Warehouse operations ran reliably, too. Partly because of Paul Mitchell's focused product line, which accounted for 75% of PSC's business, PSC carried about 1,000 stock-keeping units, compared with the average salon distributorship's 10,000 or so. That enabled PSC to promise, and to religiously deliver on, 24-hour turnaround on all orders. To make sure the products got out, Cowan and his employees would often stay up past midnight packing orders and then driving them to the UPS hub, a few towns away, by the 2 a.m. deadline. He knew his obsession with service was paying off when he stopped by a customer's salon just after the previous day's order had been dropped off and the owner pulled him outside the shop and pointed to a building down the block. "He told me that was where one of my competitors was based and it took him three days to deliver orders," recalls Cowan. "He said he didn't know how we did it, but it meant a lot to him." The last thing he needed to do, Cowan believed, was switch to some complicated new computer system.
Then one day in late 1988 a consultant from PSC's second-largest supplier came calling on Cowan. Her name was Terri Klimko, and Cowan had met her once before: he had actually interviewed her for the job on behalf of the supplier when her flight to the supplier's home base was grounded because of bad weather. Terri, who had been a corporate trainer for Pillsbury's franchise-restaurant division, and then for a national chain of weight-loss clinics, was welcomed by Cowan, who was happy to see her again. They chatted amicably for several minutes, and then Terri pulled out a pen and a notebook and told Cowan she wanted to ask him a few questions that would help reveal how well he knew his business, questions she had developed while working with franchise CEOs. Fire away, said Cowan, trying not to smirk.
Her first question: Can you tell me whom you ship to each month? Cowan shrugged. "Whoever orders," he said, suspecting, with discomfort, that he wasn't quite catching her drift. She let that one go by. Could he tell her how much each customer bought, by supplier? Could he rank his customer sales? Could he break his sales down by product? Terri kept going. After the third no, Cowan started to fidget; after the sixth or seventh he started to glare. Terri glared back. "I was taught that if you can't answer these questions about your business, you're losing money," she said. That did it. The sales call was over, and Terri was politely ushered out of the building. But the interview got Cowan thinking.
And not just about the business: he and Terri were soon married. Terri joined the company, and quickly set about applying her own corporate-training techniques to Cowan's obsession with service. She developed a business "template" for salons -- a handwritten spreadsheet that allowed salon owners, with PSC's help, to break down and analyze every aspect of their business. It addressed questions such as, How much does each hairstylist bring in per client? Do enough clients receive extra services like perms? How many clients leave the shop with take-home hair-care products, and which products do they buy?
Most salons use accountants who don't specialize in the salon business, explains Terri, and they end up giving the owners faulty advice. For example, if the accountant sees that profits have dropped, he or she will typically tell the owner to cut down on supply orders across the board -- not taking into account that take-home products are not only a cost but a source of revenue as well. "I just hate to see a salon owner or hairstylist miss out on an opportunity to make money," says Terri solemnly.
The Cowans were becoming more than just trainers and educators to salon owners. They were becoming quasi partners in their businesses. If a few stylists staged a walkout, the frantic salon owner would have the Cowans rush over to help calm the others. If preparations to hold a grand opening for a new salon fell behind schedule, the owner would call the Cowans in the middle of the night to have them come by to lend a hand. Providing, of course, that the salon owner was ordering up a stream of PSC's products. "The better the customer, the more of our time they get," says Terri. "If we were selling our services as consultants, they wouldn't be able to afford us."
But the more PSC did to help its customers improve their businesses, the more the Cowans worried about whether they had a good enough handle on their own business. PSC had begun offering a turnkey computer system and support services at a break-even price to salons to help them answer all the questions Terri could throw at them; but PSC's computer couldn't do the same for Cowan. To get some of the most basic data points Terri was requesting (such as customer rankings by overall sales each month), Cowan turned to Mike Fenske, an up-and-coming management consultant with Arthur Andersen in Chicago who was dating his sister (they eventually married). Cowan, who had become adept at working with PSC's software, such as it was, would pull down as much relevant raw data as he could from the system, put the data onto a floppy disk, and send the disk to Fenske. Fenske would then write programs on a PC database-management system to develop rankings and other useful reports.
The approach worked to a certain extent, but it was time-consuming, and the list of Terri's as-yet-unanswered and new questions was growing far faster than the list of questions Cowan could get answers to. How did the profit per client break down into product lines? How did revenues per salesperson vary over the days of the week? How did the error rate in order fulfillment vary from month to month? There were other computer-related weak links in the business: because the computer system was so slow, purchasing and accounts payable were still being done manually and only a few months' worth of detailed order information was being stored, so when older information had to be examined, someone had to pull printed invoices out of file cabinets and examine them one by one. "You really need to be able to get that kind of information at a glance for it to be useful in running your business," says Terri.
