Rent-to-Own

Complete issue of RTOHQ: The Magazine by APRO 

 

Attracting the Unattracted: Are We Making Any Progress? by Richard May

The Empire State Strikes Again

Energy from the Outskirts: Profiles of Mike Gordon, Tony Longin and Jim Ratner by Richard May

The Lighter Side of Rent-to-Own by Bud Holladay

 

 

Attracting the Unattracted: Are We Making Any Progress?

by Richard May

 

Rent-to-own’s market penetration–or, more appropriately, the lack thereof–has baffled rental dealers and policy makers for decades. According to the 2000 U.S. Census, 40 million Americans fit the typical rent-to-own customer demographic; some analysts put the number at 50 million, due to undocumented residents. Yet currently, rent-to-own serves only 4 million Americans–that’s a mere 10 percent of those who fit the industry’s customer profile.

Defining a marketing strategy to reach the potential customer–the other 90 percent who don’t rent-to-own–is not easy. Recently, APRO commissioned an independent research firm to conduct its third Potential Rent-to-Own Customer Survey. We wanted to uncover new and/or improved ways to market the business and reach those who have, for any number of reasons, said "no" to rent-to-own. APRO is using the results of this research to give members better marketing guidelines so that they might reach those millions of customers who should be theirs.

APRO has spent 16 years analyzing the rent-to-own market, its image and ways to enhance both. Many companies, public and private, have spent millions of dollars in the past 20 years to find the "holy grail" of reaching the potential customer. In those two decades, the rent-to-own customer base has increased by 1.5 million. Some would say "only 1.5 million" and say it with frustration. Others would say that the 1.5 million is just the beginning, with millions more just around the corner.

 

APRO’s latest Potential Rent-to-Own Customer Survey results are in. How does the non-customer’s image of the RTO industry compare to similar surveys conducted in 1997 and 2004? Richard May examines the perceptions and the realities.

 

The Association of Progressive Rental Organizations’ efforts to reach the potential customer are not new. Since its founding 30 years ago, APRO members have had two primary goals for their trade association: promote fair rent-to-own legislation and enhance the industry’s image–from both a customer marketing angle and a broader industry-as-a-whole perspective. The industry image reflects how legislators, policy makers, the media and the general community view rent-to-own. Our marketing image reflects how customers and potential customers perceive the business.

In 1994, APRO’s industry image campaign became a priority when rent-to-own was featured on the national news and in front of the U.S. Congress. The industry was accused of preying on the poor. In the midst of legislative mayhem, then-Representative Joseph Patrick Kennedy II told Bill Keese, APRO’s executive director, "you have an image problem." Kennedy went on to sponsor legislation emphasizing the industry’s less-than-favorable image and aimed at putting rent-to-own out of business. Amidst these attacks, APRO board member Bob Simons lobbied the association to commission a Rent-to-Own Customer Satisfaction Survey. America’s Research Group, led by Britt Beemer, was hired to conduct the research, which built a framework for the industry to address its marketing image.

It’s one thing to know your customers, but another to define them statistically. America’s Research Group’s findings helped form that definition. The statistically defined demographic allowed APRO to conduct an accurate potential customer survey and Trenholm Research Group was commissioned to find out what the industry’s image was in the eyes of that group of non-customers. The process consisted of two parts: a telephone survey and focus group surveys. The first was conducted in 1997, the second in 2004 and the latest this past September.

The Potential Rent-to-Own Customer Survey starts with a random-digit-dial telephone survey, contacting 600 Americans who fit rent-to-own’s customer demographics, but who have chosen not to use RTO. These participants answer a series of questions regarding rent-to-own stores, products, pricing, etc. The telephone survey methodology guarantees accuracy within 5 percent.

The focus groups consist of eight to 12 people per group who, like the telephone participants, fit RTO’s demographic, but do not use rent-to-own. The group sits in a room while Trenholm Research Group’s Linda Trenholm asks a series of questions, soliciting opinions. During these sessions, rental dealers, APRO executives and rent-to-own marketers watch the proceedings through a one-way window, viewing and hearing first-hand the emotions from non-customers as they explain why they do not rent-to-own. The participants are told in advance that they will be observed and, thankfully, this does not curb their zeal to express opinions and exhibit real emotion.

The reason for both components of the survey is that the telephone segment provides the statistical framework, while the focus groups provide an emotional context. Both are crucial to building an advertising and marketing campaign. The telephone survey results show what information a rent-to-own company needs to market, while the focus group results show how to market that information.

 

APRO conducted its most recent focus group in St. Louis on September 8, 2010. An APRO member group of 10 attended to watch potential customers talk about why they do not rent-to-own. There were two sessions conducted in one evening. The first was comprised of those who fit the rent-to-own demographics, but do not use RTO. The second group was comprised primarily of non-RTO users, but with a few current rent-to-own customers added as well. The reasoning behind adding a few rent-to-own customers in the second group is that marketers want to see if satisfied customers will defend and promote their choice to use the transaction. If they do, then word-of-mouth advertising shows its value. If current customers do not defend their choice among peers to use rent-to-own, this suggests that the marketing image is a more serious and complex problem to address. Dealers would need to spend marketing dollars to make customers proud of their choice to shop at rent-to-own stores in addition to spending marketing dollars recruiting the non-customer. APRO members who attended the focus group session were pleased to observe that current customers in the focus group supported the business.

