Rent-to-Own

It Ain’t Over When It’s Over: Follow-Through Ideas for After the Convention by Phillip M. Perry

The Hill is Alive with the Sound of RTO: What’s Really in HR 1701? by Ed Winn III

Power Plays: Reducing Costly Office Politics by Phillip M. Perry

Marketing to Grow by Marcia Layton Turner

 

 

 

 

 

It ain’t over when it’s over

Trade shows are great for discovering new products and making new contacts. All too often, though, business people return to mountains of backedup work. Faced with the challenge of catching up on workaday tasks, they soon forget their good intentions to follow up with vendors, cultivate personal networks and capitalize on industry trends revealed at the show. It shouldn’t be that way.

What you really go to a trade show for is for what takes place after the event is over,” says Francis J. Friedman, a trade show specialist and president of the New York City-based consulting firm, Time & Place Strategies. Like golfers working on their follow-through, successful trade show attendees are always trying to improve the quality of their after-show swing. That means sharing knowledge with staffs, placing follow-up calls with the right exhibitors and organizing business cards and notes so they don’t end up on a shelf collecting dust.

But is attending a show worth the effort in the first place, when so many products can be seen in full-color catalogs? Most people say yes. “Show time is very well spent,” says Joe Murtagh, president of The Source in Goshen, N.Y. “Where else can you have such concentrated exposure to such a vast array of information that is very well organized and presented? There’s nothing like being able to see the quality of goods and hold or touch them with your hand.”

Given the benefits of trade shows, it’s clear that everyone will be attending more of them.Here are some techniques, then, for capitalizing on what’s learned at the show after you return home:

Share the wealth

If one piece of new information from a show can help you make more profit, imagine the results if your whole staff could use the same knowledge when dealing with customers. Make sure everyone has an opportunity to benefit from the trade show information, be it educational information from seminars, industry insights from business peers met in the aisles or new product descriptions from the booths. This communication may be delivered via memo, meeting or internal e-mail. The key is to disburse the information formally so that it is taken seriously.

Don’t forget communication is a two-way street. Encourage your personnel to share insights that may enhance or alter your view of what happened at the show. This is particularly important when making decisions to take on a new line of goods or services.

“Your staff may know of products that are a better fit and should be compared and investigated,” says Richard J. Brunkan, a partner at Humber,Mundie and McClary, a group of psychological consultants in Milwaukee. “You may discover that you were being overwhelmed by an enthusiastic sales person. People who work with customers can help you decide what’s there in terms of solid stuff.”

Staff feedback can also help adjust order levels up or down or time the placement of additional orders over the following months. This is especially helpful with new lines from young companies that may not produce enough inventory to satisfy unforeseen orders down the line.Absent sufficient advance orders, supplies can evaporate just as customers are clamoring for more.

Once orders are set and delivery dates slated, assign duties to the various members of your team.What needs to happen before the goods arrive? Who needs to do what in terms of promotion and space planning? Where will you position the new goods and how can you clear space?

Good post-show follow-through depends to a great extent on advance planning. If more than one person from your business will be attending the show, assign different duties to each. Personal beats might include new products, industry trends and materials needed for a new department.

To encourage great work, make sure each attendee realizes that a report will be expected back home.“People engage in a very different level of note taking when they realize they will be held responsible for teaching others,” says Pittsburgh consultant Mina Bancroft. “They realize they will really need to understand a subject.”

Finally, assign a high priority to the meeting in which knowledge is shared. “Prior to attending the show, schedule the follow-up meeting on your calendar so it doesn’t slip between the cracks later,” says Bancroft.

Draw upon each person’s abilities when conveying information to your staff. “Because each person has unique strengths, each communicates in a different way and sees a trade show with a personal perspective,” says Donna Messer, a trade show consultant and president of ConnectUs Communications, a consultancy in Oakville, ON.

“Some learn by hearing, some by seeing, some by experiencing. Each person attending the show will describe what he or she saw in different ways to everyone back home. Encourage this and you will have one heck of a team.”

And what about those great seminars? Wouldn’t your whole staff benefit from the knowledge gained? Sometimes seminars have training materials you can distribute to your staff, saving you the effort of putting together a report. If that’s not the case, jot down the key points from the seminar and present a short but informative report to your key personnel. Alternatively, ask permission to record the seminar and have the tape transcribed for your staff.

