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Marketing Strategies for Small Businesses from Corporate Execs
Aired April 23, 2005 - 11:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANDREA KOPPEL, CNN ANCHOR: "THE TURNAROUND" with Ali Velshi begins in 60 seconds, but first, headlines now in the news.
A funeral service this morning for 13-year-old Florida teen, Sara Michelle Lunde. Police say a convicted sex offender who once dated her mother told them he choked the child. Sara's body was found in a pond. Florida is now considering a bill mandating longer prison sentences for sex offenders.
The Army has reportedly cleared Lieutenant General Ricardo Sanchez in the Abu Ghraib Prison scandal. He was commander of U.S. forces in Iraq during the time. Iraq detainees were abused. The investigation is also said to clear three other top officers. The Abu Ghraib scandal erupted about a year ago when explicit photographs were splashed around the world. They showed prisoners forced to strip naked and pose in sexually humiliating positions with U.S. troops looking on.
We'll have more news for you in 30 minutes. "THE TURNAROUND" with Ali Velshi begins right now.
(BEGIN VIDEO CLIP)
ALI VELSHI, HOST: Next on THE TURNAROUND, a dry cleaning entrepreneur with an eye for detail, but a blind spot for sales.
AMIN BATA, OWNER, PEPPER SQUARE CLEANERS AND LIBERTY CLEANERS: In 17 years, I never had to chase marketing.
VELSHI: Can the CEO of a corporate giant help him mend his business before it splits at the seams?
GARY KUSIN, PRESIDENT/CEO, FEDEX KINKO'S: His biggest value to his company is to get out there and drive revenue.
VELSHI: Small-town service meets big-city marketing.
KUSIN: You got to ask for the orders.
VELSHI: THE TURNAROUND begins now.
(END VIDEO CLIP)
VELSHI: One steams and cleans, the other copies and delivers, two different industries, one goal, to always meet deadlines on time.
Welcome to THE TURNAROUND, I'm Ali Velshi and we're in Dallas, Texas this week. The mentor for this episode is the CEO of the business services company, FedEx Kinko's. And the business that he's going to help turn around is a local dry cleaner. I know what you're thinking, it doesn't seem obvious. But you're going to find out; they've got a lot in common.
VELSHI (voice-over): Three hundred and eight-seven million pants pressed every year, 1.4 billion pounds of clothing cleaned every year. As the clothes tumble, the cash rolls in. Americans spend nearly $8 billion on dry cleaning every year. It's a dirty business but someone's got to do it. Amin Bata got into the business of dealing with people's dirty laundry back in 1986. Two years later, he opened his first store, Pepper Square Cleaners. In 2002, he opened Liberty Cleaners.
BATA: It's been a wonderful experience.
VELSHI: A wonderful experience that has hit many obstacles along the way.
BATA: We have faced challenges in the last three years: a shrinking demand for our services, a shrinking stream of revenue mainly because of the dragging economy and an increase in strain on overhead expenses. Rents have gone up the roof. Utilities have gone up the room. Supplies have gone up the roof.
VELSHI: Amin does a brisk business but his margins are tight. His income is just about 7 percent of his sales and he doesn't take a salary.
(on camera): You've got a nice operation here.
BATA: Thank you.
VELSHI: I don't know if you need anybody's help. It looks like you've got a good business going....
BATA: I need a lot of help. As far as what I'd like to see the mentor focus on, focus on efficiency, focus on marketing, focus on being able to pull in the entire customer.
VELSHI (voice-over): The man who's going to help Amin take his dry cleaning business to a whole new level is Gary Kusin, president and CEO of FedEx Kinko's.
KUSIN: It's a go to team here. I want to each him about having a go-to team of his own.
VELSHI: Named entrepreneur of the year by "Ink" magazine, Gary, who currently sits on the board of Radio Shack, co-founded Laura Merrier (ph) Cosmetics in 1995. In 2001, he joined Kinko's. And in 2004, his company merged with FedEx. He now oversees an international company which offers customers an array of services, including packaging and delivery, copying and printing, computer services, and display signs and banners. With more than 1,200 locations and 11 countries, FedEx Kinko's expects to bring in $2.1 billion in revenue this fiscal year.
(on camera): You, as a mentor, aren't directly related to the industry that the small business owner is in.