Adding current rent-to-own customers to the focus group revealed a clear disconnect between the perceptions of people who are rent-to-own customers compared to those who are not and never have been. The focus group responses began as expected, with opinions expressing that rent-to-own was a "rip-off." After a few minutes, a woman at the end of the table, a current rent-to-own customer, disagreed with the complaints and mischaracterizations. She defended her use of rent-to-own without hesitation and that quickly changed the tone of the group. Soon, another participant admitted that he, too, used rent-to-own and was happy with the experience.

"We have seen that when someone slips into the group who has had positive experiences with rent-to-own, they can shift the mood of the group," says Trenholm.

"The whole experience was eye-opening, to say the least," says Steve Branning, vice president at National Rent-to-Own based in Bridgeton, Missouri. Other rent-to-own dealers remarked that the focus group’s responses were "painful" to watch and hear, while some APRO-member onlookers who had attended previous focus group sessions felt that "it was a great improvement from last time." Despite the differences of opinion, all agreed that the dynamic was helpful when a current rent-to-own customer was added to the mix.

National TV Sales & Rental’s Mark Windsor observed, "People who have shopped with us, love us. The people who don’t do rent-to-own business still think that we have used products, high prices and no warranty."

The difference in rent-to-own’s image between customers and potential customers is supported by comparing the results of the Rent-to-Own Customer Satisfaction Survey, conducted last year by America’s Research Group, alongside the Potential Rent-to-Own Customer Survey just completed. Without question, APRO’s customer satisfaction survey consistently found that the rent-to-own customer is a satisfied customer.

Last year’s study of current customers indicates that, if the rent-to-own industry received a grade for customer service, it would be an "A." According to America’s Research Group’s Britt Beemer, to be successful and profitable in the retail market, your customer satisfaction grade needs to be at least a "B." Rent-to-own owners should be very proud of this high mark given by existing customers. When rent-to-own and its image were graded by the potential customer, however, the industry received a "D+." In 1997, the potential customer image grade was an "F." The recent survey reflects an improvement of sorts, but still reveals that our industry has plenty of work to do if it hopes to recruit new customers.

As Trenholm’s survey reported in 1997, "There was a strong negative energy toward rent-to-own, with absolutely no trust from potential consumers…with a stated image of preying on the poor and disadvantaged." In 2010, Trenholm reports that, "Although negative images continue to outweigh positive perceptions, the intensity of the negativity and energy behind it seems to have lessened. In addition, it appears that there is greater acknowledgement that rent-to-own serves a purpose."

The obvious question to rental dealers is: Why do rent-to-own customers have such a stellar image of rent-to-own, yet potential customers have such a negative one? According to the potential customer survey, the majority of Americans do not have any experience with or knowledge about rent-to-own. The recent survey shows that 29 percent of potential customers do not even know that rent-to-own exists. Thirty-five percent of the potential customers know that rent-to-own exists, but they have never had any experience with it.

During the telephone survey, respondents who did not know what rent-to-own was, or did not have any experience with it, were read a description of rent-to-own. When respondents understood rent-to-own, they were asked to describe their impressions: 35 percent of the responses were general comments; 34 percent were negative and 9 percent were positive. Respondents would offer three or four general or negative comments before mentioning anything positive.

Compared to past surveys, though, "a more positive than negative shift was reported," according to Trenholm. To what extent has there been a shift toward the positive? When asked if their impressions of rent-to-own have changed over the past five or six years, 17 percent said they had a more positive impression, 10 percent said a more negative one and the remaining 73 percent said they had no shift at all in their feelings about rent-to-own. Much of the positive shift has been a product of today’s economic times. Twenty-five percent of the respondents indicated that "hard economic times" give them a more positive impression of rent-to-own. In that regard, the recent economic struggles also have helped with the industry’s image in the media. With the recent economic collapse, rising unemployment and uncertain times, the no-debt, no-obligation rent-to-own transaction has received more positive press than at any other time in its 30-plus-year history.

 

After 16 years of addressing the marketing potential of should-be rent-to-own customers, the results from this latest research are a mixed bag. Many participants thought that rent-to-own stores offered "no-name, used" merchandise that is over-priced, products the customer is stuck with once an agreement is signed. Other participants said that rent-to-own makes good sense, especially if you use the transaction wisely.

Trenholm’s initial analysis of the differences in image perception between 1997 and 2010 is that: "There is not as strong a preconceived, rigid negative as we have heard in the past. The improvement in more positive, upscale advertising seems to have been a powerful factor in the shift in image and acceptance of rent-to-own. When respondents hear the benefits, have [a better] understanding of the fees and can weigh the pros and cons depending on their needs, they can see that there could be circumstances where rent-to-own would make sense. But [when they don't understand] those benefits, they tend to dismiss rent-to-own as a rip-off."

Since 1997, the industry’s image with potential customers has "improved" from an "F" to a "D+"–a "C" after those surveyed received some education about the transaction. Trenholm believes the most significant advancement has been an improved environment in which to recruit the potential customer. Current economic hard times have helped. Also, individuals who are now in their 20s and 30s did not grow up with RTO’s nascent-era reputation for being a rip-off.

