I was asked for a blog this week to cover 5 things that we, as brokers, do that hurt our business, or at the very least, don’t help.
It seemed pretty straight forward at first, but then I really started to think about it. I used my own experiences and came up with what I thought some of my biggest mistakes were (I made way more than just 5, so it was a challenge to narrow it down!).
I will list first, and then go into some detail on each one
- Not adapting to technology
- Hiring the wrong people
- Not loaning enough/not qualifying
- Customer service “winning at the counter”
- Not paying attention to inventory and retail
1. Not adapting to technology.
I still have brokers that don’t want to use text messaging, or don’t want to use email. They don’t understand google search and SEO or social media and how powerful it can be for their business.
Text messaging is one of the single most powerful tools that exists today in terms of communicating with and reminding your customers that they have payments due, layaway payments due, items forfeiting, or even future sales events.
I am one of the very early adopters of text reminders, and I can honestly say that I cant think of a single business that wouldn’t benefit from a well managed text messaging program. The truth is that people obey their phones. If your phone tells you to call someone or someplace, typically, we do it!
I recently replaced the appliances in my kitchen and they all integrate into an app on my phone. When my refrigerator tells me to replace its filter, I do it! I'm now obeying the commands of my appliances!! It seems humorous to me, but at the same time, I realize the power of this particular medium and how it impacts my life.
Social media is another powerful tool. Simply put, anything that you can do to “engage your customers” with your business, is worth your time and effort. Maybe it’s a sale, or one of the employees birthdays. It doesn’t matter. The closer they feel to your stores “family” the more loyal and profitable they will be
2. Hiring the wrong people
I see and talk with brokers every day, that continue to make the same hiring mistakes over and over. Our “need” for help, overrides our ability to really interview and make the right decisions. We tend to meet a potential employee, and if we like them, we offer the job. Then we are surprised when they don’t work out the way we wanted them to.
The truth is that we probably put more thought into what we are going to have for lunch, than the hire of someone who will be loaning out “our” money.
I worked for a company early in my career that used to say
“ we select with science, and hold together with trust and accountability”
Simply put, the interview process should always be structured, there should always be multiple candidates from which to choose. When we make the decision, we should train, train, and then train some more. After all, they will be making decisions about “your profitability”, but the final part of this process is that word…”accountability” That’s the tricky one. We work side by side with them every day, right? We know them and their families. I know he made a mistake and loaned on fake gold, but shes a great person, I’ll let it slide this time. Everybody makes mistakes, right?
Accountability means that we need to hold them responsible for what they do. If it is time to part ways and find someone else, we need to make the right decisions for our business. I have fallen into this trap in the past, and I can only tell you that it always ends up in the same place, prolonging the process just hurts your business and costs you money.
3. Not loaning enough/ not qualifying the loan correctly
Everyone has their own way of qualifying and loaning, there is a process that you have been using for years.
I would caution you to re-evaluate your processes. Are you loaning 80% loan to (scrap) value on properly qualified gold loans? I can tell you that your competitors are. You see, they decided long ago that the 75-80% of the loans that are redeemed, would far out run the 20-25% that didn’t, and they still were able to leverage 20% GP on those, while maximizing their potential yield on their loan portfolios. They understand that loan balance is not just one of the important things in this business, it is THE MOST important thing! It drives everything! It drives your profitability, your inventory, and ultimately ,your success.
I don’t want to forget about GM in this scenario, it is just as important, but a bit more difficult to tie down. I see brokers that choose to stop loaning on a particular item or category because they have too many on the shelf. That one always perplexes me. Why would you choose to walk away when 80% of the loans come back. The items on the shelf reflect only 20-25% of the loans. The rest were picked up, and it your shelves are still full of those items, then it is a good guess that they are probably priced too high, displayed poorly, dirty, or otherwise un-sellable. Get rid of those items, put the money back in the drawer, and loan it out again.
4. Customer Service/ “Winning at the counter”
The way that our customers “perceive” our stores means everything. Are our employees wearing uniforms, or at least shirts? Do they look and act professional? Take a look at your store from a new customers point of view.
Walk in to your front door, and stop and look. Objectively. What do you see? Is your store clean and organized, are your employees professional and neat? Believe it or not, it matters.
When we are dealing with our customers at the counter, it is equally important to note that everything is a sale. We are selling the loan, the buy, selling the merchandise to the customer. We are trying to maximize our profitability on a per transaction basis. Meaning that “every” transaction has to be analyzed on its own to make sure that it is as profitable as it can be.
Our employees need to be trained on product knowledge, friendly, patient, helpful, and most of all, professional.
I once overheard a regional manager asking about pricing on a drill. He covered up the price.
Regional: “ how much do you think that you can sell this for?”
Mgr: “ how much do we have it it?”
Regional: “it doesn’t matter, What is it worth?”
Mgr: “ about 10-15$???”
Regional: uncovers sticker to reveal $39.99, “ so here is the point, when this came in we loaned $5, and we would have been thrilled when the customer came back and redeemed for $10, but they didn’t come back, it forfeited, and we price at $39.99 and are unwilling to take less than $20 for it, so its been here on the shelf for 6 months.”
Mgr: “I didn’t think about it like that.”
Regional: “We sell money, we loan, that’s what we do. We never really wanted to own this, the goal was always for the customer to redeem it, but he didn’t. and that’s okay, but remember that our store is filled with items that forfeited. Price them to sell, turn the inventory into cash, and loan out the money again. We are a retail store by default, in our perfect world, everyone would return and redeem, we wouldn’t have to sell anything, but, our business has items that we need to sell. Don’t get attached to it, sell it and move on to the next loan.”
It was a very powerful conversation, and was an "ah ha!" moment for me.
Too often we get set in our ways and make the mistake of pricing too high, not selling when we should, and risking our stores turning into kind of a retail museum.
I’ve said it before: Sell it and turn the inventory into cash that you can loan out again.
Go through your inventory and reprice, pay attention to any inventory that is approaching the 180-day age, keep your sales floor organized, neat, and clean, and sell, sell, sell.