KUSIN: Well, you know, there are a lot of similarities between dry cleaning and FedEx Kinko's. We do a final check before we give our finished product to customers. I suspect they have to give a second final check.
There are lots of different types of customers. There are customers at dry cleaner's who are extraordinarily price sensitive. There are others who really care about quality. So it's opportunities for dry cleaners to literally segment themselves, to differentiate themselves and they have to think like that. They have to think about who are their competitors, what is their value proposition. And that's why I'm looking forward to learning and talking with Amin about.
VELSHI: Well, Day 1 is underway, so we're going to get you over there to talk to him.
KUSIN: Terrific. I'm looking forward to it.
VELSHI (voice-over): It's 10:30 in the morning at Pepper Square Cleaners. Amin is busy working in the office when Gary walks in.
KUSIN: Hi, my name's Gary Kusin.
BATA: Hi, Gary.
KUSIN: I'm the president and chief executive officer of FedEx Kinko's.
BATA: All right! Well, it's great to meet you.
KUSIN: I'm looking forward to this.
BATA: I am, too. I need all the help I can get.
Here's where the similarities are: they take in raw materials that doesn't belong to them and have to do something with it and then turn it back. In that regard, we are very comparable.
VELSHI: Gary begins by getting a quick tour of Amin's facility.
BATA: This is where they proceed to the front and this is where the bagging is done.
BATA: She handles the body of the shirt.
KUSIN: Your employees, do they have staggered starts?
BATA: Yes, they have staggered starts. He sews the buttons now.
KUSIN: OK. What's your average ticket to your walk-in consumer?
BATA: Our average ticket last year, in '04, was $21.
VELSHI: From employee issues to production costs, Gary's fact finding mission has provided him with important information. But before he lays out a strategy to help make Amin's company stronger, Gary gives him some assignments, to conduct a customer survey and create a value proposition.
BATA: A value proposition to him is brand building. What do we offer here that nobody else can offer? What's going to set us apart? That must be set in stone. It must be defined. It must be verbalized. It must be communicated. Once that is done, we can run with it.
VELSHI: Next on THE TURNAROUND, Amin finds out what the customers really think.
UNIDENTIFIED MALE: This service, too expensive.
VELSHI: And later, the phone call that can make or break this turn around.
BATA: Hello, John, Amin Bata.
VELSHI (voice-over): It's Day 1 of the turnaround. A couple of hours ago, Amin Bata, owner of two dry cleaners in Dallas, Texas area, gave his mentor, Gary Kusin, a tour of the Pepper Square Cleaners.
(on camera): What do you think you can actually focus on during the course of this turn around?
KUSIN: My biggest hope is that all Amin does is realize that his biggest value to his company and to himself is to get out there and drive revenue.
BATA: The wealth of knowledge that he's got is just instrumental and I think it can benefit any business.
VELSHI (voice-over): But Amin isn't worried about any business. He's worried about his own. Business is down and production costs are up. With Gary's help, Amin hopes things will soon turn around.
(on camera): Market research is one of those things that a lot of small business owners don't think they have the money of the wear- with-all to do. Now, Gary gave Amin a particular task, easy marketing research, just talk to the customers who come in to your store, ask them what you do that they like, ask them what you do they don't like and ask them what you can do better.
UNIDENTIFIED FEMALE: Prices.
BATA: OK, change prices. Raise them, right?
UNIDENTIFIED FEMALE: Raise prices.
UNIDENTIFIED FEMALE: You all remember my name, your honesty, you're your dependability.
UNIDENTIFIED MALE: Good service, good friendly people, too expensive.
UNIDENTIFIED FEMALE: If they deliver again.
UNIDENTIFIED MALE: My information on this ticket.
UNIDENTIFIED MALE: Absolutely.
BATA: That's a good one.
UNIDENTIFIED MALE: Absolutely.
BATA: That's a good one.
BATA: The thing that I was most proud to learn was they come here because of the people up front and the way they're treated. The biggest surprise was the concern for security, putting the addresses of the customers' right below their names on every claim check that we print. And I found out they didn't like that. The other piece of information that I got was a lot of them want route service. They want to be delivered and picked up from at home.