"I think it’s a positive that the more recent the user, the more positive the image of rent-to-own," Trenholm says. "This could be due to their financial situation or that they are more informed and [better] understand the advantages that rent-to-own offers. It may be that, as the population matures, the younger person does not remember the really negative days of rent-to-own and, with that, the negative energy about the industry may be dissipating with each year. For example, the 30-year-olds in the group were teenagers in 1997 and have grown up with rent-to-own stores presenting themselves more appropriately in their advertising and service."

The recent focus group in St. Louis should remind rent-to-own professionals and marketers about the power of listening to their current customers and potential customers. Several who attended the St. Louis sessions started making changes to their advertising and marketing campaigns as soon as they returned to their stores. Discussions are currently underway to conduct focus groups across the U.S. so that APRO members in all regions of the country can view first-hand the image and marketing changes that are necessary in order to attract new customers to rent-to-own.

These studies show a slow improvement of rent-to-own’s marketing image. Results also show that rent-to-own’s improved image stems from APRO members applying recommendations generated from the Potential Rent-to-Own Customer Survey results in 1997 and 2004. We’ve come a long way in the minds of some consumers–but, the industry still has a mountain to climb. Thirteen years ago, the mountain was far off in the distance. Now the rent-to-own industry stands at the foot of the mountain and should be blazing the trail to reach the 30-plus million non-customers who could be renting to own.

 

The Empire State Strikes Again

 

New York state rental dealers have been facing political adversity during the whole of the 21st century and for several years during the 20th. This summer, Governor David Paterson signed into law a total remake of the 1986 Rent to Own Program Law. Without question, it is the most restrictive and onerous rental-purchase statute in the country.

The original 1986 legislative debate in Albany was acrimonious and the result was a rent-to-own price cap at two times the cash price, the first state in the country to limit RTO pricing. The statute did not set cash prices, leaving those to the discretion of rental dealers, and that situation has ever since bedeviled some of the state’s advocacy groups. There were sporadic efforts on and off during the 1990s to move the transaction toward being regulated as a credit and to impose onerous price controls, while continuing to require merchants to offer the ability to terminate without further obligation. The New York State Assembly recently passed rent-to-own legislation that’s the most restrictive in the country. Here is a summary of the new regulations and the circumstances that led to them.

 

Anti-rent-to-own legislative efforts in New York heated up considerably, beginning in 2000. New York rental dealers awoke in early 2000 to find that a negative rent-to-own bill with a dozen original co-sponsors was moving rapidly through the New York State Assembly. The issue–then, as always–and purpose of the bill was to eliminate rent-to-own by severely limiting prices. One problem for the industry in 2000 was that, by then, dealers had already submitted to limits on cash prices in three states: California, Hawaii and West Virginia.

In late 2006, negative press created a controversy that drug into the 2007–08 legislative session, which culminated in a committee hearing in June 2008. An industry grassroots effort narrowly averted a disastrous bill passing out of the committee.

During the 2009–10 legislature, there were seven separate anti-RTO bills pending in the New York statehouse and New York dealers understood only too well that ultimately the pressure on the legislature from the press and advocacy groups would force that body to act.

With all of the commotion surrounding rent-to-own, New York state legislators looked to other states to see how rent-to-own was being dealt with elsewhere. Legislative staffers in Albany contacted rental dealers in California and West Virginia to see what effect the price caps in rental-purchase statutes in those two states were having on the business. There was also the example of New Jersey right next door, where that state’s supreme court recently had declared rent-to-own transactions to be credit sales for all purposes and subject to New Jersey’s 30 percent criminal usury statute.

What finally came out of the statehouse in Albany this past summer was the most restrictive rent-to-own statute yet enacted. The New York Legislature imposed California-style restrictions, limiting the cash price to specific multiples of the dealer’s cost, capping total cost to a multiple of the maximum statutory cash price and tying the early-purchase option to the cash price. New price controls, however, aren’t the only changes that the amendments will force on dealers. The law also establishes a host of rigid new rules for rental dealers’ business practices.

Here are some of the details of the new rent-to-own legislation in New York, which becomes effective in January 2011:

 

ECONOMICS. Several changes in the law affect the economics of RTO. Most notably, cash prices in RTO stores are limited by product category to a function of the dealer’s wholesale cost, net of any vested and calculable discounts, rebates, or incentives:

• Appliances: 1.75 times the wholesale cost
• Electronics costing less than $150: 1.75 times the wholesale cost
• Electronics costing more than $150: 2.0 times the wholesale cost
• Furniture: 2.15 times wholesale cost
• Auto, jewelry and music: 2.0 times the wholesale cost
• Other: 1.75 times the wholesale cost

Then, the total rent-to-own price, regardless of how long the product may be rented, is capped at 2.25 times the statutory cash price.

Dealers must maintain records and be able to prove that their pricing is in accordance with the statute. If a dealer violates the pricing rules, he or she must refund all money paid by the consumer on the account and the consumer gets to keep the product. The dealer must keep records for two years after an agreement has terminated.

