RTO World 2024 brought together great deals, great fun, & great minds, as different generations of RTO pros shared their acumen & know-how
RTO World 2024 might not have offered the best traveling weather in the seven- year history of the rent-to-own industry’s premier event (thanks, Hurricane Debby), but it did offer plenty more to make up for Orlando, Florida’s cloudy skies, gusty rains, and flight complications: several new events, APRO awards galore (see all the winners in Raising Up Our Industry’s Stars, page 27), a tradeshow literally overflowing with fantastic products, a steaming Hot Show, a live podcast, multiple creative ways to give back, an Orlando Experience Party to remember, and So. Much. Extraordinary. Education!
Not only did learning opportunities get off to an early start with the introduction of the in-depth Protecting the Transaction Legal Summit and the debut of the Women’s Forum (read more about these in Keeping It Fresh, Florida-Style, page 32) on Monday afternoon, but the event officially launched extra-early Tuesday morning with Titanium Sponsor insights from Andrew Hajduk, CEO of Vox-Pop-Uli, and Mike Kays, Vice President of Rental Sales for Ashley Furniture Industries. Then, following the General Welcome Session, four different education breakout sessions happened through the rest of the day, offering 15 different presentations by individuals and panels ready to share their treasure troves of experience, knowledge, and perspective with their RTO colleagues.
Unsurprisingly, some of RTO World’s most popular education sessions this year were led by APRO members with extremely familiar faces – because they’re industry veterans and rent-to-own legends in their own time. But not all the superior sagacity came from the wizened gurus of RTO; several new faces also made their presenter premiers, with fresh viewpoints to offer and glowing reviews of their own.
Mike Tissot – Owner of Ohio-based Countryside Rentals Inc. dba Rent- 2-Own – is a well-known and perennial favorite presenter among his peers. Tissot’s direct messaging, invaluable information-sharing, openness, humor, and ample use of acronyms has earned him the RTO motto “When it’s Tissot, don’t miss it!”
And Tissot’s “Super Session” at RTO World 2024 did not disappoint. RTO and All the KPIs (Key Performance Indicators) was a number-lover’s delight, with Tissot outlining the top ten numbers that drive extremely profitable and successful rent-to-own stores.
“There are a million numbers for us to consider in the RTO business,” Tissot began. “Numbers to track and obsess about and think the world revolves around them – customer count, store size, revenues, profit, AOR, BOR – it’s the alphabet soup of rent-to-own. But my favorite is gross profit, because it’s a number that never lies. A lot of numbers in RTO can lie, because we’re trying to make things look better than they really are. But stores with high gross profit make a lot of money and generate a lot of cash, period. For our company, a top store is 71% or more gross profit with 24 months straight-line depreciation; gross profit under 67% is trouble.”
Next, Tissot listed expenses as a crucial KPI – specifically, what percentage of expenses represent a location’s total revenue. He defined expenses as everything other than inventory costs, beginning with employees – salaries, benefits, bonuses, payroll tax, unemployment tax, and workers’ compensation.
Tissot said Rent-2-Own (R2O) aims for expenses at 48% of total revenue, with employee costs comprising 24%, or half of total expenses, with the other half made up of occupancy costs and operating expenses like credit-card fees and trash bills. Expenses higher than 54% of total revenue are considered too high for Tissot’s stores.
Growth is the third KPI Tissot mentioned, noting the important role the calendar plays in this for rent-to-own businesses.
“You gotta grow – your accounts, your accounts receivable, your customer base – and there are five months each year when growth is easier,” attested Tissot. “On the RTO calendar, you’re going to be flat or lose in January and February; March and April, the money is flowing, payouts have happened during early March and tax refunds come in. If we’re up at the end of April, then it’s going to be a great year. The ‘J’ months are tough, but the last third of the year – the ‘ber’ months – are bigtime growth months. Our company grows 10% every Q4; always has, always will. And if we don’t, then there’s a bigtime problem.”
Tissot continued his KPI countdown with percent collected, which R2O evaluates using a rolling three-month average, to accommodate for good months and not-so-good ones.
“We don’t use percent collected reports from a POS system; we calculate percent collected manually,” Tissot explained. “I look at how much potential did I have at the beginning of the month and how much rental revenue did I get? Just black and white. If I get new rentals, does it add to that? Yes. And if I pick stuff up, does it detract from that? Yes. But our company expectation is 94% of potential collected, with 88% being too low.”
Tissot then moved on to free time, saying stores that give away too much free time have poor gross margins and don’t make much money. He urged his colleagues to use free time with thoughtfulness and intention.
“When we use free time just to make our numbers feel good, it can really impact a store negatively,” affirmed Tissot. “We work to keep free time under 6%, and we make sure we use it to both acquire and retain customers. Don’t use free time frivolously.”
