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Selling by Not Selling: From $24 to a Turnover of $400 Million

Selling by Not Selling: From $24 to a Turnover of $400 Million

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Selling by Not Selling: From $24 to a Turnover of $400 Million

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5/5 (1 valutazione)
Lunghezza:
252 pagine
5 ore
Editore:
Pubblicato:
Oct 7, 2013
ISBN:
9781483510200
Formato:
Libro

Descrizione

This is the story of Jim’s Group, as told by its founder. An account of how a $24 business investment turned into one of the world’s largest franchise chains, with over 3250 Franchisees in four countries and a turnover of $400 million. This is franchising as you’ve never seen it, with unique systems to protect and empower franchisees, and a passion for customer service that has reduced customer complaints to a fraction of their former level. It is also an unusually frank and honest account, showing the human weaknesses and mistakes as well as the successes.
Editore:
Pubblicato:
Oct 7, 2013
ISBN:
9781483510200
Formato:
Libro

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Selling by Not Selling - Jim Penman

succeed

Introduction

I am an unlikely person to build a successful business. For a start, I’m lazy by nature. Given half a chance I can spend hours or even days reading or playing computer games or doing anything but productive work. I’m also a poor manager, not well organised, not good at sticking to systems, and with very little head for accounts.

On top of that I am introverted and socially inept, hate crowds and have no capacity for small talk. Not only can I not remember names, but I have a rare condition which makes it hard at times to remember faces. Lack of social skills means I often offend or upset people without meaning to. This might not matter so much to a computer programmer or engineer, but my business is one that depends totally on relationships between people.

I have no formal business training, have never done a business plan or written a proper mission statement. I’ve never been able to create or stick to budgets. My mind is practical rather than theoretical, and to be honest I find most business texts difficult if not impossible to follow.

So how did I come to run Australasia’s most successful service Franchise, with 3250 Franchisees worldwide and growing? This book is the story of that journey. It’s a messy story, full of dumb mistakes and blind alleys, financial and family crises, probably unlike any business book you’ve ever read. But anyone who reads it should get a sense of why this business works, with some valuable clues on how to make any business work - even if you’re not especially talented!

I dedicate this book to my staff, to my Franchisees who put so much effort into satisfying their customers. To my Franchisors, whose passion for the success of their Franchisees so often goes beyond the call of duty. And most of all to my wife Li.

Chapter 1 Selling by Not Selling

I can still remember the day when I learned how to succeed in business. Not just the day but the hour and even the minute. It wasn’t when I made the decision to franchise, or even the day I signed my first Franchisee. It happened years earlier, when I had a business aimed at building up and selling lawn-mowing businesses (known as ‘rounds’) and found I simply couldn’t sell.

In fact, I had never been able to sell. One of my first ‘jobs’ after leaving school was selling encyclopaedias door to door, and I put the word ‘jobs’ in inverted commas because it never actually made me any money. I knocked on doors for several weeks without being able to persuade anyone to buy. Later I tried canvassing for a paint company, and failed also. I had no people skills, I couldn’t take rejection, and I absolutely hated selling. I was a thoroughly awful salesman. But now, for my business to succeed, I had to sell mowing rounds consistently, month after month.

I struggled with this problem for a couple of years and tried many ways to overcome it. I approached business agencies, experimented with different forms of advertising, even hired others to sell mowing rounds for me. It came to the point where a professional salesman, on commission, sold the business for me in my office while I either looked on or sat with my back to the scene, pretending to be involved in something else. If this sounds absurd, it was. It was also ineffective. I asked a family friend what I should do. ‘Be your own salesman,’ he said. ‘No one can sell your own business as well as you can.’ Easy for him to say. He had the charm and confidence that went with many years as a business manager. Not much help to a social incompetent like me.