 

For used product there is a pricing matrix that requires dealers to assess all returned products and put them into one of four categories, depending upon the quality of the used product after it has been refurbished in the store: excellent, good, fair or poor. There are statutory definitions for each of these categories. Then, the dealer must shorten the term on the next rental agreement by subtracting anywhere from one to 20 weeks from the rental term depending upon the quality of the product, as determined by the dealer and the original term on the rental agreement when the product first went out. Alternatively, the dealer can lower the cash price, the total rent-to-own price and the periodic rental rate by a pro rata amount if the dealer does not wish to shorten the rental term. The dealer must maintain records of an item’s condition and pricing as determined by the matrix from each time the item is rented for as long as the dealer owns the item.

There is a statutory income interruption provision that requires a dealer to allow a customer to cut rental payments by as much as one half if the customer has paid at least one half of the total rent-to-own price and suffers an income reduction of 25 percent or more. The customer does not obtain ownership by paying a lower price than originally agreed upon, but does get a longer time to pay. The customer need only present "some evidence" of income reduction to get the extended payment schedule. Dealers must disclose the consumer’s income-interruption rights in the rental agreement.

The new statute gives the rental dealer the duty to keep the rental product in good repair during the rental term. The dealer must repair or replace the product within two business days after being notified of the problem or else provide the customer with a loaner unit of comparable quality and condition. The customer may not be charged rent for any period of time greater than one day during which the product is not in good working order and before the customer gets a loaner. If the dealer cannot repair the product within 30 days, he/she must provide the customer with a permanent replacement product that is the same brand, quality, age, is in the same condition and offers the same warranty coverage. If the dealer cannot get such a product, he/she must furnish the customer with a substitute product that satisfies the customer–such satisfaction not to be unreasonably withheld.

The new statute extends the mandatory reinstatement period from 30 days to one year.

 

DISCLOSURES AND NOTICES. The New York statute requires that certain financial disclosures be placed in a box immediately above the space for the customer’s signature on the rental agreement. This provision was picked up from the California rental purchase statute, which in turn borrowed the notion of uniform boxed disclosures from the Truth in Lending Act.

The statute adds a new "Cost of Rental" disclosure, the difference between the cash price and the total rent-to-own price, which must appear in the box.

There are several statutory notices that accompany the financial disclosures. Dealers must attach a chart to the rental agreement showing the early-purchase option amount after each payment. The early-purchase option calculation is dictated by the statute and requires dealers to multiply the cash price by a fraction, the numerator of which is the total number of payments remaining on the account and the denominator being the total number of payments necessary for ownership. So, after six months on an 18-month agreement, the early-purchase option would be calculated as the cash price times two-thirds.

The statute prohibits mandatory arbitration of disputes with rent-to-own consumers, except as permitted by federal law.

The statute requires that dealers, upon request, give the customer a completed copy of a rental agreement that is valid for the next 48 hours. Presumably, dealers must hold the product listed in the agreement during this period, at least unless they clearly disclose to the consumer that they will not do so. Finally, the dealer must give a customer a written receipt for every payment. Every receipt must compare the remaining rent-to-own price with the current early-purchase option price.

 

Looking forward, New York rental dealers have a new rent-to-own statute with which they must soon comply. But New York dealers also can look back with pride at their organizational, political and public relations skills honed ever more sharply over the past few years. They withstood withering scrutiny and public criticism. They made their case forcefully and forthrightly in Albany, Buffalo, New York City and everywhere else they were attacked. Most importantly, they saw enacted a law that salvaged their hard-fought right to continue doing the business that they all love.

 

Energy From the Outskirts

by Richard May

 

Montana has only 20 rent-to-own businesses, Maine 51 and Colorado 126–not exactly what you’d call RTO hot spots, considering that Texas boasts 973 stores and Ohio has 388. Still, there’s rental business to be done from coast to coast and dedicated entrepreneurs in even the most remote regions to do it. Let’s meet a few dealers from rent-to-own’s so-called "outskirts."

Beyond the day-to-day services these businessmen provide, Colorado’s Mike Gordon, Montana’s Tony Longin and Maine’s Jim Ratner also invest their time and energy on behalf of the industry as a whole, working with their legislators to assure a better future for rent-to-own. Without these dedicated APRO members and others like them–rental dealers who serve the industry and, unfortunately, garner little attention for their efforts–rent-to-own might be on shakier grounds.

These men have worked hard to attain industry support from members of Congress, such as Olympia Snowe, Michael Bennet, Jon Tester, Max Baucus and Denny Rehberg. They’ve met with lawmakers in Denver, Helena and Augusta–their states’ capitals–as well. They’re just the type of energy this business needs in order to thrive and endure.

 

Strong support for the rent-to-own industry comes from APRO members across the nation, including political movers-and-shakers in Colorado, Montana and Maine. Introducing a former football player, a Wild West outdoorsman and a Deadhead.

 

Mike Gordon

PREMIER RENTAL-PURCHASE, LAKEWOOD, COLORADO

 

Rent-to-own and football have been a part of Premier Rental-Purchase owner Mike Gordon’s entire life. As a high school and college football defensive tackle, he grew up eating nails for breakfast, razors for lunch, running backs for dinner and quarterbacks for dessert. He is a formidable fellow, towering close to 10 feet–or at least it seems that way. Friends and associates call him "Big Mike" and when you meet him, you thank the heavens that he is a gentle and giving soul. He’s the type of guy who, when you offer to buy him a beer, hands you the beer he’s just bought for you.

