart below shows the different levels at which cash prices have been fixed in the four states by category of goods.

California’s price fixing scheme is the most restrictive. The new California statue goes on to fix not only the prices of new goods, but the prices of used goods, as well, with a statutory depreciation formula. West Virginia has a similar depreciation formula for pricing used goods in RTO stores. When the dual price caps are applied in these four states, the range of overall turns as a function of dealer cost that rental dealers can get looks like this:

• California: 1.65 x 2.25 = 3.71 turns; 1.9 x 2.25 = 4.27 turns
• Hawaii: 2 x 2 = 4.0 turns
• Maine: 1.75 x 2 = 3.0 turns; 2.5 x 2 = 5.0 turns
• West Virginia: 1.56 times 2.4 = 3.74 turns; 1.82 x 2.4 = 4.37 turns

The buyers and sellers who make up the marketplace and who are responsible, finally, for producing, distributing, and consuming goods and services, understand that there is no free lunch. If only politicians could accept this fundamental economic truth, then maybe they would get out of the price fixing business once and for all and let those buyers and sellers set prices where they ought to be.

Ed Winn III is APRO’s general counsel. His e-mail address is edwinn@mwvmlaw.com.

Backing Up Your Data: What You Might Be Missing
by William J. Lynott and Dee Dee Yelverton

If you’ve ever been a victim of a mild case of computer fever, a customer file that you couldn’t open, or an inventory record that you or someone accidentally deleted, consider yourself lucky. Glitches like that pale in comparison to the ultimate computer disaster—a hard disk crash or a virus that wipes out all of your business records.

Think it can’t happen to you? Think again. Computer consultant Michael Leibrandt, Abington, Pennsylvania, says that almost every computer in service over a period of several years will suffer a major catastrophe such as a hard disk crash. Imagine what that would mean to your business. Ellison Crider, general manager of Rental & Sales Software Systems, a leading provider of business management software to rent-to-own companies, says it may be tempting to skip this boring task. “Backing up data is kind of mundane, but you have to do it,” he says. “What we recommend, at the very least, is that you back up your data, such as account information, customers, inventory, accounting information, etc., every day. Most of our clients back up their full systems every day.”

Richard Rose, president and chief executive officer of R.T.O. Inc. agrees. “We use RSSS; however, we continue to backup ourselves, too, because there is no being safe enough. In the RTO industry, most of us do hundreds of thousands of transactions a week or even in a day. If you lose your data, you lose your business.” Newer technology makes this process faster than in years past. “With the size of tape drives and the speed of systems today, it doesn’t take hours to do it,” says Crider. “It might take 15 minutes, but it needs to become routine. If something ever happens and you’ve backed up your data, you can restore it from the previous day.”

Rose, who half-jokingly calls himself “neurotic” about this task, says he has heard horror stories about data loss. “Fortunately, none of them are ours,” he says. “Not only do we use RSSS and do backups ourselves, but we keep a copy offsite, onsite and with RSSS so that at any given moment we have access to a current copy of our records should we ever need it.”

Computer failures aren’t the only danger. “Many business owners tend to think of a computer malfunction as the only risk to their business records,” says Jack Shea, president of Solutions by Computer, Springfield, Massachusetts. “It’s easy to forget about the possibility of fire or flood.” Other risks include human error and corrupt media. “If you are relying on store personnel to do a backup every night before they leave, maybe they will or maybe they won’t,” says Crider. The more manual a process, the more room there is for human error.

Crider says that customers sometimes do not think about the fact that tapes or disks do not last forever. “If you are using a corrupt tape, you aren’t getting a good backup,” he says. “You have to replace the media periodically. With a tape, we recommend replacing every six months to a year. With CDs, you should replace them more frequently.” RSSS offers a backup service that includes a verification report that he reminds his clients to check regularly. “Something we recommend, depending on the business requirements, and it’s not a bad idea for everyone, is to have a backup tape for each month of the year,” says Crider. “And definitely make one at the end of the year. It just needs to become routine. Every day when you walk in, take yesterday’s tape out and put today’s in.”

Still, whether you use rental-specific software or an off-the-shelf package, you must take the steps necessary to give yourself the peace of mind that comes from knowing that your business records are safe. Remember, you can replace a computer that fails, but the information it contains, in many cases, is irreplaceable.