Speaking of communicating news to your staff: What can you do with all those notes you scribbled as you walk the aisles? In the rush of business they can fall through the cracks. Too often they end up collecting dust on a shelf or disappearing into your file cabinet. Develop a plan to efficiently process those notes. Go to the show with this plan in place and you will be able to maximize the profitability of your notes when you return to your business. Rather than enter all of your notes on a running series of pages, try dividing a notebook into sections by topics such as new products, personnel changes, industry trends and government regulations. Once back at your place of business, process the notes by removing the pages from your notebook and inserting them into a vertical hanging file organized by topic.

In another approach, some attendees walk the trade shows with tape recorders, making continual short comments that are later transcribed by someone back home. Here’s a related idea: While walking the trade show aisles, very often you will see displays of materials you want others in your company to be aware of. Request permission to take photos (some shows do not permit the practice) then distribute the pictures to everyone.

Follow through with vendors

Exhibitors can be as forgetful as buyers when the trade show glitter has faded. If they move on to other things and fail to send promised information, everyone loses. Smart business owners will mark their calendars with ticklers to remind laggard vendors.

There are three benefits of prompt follow through with vendors. First is the reduced risk of misunderstanding. Your memory of what an exhibitor said may differ from that of the vendor’s and the latter may forget a deal that was not put in writing because of the rush of people at the show. So call and nail down your agreements. Second, calling can confirm schedules for on-site visits by vendor reps. Finally, you can avoid the disappointment that can arise when you wait too long to place orders. Many manufacturers are trimming production in response to a softening economy, so late buyers may have to stand in line behind early birds or even be left out of the pipeline entirely.

Vendors will offer you a plethora of brochures and catalogs as you walk the aisles.When you return home, a stack of accumulated brochures can seem so overwhelming that you avoid looking at them for months. Ask vendors to mail catalogs and brochures to you and assign a staff member to file them in an accessible way. You might want to sort the catalogs alphabetically by company, then create a Rolodex or computer database that references the company names by product or service for rapid access months later.

Trade show buyer’s guides can also fill a need long after they have served their original function as trail blazers to booth locations. “The buyer’s guide is a wonderful resource with great shelf life,” says Lori Kurschner, vice president of marketing for the Dallas Market Center. “It can be referenced for contact information throughout the year.”

And in yet another post-show resource, Kurschner points out that many venues now host Web sites with “market planning tools” that can help track the elusive supplier in the months after a show. Because many such sites are searchable electronically, buyers can quickly find sources of supply for specific lines.

Finally, how about all those business cards collected during the show? Too often they remain wrapped in their rubber band cocoons, never to be looked at again. Try categorizing business cards on a scale of one through four, with “one” being the most important to contact. Back home, make sure you call the “one” cards first.

“I advocate writing relevant information on the back of the cards rather than on a separate paper,” says Brunkan. “That avoids having to match things up at the office. On each card, note what was interesting about the product and what needs follow up.”

If it all sounds like smart networking, that’s because it is. Trade show experts encourage such relationship building. “When an attendee actually follows through with vendors met at a show, a light goes on with suppliers,” says Messer. “They say ‘this is one I want to keep.’ You have brought to the attention of exhibitors that you are different.”

The results can be beneficial.“Down the road, you may be called for a testimonial or you may be offered something to try out because you have been responsive,” says Messer. And, of course, you will be the first to know of any buying opportunities.

The squeaky wheel rolls farther down the road to success. “If you are lazy and don’t follow up, you will be treated the same way,” says Friedman. If you establish a dialog on the other hand, you become a partner for mutual profit rather than just another name on a customer list. “We are in an era of relationship building, but the hard part is that we are hiding behind our e-mail and phone systems.”

Inform your customers

We’ve covered co-workers and vendors. Who but the customer is the ultimate reason for all of this trade show commotion? One way or another, customers need to be informed about what you have seen at the show. For your most important customers, a personal call is not out of the question.

While one-on-one calls are great, it may be impossible to get in touch with everyone in a timely manner. That’s where some creative communication comes in. Either a special mailing or a section of your regular newsletter can be devoted to a report on what you learned at the trade show.

As the comments in this article suggest, getting the biggest bang for your buck invested in attending a trade show depends on how you sweep up after the dust has settled and the glitter has faded. “When you get back to your place of work, the important thing is to have a plan in place that prioritizes the information you’ve obtained,” says Bancroft. “I suggest that you start processing the information while you are still at the show and especially as you travel back home. Ask yourself, ‘what is the top thing I have learned and what will I do with it?’” To tackle the big pile of new information efficiently, break it into manageable pieces. “If you end up with information overload, you will not be able to process any of it,” says Bancroft.