Big Mike, along with other Colorado rent-to-own dealers, recently visited with their U.S. senator, Michael Bennet. Bennet is a Democrat who serves on the Senate Banking Committee, which had direct jurisdiction over the creation of the Consumer Financial Protection Bureau. So when Gordon and his colleagues went to call on their senator on behalf of the rent-to-own industry, they were in conversation with a legislator who had their businesses’ future in his hands. Bennet came out of that meeting impressed not by Gordon’s physical stature, but by his clear, heart-felt and personal explanation of rent-to-own’s benefits. As APRO member Chuck Green tells it, you could see the change in Bennet’s face immediately after Big Mike’s story.

Rent-to-own came into Gordon’s life one Christmas when he was a boy. He received a bicycle from his grandmother, the woman who raised him in a comfortable, stable home. Gordon’s grandmother was able to provide that stable home–and the much-desired bicycle–thanks, in part, to the many household goods she acquired from a local rent-to-own business. Now the circle is complete as Gordon helps families acquire the same at his Premier store in Lakewood, Colorado, a Denver suburb located at the bottom of the Rocky Mountains. He’s been on both sides of the RTO counter and his personal take on the transaction–not unlike thousands of other rent-to-own customers–helped Senator Bennet better understand the industry.

"It was a very relaxed atmosphere and Bennet had a chance to listen to us as individuals," Gordon remembers. "We hoped that he would realize that the rent-to-own industry is not taking advantage of people, but is, instead, providing a service for people from all walks of life."

Earlier this year, Bennet faced serious competition in his party’s primary, where a more liberal challenger for his Senate seat accused him of being too soft on consumer regulations. He also was being pressured by consumer groups–as were all Senate Democrats running for re-election–to enact stricter consumer regulations. To win the primary, Bennet needed the support of his Democratic base and felt tremendous pressure to push for an aggressive, liberal version of the Consumer Financial Protection Act. Rent-to-own is one of the industries that could have been adversely affected by the CFPA had certain parts of the proposed legislation been enacted. Bennet had a key role in shaping the bill and, not being all that aware of the benefits of rent-to-own, the RTO industry could easily have become a political target in Bennet’s re-election bid.

 

When members of the Colorado Rental Dealers Association met with Bennet, the senator understood the RTO industry’s position. CRDA President Chuck Green and his colleagues quarterbacked the offense and "Big Mike" Gordon dominated the defense. The saying goes that it’s the defense that wins Super Bowls. After visiting with Gordon and his fellow Colorado rental dealers, Bennet had an entirely different view of rent-to-own. He dismissed political pressure from consumer groups and rent-to-own avoided a sack. Just another strategy–not unlike those played out from Maine to Montana–where a small-business owner and his state association gained some serious yardage for rent-to-own and achieved an underdog victory in the Super Bowl of consumer regulatory reform.

While RTO dealers can breathe a sigh of relief for this season, there’s the challenge of next season, when the Consumer Financial Protection Bureau begins writing actual regulations. In the meantime, Gordon is happy back at his Lakewood store with his six employees. He’s keeping his story in the playbook for the defensive line on behalf of the rent-to-own industry.

 

Tony Longin

B&B LOAN AND RENTAL, GREAT FALLS, MONTANA

 

Montana represents one of the last unspoiled bastions of America’s Wild West. There, in Great Falls, rent-to-own cowboy Tony Longin decrees the law of the land–that local residents should have comfortable homes, with furniture, electronics and appliances to fill them. Longin, his wife, Collette, and their four children–Olivia, Amelia, Gabriel and Raphael–nurture a long-standing American tradition: the family-owned small business, B&B Loan and Rental, by name.

Perhaps Longin is not so much an RTO cowboy as he is the rent-to-own sheriff in that part of the country. After all, he was a political science major at the University of Montana and has a background as a detective for Montana law enforcement. Since becoming a rental dealer, Longin has honed his Wild West sheriff skills, effectively assuring that Montana’s RTO laws and order are in sync for helping both customers and the businesses who serve them succeed.

Longin and his Montana rent-to-own colleagues David Lyons and Rohnn Lampi have turned Senator Jon Tester, Senator Max Baucus and Representative Denny Reh – berg into rent-to-own political supporters. Recently, Senate Banking Committee Democrat Tester signed on as co-sponsor of the RTO-industry-supported bill, S 738. Baucus has been a co-sponsor of the bill for the past three sessions. He hasn’t signed on to the current version yet, but Longin and company are pursuing his support now that the health care bill isn’t stealing the spotlight. Rehberg has pledged his co-sponsorship and already has shown his support of the industry, voting for the rent-to-own bill on the House floor in 2002.

Montana’s political posse doggedly pursues favorable rent-to-own federal legislation, but are even more diligent on the state level. Several years ago, they helped move a rental tax relief bill through the state legislature, saving Montana rent-to-own business owners thousands of dollars. Longin also was the industry’s torch bearer in passage of his state’s rental-purchase statute in 2000.

"I need to do my part in delivering the industry’s message to those who need to hear it: the politicians," Longin says. "So I am very happy to contact lawmakers–whether in D.C. or Helena–to get the true rent-to-own story out."