A brief history of backups

In the early days of desktop computers, backing up was a simple procedure. All you had to do was pop a floppy disk in a drive and copy your data. Today, most files are much too large to fit on floppies. That is why manufacturers no longer include floppy drives as standard equipment; many no longer offer them as options. In 1995, Iomega introduced their innovative Zip drive, a format that many regarded as the logical successor to the floppy, but that has not happened. One disadvantage was the cost of Zip disks, originally ranging from $5 to $10 per disk. Even with newer Zip disks able to hold up to 750 megabytes at about $15 each, the ever-increasing size of data files has caused many users to look to emerging technology as a better solution to the backup problem.

While some users still rely on Zip disks for their backup chores, Leibrandt recommends looking to newer technology as a better long-term choice for protecting business data. Another early format that seems to be losing favor is the tape drive. “Tape backups are less reliable than other methods,” says Robert Meyhoefer, director of Information Systems, The Cardiology Group, Mt. Laurel, New Jersey. “Tapes can break, making them unusable, backups and restores are slower than other methods and tape drives capable of handling large amounts of data are quite expensive.”

Here are five backup methods that Leibrandt, Meyhoefer and Crider say are most suitable for providing the peace of mind that comes from knowing that your business records are protected from loss CD/DVDs Compared to early floppies that held a maximum of 1.4 MB of data, CDs can hold as much as 800 MB. DVDs can hold upwards of 4.7 gigabytes. A GB is 1,000 megabytes. There are few sets of rent-to-own business records that cannot be accommodated by CDs or especially DVDs.

A single DVD with its massive storage capacity can be purchased for around $1.25; CDs cost only pennies each. Most new computers now come with CD/DVD drives built in. As recently as half-dozen years ago, a DVD drive went for as much as $500 and a single DVD disk for $35. “While we use tape backups for our Unix-based systems,” says Shea, “our Windows-based systems use DVD disks.” According to Leibrandt, you should keep in mind that disks have their own set of disadvantages. Some users have reported disks that became unreadable after a few uses, others readable only in the drives in which they were created. He recommends a second set of backups when using DVDs. “However, as far as cost is concerned,” says Leibrandt, “CD and DVD disks can’t be beat. For most users they should be adequate and would certainly be the least expensive.”

Jump, Flash and USB drives

So-called jump drives are tiny plug-and-play portable storage devices that use flash memory for data storage. As small as one-half inch by two inches, they can be carried in a shirt pocket. Jump drives will work with any newer PC or Mac with an existing USB 1.1 or USB 2.0 port. When you plug a jump drive into a USB port, your computer automatically assigns it to the next available drive letter. Then, just use the drag and drop method to transfer files and folders. Retail prices for jump drives range from about $30 for a 512 MB unit to about $60 for 2 GBs of capacity. Some manufacturers offer jump drives with up to 16 GB of memory.

“The primary advantage of jump drives,” says Leibrandt, “is compactness and portability. They were originally designed to transfer files from one computer to another with a minimum of bulk, and they do that job superbly well.” Meyhoefer agrees. “If you are backing up less than 2 GB of data, I recommend using inexpensive USB jump drives. They’re a great way of backing up and transporting data quickly and easily. You can never make too many backups. Just make sure you organize multiple backups so you can find what you need easily in case of an emergency.” In Leibrandt’s opinion, jump drives have one major disadvantage. “They’re so small,” he says, “that they’re easy to misplace or lose. I’ve managed to lose a couple of them myself.”

Business management service providers

Business management service providers can offer a number of options that make backing up your data easy and reliable, including automatic backup, off-site data storage, fast retrieval of critical files, reporting and recommendations tailored to your needs. For a list of providers, including RSSS, check APRO’s Web site at www.RTOHQ.org.

External hard drives

As you know, the “permanent” storage device on your computer is its hard drive. This is where all of your applications and data files reside. The use of a second hard drive for backing up data is arguably the most popular of all systems. “The method of choice for backups is the addition of an external hard drive,” says Leibrandt. “Plug the device into a USB port and copy your entire library of data files. For the ultimate in protection, unplug the drive and take it home with you at night for safe off-site storage. Because they come with huge storage capacity, one drive can do it all.”

The latest external hard drives have also benefited from technological downsizing. Drives of up to a whopping 250 GB of capacity cost about $100 and are smaller than your favorite novel. Even smaller drives with a capacity of 20 GB are no larger than a cigarette package. For the ultimate in compactness, Leibrandt likes the FireLite brand. “I’ve had very good luck with them,” he says. “However, you won’t go wrong with any of the major manufacturers such as Maxtor and Iomega.” Maxtor drives, bundled with Dantz Retrospect software, include a one-touch backup button. Just press the button and do other work while your computer handles the backup procedure automatically.