The more you keep your goals in mind, the more successful you will be as a trade show participant. Cultivate the employee, the exhibitor and the customer whom, as a group, form a “three-legged stool” of post-show success. If you take careful aim at your target and follow through with a good after-show swing, you’ll land a business owner’s favorite “hole-in-one”: more profit on your bottom line.

Philip M. Perry is a free-lance business writer based in New York City.

 

The Hill Is Alive

Industry-supported federal legislation has gained momentum in this Congress. Previous efforts had moved lethargically. This time around, however, there is considerable interest from friend and foe alike over HR 1701. Part of this interest stems from changes made to the bill prior to its reintroduction in this Congress and other changes by the House Subcommittee on Consumer Affairs, which held hearings on the bill last summer. Yet still more changes are being considered by the full House Committee on Financial Services this summer.

It would behoove every rental dealer to know just what HR 1701 does and does not do and what the changes are that have already been made to the bill and what the changes are that have been proposed. While the prospects for passage of the bill before the Congress adjourns in the fall cannot be predicted, responsible rental dealers need to be conversant with what is in the bill to measure how its passage may affect business practices, because some of the provisions will do just that.
 
An Over View Of federl Effort

The industry’s efforts to enact federal legislation began as an attempt to enact bona fide consumer protection legislation while giving the industry protection from re-characterization (lease vs. sale) by Congress. Every version of an industry-supported bill has offered an advertising and contract disclosure scheme not unlike the state rental-purchase statutes that have been enacted around the country over the past 18 years.

The bills all offered a floor of consumer protections and specifically allowed the states to add more consumer protections as they might see fit.What these bills offered the industry was a definition of rental-purchase transactions as leases in federal consumer protection law (such a definition already exists in the Internal Revenue Code) and protection against any state attempting to regulate the transaction as a credit transaction or requiring the disclosure of an annual percentage or other interest rate disclosure.

Despite the changes discussed below, the twin core provisions of the current bill, HR 1701, remain—a floor for contract and advertising disclosures and other consumer rights in rental-purchase transactions and a definition of the transaction as a lease for consumer protection purposes.

Changes From HR 1634 TO HR 1701

In the 2000 Federal Trade Commission Survey of Rent- To-Own Customers, the FTC staff made several recommendations concerning consumer disclosures and how and when they should be made for maximum effect.

The FTC recommended that consumers be given the total cost of rental-purchase as early as possible in the transaction. Most state rental-purchase statutes only require that rental dealers disclose the total of the payments, which is the rental rate multiplied by the number of payments necessary for ownership. The FTC recommended that the total include all mandatory fees and charges. Accordingly, HR 1701 added a new disclosure labeled “Rental-Purchase Cost,” which includes the total of rental payments plus all mandatory fees and charges. Rental dealers must also clarify that damage waiver or leased property insurance coverage is optional.

The FTC also noted that few state rental-purchase statutes require that this amount be disclosed on price tags in the store or in advertising. The FTC reasoned that the sooner consumers have this information, the better able they would be to compare costs in the marketplace and make an informed decision about entering into a rental-purchase transaction. By the time a consumer is shown this information in a printed rental-purchase agreement ready for signing, it is often too late to shop around. To speak to this issue, HR 1701 requires that this “Rental-Purchase Cost” disclosure appear on price tags in the store and in certain advertising when rental rates are advertised.

Other changes from the older version of the bill to the current one include some new disclosures in the rental-purchase agreement, including a “Cost of Rental Services” disclosure, which is the difference between the total “Rental-Purchase Cost” and the cash price of the merchandise. This is a disclosure that is currently required in only a few states. Finally, the new bill would require the following statement to appear in boldface and in capital letters on each agreement: YOU ARE RENTING THE PROPERTY. TO ACQUIRE OWNERSHIP OF THE PROPERTY YOU MUST MAKE ALL PAYMENTS NECESSARY TO ACQUIRE OWNERSHIP.

HR 1634, in the previous Congress, vested enforcement authority in the Federal Reserve Board. HR 1701 gives the FRB the authority to draft model forms for use by rental dealers, but gives the FTC the authority to enforce the Act, since the FTC is the primary federal agency in charge of consumer protection matters generally and, in particular, unfair and deceptive acts and practices.

The old bill required a disclosure that the consumer may be liable for the fair market value of the rental property if it is lost, stolen, damaged or destroyed. The FTC was critical of this kind of provision. To address this, the new bill provides that a consumer may be held liable only for the lesser of the fair market value, the remaining rent, the early-purchase option amount or the cost of repair if the property is lost, stolen, damaged or destroyed.