 

In 1998, Longin started working in rent-to-own at his wife’s family’s business. The couple bought B&B Loan and Rental in 2000 and have enjoyed running a successful business ever since. "Having our own small business is great!" Longin enthuses. "It’s a lot of hard work, long hours and responsibility, but our staff is great. Knowing that we are responsible for our own success is the best thing about small business for me. Hard work does pay off." Longin considers B&B’s staff his "family of five." They help him run a 15,000-square-foot store that was built recently; four years ago, the previous location in downtown Great Falls was consumed by fire.

Longin has endured not just fire, but ice as well. He helps Great Falls residents through those famously tough Montana winters with the help of fireplaces–one of the items he rents as part of a diverse product line that also includes snow blowers and ice augers. When not holding down the fort at B&B, Longin is a coach for his children’s basketball and soccer teams, a school board member and a local-business advocate. As a former college football player and track star, Longin enjoys his rugged Montana lifestyle to the hilt–white-water rafting, skiing and hiking. "I have a great family, great friends, live in a great place and enjoy a great business," he says. "I am truly blessed to live the life I do."

Although Montana might be a tad removed, geographically speaking, from rent-to-own’s more hearty regions (the "Big Sky Country" state has 20 RTO stores compared to the "Lone Star" state’s 973), Longin doesn’t feel isolated. He–along with Lyons and Lampi–are doing their part to protect rent-to-own. "The industry’s been very good to me, so I’m glad to help out," Longin says. Keeping in contact with lawmakers on Capitol Hill and in Helena, making sure legislators learn about rent-to-own from the small-business point of view, helps keep order in the Wild West and beyond.

 

Jim Ratner

PREMIER RENTAL-PURCHASE, AUBURN, MAINE

 

Too bleep-ing long" is how Jim Ratner sums up the 28 years he’s been in the rent-to-own business. He says it in jest, of course. This Maine-based Premier Rental-Purchase owner loves his work–and APRO members should be thankful that he’s stayed in business as "bleep-ing" long as he has, because recently he played a significant role in thwarting potential disaster for the rent-to-own industry.

Ratner has spent plenty of time pursuing the rights of rent-to-own in the legislature, both at the state level and down in D.C. and his efforts have paid off. One key legislator in the fight to protect RTO businesses this past year is Ratner’s Republican U.S. senator in Maine, Olympia Snowe. Recently, she helped the rent-to-own industry during the seemingly endless finessing of the Consumer Financial Protection Act–and we have Jim Ratner to thank for getting her involved. He deserves the gratitude of the industry for helping stave off potentially threatening small-business regulations buried deep within that consumer protection legislation.

During the most recent session of Congress, Ratner secured Senator Snowe as a co-sponsor for the RTO-industry supported bill, S 738. Snowe’s co-sponsorship of that bill opened the door for a real challenge to potentially damaging parts of the Consumer Financial Protection Act, a bill that was on the top of a pile of priorities in Washington.

Once he helped secure Snowe’s co-sponsorship for S 738, Ratner and his colleague in Louisiana, Jeff White, played political tag team with Senators Snowe and Mary Landrieu (D-Louisiana) in an effort to amend the 1,000-page Senate version of the Consumer Financial Protection Act, which was moving at lightning speed through the U.S. Capitol. Ratner and White were players in one of the most important amendments crafted for that bill.

Landrieu, as chair of the Senate’s Small Business Committee, and Snowe, the ranking Republican on that committee, were responsible for the small-business exclusion definition within the consumer protection bill. In order to get the 60 votes required to pass the bill, the Democrats desperately needed Snowe–a moderate Republican known for crossing the aisle in an era when most in either political party won’t consider doing so. Therefore, Democrats had to listen to Snowe–and Snowe had to listen to her small-business constituents, Maine entrepreneur Jim Ratner being one of them.

Ratner played the frantic, ever-changing Capitol Hill chess game, working with APRO and Snowe staffer Matthew Berger to persuade the senator to make sure that the consumer bill was safe for small business. All eyes in Congress and across the country were focused on Snowe and what she would do with the bill’s amendment. "I received almost daily updates from APRO regarding the progress of this bill," Ratner says. "I even had to duck out of my wife’s knee surgery to talk to APRO and Senator Snowe’s office regarding the amendment in question."

Snowe and her staff had every business lobbyist in the country clamoring for their time. Staffer Berger took calls only from Maine small-business owners, including Ratner. Ultimately, the chess game paid off and the key amendment in the bill was worded to protect small business.

The exemption for small business in the Consumer Financial Protection Act was a win for the rent-to-own industry. "This exemption is a huge victory," Ratner stresses. "We owe Senator Snowe much thanks for her advocacy of small business regarding [her input into] this far-reaching bill."

In addition to persuading Snowe to support RTO industry efforts, Ratner also has gone to battle on the Maine legislative front. Last year, he and his colleagues helped defeat a Maine legislative effort that would have mandated a complicated rent-to-own pricing formula. "It would have required calculus to figure it out," Ratner says. Instead of learning calculus, Ratner summoned his political savvy and was victorious in helping defeat the proposal. "I give the credit to my partner, John Reichenbach, and ColorTyme franchisee Dave Colizzi for their persuasive testimony at the hearing."