Online data storage

Business owners who prefer not to invest in backup hardware and try to avoid the bother of toting physical backups to an off-site location have an alternative method that helps solve both of those issues. Online data storage allows you to log on to a secured Web site where you may upload your files for storage and recovery if that is ever necessary. Most rental-specific software packages such as Computer Solutions offer an online storage option for an additional fee. “One of our clients in Ohio recently had a devastating fire,” says Shea, “but we were able to get him up and running quickly with our online backups.”

The costs for online storage vary according to the capacity you require. Ibackup.com offers a basic plan with 5 GB of storage space for $9.95 per month. An enhanced plan with additional features costs $14.95 per month. Packages of up to 300 GB are available from Ibackup. Rates from other companies are similar. Iron Mountain (ironmountin.com) offers a plan with 2 GB of space for about $165 per year. All companies encrypt their stored data so that it cannot be accessed by unauthorized persons.

You may be entitled to free online storage space if you have an account at Hotmail or Yahoo. Also, some internet service providers offer limited storage space to their account holders at no additional charge. “There’s one caution with online data storage that you should keep in mind,” says Leibrandt. “If the provider’s server goes down, you won’t be able to back up or have access to your files until the problem is fixed. That’s why I consider online data storage a supplement to traditional backups, not a replacement.”

Schedule regular backups

Remember that protecting your business against data loss will be effective only if you perform your backups on a regular basis. Unless you use a program or a service provider with an automatic backup feature, you must initiate the process. How often should you back up your data? If you used your computer only occasionally, a weekly backup might be enough. However, when important information in your computer changes every day or multiple times per day, you should make backing up a regular part of your daily routine. “We do data backups three times per day for some of our clients,” says Crider.

“For the ultimate in protection, you must always store a backup copy of your data offsite,” says Meyheofer. “When my client’s building was destroyed by fire, I asked if he had current backups of his business data. ‘Sure,’ he replied. When I asked where they were, he pointed to his burnt-out building.” In today’s lingo, this is called disaster recovery, according to Crider. Disaster recovery includes having a copy of your backup data offsite as well as onsite. “The disaster recovery concept is a fairly new development,” says Crider. “It really took off after [Hurricane] Katrina. The idea is that you have an offsite disaster recovery system so that you can basically be up and running in a very short period of time instead of rebuilding your data from memory,” he says.

Finally, whatever backup option you choose, be sure to do a test restore occasionally to make certain that it’s working properly. “Don’t wait until you have a catastrophic loss to discover that your backups don’t work,” says Leibrandt.

William J. Lynott is a prize-winning author and veteran freelance writer based in Pennsylvania. His work appears regularly in leading trade publications and newspapers as well as consumer magazines. He can be reached at lynott@verizon.net.

Postcards: Big Results from Small Mailings
by Phillip M. Perry

Good things come in small packages.” That saying, so familiar to gift givers, seems equally valid for the direct mail postcard. Despite competition from the Internet, four-color brochures, television and radio, the humble little postcard refuses to cede ground as an integral element in successful marketing programs. u “Companies in the rent-to-own industry can and still do use postcards and they can be effective,” says Al Benson, vice president of sales for Central File Marketing, a full-service print shop and direct marketing company based in Brown Deer, Wisconsin. Little wonder why: A correctly designed postcard can pop out of a pile of mail and catch the recipient’s eye with an immediate message. “The reason we like postcards is because they allow the recipients to get your message and your call to action without opening envelopes and breaking open tabs,” says Marty Smith, vice president of sales of St. Louis-based Imagery Marketing Consultants. “Very often recipients toss envelopes without opening them and the sales messages get lost.”

Getting that high-powered message to a select group of people can heighten the results. “Postcards are especially effective for reaching targeted audiences,” says Bonnie Nitzsche, owner of Cincinnati-based Nitzsche Advertising. For example, postcards might be used to promote a furniture special to a current customer list. And many rent-to-own dealers like to send cards toward the end of the month to their house list, since so many people receive checks at the first of each month. Create great offers: The postcard’s small size, of course, does present a challenge. The fact is, recipients are likely to overlook a postcard that arrives with bulkier and more impressively sized envelopes and catalogs. “A postcard gets about one to two seconds attention when it arrives in a stack of mail,” says Benson. “It will get more time if you’re lucky and it arrives without a lot of other mail. But postcards tend to get lost in the shuffle. It’s tough to get the message across unless you have a good design so that the card stands out in the mailbox.”