VELSHI (voice-over): The desire for a route service is a surprise to Amin. It proves his marketing is ineffective because Pepper Square Cleaners does offer pickup and delivery.
One fifteen, Amin meets with Gary and Tom Leverton, FedEx Kinko's senior vice president of marketing and strategy, to go over the results of his strategy.
KUSIN: Are you learning?
BATA: I learned a lot. KUSIN: Let's go to the likes.
BATA: That's everybody knows my name.
KUSIN: OK, so they feel like they're a valued customer.
KUSIN: They're getting recognition when they come in the door. Very important, that's great.
BATA: Good service, friendly people. So that was it for the good.
BATA: Now, here's what you don't like, would like to change, would like to add or would like to remove.
BATA: The first one that really shocked me was our claim checks. The claim check has last name, comma, first name and then it has the address of the customer. They don't want that.
KUSIN: Confidentiality, it's security. It's an issue...
BATA: Identity theft.
KUSIN: Identity theft. Well, that's very interesting feedback, isn't it?
BATA: Yes, it is. We did get one delivery request and she never knew that we had it even though it says it right there on the van.
KUSIN: Fascinating. Isn't it amazing what happens when you talk to your customers?
BATA: It's incredible. We got too expensive three times.
KUSIN: Were you able to explore more than that? Like, I could pay 10 cents less for a shirt or it's a penny less down the street or it's a -- you're a dollar up? Did you get anymore...
BATA: No, we didn't get them to elaborate.
VELSHI: But he realizes his prices aren't expensive after all. He explored the pricing at some of his competition and discovered his prices like for pants are lower.
BATA: We are at 4.50. We have one competitor here that's at 5.99. This one here is 4.75. And one that's the oldest player in town is at 5.19.
KUSIN: If you were at 4.99, which is a very good retail price point, you would be increasing your average ticket here on slacks by 10 percent. It's 30 percent of your entire revenue. So, 10 percent times 30 percent, you would move your margin as a company by three points. One item, one price change gets you three whole points on the bottom line.
VELSHI (on camera): Market research isn't necessarily expensive.
VELSHI: It's not about hiring experts.
KUSIN: He got so much data. He can figure out to market, who to market to, and what it's worth out of his existing cash register. He's got a lot of tools.
VELSHI (voice-over): The next two hours are spent at the drawing board. Gary lays out strategies for bringing in new customers; retaining the old ones and helping Amin distinguish himself from his competition.
BATA: It's spotless clothes.
KUSIN: OK. That's important, give me another one.
BATA: Ready to wear. Tea and coffee in the morning. We guarantee in by nine and out by five. I would say multiple services. In other words, the one stop shopping.
KUSIN: One stop shopping. That's a good group of promises for a customer.
VELSHI: But brainstorming is only part of the solution. Now Amin needs to figure out how to communicate his promise or value proposition to his customers.
TOM LEVERTON, VP OF MARKETING, FEDEX KINKO: What are those two or three things that you want to promise somebody when they walking in that will make them want to come back? And lastly, one more point, what kind of visual changes inside the store, so when they come in, they understand the promise that you're trying to deliver to them?
VELSHI (on camera): You've really seemed to have embraced this.
BATA: Absolutely. And that's -- I think that's where the merit is in this entire process, to find out where the improvements are needed, where we can improve things and then come out ahead. So that's a part that I am embracing, is to see where we can make changes.
VELSHI (voice-over): And changes mean more homework for Amin.
KUSIN: We want to refine your value proposition, exactly what your brand promise is going to be. We need you to be very specific and focused on that.
VELSHI (on camera): The first day of this turnaround in Dallas, Texas, is over. We've paired a small dry cleaner with a CEO of FedEx Kinko's. Well, our mentor has given Amin Bata, the dry cleaner, something to think about. But mostly today has been conceptual. Tomorrow, they're getting down to practical tasks.
Are you clear now on what your homework is for tonight?
BATA: Yes, there's tons of it and I'm geared up about it.
VELSHI (voice-over): Next, Amin isn't clear on his assignment after all.
BATA: That's a good one. I need help on that one.
VELSHI: And later, Amin tries to land a large account, but will he seal the deal?
KUSIN: The most common mistake people make is they don't ask for the order. You've got to ask for the order.
VELSHI: Coming up on THE TURNAROUND.