These and a few other changes made HR 1701 more genuinely pro-consumer and allowed industry supporters to make that case persuasively to some new Democratic allies. HR 1701 is, in fact, co-sponsored by a Democrat and has a healthy mix of Democratic supporters among the 81 co-sponsors on the bill.

Change The Sommiller

The bipartisan nature of HR 1701 was evident during the subcommittee process last summer and fall, particularly during the subcommittee meetings when members offered amendments to the bill. There were nearly 30 unfriendly amendments offered, but most were beaten down by substantial votes in the subcommittee. The final vote on the bill out of the subcommittee was 24-4.

One change that was agreed to during the subcommittee process involved the bill’s preemption language. When HR 1701 was first introduced, some consumer advocates deliberately misread the preemption language as having the federal law overrule all state rental-purchase statutes. This was never the intent of the legislation, but this interpretation was reinforced when the subcommittee got a letter from the National Association of Attorneys General signed by all 50 state attorneys general urging the subcommittee not to pass any bill that would overrule state rental-purchase statutes.

The subcommittee voted on a change to clarify this language in the bill so that states merely are precluded from regulating rental-purchase transactions as credit transactions or requiring the disclosure of an annual percentage rate disclosure.

The subcommittee also agreed to extend the statute of limitations in the bill. Consumers still have one year to bring an action for a violation of the statute, but the oneyear period begins to run from the date the last payment was made on the account instead of the date of the violation. The subcommittee also changed the damage waiver language and further clarified the voluntary nature of the charge. Consumers must affirmatively elect or decline coverage and must separately sign the election.

As of this writing, the bill is still before the full House committee. However, negotiations continue behind the scenes as proponents attempt to garner more support for the bill and opponents either attempt to derail the bill’s momentum or get additional changes to the bill’s language that will satisfy them.

In the past 30 days there have been at least 17 additional amendments proposed to HR 1701. Opponents have told the committee chairman that they intend to offer as many as 30 more amendments during the full committee mark-up on the bill. This is unusual, since normally, once a bill has been amended at the subcommittee level, the full committee votes for or against the bill without further amendments being offered. The number of amendments still pending before the committee is evidence of the contentiousness that surrounds HR 1701.

Change Prposed Before The Full Committe

A number of proposed changes involve price controls. One proposal would set cash prices at no more than twice the rental dealer’s acquisition cost. The industry has rejected this proposal as out of hand.

Another proposal was to allow the Federal Reserve Board to set the industry’s cash prices by regulation, which has also been rejected.

A recent proposal is to require the industry to disclose not only the dealer’s cash price, but also require a disclosure of the Manufacturer’s Suggested Retail Price where such prices exist, so that price tags and advertising would have both amounts on them.

Accompanying this attempt to limit cash prices are additional proposals to require an early-purchase option as a set percentage of remaining rent. The percentages have varied from 50 percent to 65 percent and, in some proposals, they change over the life of the agreement.

There is also a proposal to require all rental dealers to offer a “90 days same as cash” option in rental-purchase agreements. The industry countered with a proposal to submit to the “90 days same as cash” requirement and then have a required early-purchase option for the duration of the agreement of not less than a 25 percent discount off of the total of remaining rental payments. This offer was made in exchange for several important Democratic votes on the full committee, but as of this writing, has not been accepted.

Also on the table is an extension of reinstatement rights from the current maximum of 90 days to a maximum of 180 days after the consumer has paid 75 percent or more of the total rental-purchase price.

Another proposed amendment to HR 1701 is to require rental dealers to transfer any unexpired manufacturer’s warranty to the consumer upon ownership. This is a requirement in a number of states. The industry has no objection to adding this language to the federal bill. Another proposal is to add language that will limit charging more than one late fee for a missed payment no matter how long the payment goes unpaid. This provision is intended to prevent rental dealers from being able to assess late charges on late charges and is the law in most consumer transactions that are regulated either at the state or federal level. The industry will not object to the addition of this language.

There has been language proposed that would better define “clear and conspicuous,” the current standard for making the disclosures called for in the bill. The new definition reads as follows: “information…shall be worded plainly and simply and appear in a type size, prominence and location as to be readily noticeable, readable and comprehensible to an ordinary consumer.”

Unless rental dealers are deliberately trying to obscure information in their agreements or in their advertising, this new language should not require a change in current disclosure practices.