 

Ratner and Reichenbach run two successful Premier stores in Maine, one in Auburn, the other in Westbrook. Ratner began his rent-to-own career in 1983 as a route manager for Rent-A-Center, became an owner in 1986 as a Rent America franchisee, then weaved his way through building rent-to-own companies, eventually selling them to concentrate on his and Reichenbach’s two Premier locations. Aside from running his business and addressing the legislative challenges to that business, Ratner spends time with his family: his wife of 26 years, Cindy, son Eli, daughter Delaney and their five agility-competition dogs. He also attends as many live concerts as he can. He’s attended more than 100 Grateful Dead shows and has all of their recordings (according to one online source, that’s more than 90 records and counting).

This Deadhead cites his accomplishments as being the result of patience, persistence and commitment to his business and the industry. "I feel very strongly about being proactive regarding any legislative initiative that affects the rent-to-own industry, both at the state and federal levels," Ratner says. "I am dismayed by the apathy of [some] rental dealers." To any rent-to-own armchair quarterbacks out there–complaining a lot about government interference, but doing nothing to make things better–he warns: "If something negative ever comes down the pike, there’s going to be a lot of finger pointing, but they can just point the finger back at themselves. How much does it cost to go to the APRO Legislative Conference? With airfare, hotel, meals and dry cleaning the business suit, it’s less than $1,000! How much would it cost a rental dealer if a Schumer-type bill were to be passed into law nationwide? It would cost the dealer his livelihood and future."

To promote participation in next year’s Dave Egan Legislative Conference, APRO might just send Jim Ratner out on a road tour as proof positive that one small-business owner’s political savvy–in a state not often cited as one of RTO’s legislative hot seats–can make a big difference to a burgeoning industry.

 

The Lighter Side of Rent-to-Own

by Buddy Holladay

 

There was a time when rent-to-own humor had its own running department in APRO’s publications. Some believe that section still exists today–it’s just called something else (a few months ago, for example, I read a piece about bank financing for rent-to-own start-ups). If laughter is good for us, as many maintain, surely a good sense of humor can lift spirits and promote teamwork in any rent-to-own operation. Is there a better punchline than a 3.99 percent close after losing 23 customers? And what can you do except laugh it off when you realize that, while you’re shelling out thousands of dollars on a direct-mail campaign, shiny buttons and television ads, your local police force has more business than it can handle without spending a dime on advertising?

The truth is, humor plays a much larger role in the rent-to-own industry than most folks realize. Do a little research and you may be surprised to learn that two route managers working collections one night in Atlanta came up with the original "knock-knock" joke. There are even those who say that improvisational comedy sprang from watching a manager trainee explain how the early-pay-out option differs from 90-days-same-as-cash. So, for the next few minutes, lighten up and enjoy 10 of the funniest things I have heard and seen in the rent-to-own business–or, at least, 10 funny things that we can publish in a family-friendly magazine.

 

Well, at least it brought in SOME traffic

Before regulation defined and deified customer rights and benefits, a young store manager in San Antonio had a great idea for getting back blue-chip customers. He sifted through the inactive files and sent a carefully crafted bulletin to the hottest prospects. Realizing that time was of the essence and having learned that an effective ad must include an urgent call to action, his new mailer proclaimed in bold red type: "YOU HAVE 10 DAYS TO RERENT." It took only a few days for a frail and bespectacled senior citizen to trudge through the front door, mailer in hand. The old fellow cautiously approached the young man at the sales counter: "Excuse me sir, but I got this in my mail. It says I have 10 days to repent. Is that true?"

 

Maybe we should rethink our product training

The store was in the middle of a prolonged sales slump. The only order forms flying around were in the shape of paper airplanes and the only end in sight belonged to the truck backing up to unload more pick-ups. So this Ohio dealer called on his vendors for help in fighting a competitor who had just opened down the street and was flooding the airwaves with slick commercials. Dealer Dan (not his real name) figured that if his people could just develop a bit more product knowledge they would be better armed to overcome the other guy’s lower prices, newer goods and higher quality. Dan was wrong. After three days of group and one-on-one product training, he overheard this from an assistant manager speaking to a phone shopper: "Well, we just got some new French Prudential-style furniture; it’s made out of killed and dried hard wood. Also, we have some really cool stereos with psychiatric lights that match the beat of the music."

 

Another reason why advertising doesn’t pay

This rent-to-own dealer in a major Southwest city kept hearing about "use the user" and "internal marketing," so he decided to look into stocking some promotional hand-outs. After all, even the post office was giving away free ballpoints (since the freeze on spending, employees had taken to bringing their own pens). After three creative meetings down at the local tavern and a couple of lunches with some of the area’s top matchbook and pen executives, each store was shipped a case of ballpoint pens bearing the company logo and a nifty slogan. When the owner visited one of the stores a few weeks later, he asked the manager if he’d received his promotional pens, since none were in sight. The manager gave a conspiratorial wink and explained that the pens were stored under lock and key in the back room: "Otherwise, customers keep taking them! I must have gone through a couple dozen of them the first week. But don’t worry, we stopped that."