VELSHI (on camera): Branding and marketing, it's important to the success of any small business in America. It's going to be particularly important to the success of the small business that we're trying to turn around here in Dallas.
Welcome to Day 2 of the turnaround. Our small business owner, Amin Bata, runs two dry cleaning operations in the area. Our mentor is the CEO of FedEx Kinko's. Well, the CEO, Gary Kusin, gave Amin a lesson in business yesterday and sent him home with some homework: think about the things that make his dry cleaning operation different from the 2,000 other dry cleaners in the Dallas area.
Tell me about his attitude. How you feel about how you were received and whether or not he's embraced this project adequately?
KUSIN: I think Amin has had a very open mind about everything we talked about so far. I can tell that moving him into sales and marketing is pushing his envelope. So now if we can give him some real tangible ways to think about marketing into operational ones and in a way that works for him, I think we're going to have a wining opportunity here. I think he could turn this around.
VELSHI (voice-over): It's 10:30 a.m. Amin meets with FedEx Kinko's senior VP of sales, John McDonald, for a quick lesson on generating sales and building a reference account. One area Amin wants and needs to improve upon is bringing in larger accounts. He already services three department stores, two tailors, three high schools, five bridal shops and a retirement home, but that's not enough. BATA: All that business came in as referral. We didn't chase it. We waited for it to come through the door. Gary's telling me we can't wait anymore. We need to go out there and pursue it.
JOHN MCDONALD, SENIOR VP OF SALES, FEDEX KINKO'S: Absolutely. And with any of these customers that you have today be willing to be a reference point?
BATA: Yes, they would. I verified with the two public schools. They're willing to do it.
MCDONALD: There's nothing that works better than that kind of reference where people are willing to say what a great job you do. That would be good business.
BATA: Good to see you again.
LEVERTON: Good to see you too.
VELSHI: Amin meets marketing vice president, Tom Leverton, at a nearby FedEx Kinko's location to design marketing and sales materials to attract new customers. First on Tom's agenda is a new store front.
LEVERTON: Here is a picture of your store. You really have three walls that we can do something with.
LEVERTON: I know you do pants. I know you do shirts. How would you want to try to drive home a few messages, things that I might not know you do?
BATA: The display of the oriental rugs, the display of the wedding gowns, the display of draperies. That would be an idea. We could display those items that are finished products, finished goods that are ready to be picked up, paid for.
LEVERTON: What about showing, you know, punchy pictures of them instead of the actual products. And then it would be a cleaner look, a little bit more modern and that hopefully will help inspire confidence, which is essential if you're going to try to promise quality.
VELSHI (on camera): Amin has become fond of using the term "value proposition" over the last couple of days. It's the reason why customers would use his dry cleaner as opposed to someone else's. Well, now he's here getting some good advice on how to get the ideas from here on to here.
LEVERTON: When we talked yesterday about trying to communicate one or two things to the customers, that promise side, I think that's something that you might want to think about bringing out. BATA: That's a good one. I need help on that one. We've got so many ideas we can't put it in words.
LEVERTON: And that's the challenge. When talking to a customer, you only get one shot to do it so it needs to be something clean. It needs to be something short, your whole promise and your hook.
BATA: I've got a thought on that.
BATA: Our emphasis on button checking.
BATA: That's a continuous issue. If a garment is not ready to wear, it comes back. So we have triple checks on buttons on both dry cleaning and laundry.
LEVERTON: I don't like triple check.
BATA: It's too technical, isn't it?
LEVERTON: Yes, it is. Maybe we put out with inspection. We inspect your garments...
BATA: Three times. Your clothing is checked for these four items before it leaves.
LEVERTON: We guarantee our results down to the button.
BATA: There you go. That's what our core value could be right here, our strong point, our value proposition. What do you think?
LEVERTON: I like that better.
BATA: What do you think?
LEVERTON: I like it a lot.
VELSHI: With Tom's help, Amin comes up with a first draft of his value proposition and a new design for a store front. An artist creates a mock up of the plan and after the close of business tonight, a FedEx Kinko's design team will turn Amin's vision into reality. Now, Tom and Amin work to come up with an advertisement that can be hung on outgoing orders.