Another proposal is to tie the liability and penalties sections in HR 1701 to the liability and penalties sections in the Truth-In-Lending Act. This will not mean any substantive change in those sections as they are currently drafted, but will allow these sections, as they apply to rental dealers, to be amended automatically whenever TILA is amended in the future.

As a practical matter, all of the nation’s banks, savings and loans, credit unions and other lending institutions are governed by TILA and have an acute interest in how that Act reads, especially the liability and penalties sections. It is no guarantee that one day those sections might not be amended, but it will be under the intense scrutiny of a lot of interested observers.

Other issues that have been raised and that the industry cannot accept include limits on liability damage waiver fees, late fees and all other fees that rental dealers charge. There have been specific dollar limit proposals as well as language that all fees for other charges “must be reasonably related to the cost of any services performed.”

There is a proposal to delete language in HR 1701 concerning a rental dealer’s ability to correct errors discovered before getting written notice of the error and before getting sued because of it.

There is a proposal to expose rental dealers to liability for advertising errors without proof of any actual damages. HR 1701 currently requires proof of actual damages before a consumer can recover for an advertising violation.

There is a proposal to add another disclosure concerning “any damages to the property” as part of the description of the property and a proposal to prohibit rental dealers from offering alternative payment schedules in the same rental-purchase agreement, presumably because it might confuse consumers.

HR 1701 currently limits the penalty for a violation of the disclosure requirements to an amount between $100 and $1,000. There are proposals to raise the floor from $100 to $250 and to eliminate the cap on the penalty. These amounts are in addition to any actual damages incurred by a consumer.

There is a proposal to prohibit rental dealers from threatening or invoking criminal prosecution of a rental customer without clear and convincing evidence of a crime. This language would effectively mean that unless the customer were convicted after being charged, the rental dealer would get sued for malicious prosecution and a violation of the federal law as well.

There is a proposal to prohibit a rental dealer from using the word “free” or otherwise indicate that something is available without charge if the rental dealer “charges the consumer, including any service for which an additional charge is collected by inclusion in the amount required to be paid under the agreement when such amounts exceed that paid for like goods or services by other consumers in the ordinary course of business.”

There is a proposal to give consumers a right to rescind all agreements with an initial term longer than one week. Consumers could cancel within 48 hours of signing an agreement and get all of their money back. In addition, consumers would be able to get a completed rental-purchase agreement to take home and review for 24 hours.

There is a proposal to clarify that balloon payments are prohibited in rental-purchase agreements. There is a proposal to add an annual percentage rate disclosure to the bill. There is a proposal to exempt Vermont from coverage of the bill.

This is by no means an exhaustive listing of the kinds of changes various members of the full committee have either suggested or threatened during negotiations leading up to the full committee vote.

The industry is convinced that if its many supporters show up when HR 1701 is considered, there will be a substantial majority of committee members in favor of the bill and the handful of amendments that the industry has indicated are all right to make. The risk in politics is that the industry’s friends will have other commitments on the day of the vote and that opponents will be able to push through some of the more objectionable amendments. Then the industry will be forced to try to amend the bill further on the floor of the House or attempt to scuttle the effort altogether.

It is a blood sport, politics, as all of the active participants in the process are well aware. There are full committee members who would like nothing better than to see the entire rental-purchase industry go out of business forever. They are, in fact, often more passionate about their position than industry supporters are about theirs. Passion can go a long way in politics. The industry maintains constant vigilance over the process because it must in order to ensure a proper and fair outcome.

The committee chairman has already canceled a vote on HR 1701 two times in the past two weeks. Another vote has been scheduled for late June. Rental dealers are urged to follow the progress of HR 1701 closely as it moves through Congress and to voice any concerns about language in the bill to APRO board members or staff. Copies of the current version of HR 1701 plus language concerning most of the amendments discussed above are available to APRO members upon request or can be found on APRO’s Web site at www.apro-rto.com/.

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

 

 

Power Plays

You had high hopes when you hired Ruth to head up your marketing department. She had just the right business skills and got along great with people in her previous position. What more could you ask? Plenty, as it turned out. Although Ruth brought lots of enthusiasm and talent to your organization, she never seemed to get the support of the staff. Her directives were ignored. Her plans to improve business performance never got off the ground. Finally, after many months of struggling, Ruth resigned. By that time, your revenues had gone south and you were saddled with yet another costly talent search.

What happened? Office politics, that ugly and costly drain on business profit, had struck again. During Ruth’s second week on the job, one of her staff members had turned to Allan, a veteran supervisor and informal group leader, and asked a single question: “So what do you think of Ruth?” Allan pursed his lips and shook his head slightly, saying nothing else. But that was enough: Everyone understood that Ruth was not to be supported by anybody who wanted to stay in Allan’s good graces.

