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The Pawnshop Chronicles: Street Wisdom for the Business World by Jack E Rossin Editor’s Note Starting this month, The Pocket is happy to offer installments of The Pawnshop Chronicles: Street Wisdom for the Business World to its readers. This book gives an insider’s view of how pawnshops work and a marketing consultant’s analysis of what it all means in our contemporary business world. The insider and the consultant are both the same person, Jack E Rossin, who started working at the pawnshop after school and eventually spent seven years at Nate’s Loan Office in Chester, PA. The Pawnshop Chronicles are real stories with important marketing ideas that are as relevant in the high technology world of the 21st Century as they were in the 1960’s. The stories are about building customer loyalty, differentiation, isolating your key selling message, research, sales, return on investment and much more told in a very casual and quirky style. We hope you will enjoy it and look forward to more chapters in the months ahead. Chapter 1 You Determine Your Customer’s Loyalty It was a Friday night in January. It was the only night of the week we stayed open late. Usually, the whole town came out to shop on Friday nights. However, this Friday was bitter cold. The wind was howling and the streets were empty. Nate and I were the only ones working that night in the pawnshop, and judging from the traffic in the store, we were overstaffed by two. The front door opened and a man walked in. He wore a heavy, dirty pea coat and a stocking cap on his head. As he walked down the long store aisle toward us, we stood silently taking in his every step. It was more than just casual interest. He had a 16-gauge, double barrel shotgun in his hands. In the 10 seconds it took him to reach us, a million bloody scenarios went through my mind. He stood for a moment in front of us holding the weapon, and then placed the shotgun on the counter. “Can you lend me $10 on my gun?" he asked meekly. My boss quickly nodded yes—neither of us could talk. I wrote the ticket, gave him his money, and placed the shotgun in the back. It was just another day at the pawnshop. The concept of a pawnshop is very simple. We loaned money on physical collateral—guns, jewelry, men's clothing, small appliances, TVs. If a customer retrieved his property within four months, he paid back the loan with interest. After four months, the item was ours to sell at any price we could get. Every month we would comb through all of the pawned merchandise to see which items were past the four-month cut-off period. Typically, we might collect a rack of clothing, small appliances, and a fair amount of jewelry. There were always rifles and shotguns that could go on sale—firearms sold very well. Interestingly though, we rarely put those guns for sale even when they were past the four-month time limit. What Nate knew intuitively was that every situation is a different profit opportunity. Nate understood that men have a peculiar bond with their guns—their gun is a part of them. We played on that. We would hold guns in hock for 8 or 10 months, even longer. When an owner returned for his gun months after we could have legally sold it, we charged him unmercifully to get it back. He might have borrowed $10, but he paid $50 to redeem it. He knew we did him a favor by saving the gun as long as we did, and he would never balk at the price to have it back. He was happy to pay. And, the bonus came the day after hunting season ended. That same customer was back in the pawnshop hocking his gun, so that we could repeat the process next year. Marketing is what you do to create a relationship with a customer for a lifetime. Effective marketing takes a long-term view of activities and is not tempted by short-term sales goals or quarterly reports. We could have sold the rifle after four months plus one day, but we made far more money over time by creating a loyal customer. A loyal customer spends more money with you, tells others about you, and ignores an occasional misstep on your part. The customer is always at the center of strong marketing. The lessons from the pawnshop are all about how to win the heart and soul of that customer. These stories are parables about simple marketing concepts. There was nothing complicated in how we did business, and it applies to every category of business. Retailers and manufacturers, high technology and service providers all have similar marketing challenges that start by building a positive relationship with their customers. It shouldn’t require a shotgun to do that. Building loyal customers is a long term, integrated process. In today’s vernacular, it’s all about drilling down deeper. Once you make a contact with a client or prospect, how do you drill down further to find out what that customer needs and how you can provide it. A simple contact with a prospect is just the first step in a long dance to build customers for life. Jack E Rossin speaks frequently on marketing matters. For more on him and his book, please visit www.jackerossin.com. Chapter Two
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