LEVERTON: The goal here with any of these marketing issues is to step back from your business and try to think like the customer. You want to change the customers' actions. You want them to either come to you more frequently, come to you exclusively or bring you jobs they don't bring you today. Those are your three goals. What do you want to tell them?
BATA: I want to tell them about jobs they don't bring in frequently. That would be household items. LEVERTON: OK.
BATA: It's going to be the draperies, the area rugs.
LEVERTON: OK. With something like this, you can either have an educational piece or a call to action. Education is did you know we do these pieces?
LEVERTON: You put your brand on there. You put your phone number and you're done. The call to action is bring in your pieces now because you're going to get a benefit for it, 10 percent off or a benefit.
LEVERTON: Which do you want these pieces to be? They both have a value.
BATA: We could do a 10 percent off.
LEVERTON: Now, going for a call to action. Now, how do you want to word these? Do you just want to say oriental rugs, draperies, wedding gowns?
BATA: We could do some wording here regarding spring cleaning. Bring you're your draperies.
LEVERTON: Bring down your draperies.
BATA: Roll up your rugs.
LEVERTON: Roll up your rugs.
BATA: There you go.
LEVERTON: There you go. That's great.
VELSHI: Are you getting somewhere with this?
BATA: I'm getting a lot of places with this.
VELSHI: You hadn't really separated the values of your operation from that of other dry cleaners. You hadn't quite understood how to tell people why to come to you as opposed to just to get their clothes dry cleaned.
BATA: Exactly. That's been the goal since yesterday is to verbalize what we do behind the scenes, put it into words so that we can go ahead and display it in everything that we do.
VELSHI (voice-over): Coming up, Amin presents his value proposition to Gary.
KUSIN: You may want to incorporate yourself into this because you personalize it. VELSHI: Then Gary gives him his biggest challenge yet.
KUSIN: We have a lead for you. We'd like you to go in and make a pitch tomorrow.
VELSHI: Next on THE TURNAROUND.
KOPPEL: Good morning, everyone. I'm Andrea Koppel at the CNN Center in Atlanta. "THE TURNAROUND" with Ali Velshi continues in a moment but first these headlines.
Insurgents again are stepping up their attacks in Iraq in a series of incidents today. A car bomb killed nine Iraqi guardsmen and wounded at least 20 others west of Baghdad near the Abu Ghraib prison. And the military says another car bomb exploded near an U.S. patrol in Baghdad killing one Iraqi civilian and wounding at least three task force soldiers.
Rising tensions over a history book prompted a high level meeting between Japan's prime minister and the president of China. Japan extended the olive branch and apologized for its wartime atrocities. There had been massive protests in China over a new textbook that glosses over Japan's aggression in World War II.
And we'll have more news for you in 30 minutes. I'm Andrea Koppel in Atlanta. "THE TURNAROUND" with Ali Velshi continues right now.
VELSHI: Welcome back to THE TURNAROUND. I'm Ali Velshi. We're in Dallas, Texas, where our small business this week is a dry cleaner. Now, we've paired him with the CEO of FedEx Kinko's and our dry cleaner seems to think that it's the quality of work they do here which sets him apart from his competitors. He is, however, having some trouble getting that message out and that's what he's working on that today.
VELSHI (voice-over): In order to market his business more effectively, Amin's mentor, Gary Kusin, suggested that Amin work on his value proposition. Back at Pepper Square Cleaners, Amin presents the new hanger ad he's designed, which includes his value proposition, to Gary. But Gary doesn't like everything he sees.
BATA: Here's our core proposition. Inspect every aspect of your garment right down to the last button.
KUSIN: Do you like the font size on that? I'm surprised it's not bigger.
I noticed everybody that comes in here and says, Hi, Amin, to you. You may want to incorporate yourself into this because you personalize it. You make it real.
BATA: Well, I would say my problem is our promise.
KUSIN: It's worth a conversation.
VELSHI: For now, Gary's work at Pepper Square Cleaners is done but he wants to check out Liberty Cleaners, Amin's second location. The 2,000 square foot facility is a smaller operation than Pepper Square and brings in considerably less revenue.
UNIDENTIFIED FEMALE: Thank you.
KUSIN: So walk me around here.
BATA: I sure will.
VELSHI: Amin takes Gary through the operations at Liberty Cleaners. Gary realizes that many of the answers to Amin's problems lie right at his fingertips.