Just how do you get your postcard to stand out in the mailbox? Job #1: develop an offer the recipient can’t refuse. “We have found that in the rent-to-own industry, ‘free’ is the most powerful message,” says Benson. “Offering the first week free is a traditional marketing offer and it’s a great way to avoid having your merchandise sit on your floor unrented.” The message might be to “bring in this card and your next item is free until January.” A variation on this is the matching payment offer: The customer pays a week and the rent-to-own store pays a week. “Present some kind of enticing offer that draws people in,” suggests Nitzsche, who has seen postcards used successfully in promotions such as these:

• Pictures of three rooms of furniture with a burst graphic in the middle. Text states: “All three rooms for only $39.95 a week.”
• Pictures of several items of furniture or electronics. The headline states: “Choose your discount.” The customer can choose from alternatives such as a percentage off, or “rent for three weeks and get a fourth week free.”
• A limited time offer of a “free gift for the first 500 customers who bring in this card” or “free gift, no purchase necessary.” These offers lend a sense of urgency and are especially good for special events or grand openings of new stores. Another way to get people to act right away is to include a “limited time only” offer.
• A “$10 brings it home today” headline. This high-value approach has proven itself a winner, according to Nitzsche. “That’s a grabber; it’s a strong offer.” Any limitations can be covered by a line that says “see store for details.”

Print larger sizes: A great offer is one thing: Finding the room to get the details across can be quite another. While larger postcards (such as 4x6 inches or 5x7 inches) are more expensive to print and mail, Nitzsche says it may be worth the cost because they can attract greater attention from recipients. There is also more space for your message. “You can have your main message on the front of the card and print details on the reverse side,” she notes. There will be plenty of room for the store address, information about nearby landmarks, and even a slogan about the store such as “if you are renting from someone else, you are paying too much.” Smith recommends postcards at sizes of 8x5 inches or larger. “We prefer to see 11x6 inches, since the larger postcards tend to get noticed more easily while still qualifying for bulk postage,” he notes.  Digital printing methods, adds Smith, have now made it cost effective to incorporate variable data and print on larger paper that can be folded prior to mailing. For example, a tri-fold postcard can be printed on 6x12-inch stock that folds down to 6x4 inches. This allows for plenty of personalization in terms of the customer name and offers that are based upon previous rentals.

Design carefully: Well-designed postcards attract the eye and drive your message home. Avoid trying to cram too much information into a limited space, suggests Nitzsche. “You need to leave enough white space to create an inviting card that people are likely to read.” Nitzche adds that the style of type and color of print has a big impact. She tends to favor white type over a red burst or black type over a yellow one. “These combinations really seem to hop off the page.” Four-color printing has become the standard for postcards, with most marketers noting that its response rate is far higher than that for black and white. Combine color with graphics for real impact.  Remember that many recipients will look at the address side of your postcard first, so make sure there is an eye-catching picture on that side of the card as well as the front.

Personalize your message: Target your consumer directly. Benson suggests including the recipient’s name (rather than “Occupant”) in both the address block and the selling message. You can also tailor the offer to previous rental transactions from the target customer. Add further personalization with a message from the manager offering to take care of the customer personally. One technique to heighten the postcard’s profile is to get the recipient involved in some way. “The more time the recipient spends with a piece of mail the more effective it is,” says Benson. Recently the industry has been moving toward folded postcards that open up to present larger messages.  This involves the recipient in a physical activity, which extends the time spent with the mailing and heightens interest. The larger size does not add significantly to the printing cost, and if carefully planned the postage will not increase. (Folded cards can be as large as 61/8 inches by 111/2 inches finished size without an upsurge in the bulk postage cost.)

Mail consistently: The most successful postcard campaigns time their mailings to coincide with a customer’s complete life cycle. This begins with “welcomes” to new customers, “thank you’s” to customers who have made final payments, and “we want you back” invitations to inactive people. Midway through such a campaign, postcards can be used to “roll over” current customers into additional transactions prior to the expiration of current rentals.  The card might offer a discount on the final payment of a currently rented item if the customer rents another item now. “Such cards can help plant the seeds for additional income,” says Smith. Powerful as they are, it’s easy for such critical mailings to fall through the cracks and companies like Imagery have established automated mailing systems that take the detail work out of the hands of rent-to-own organizations to insure consistency to direct mail programs.

Valuable tools: No one suggests that one isolated postcard mailing will work wonders for a rent-to-own operation’s bottom line. As part of a continuing mailing program, though, or as an eye-catching foot-in-the-door for a larger marketing campaign, the ubiquitous postcard plays a significant role. “Rent-to-own businesses can really benefit from a consistent direct mail program,” says Smith. “Postcards and other mailings to your regular customer list are valuable marketing tools.”

Phillip M. Perry is a freelance business writer based in New York, New York.