Power plays hurt profits

Office politics is the practice of accumulating and utilizing power. Our opening story is a prime example of how destructive behavior can wreck a business.Moreover, the anecdote illustrates a costly lesson that some businesses never learn: Successful managers and supervisors do more than master technical skills and get along well with people. They also become “master politicians.”Not only can they identify and overcome destructive power plays like Allan’s, but they are also skilled at employing office politics for good purposes (see sidebar: “Good Office Politics.”)

In the opening story above, Allan played the role of a master politician.With a shake of his head, he marshaled the power of his loyal co-workers against a new manager who he regarded as a threat to his own hold on power. The result was a dysfunctional work place and a broken profit machine. “Office politics is absolutely a bottom line issue,” says Ian Jacobsen, a Sunnyvale, CA-based consultant who has dealt with destructive office politics at many businesses. “One supervisor recently told me she was spending 40 percent of her time dealing with office politics, so her company was really only getting less than two-thirds of that person for actual work while paying her a full salary.”

Wasted time is not the only damaging aspect of such power struggles, says Jacobsen. “Office politics also diverts the organization from accomplishing its mission because people are pursuing their personal agendas rather than the business mission.” In our opening story, Allan pursued his own goal of maintaining his power over his peers instead of helping Ruth institute her ideas.

Damaging as it is, office politics is here to stay because it is part of human nature. “No one ever checks their humanity at the door when they come to work,” says Michael S. Dobson, a management consultant based in Bethesda,MD. “We all bring ourselves to the work place.”

In fact, destructive office politics is more prevalent today, say organizational consultants. “Some people thought politics was on the way out with the movement toward promoting cooperation among people at many businesses,” says Andrew DuBrin, professor of management at the Rochester Institute of Technology, Rochester, NY, and author of the best-selling Winning Office Politics. “But there is actually more back-stabbing in recent times as companies continue to shrink and people compete for the best positions.”

During difficult financial times, people feel less secure about their jobs and will do whatever they see in their interest to secure their paychecks, says DuBrin. People act in their own economic best interests and as long as those interests are misaligned with the corporate interests, you will experience destructive power plays.

There is another reason for the growth of office politics, says DuBrin. “Many more people have learned the value of networking as a tool for becoming liked. People recognize intuitively that the last people to go are the people most liked.”

How to reduce office politics

Office politics turns destructive when people are rewarded for who they are and who they know— not for how well they perform. Staff members realize that no matter how good they are at their jobs, they are in danger of losing their paychecks to someone who is in better favor with the boss. Rather than concentrating on serving the customer and improving their work skills, people focus on playing up to their supervisors and forming powerful cliques that can overcome common threats.

We saw both results in this story’s opening anecdote. First, Allan’s clique responded to his desire for control, understanding he would protect them in turn. Second, the group was able to destroy an individual who seemed to threaten their common power. All of this came about because the interests of staff members were misaligned with that of the business.

“People play office politics for only one reason— they believe it is in their best interest,” says Lawrence Serven, principal of a consulting firm called The Buttonwood Group, in Stamford, CT. “Often that belief is well founded. It’s really the system that is to blame, not the person.” To reduce the power of office politics, says Serven, change the system to one that rewards performance. “Office politics needs to be addressed just like any other performance issue.”

Here are five positive steps you can take to establish a productive reward system that will bring each individual’s goals in line with those of your business:

1. Set a good example.

Start by taking a fresh look at your own behavior. “Make sure you do not play destructive office politics yourself,” says Jacobsen. “Ask yourself, ‘What games am I playing?’ and ‘How would things look if I were a fly on the wall?’ Once you have an unbiased perspective, make an effort to institute more productive ways of interacting.” Make a conscious effort to reduce the impact that personal relationships have on decision making.

2. Outline and communicate the goals of your organization.

Your staff needs to understand your organization’s goals before they can share them. “One role of management is to define the business,” says Dobson. “Answer the question, ‘What do we do for a living around here?’ The more clear you are about the company mission, the better.”

3. Describe each person’s contribution to the goal.

How do you define quality performance? This question needs to be answered in specific terms for each individual. “Office politics turns bad to the extent that quality performance cannot be specifically defined,” says Dobson. “If I think I am doing a good job and you say I’m not, then I start to believe you are persecuting me, so things get nasty.”Without objective performance criteria that everyone accepts, staff members will compete in any way they know how for the limited organizational resources.

