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The Pawnshop Chronicles: Street Wisdom for the Business World by Jack E Rossin Chapter 3 Editor’s Note: In this chapter from The Pawnshop Chronicles, Jack Rossin shows how easy it is to get crucial information about your business from your customers and wonders why more companies don’t do this on a regular basis. Use Research to Understand Customers Better A knish walked into the pawnshop. The arrival of an attractive woman always excited my bosses. In a business with a downscale clientele of mostly smelly laborers, the appearance of a beautiful woman, a knish in pawnshop parlance, was always a welcomed sight. The two owners of the store battled each other to see who could wait on her first. The knish carried a velvet-covered ring box that contained a 3/4-carat diamond engagement ring. She wasn't coming to pawn it—she was there to sell. She had become engaged in the spring, and the deal fell apart in the fall. Some people look for the turning of the leaves to know when it's autumn. In the pawnshop, we had signs for each season. A young woman selling her engagement ring either meant that summer was over or Christmas just ended. It happened every year like clockwork. And, you can imagine her emotional state. She had been jilted and was now in a seedy part of town, in a strange type of store doing something she never did before and probably would never do again. She couldn't get out of there fast enough. She didn't have to tell us any of this. Nate knew from years of experience what was going through her mind. And knowing made the negotiation for the sale lopsided. She and her now-missing fiancé might have paid $1,000 in May for that ring at an uptown jewelry store, but she would be lucky to walk out with $75 by the time Nate was finished. She was a wounded animal in his jungle. The people who came in under these circumstances were not really our customers; they were one-time visitors who wanted to sell, not pawn. Yet, without knowing them, Nate could often piece together the situation that brought them to us. Having a feel for the rhythm of the business gave Nate tremendous leverage in negotiations. Every year, we had a number of young women sell us their engagement rings. Every year, family members in mourning came in to sell the clothing and other valuables of a recently deceased spouse or parent. The beat of life goes on. When he was buying merchandise, Nate looked for leverage. Once, a man and his son carried a television into the pawnshop. It was a heavy, awkward floor model housed in a fake wooden console popular in the1960s. We watched the two men wrestle the set out of the back seat of the car and schlep it through the store to our counter. Carrying it was not easy. Both men were sweating and happy to put it down. They wanted to sell it to us for $50. It was worth $30. We bought it for $15. Why? Nate had leverage. He knew they didn't want to drag the TV back out of the store and fit it into their car again. It was easier for them to take less money and not chance a hernia. It was just another day in the pawnshop. Having leverage is an important part of marketing. Can you imagine how much more powerful your marketing efforts would be if you knew something crucial about your customers that would influence their decision making? You can create powerful leverage by investing in research to understand your customers better. Successful people in all kinds of business use some type of research to evaluate their efforts. Playwrights research their work in front of a live audience. The writers sit in the rear of the theater and take notes on where and when the audience laughs, and during which part of the play people leave to go to the bathroom. Your customers are your audience. You should know everything about them and what moves them to applaud. But don't fall into the trap of believing that you understand your customers’ mindset intuitively. If you haven't done some type of research on this subject with real, breathing customers, then you're just guessing. There are many types of research, from fancy studies that diagnose every facet of your business, to the technique I find most valuable: chatting with customers. Talk to your customers one on one and you'll get an insight into what they want, and why they do business with you. This is information you can’t get anywhere else. More importantly, talk to people who no longer do business with you. Sometimes, customers are reluctant to tell you the ugly truth, but ex-customers have nothing to hide. These people can give you the kind of insight that is hard to get elsewhere. A lost customer is a valuable resource from which to learn the inside scoop about your operation, staff, and marketing activities. You'll discover what you did wrong, and which of your competitors have a better answer. This is one of those stories with an obvious point: The more you know about what made your ex-customers ex, the more firmly you'll cement your relationship and profit with current customers. What isn't obvious is that most companies don't do it and miss a valuable learning opportunity. Knowledge is beautiful, man. Jack E Rossin speaks frequently on marketing matters. For more on him and his book, please visit www.jackerossin.com. Chapter Four
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