Potential per customer is another important KPI, according to Tissot, with R2O working to keep potential per customer above $200, and its best store averaging $248 per customer.
“I believe we have to rent people as much as they can afford,” Tissot said. “If they want something, then we’ll try to get it for them. Sometimes you have to downsize folks, but if you’re in the 150s or so, there’s huge opportunity to rent your customers more items. They’ll be harder to manage, but it’s definitely worthwhile.”
Tissot also touched on inventory (cost of 90-day inventory under $10k), deliveries (70 agreements – not units – delivered per week), and agreements, then concluded with a number that surprised some participants.
“Turnover,” Tissot stated. “You might not have expected to see it on this list, but gosh, it matters so much. Customers stay with us because a manager has been there for ten years. Not only are they comfortable with that person, but it also speaks well for how that person does their job. Staff turnover is bad for customers and bad for morale. So at R2O, we try to keep turnover less than 30%.”
Kelly Martin – Chief Operating Officer of Missouri-based SKC Enterprises Inc. dba Rent One – was one of the relatively newer voices presenting at RTO World 2024, though her roots in the rent-to-own industry run deep. The daughter of Rent One Owners and longtime industry leaders Larry and Sharon Carrico, Martin was literally raised on RTO, and is now coming into her own as an executive team member in the family business.
Martin was one of the unfortunate RTO World registrants thwarted by Debby’s inclemency, so Martin presented her education session, From Problem Fixer to Solution Finder, via Zoom – with a little help from coordinating colleague Dan Singh, CEO of Dial Rent To Own. And voila!, an exemplary solution found even before the actual presentation had begun.
Martin started with one word for her audience (no, it wasn’t ‘plastics’).
“Vulnerability,” Martin said. “A business associate of mine defines vulnerability as the ability to be honest even when it’s uncomfortable. I believe if you don’t promote vulnerability with yourself and talk about it openly with others, and make it known that it’s OK to be vulnerable, then you can’t solve a whole lot of problems.”
In 2022, Rent One conducted a culture survey with their multi-unit leaders (MULs), and Martin shared some of the not-so-stellar results with attendees.
“It was clear we needed a much better understanding of roles, processes, and procedures,” noted Martin, “and we needed to improve our communications companywide.”
As Martin and her team explored the challenges facing their MULs, they started to see a pattern emerge – one that began with store visits.
“As an MUL, how often do you have a plan of action when you’re going into a store?” Martin asked. “How are you tracking what happens while you’re at the store? How are you following up on your visit? And how do you determine whether what you did while you were there was successful or not? What we discovered was that most of our MULs weren’t too effective at these sorts of activities, because they get to the store and oh, the back room’s a mess and something else looks awful and this person quit and that thing happened … and guess what? We become the problem fixer – we jump in to help with the back room and I’ll do this and I’ll help with that, and we never get around to solution finding. So we spend all that time and gas and other costs to make that store visit happen, and it just turns into a cycle of chaos.”
The Rent One leadership team began by zooming out and taking a 10,000-foot view of the company as a whole, and realized they needed a vision, a mission, and core values that were clearer and easier for their employees to really ‘get.’
“We need our folks to know why they’re showing up to work at Rent One,” explained Martin. “On a daily basis, we want to empower our people to enthusiastically improve the quality of life in their communities through compassion and solutions. If we do that consistently and continually, then we’ll inspire happiness in our communities through a higher quality of life – people have colder milk, a better night’s sleep, a closer family spending time together in a comfortable space. And we do all of that with CARE – compassion, adaptability, resourcefulness, and enthusiasm.”
Next, Martin and her team turned their attention to their MULs specifically, approaching their issues using the Eisenhower Matrix – a four-quadrant tool that evaluates tasks according to their importance/unimportance and urgency/ non-urgency. The bottom line? To shift from being reactive problem fixers to proactive solution finders, the company’s MULs needed to spend much more of their time on things that may not be urgent, but are important. But how? Martin outlined Rent One’s multifaceted method.
“We introduced a new regional manager strategy guide and realigned and defined their focus,” Martin began. “We introduced a new companywide communications system called Haystack. And we created my job, COO, which combines operations, communications, and onboarding talent into one position. We realized we didn’t have a (managerial) bench, so we created a store-manager- in-training program; it’s intended for people with two years of true management experience, it’s a higher hourly rate, and it’s designed to get them up and running a store within 30 to 90 days. And we turned our managers-in-training into internal promotion opportunities, with six months to a year development time.”
And how about those pesky store visits? Martin said her MULs have honed in on developing a plan prior to a visit, tracking what happened during their visit, evaluating what worked and what didn’t, and repeating what works, as well as sharing it with others.