4. Maintain objective performance evaluations.

Regularly scheduled, objective performance evaluations are your best tools for reducing the impact of office politics. When it comes to feeling secure about their jobs, people look upon favorable reviews as valuable support. Even unfavorable reviews, when carefully prepared and presented, are seen as guides for getting back on a secure track. In both cases, people who know where they stand will be less fearful about losing their jobs and will devote less time to creating power centers and more to improving work performance.

Finally, evaluations work well when individuals know they have the power and resources to improve their positions. Encourage autonomy among individuals by making sure they possess the means to achieve the specific goals outlined in the performance evaluations.

5. Call people on games they play.

Suppose Andy approaches you with the following statement: “I have some negative things to tell you about Nick. He appears to be slacking off quite a bit in his work.”

It seems like destructive office politics at work or could it be that Andy has really spotted something serious? DuBrin suggests a response such as this: “Fine, let’s bring Nick in here and have a three-way conference.”

This is a very effective technique because “exposure is the best disinfectant,” says DuBrin. “Everyone will understand that if you make negative statements about people, there will be a three-way conference or more. This will quickly freeze up a lot of people; they will not make accusations unless well-founded.”

Change for the better

Above all, be aware that you can reduce the incidence of destructive power plays. “In many organizations, there is a sense that we can’t do anything about office politics, so we should ignore the issue,” says Serven. “That’s about as much of a solution as you find in a lot of companies. But you will never have zero errors or 100 percent employee retention or complete absence of sexual harassment. Does that mean that you don’t make progress? Of course not.”

The secret is to work toward a single end result: a company that rewards people on merit. When you reduce destructive office politics to a minimum you will have a more productive work force and a healthier bottom line.

Phillip M. Perry is a free-lance business writer based in New York City.

 

Marketing

SuccessfuLrent-to-own dealers nationwide have several things in common when it comes to marketing, not the least of which is a preference for planning. Although there are marketing tactics you can implement today that will certainly generate new business immediately (and you’ll hear more about those later), to be more profitable in the long run, research and planning must come firs.

1. Write a marketing plan

“You need to have a plan with specific goals,” says Larry Carrico, owner of Rent One in Mount Vernon, IL. “You need to set realistic targets for your own business based on what you’ve done in the past,” he says, which means doing some research up front. Carrico relies on APRO’s annual statistical survey for a guide to industry averages, which lets him know which of his 34 stores are below average and which are above.

Based on that information and his own historical record-keeping, Carrico can map out sales targets for each store, along with cost estimates, inventory purchase plans and marketing budgets. Carrico’s company spends 5.5 percent to 6 percent of sales on marketing each year, which is well within the 4 percent to 7 percent range he reports is the standard for the rent-to-own industry.

With a marketing plan in-hand that tells his managers what they should expect month-tomonth in terms of sales, expenses, inventory needs, hiring and promotions, his staff is better prepared to meet the targets that have been set. With performance standards established as part of the marketing plan, Carrico can evaluate his stores and managers on an ongoing basis. Likewise, managers know where they need to improve, whether it’s amount spent per month per customer or number of products currently rented.

2. Invest in training

Amarketing plan may well set you on the road to riches, but you may still encounter problems with implementation. Carrico has learned that in many cases, poor performance in one area may be the result of inexperience or misinformation. Fortunately, both can be corrected with training.

For example, “an employee’s fear of computers may be the reason that your store is renting fewer of them,” he says. By investigating areas where performance is below the industry average, you may discover skills your employees can improve through seminars or classes.

3.Network, network, network

Carrico has found that the store managers who are most visible in the community often have higher revenue-producing stores. “How active a manager is in the community makes a difference,” he says. Carrico tries to encourage community involvement by announcing new managers via a press release to the local press and by featuring managers involved in community service in the store’s internal newsletter.

4. Look for speaking opportunities

Another effective marketing tool is public speaking, which Jay Conrad Levinson, author of the best-selling Guerrilla Marketing series, believes is one of the best tactics around.

“By offering a half-hour talk about your industry, such as trends in rent-to-own or on a public service project you’re involved in, you become an authority for the audience to look up to,” says Levinson. Given widespread fear of public speaking, you’ll likely have little competition for such engagements within your industry. As long as you’re not selling anything directly or are too self-promotional, Levinson has found that more than 50 percent of the audience is likely to become a referral source—or a customer.

Levinson also recommends free clinics or in-store demonstrations to bring potential customers in and to encourage existing customers to try a new product.