 

Never underestimate the value of research

A Denver ad executive working for what then was one of the country’s largest rental chains–which meant more than 10 stores and a home office not in a trailer–came up with a marketing idea that wowed everybody at the monthly manager’s meeting. It was cost-efficient, innovative and a no-brainer when it came to in-store execution. With a big flourish, the ad man thereupon whipped out a bright, day-glow bumper sticker bearing the company’s tag line and telephone number. Thousands were ready to ship. And they did. However, it was soon discovered that the plan contained a flaw: almost no customer owned a car; the city-owned bus line went everywhere, 24 hours a day, seven days a week. A frantic attempt to salvage things was thwarted by suddenly efficient city workers who managed to peel the bumper stickers off transit buses, signs and benches almost as fast as store employees could run around slapping them on. When the supply on hand dwindled to less than a year’s worth, the company abandoned the plan and went back to radio. The ad exec is thought to be still raising emus in Idaho.

 

Speaking of cars…

Company officials tried everything to generate sales in a weak market until finally someone hit on the idea of the biggest give-away ever. Some lucky customer would win a brand-new gold Mustang sports car–at that time, the stuff of dreams for every guy over the age of 12. The promotion was masterful in planning. The company figured it couldn’t lose. Spread over all the stores, the car’s cost amounted to little more than a blip on the budget. And what customer could possibly pass up a free shot at winning a brand-new Ford Mustang? The lucky winner came from New Orleans. On the appointed day, the gold Mustang was parked in front of the store, the newspaper was there, the radio station was there, even the TV station was there; top company officials including the owner and all district managers were there. Even a few politicos showed up.

With the presentation set for 2 p.m. that Saturday, the group was a little anxious when 20 minutes passed with no sign of the winning customer. Then an hour. Then an hour and a half. Now it was near-panic. Finally, after the media people were gone, after the employees had returned to work and the district managers had driven back to their own territories and the owner was mulling things over in the front seat of the Mustang he apparently still owned, the lucky winner strolled into the store with this explanation: "Hey! When the owner visited one of the stores a few weeks later, he asked the manager if he’d received his promotional pens, since none were in sight. The manager gave a conspiratorial wink and explained that the pens were stored under lock and key in the back room: "Otherwise, customers keep taking them! I must have gone through a couple dozen of them the first week. But don’t worry, we stopped that."

 

Not all the characters were in the business

Oscar hung around the store for years without anyone knowing much about him. He was a man of indeterminate age owing to the ancient overalls that had never seen a washing machine and a beard that seemed to start in his ears and end at his waist, which was about a meter and half in front of the rest of him. Oscar was never a problem, just an ol’ boy who’d trade odd jobs for wine money and a place out of the rain. He would break down cartons or sweep the sidewalk and the manager would let him eat in a cool spot inside, in the back room. Then Oscar would pull from the same worn paper bag a sandwich consisting of a half inch of lard between two slices of white bread, a pickle and a jar of something that looked like a failed lab test. When asked why he ate lard sandwiches, Oscar replied that he’d run out of peanut butter a few years ago and just never went back.

 

Violence in the workplace is never funny–unless a banana is involved

In southern California–where else?–in the late 1980s, Banana Man and Bush Man provided comic relief for workers in the office of a local rental company. Banana Man and Bush Man were the most mysterious and interesting residents of Los Angeles who were never on anyone’s tour map. Every afternoon around 3, the two could be seen fighting like wolverines in the green space outside the offices. For no apparent reason, Bush Man would leap from his paper-lined seat under the shrubbery, strip off a large switch from the hibiscus and commence to flailing on Banana Man, who would pull out a big thick banana and mount a spirited, if messy, counterattack. They would do battle until the hibiscus branch broke or the banana turned to mush. Then the yard mates would lay down their weapons and meander down to watch the ocean. One day they just weren’t there.

 

We’ve come a long way, baby

The company was looking to open stores in one of the region’s largest cities. Knowing little about the local real estate market, the principals made an afternoon appointment with a big wheel at the city’s top commercial real estate firm. After a few minutes of warm and engaging chit-chat about all things local–football, the economy and the economy of football–the realtor cut to the chase: "So exactly what kind of business are you boys in?" As the veep and his sidekick laid out their version of RTO 101, the realtor sat speechless behind his desk, smile frozen and eyes growing narrower with every word. When the rent-to-own guy was finished, the broker glanced out the big picture window opposite his desk, shot his French cuffs and checked his $10,000 Rolex. He leaned forward in his chair and offered this heartfelt suggestion: "You know, if you boys leave now you can probably beat the traffic."

 

Reasons why my payment is late

If airline passengers can pile up points for taking flights, surely at least one rent-to-own company will see the value in awarding its own customers points for not taking flight. Here are a few candidates for M.O.L.E.–Most Original Late Excuse–points:

• I tried to put my payment in the door but somebody moved the mail slot.
• My girlfriend said she was taking care of it, but her husband lost his ride.
• My money order came back so you guys must have changed your address without telling me and that’s against the agreement.
• The guy who delivered my TV said that if I couldn’t pay, I should let him know. So I told him then that I wouldn’t be able to.
• We came down here Sunday afternoon, but the place looked like it was closed down. It’s the third or fourth time in a row this has happened.
• I thought semi-monthly meant every two months.
• My car was stolen and I didn’t get it back until after you were closed.

Dream big. It can’t hurt.

Buck and Barry had just opened their first store after toiling for years for one of the "Big Boys." Every dime they had, all their savings and every dollar they could beg or borrow from family members had gone into the new venture. After booking their first account and slamming the cash drawer shut, Barry turned to his partner and said, "Do you realize we are now just 2,000 stores behind Rent-A-Center?"