“When it comes to finding solutions, my advice is three-fold,” concluded Martin. “Get creative – we get into a box and forget there are other ways to think about things. Ask another MUL, Google it, tap new sources. Share information – put a process in place to regularly brainstorm solutions and share successes. Do it as a group and you’ll learn faster and win faster together. And remember what [American author and motivator] Zig Ziglar said about repetition: ‘[It] is the mother of learning, the father of action, and the architect of accomplishment.’ Find what works well, then repeat, repeat, repeat, and succeed.”
Weighing in with a combined century- plus of rent-to-own experience and expertise, the featured panel at the RTO World “Super Session” Insights from Experienced Owners brought allllll the heavy-hitter wisdom. Chris Bolin, Owner of Tennessee-based Bolin Rental Purchase, Gary Ferriman, President of Ohio-based Showplace Inc., and Lyn Leach, President of Nebraska- based Ace Furniture & TV Inc. dba Ace Rent-To-Own, gamely answered some big-ticket questions posed by moderator Mike Tissot – beginning with advice they would give to their younger, two-years-into-RTO selves.
“Don’t do stupid stuff,” Bolin began. “If you’re opening up a new business, don’t go buy a bunch of vehicles. Don’t spend a quarter-million dollars on a store. Refurb and buy inventory, buy things that will make you money. Buy things that will make your business run and grow and prosper.”
“Do more party-like promo events, more tent sales, more customer appreciations,” recommended Ferriman. “Have something happening to keep your employees excited, because if they’re excited, things will happen. Also, provide more incentives. Make one-on-one win-win agreements with employees – ‘if you do this, then I’ll do that’ – and send them off on a vacation or whatever. That sort of deal is really valuable.”
When he inquired about qualities of good leaders, Tissot was given a Gary Ferriman original acronym.
“I need people who are juiced,” Ferriman attested. “People who are enthusiastic, task-oriented, and who gotta get stuff done. I’m looking for the HOTUP leader – someone who is Hungry, takes Ownership, is Teachable, has Urgency, and is Positive.”
“Honesty is most important for me,” countered Leach. “If you’re not honest, I can’t work with you. You need to have a good work ethic and be willing to give me your best effort. And the only way people will give their best effort is if they can see you care, so I’m seeking someone who can listen to a story or hear about a person or see a situation and take a deep breath and care. You can’t fake that. And if people know you really care about them, they’ll do just about anything for you.”
Tissot asked what the most successful rent-to-own stores have in common; Leach’s answer immediately called back to great leadership.
“It’s never about the location – it’s about the people running the store,” Leach insisted. “So if it’s performing poorly, you might have the wrong person in charge. Every one of my top stores has a great leader. Strong collections is critical, too; you cannot grow a store if you’re not collecting. And third is conversion – we call it customer service rating. When the contract is over and the person has ownership, what percentage of those folks get something else that same day?”
“Bench strength,” noted Ferriman. “It’s the leader behind the General Manager, that really great right-hand person who can run the store on their own, and maybe having a third and developing a fourth person who could do it on their own. Tissot once said the secret to a million- dollar store is a really good General Manager. Well, I think the secret to a three-million-dollar store is having three high-quality people all pulling in the same direction at the same location.”
“All our best stores have a great vibe,” Bolin affirmed. “When you walk in the door, you can feel the positivity. People greet you, they’re smiling, waiting, eager to help you, and there’s a beautiful showroom full of product. It’s about the feeling the customer gets when they come in – do they feel welcome?”
Tissot quizzed the RTO veterans on a few other issues, from the best ways to increase foot traffic to the keys to longevity in the business, then finished big with, “What do you still love about rent-to-own?”
“I love that we sell validation, security, happiness, the improvement of the quality of life,” Leach initiated. “We’re selling validation for a mom who didn’t have a bed for her kids to sleep on, and here we come setting up a comfortable bed, and now her kids are hugging her around her legs and thanking her. Or we’re bringing in a sectional and maybe a TV, too, and setting up a living room where now a dad is providing a comfortable place for his family to gather and spend time together. Seeing that, and having people come back and talk about sales I made to them 40 years ago, and still shopping with us, seeing how we’ve helped provide them with happiness and a better quality of life – that’s what I still love.”
“I love helping make peoples’ lives better, and not only my customers, but also our employees,” agreed Bolin. “I enjoy seeing our employees enter as account managers and become assistant managers and grow into store managers, and now they’ve got a great income for their family and their skillset is three- or four-fold what it was when they joined us. I’m just so proud of them.”
“If you’re not moved by helping customers get stuff they need and by helping employees build their best lives, then you probably don’t belong here,” Ferriman concluded. “This business is not rocket science. It’s common sense and taking care of people. That’s what I really love about it.”
Kristen Card has been a contributing writer for RTOHQ: The Magazine for more than 20 years.
