In 1958, William Millar founded the first store in Avalon, N.J., that sold only ceramic tile and vinyl (or linoleum). In 1962, he added carpet and opened his second Garden State store in Wildwood. Today, 46 years later, his son John directs the company, which has expanded to 12 stores in 12 cities across three states. Each new store makes its budget for revenues, expenses and profits typically in its first year. I interviewed John Millar, who willingly shares with you the keys to Avalon Carpet & Tile's growth.
Avalon's executives start with the principle that products, services, operations, and personnel are not the end purpose of business but, rather, the means to the end. As management guru Peter Drucker has asserted, the "end" of all you do is to make and keep customers. All other efforts should drive toward that end, because customers are your only source of income.
Hence, customer loyalty is the desired end to all business practices. How can you motivate more of your customers to become loyal? Of course, it takes the entire set of customer experiences to generate loyalty. To help you put that entire set into context, I suggest you fit them into the one strategy -- a strategy that Avalon has used for 46 years -- to brand your business. Branding is all about making loyal customers.
"Brands" are things for which people will pay extra, even if the product or service is identical to a competitor's. A brand is a business version of patriotism. Brands are symbols of quality -- even a trust mark, or a covenant with customers.
The brand-covenant gives customers a backing for their purchase decisions because they feel confident that they will not get stuck with a disappointing or faulty product. They then can purchase with confidence and speed, thus minimizing anxiety and time. These savings are worth more than money.
In addition, loyal customers increase your profits. In his book "The Loyalty Effect," Fredrick F. Reichheld reported, "Making loyalists out of just 5 percent more customers would lead, on average, to an increase in profit per customer of between 25 percent and 100 percent."
A brand signifies a relationship with the customer. An article in Fortune magazine characterized a brand this way: "It's a company's most valued asset. It's the main differentiator, the best defense against price competition and the key to customer loyalty. Competitors can copy your products, feature-by-feature and benefit-by-benefit, but they can't steal your brand."
Having established an understanding of the value of loyal customers and the method of making them loyal by branding your business, let's discuss the hows of branding. A good rule to remember: develop your "inside reality" and "outside perception" to seamlessly produce just one thought in the minds of everyone in your market.
You want them to think (even subconsciously): "I would have to be an absolute fool to do business with anyone else but you -- regardless of price."
What do your customers notice? Outside your store, customers look for cleanliness and style. Inside, they look for cleanliness (no dusty racks or samples), neatness (no messy desks or aisles) and how much you care about them (by maintaining clean bathrooms).
Next, they evaluate your products -- both the quality and variety. Avalon is offering expanded lines of ceramic tile, marble and stone to meet growing consumer demand for such products. They continually expand this department, as John Millar notes, "to stay years ahead of our competition. It yields 30 percent of our business. We continually seek to sell better quality tile, marble and stone."
The second aspect of Avalon's inside reality is the customers' emotional responses. They want customers to feel better about themselves when they leave than when they entered. Avalon knows that the No. 1 driver of repeat business is the relationship that customers have with the employees.
John sees to it that managers hire "good, competent people." He reports that, as a result of this hiring strategy and good employee policies, Avalon customers "have a great experience with our employees. They build relationships with our customers. This, in turn, opens doors to future sales and referrals."
What he says is absolutely true. People are not loyal to things -- they are loyal to people.
Everything about Avalon's advertising shouts top quality and amazing products, yet Avalon's tagline is, "We have it all at low prices." Thus, they promote the best of both consumer worlds.
As you may now realize, Avalon is doing many things well, and each thing contributes. However, one best practice of theirs that I'd like to highlight is their investment in advertising to inform customers of their wide variety of products, convenient locations, low prices, and attractive showrooms. Before placing media ads, they carefully examine the available advertising vehicles in the market area of each branch location. They find the correct vehicle and exploit it.
They convey their message well. Their inside reality wholly matches their outside perception. This congruence has persuaded many prospective customers to shop with them and become loyal customers.
I worry when dealers tell me they've cut back their advertising. I hope they are substituting other promotions, for I believe that retailers who fail to keep their reputation alive in shoppers' minds will eventually find their revenues plateau (flatten). I believe they will cease growing if they don't frequently tell their story.
In his book "Guerrilla Marketing," Jay Conrad Levinson writes: "Don't delude yourself into believing that you can succeed with no media advertising. Winning with that strategy would be like winning the lottery with your first ticket. It happens, but don't bet your boots or your business."
I recommend company promotion by all means available -- including advertising, teaching your employees to sell the company while at work and outside work, and by being reliably the best. Advertising plays a critical role in reinforcing the relationship that people -- employees as well as customers -- have with your company brand.
Avalon did it right. They first established their brand with its inside reality and then promoted it with their advertising.
You can build your own powerful marketing message in three steps. First, have something good to say. Second, say it well. And finally, say it often.
I recommend that you set a goal to embody such superior and distinct value within your brand that customers can neither overlook nor forget you. Their emotional and practical costs of switching loyalties should be so high that your competitors must work near miracles to lure your customers away.
Of course, as John emphasized, you don't need to imitate Avalon. He would urge you to run your own race. "Don't duplicate competitors," he advises. "Focus on your own business."
As the result of much planning, smart work and sticking to their mission, Avalon has grown its sales through loyal customers, hit budget-projections with new stores and built a community of people who strive for a compelling future.
It's their dream coming true! How's yours coming?