But he was right, and one day I did learn how to sell. Which opened the door to a business far beyond anything I could have imagined. It happened because I was looking for advice on advertising, and went to see someone I knew who was partner in an advertising firm. As you would expect, his offices were impressive: all expensive furniture and glass topped coffee tables. While waiting, I sat and pretended to read Business Review Weekly. We had no uniforms in those days, and with my dress sense slightly to the left of Fidel Castro, I felt rather like a tramp who had wandered into an elegant drawing room. Eventually he invited me in and spent half an hour answering my questions. Advising me on media, how to word ads, anything he thought might help me out. And at the end of the interview, advised me that I really could organise and control my own advertising, and that at this stage I didn’t need an agency.

I remember leaving the office feeling very impressed by this man and his agency - but then wondering why. He had not told me about his clients nor shown me any promotions. In fact, he had advised me not to use him. Yet I knew that if I ever did need an agency, I would use his without hesitation, without asking about price, and without considering any competitors. (Which I did a few later when we decided to run TV commercials). He had done nothing to sell me on his business, yet he had given me the most effective sales pitch of my life.

While walking through the streets to where my car was parked I began to realise what he had done. I had been sold on this man and his Company because his sole concern had been my welfare and the success of my business. I began to wonder whether this same principle could be used to aid my abysmal sales skills. And then, just as I reached the car and leaned over to open the door, I figured out how it might. Could this possibly work?

The next time someone called me about an advertisement in the paper, I tried it out. Normally, when someone rang me about a lawn mowing business I would describe the business and suggest why they should buy from me. I gave all the advantages including automatic replacement of clients which dropped out. But this time I began by asking him a question. I said, ‘Do you know what it means when we talk about the cut of a lawnmowing round?’

Now, this is something that every lawnmowing contractor knows. A ‘cut’ is the value of a job done once. For example, fifty customers with an average job price of $30 would have a cut of $1,500. From this you can figure out expected income and a fair price for the business. Newspaper ads for mowing rounds were all phrased in terms of cut, but I knew from experience that most potential buyers did not know what it meant. So now I told him, without waiting to be asked. And continued talking, giving more information that I thought might be useful.

With this guy and those who followed, I gave still more help when they came for an interview. I told them not only how to buy a mowing business, but also how to run one properly. I gave advice on advertising, collecting payment, and such technical hints as how to cut wet grass and fill the catcher.

All my hard-earned knowledge was passed on without strings. It was not: ‘Buy from me and I will help you’ but ‘Here’s how you can succeed, regardless of who you buy from. Or even if you choose to build your own business.’ At the end I would simply show the business on offer and briefly state some of the advantages of dealing with me. My aim was that by giving advice and focusing solely on their interests, I would show that I was worthy of their trust. Which would hopefully increase my chances of making a sale.

But what if their best interests lay in not buying from me? I faced this challenge about a month later when a young man who had been to see me rang back for advice. He had been offered another mowing business in the same area. Which did I think was better? I asked him all the relevant questions: the cut, the number of clients and how widely scattered they were. This told me the hourly rate and therefore the likely income. I asked whether he felt the seller was genuine and why he was selling, calculated how many clients he might be expected to lose. Then I did my sums. The other mowing round worked out about ten per cent better value than mine.

What to do? I was taking this approach to try and grow my business, but if I advised him fairly he would buy the other one. At this point what came to the fore was something that had been a standing joke in my family for years: my complete inability to tell a lie. There are a number of stories of me blurting out some inconvenient truth in response to a question, a symptom of my extreme social awkwardness.

So in this case I just told the truth. I said the other business was better and advised him to buy it. He thanked me and hung up. Shortly afterwards the same thing happened with another buyer, and again I advised him to buy the other business. The third time I was asked for advice my run was actually better value because the other guy was charging too much, but his was in an area closer to where the buyer lived. So I suggested he go back and offer the market price.

By this time I was feeling quite virtuous but a little discouraged. I had adopted this new approach with the aim of selling more runs, and it also felt good to be giving fair, unbiased advice. But it wasn’t doing much for me and business.

But then something astonishing happened. All three came back and bought from me! In the first two cases my runs may not technically have been the best – but I had obviously gained the buyers’ trust, which counted for more. In the third case, the overpriced mowing round, my contact did make the offer and was refused. Shortly after he bought from me, the vendor of the other business dropped his advertised price in the paper to within $100 of my estimate.