KUSIN: How do you keep receipts here?
BATA: We -- our...
KUSIN: Do you do it by the day?
BATA: We can pull up how much each customer...
KUSIN: So if I was a regular customer of yours, could you pull me up and see exactly how many -- what I bought from you this year?
KUSIN: Oh my gosh.
BATA: Yes, number of times and how many tickets and what your total spending is so far.
KUSIN: Oh, you're going to make me cry. I'm telling you. That's all there. You've got everything you need. You've got to do a sort. You should find out from the biggest to the smallest of your customers in that for the last 12 months. I would love to know.
BATA: I can do a customer analysis...
KUSIN: You know I'd love to see that.
VELSHI: Amin pulls up customer records for the past year. They focus in on the top 20 percent of the highest paying customers. Out of 196 regular customers, 39 of them bring in the most revenue.
KUSIN: Look at the rapid drop of here, from your biggest customer, who does 4,398 down to 219. What that means is in here your top 20 customers and you can kind of see them up here, you need to be on a first name basis. You need to know everything about them and their lives and you need to be going out to their house to pick it up. The 20th percentile customer came in three times last year and spent $70 a trip. But you what? That's a conversation you say with them, you know, we love you man. How did we do? Did we do OK? Why are we only seeing you three times a year? There is a treasure trove of marketing opportunity here for you.
VELSHI: In addition to giving business advice, Gary has also been formulating a major challenge for Amin, a pitch meeting with high profile department store.
KUSIN: We have a lead for you. We'd like you to call them. We'd like you to make an appointment.
KUSIN: We'd like you to go in and make a pitch tomorrow.
KUSIN: It's Stanley Korshak.
BATA: All right.
KUSIN: OK. They're very interested in listening to your pitch.
Stanley Korshak is one of the very top retailers in Dallas. For him to get an opportunity to pitch them is an enormous opportunity for him. When's a good time that you could do that tomorrow?
BATA: Sure. Let's do it right now.
It'd be outstanding to land them whether they use us out of their alterations department, out of their bridal salon, out of their special events merchandising, out of their personal shoppers. That would be a privilege. That would be an honor to be able to service them. So it is exciting. It's very, very encouraging to get that lead from Gary.
BATA: Hello, John, Amin Bata. Is Suzanne Warner available? Hi, Suzanne, Amin Bata with Pepper Square Cleaners. How are you today?
VELSHI: Amin sets up an appointment for tomorrow and Gary offers some last-minute advice.
KUSIN: Let me tell you what the most common mistake people make in the sales -- in the pitch is they talk wonderfully about their -- about their product, their value proposition, their services. When they get to the end, they don't ask for the order. You have got to ask for the order.
VELSHI: In other words, close the deal.
BATA: This is the first effort in marketing by myself with the guidance of Gary. In 17 years, I never had to chase marketing into department stores or anything like that so this will be quite an opportunity.
KUSIN: Tomorrow is a new day and let's see how you hit the ground running tomorrow, OK?
BATA: All right.
KUSIN: I look forward to it. I am very excited.
BATA: I am, too.
KUSIN: I will probably put on a tie for tomorrow if we're going to Stanley Korshak.
BATA: All right.
VELSHI: Day 2 of this turnaround is over. Our dry cleaner, Amin Bata, has done very well so far. He's identified a brand for his company. The thing that separates his dry cleaner from others. He's even put that on paper and developed some graphics for it. But fundamentally, he's an operations guy so his big challenge comes tomorrow. He has to put his marketing hat on. He's meeting with one of Dallas' premier clothing retailers and he's going to pitch them on giving him their dry cleaning business.
(voice-over): Coming up, will Amin be able to seal the deal?
BATA: I didn't think about the obvious.
VELSHI: And the store front's transformation grabs Amin's attention.
BATA: It was a bus load of a surprise. I didn't think it was going to be as big as it is.
VELSHI: Next on THE TURNAROUND.
VELSHI (on camera): Day 3 of this three-day turnaround has begun at this dry cleaner in Dallas, but the big changes aren't going to be the physical ones here, they're going to be the ones that Amin, our small business owner, undertakes. He's going to meet this afternoon with one of the city's premier retailers. If he can win their business, it could be the beginning of something new for him.