Computer demonstrations or classes are likely to boost rentals of those products, just as a presentation on “50 Ways to Save Money” (using rent-to-own, of course) may spur rentals of large appliances covered in the talk, such as a second freezer.

5. Bill monthly

One unconventional marketing strategy that works well for a successful rental-purchase business owner in Yakima,WA, may at first sound self-defeating. Where most rent-to-own operations look for opportunities to have more face-to-face contact with their customers, Mark Peterson of H&H Furniture Inc. prefers to have less.

Instead of requiring weekly or biweekly payments from customers, as is the industry norm, Peterson sends out monthly bills. “The cost of mailing is lower than driving out to track down a payment every week and it’s more professional,” he says. In addition, he can insert promotional materials with the bill, taking advantage of each monthly contact with his customers. By encouraging customers to treat their rental payment just like other household bills, Peterson reports a low loss ratio.

Another benefit is a much higher keep rate. H&H has a keep rate far above the 30 percent industry average, which Peterson attributes largely to his monthly billing policy.

6. Use multifaceted promotional campaigns

At the core of many rent-to-own marketing programs is a multifold campaign that coordinates several tactics to drive home one message.

Amy Zeller-Fankhauser, vice president of City Rentals Inc., who has seven stores in and around Defiance, OH, invests in direct mail campaigns coordinated with radio advertising. City Rentals is currently running a new in-store promotion similar to the McDonald’s Monopoly game to bring customers back into the store.

Carrico is also a believer in multi-part marketing pushes, which he organizes around a theme. Right now, his Rent One stores have a “Say No to Laundromats” promotion designed to encourage washer and dryer rentals. To support his theme, Carrico has bought radio and television advertising and has designed four-page flyers to be sent to potential, existing and past customers. Rarely does he rely on just one tactic.

Similarly, Peterson is constantly trying different mixes of the same marketing tactics as part of multi-level campaigns. However, he sticks to one main message, positioning H&H Furniture as the “Couch Potato Headquarters” and mentions that in every promotion he undertakes.

Because Yakima has very low-cost television advertising, 60 percent of H&H Furniture’s marketing budget is invested in that medium, with the remaining 40 percent split between print and radio advertising. During four promotions scheduled throughout the year, such as the Christmas holiday, Fiesta Furniture Event in May, an anniversary sale in the summer and a floating promotion that they frequently use to tie in to a new store’s grand opening event, Peterson makes heavy advertising buys for his four stores. Where print, television and radio advertising are purchased to coincide with an upcoming promotional campaign, many stores also invest in ongoing advertising methods, such as Yellow Page ads under the “rental” category or telephone message-on-hold systems.

7. Try direct mail

City Rentals’ largest marketing expenditure is in direct mail, which accounts for 40 percent to 45 percent of the company’s marketing budget. Zeller-Fankhauser does about five mailings a year, alternating between targeting new and existing customers.

H&H Furniture’s Peterson ties his two annual direct mailings into one of his four seasonal pro- motions, targeting new and existing customers. What makes Peterson’s challenge unusual, however, is that his four stores cater to four totally distinct populations, requiring that he alter his message to fit his customers’ needs. The direct mailing to his customers on an Indian reservation is unlike the mailer to his metropolitan customer base nor like the mountain community (think “Northern Exposure,” he says) or his Hispanic neighborhood. Tweaking the message or the promotion to fit your customer profile is important and can yield results well above average when done well.

Carrico’s direct mailings are designed only after careful analysis of his stores’ strengths and weaknesses. He says his best first mailer is to a current customer’s home to suggest a product he or she doesn’t already have. He looks at income, location and gender when creating his mailers, trying to appeal directly to his buyer.

8. Invest in in-store promotions and giveaways

Zeller-Fankhauser’s new Bingo board promotion is the first of such in-store promotions City Rentals has tried, but it seems to be working, she says. By offering game pieces to customers who take a specific action, such as bringing in a new customer, re-renting or making a payment, Zeller-Fankhauser’s goal was to educate customers about the range of products the stores carry, as well as generating more revenue. “Some customers make an extra payment just to get a game piece,” she says, which is exactly what she had hoped would happen.

The key to getting more customers and making more money is not in quickie promotions, but in designing a program that is constantly building on itself. By investing time identifying your most lucrative prospects, establishing a marketing budget that fits your total sales volume and setting minimum performance standards for any new marketing campaign, you’ll be much more profitable.

Marcia Layton Turner is a free-lance writer.