Smoot, too, is convinced of his plan's efficacy in creating loyal, dedicated employees. "If I put an advertisement for a job opening in the newspaper, I'd have a line around the block," he says. "It keeps us from constantly having to train new people, because people come here to stay. People come here to retire."
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Know Thy Customer
Bob Fletcher likes to joke that he sells something nobody wants or needs -- and charges an average price of almost $3,000 for it. Not only that, his market in the United States has shrunk more than 90% over the last 15 years.
We should all have such problems. From 1989 to 1991, Fletcher's business grew from $11 million to $20 million in sales, and, despite the recession, his 1991 pretax margins were 26%. What's even more unlikely, he gets those kinds of margins in a retail business.
Clearly, Fletcher Music Centers, based in Clearwater, Fla., is no ordinary retailer, although it used to be. Back in the mid-1980s, chairman and founder Fletcher had a chain of music stores in Florida malls, specializing in selling keyboard instruments, complete with free lessons. Unfortunately, profits were stagnant, he says, because the typical organ buyer -- a retiree who wanted to make music easily -- was turned off by the new high-tech organs coming from Japan. Despite declining sales, Fletcher knew organs were where his stores made the most money. So, in a risky move, he began eliminating his non-organ products while conducting focus groups with organ customers.
What he got was an earful. The knobs on the new organs were too small for arthritic fingers. The print was too tiny. The organs were too high-tech looking. Fletcher admits that he was surprised by just how emphatic his customers were about their dislike of the available organs. So Fletcher Music Centers acquired the name of an old organ manufacturer, Estey, and designed a retiree-friendly organ complete with oversize print and controls and an old-fashioned wooden appearance. Today Fletcher says he sells at least half the organs sold in the United States in his 21 Florida stores.
But there's more to Fletcher Music Centers' success than an appropriate product. Customers, many newly retired to Florida, are often lonely, and the free group lessons that the stores offer become a way for them to meet people with common interests. Fletcher Music salespeople push the lessons because they know that only if customers become proficient on their first organ model will they want to upgrade -- and, according to Fletcher, upgrades are where the company makes its money. As a result, Fletcher sees his business as creating a community of organ enthusiasts rather than just selling instruments. "These classes become social gatherings," he says. "We realized what a need there was and how thankful people were for the social atmosphere."
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Going International
Don't try to tell Barbara and Steve King how impossible it is to break into the Japanese market. The Kings' company, Landscape Structures Inc., in Delano, Minn., has been selling successfully in Japan for a decade now. Today, in fact, Japan is Landscape Structures' largest foreign market, and last year it accounted for approximately 10% of the company's $27 million in sales. What's more, entering the Japanese market was so painless for the Kings that it persuaded them to become serious about international business. Back in 1981 the Kings, whose company makes modular playground structures that can incorporate everything from slides to tunnels, got a call from a Japanese company interested in distributing a product like theirs. Representatives visited three U.S. companies, according to Steve, who is in charge of marketing, and chose Landscape Structures.
In fact, Landscape Structures does so well in quality and design -- key in the ultrafussy Japanese market -- that in 1989 it was one of the winners of the Good Design Prize awarded by Japan's Ministry of International Trade and Industry.
These days Landscape Structures distributes its product in other countries through independent dealers, just as it does domestically. It found those dealers through word of mouth in its small, specialized industry and by trading leads with a company with a related product. Then, too, Steve says, Landscape Structures benefited by commissioning some early market research from the exporting arm of a big bank; it was inexpensive and useful. (In general, he advises companies going international to use big banks, since they are often more experienced with the details of letters of credit.)
The Kings expect their industry to get more competitive as foreign companies enter the United States. But they also plan to continue to seek out new markets in any country that has enough prosperity to build modern playgrounds. The best kind of market? "A country that values its children."
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Down Under
"A lot of people thought we'd just sit back and retire," recalls Jenny Craig. That was in 1982, after her husband, Sid, sold his chain of women's figure salons and signed a two-year noncompete agreement. Instead, the couple headed for Australia, invested $7 million, and grew their weight-loss chain into Australia's largest, with 96 centers. At the end of the two years they brought the concept back to the United States. Now based in Del Mar, Calif., their diet empire, Jenny Craig International, spans six countries, with 600 centers and 1991 revenues of $412 million.