BATA: Day three, a lot of big things happening.
VELSHI (voice-over): Big things and hopefully big improvement that'll put a new spin on Amin's dry cleaning business. Ten a.m., while a FedEx Kinko's design crew gives Pepper Square Cleaners a facelift, Amin meets with Larry Rogero, FedEx Kinko's director of environmental affairs. He gives him some energy and money saving tips.
LARRY ROGERO, DIRECTOR OF ENVIRONMENTAL AFFAIRS, FEDEX KINKO: What do you spend on electricity a month?
BATA: Electricity averages anywhere between 1,200 to $1,800 a month.
ROGERO: You can work with your landlord and potentially put skylights in here so you can bring natural lighting in. These are called teeth wall (UNINTELLIGIBLE) that you can put in (UNINTELLIGIBLE) lights, the same brightness, same color. It uses about 70 percent of the energy...
ROGERO: ...that you would normally use.
VELSHI: Beyond the physical plant, Amin is also looking to improve the quality of life for his employees. Between his two stores, he has 16 full-time employees who work 40 hours a week. After a year, he gives them one week paid vacation but he hasn't been able to give them a raise in three years. Amin wants to do more for his hard working staff but he can't afford to. Tracy Brightman, VP of human resources for FedEx Kinko's, is going to help him achieve that goal without having to shell out a lot of cash.
BATA: We need someone with ideas for rewards and recognition.
TRACY BRIGHTMAN, VP OF HUMAN RESOURCES, FEDEX KINKO'S: OK. Well, I mean that's a great thing. And you know, there's so many studies out there that show, you know, money is obviously part of why everybody works but it's really not the determining factor on why people stay at jobs or why people will leave jobs and never underestimate the values of things that don't cost a money as a thank you for what you did, the pat on a back for a job well done.
VELSHI: Tracy suggests Amin can do simple things like name an employee of the month, recognize staff birthdays, have a pizza party or a pot luck and maybe even give $10 gift cards for a job well done.
BATA: She gave me some wonderful ideas. None monetary ideas on how to reward employees.
VELSHI: Twelve thirty, Amin's meeting with Stanley Korshak, one of the largest department stores in Dallas is moments away.
(on camera): Your meeting is in about 45 minutes. How do you feel about it?
BATA: Pretty good, a little overwhelmed but not nervous. I think I'm OK.
VELSHI (voice-over): A lot rides on this presentation. If he does well, it could help him expand his operation.
BATA: I think we can land this one. This will set a benchmark for us. We do a couple of other high end stores, a third one on our perspective will just add to our value.
KUSIN: I'll be looking for presence. I hope that he's wearing his nicest suit.
VELSHI: Besides a nice suit, Gary will be looking at Amin's overall performance and more importantly, to see if he remembers to close the deal.
KUSIN: The most common mistake people make is they don't ask for the order. You have got to ask for the order.
VELSHI: One thirty, wearing a newly pressed suit, Amin arrives for his meeting with three Stanley Korshak executives.
BATA: Hi, Suzanne, Amin Bata.
SUZANNE WARNER, BUYER, STANLEY KORSHAK: Hi.
BATA: It's good to meet you. Thank you very much for allowing me to come and introduce myself and explain some of our services at our cleaning operation.
VELSHI: Amin begins his pitch while Gary watches his every move.
BATA: We do everything from special events merchandising to quarterly rug cleaning.
VELSHI (on camera): Amin's been pretty cool and collected over the last three days and that's because he's been around people who have been here to help him. That's not the case here. Our mentor, Gary Kusin introduced Amin to one of the top retailers of men's clothing in the city. And Amin is pitching them on using him as one of the service providers. Let's see how he's doing.
KEITH CARLISLE, BUYER, STANLEY KORSHAK: What about men's tailored clothing? They're almost fragile and they have to be pressed in just a certain way.
BATA: The secret to avoiding seam impressions is to use either no moisture or very low moisture.
WARNER: On men's dress shirts, quite often we recommend not have them starched. How do you handle a process like that when it's no starch?
BATA: There should be a separate head for the no starch shirts. There should be a separate head for the starch shirts. If the plant maintains two sets of presses, then those starch customers will always happy.
CARLISLE: And you maintain two presses for that then?