Amazing as it may seem, from that time on I had no more problems selling lawn mowing runs. And weirdest of all was that my own social ineptness, my biggest obstacle to successful sales, had become my greatest asset! I forgot about all other principles and focused on making my buyers into fans, a job which only just began when they bought the business. I would give them advice over the phone, provide free training seminars, be scrupulously fair in replacing lost clients, and buy back their businesses at the best possible price if they wanted to sell.

With time, I developed and gave out a twelve-page manual on buying and running a mowing business, which I called ‘How to buy or build a lawn mowing business’. In other words, I even told them how to build a business from scratch – as I had done – and so avoid the need to buy from anyone.

And as each person bought I would print their name and phone number on a piece of white card and pin it to a board above my desk. Prospects would be invited to pick a few at random and phone them, and my previous buyers would sell my business better than I ever could.

When we came to launch the Jim’s Franchise system a few years later, this was the key idea behind everything we did. ‘What is in the best interest of our buyers (now Franchisees)?’ So we took on an entrenched competitor without capital, without business experience, running from home since I couldn’t afford an office, and beat them. And I truly believe our one significant advantage was a single-minded focus on the welfare of our Franchisees, which is now the number one principle in our Jim’s Group code of values.

I don’t want you to think that following this principle makes me an especially ‘nice’ or benevolent person. In fact, I commonly come across as tough, even ruthless. I have personally knocked back scores of people who wanted to buy a Franchise, because of significant doubts about whether they would succeed.

Part of the talk I give new Franchisors is a passionate diatribe on the importance of selection. I give all the sensible reasons why they should be selective: happy and successful Franchisees will refer others, give less trouble, be less likely to leave, less likely to generate complaints. Then I ask them to give me the one reason that is more important than any all the others put together.

They commonly come back with more of the same sort of reasons, that they will be more successful, more profitable, and have more growth (all of which is true). But I won’t move on till someone gives the real reason. And when they give it, especially if it’s taken a while, I have them get to their feet and receive a round of applause – so that no-one will ever forget. The chief reason you knock back a prospect when there is significant doubt they will succeed is:

‘For their sake’.

I tell them if they don’t have concern for Franchisees as their first and major motivation, they are unlikely to succeed and certainly won’t feel comfortable in our group. An example of the possible consequences of a poor choice was a young man who bought a Jim’s Mowing Franchise in the Geelong area, and failed. Years later he drove his three sons into a dam and drowned them, for which he was convicted of murder. What keeps me awake at night is to what extent the failure of his business may have contributed to what happened.

The same toughness applies in other areas. I’ve had desperate Franchisees on the phone asking not to have to fly across country to attend re-training as a result of excess complaints (this is after counselling and a personal warning letter from me have failed). I never give way. No matter what the hardship, poor customer service will damage their business and that of every other Franchisee, especially in their area.

The same principle applies to staff. I have been fortunate in having wonderful, committed staff over the years, but anyone who fails to give great service to my Franchisees and Franchisors is unlikely to last long. No matter how likeable they may be or how popular with other staff. Exceptional service is the key to success, to growth, and to profits.

This is equally the case with Franchisors who fail to provide the proper level of support, especially in recent years as standards have tightened. Jim’s Group is the only Franchise system in the world that allows Franchisees to vote out their Franchisors by a simple majority, for no other reason than not being happy with the support they are providing. I personally will intervene and promote such a referendum, which can be especially hard when the Franchisor is someone I have known and worked with for years. Of course, Franchisors are Franchisees too, and our ‘termination’ is almost always a forced sale rather than simply taking someone’s business.

Franchisors can get angry at me for other reasons, too. Some months back a prospective Franchisor came down to Melbourne for induction training. Since the training is part of our selection process, and to make sure they know exactly what they are getting into, this happens before they actually sign. One night when I took them out for dinner, one of the prospects asked me whether the price the vendor was asking was fair. After asking a few questions, my advice was that it was on the high side. As a result, the sale did not go ahead. We missed out on a handsome commission and the selling Franchisor was furious. But just as with selling mowing businesses in the old days, when he asked for advice I had to put his interests first.

It is fair to say, though, that the great majority of our Franchisors totally agree with the principle of putting Franchisees first. This is not uncommonly quoted back at me in the course of our vigorous discussions on group policy! A Franchising expert from the UK who attended a National Conference was impressed by the sheer uniformity of views on this subject. He said our culture was quite different from anything he had seen in his wide business experience.

Franchisors commonly refer to this as ‘selling by not selling’. The most successful tend to treat prospective Franchisees as job candidates rather than purchasers, asking a lot of questions and trying to see if they are likely to succeed. It is the opposite of high pressure sales.

At Jim’s Group our most important customers are Franchisees. This is partly for moral reasons, in that they have entrusted their financial future to us, but is also quite pragmatic. The business environment is such that we have almost no trouble finding clients these days but are desperately short of good Franchisees.

Still, looking after customers is also a core value and a special passion of mine. In fact, I’m convinced it is the key reason why we find it so remarkably easy to find work. To put some figures on this, over the past year we have been forced to knock back more than 80,000 prospective clients or almost one caller in five. This despite a relatively modest advertising budget. In fact, only about one third of the clients who phone us are influenced by paid advertising at all, and this does not count the great number who go directly to our Franchisees. What these figures and our polling shows is that the great majority of clients are drawn to us by reputation rather than advertising as such.

At Jim’s we take customer service so seriously that I invite unhappy customers to contact me personally if their first complaint is not satisfied. This invitation is given with our messages on hold, on our web site and in regular Email letters to customers. When you consider that we service around 100,000 clients a week, it is an astonishing credit to our Franchisees and Franchisors that only one or two cases per week typically come to my attention. Needless to say, no Jim’s customer has ever needed to take legal action to have the job done right. This policy has another advantage, apart from heading off bad PR. It puts my focus on training and systems that stop such problems happening in the first place. There is also a strong incentive for Franchisors to fix complaints themselves, when they know their founder will be breathing down their neck if they don’t!

The chapters to follow will give an account of the growth of Jim’s Group from humble and unlikely beginnings. It’s not primarily a ‘how to’ manual, though I’m sure there are useful lessons to be learned. Still, if you asked me to sum up everything I know about business in a single sentence it would be this.

Be passionate about customers.

Chapter 2 Beginnings

Looking after customers was a lesson I began learning from the age of eight. Our neighbour over the back fence was a Mr Tapley, who seemed at the time a very old man. But since he was still alive when I visited him thirty years later, I guess he may just have been a lot older than me. I knocked on Mr Tapley’s door doing bob-a-job for the cub scouts and he let me rake his gravel driveway. This continued as a regular commercial arrangement. I would rake the drive, pull weeds, or do any other job that needed doing. He paid me two shillings a week, twenty cents after decimal currency, though money was worth more in those days!

I learned a lot from Mr Tapley, particularly one summer’s day when I must have been about ten. The gravel drive did not need work and there was not much else on, so he asked me to carry some rubbish to the incinerator. On checking the job afterwards, he found some leaves and branches that I had dropped along the way. He said rather sadly, ‘If you’re not going to do it properly, I might as well do it myself.’ Mr Tapley was a gentle man, who never raised his voice in all the years I knew him. Perhaps that is why I still remember so vividly my shame, and the determination never again to let him down.

About the same time I began mowing the family lawn with our push mower, which was not an easy job. The back yard had a fair slope to it, and twigs from the trees were forever jamming the blades. This was a job experience I shared with most Australian boys, growing up in a land with endless suburbs and big back yards. Later on I also mowed the lawns for a neighbour across the road. He too was a gentle man, very kind to me as a troubled youngster. My mother said that he had been in a POW camp for Polish officers and suffered terribly, though I never asked him about it. Everything I know about gardening I learned from my customers. But I never learned more than from these two good men. In particular my notoriously emotional attitude to customer service, the upset I feel even now when any one of my customers has been let down.

Not that any of this affected my choice

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