CARLISLE: That's interesting. I never heard of that, very interesting.
BATA: Well, it was great to meet you guys.
UNIDENTIFIED MALE: Thank you very much. Thank you for visiting.
VELSHI (voice-over): Twenty minutes later, the meeting is over. Amin thinks it went pretty well.
(on camera): How did it go? How did it feel to you?
BATA: It felt like a lot of information going back and forth and I kind of got a sense of what they're looking for and what we may be able to provide.
VELSHI (voice-over): But Gary points out that Amin forgot the golden rule of sales.
KUSIN: I'll kind of start with what I think was perhaps the most egregious thing. You really had them where you wanted them. They were eating out of your hand. You didn't ask for the order and that is the most important thing about a sales call.
BATA: My reasoning for not closing with it is I didn't think about it. I didn't think about the obvious. The obvious is when do we get the job?
VELSHI: And while he did show off his knowledge of the business, Amin's presentation wasn't seamless. Gary offers some tips that might help Amin in future sales calls.
KUSIN: The first part of a sales call is small talk and here the small talk would have been, whoa, this is a beautiful store. Then the next stage, you asking questions of them. Tell me about your business. Tell me what your needs are in dry cleaning. Now you go into your value proposition. And your real value proposition to them is quality. And you communicate that through your knowledge of the business. The next stage is any questions of me. And then the end is always, always, always the close. They ask for the order.
VELSHI: Nonetheless, Gary thinks Amin did make a good impression and the Stanley Korshak people agreed.
(on camera): He had, I thought, some very confident answers.
CARLISLE: He was very confident.
WARNER: He knew his business very well.
VELSHI: Your level of confidence in a cleaner probably has to be higher even than the average consumer's level.
CARLISLE: I think so. Absolutely just because of the nature of the fabrics that we sell.
VELSHI: Do you kind of feel that he gives you that sense of confidence? Do you feel that this is somebody you could do business with?
CARLISLE: Well, I do.
WARNER: I thought he was very informative and very knowledgeable.
UNIDENTIFIED MALE: I thought we'd stump him on something but we didn't.
BATA: It is exciting that the meeting went well because it was an opportunity to start a new process, something that we haven't pursued before. This is a new venue.
VELSHI: Coming up, Amin sees his new store front for the first time.
BATA: Oh my goodness. Look at that. This is something to applaud.
VELSHI: And he reflects on his turn around.
BATA: We're going to start a new day tomorrow.
VELSHI: Next on THE TURNAROUND.
VELSHI (voice-over): It's a final day of this three-day turn around in Dallas. Our small business owner is Amin Bata, a local dry cleaner. Our mentor is Gary Kusin, the CEO of FedEx Kinko's. Gary found Amin to be a hard worker with a keen eye for operations and a commitment to quality. So over the past three days, Gary has given Amin some tasks to complete, tasks designed to help Amin differentiate his business from the competition. The tasks have included developing a value proposition to articulate Amin's commitment to quality, getting more aggressive about marketing, something that Amin has shied away from in the past, and redoing his storefront, freshening it up and using it to underscore Amin's differences from the competition.
BATA: The prize of it all has been to get the storefront to say what we have always done, to put that wording on the walls, to put it all over where the customers can see it in pictures and in words, getting our message out to the customer that we haven't gotten out in the last 17 years.
VELSHI: The store front redesign at Pepper Square Cleaners is almost complete. It's finally time for Amin to see his storefront vision come to life.
KUSIN: All right.
BATA: Oh my goodness. Look at that. This is something to applaud.
KUSIN: Oh, yes. BATA: They did a great job.
BATA: Thank you very much.
KUSIN: In my mind, the ribbon cutting is much more than a ribbon cutting. It symbolizes, to me, especially in this case, a new day, a new beginning, a new approach to business. It's the same physical location but it's not the same.
BATA: The idea, I put in the name in the middle and putting six services, three on each side of our name was important because those are services that compliment our traditional cleaning laundry. The button was a surprise. I didn't think it was going to be as big as it is. The button is our promise that the clothes are not only cleaned and pressed but they're ready to wear. That is our message. It's a big button for big promises.
VELSHI: And remember those hanger ads that Amin designed?
BATA: What do we have here?
LEVERTON: It's yours.
BATA: What do I see here?
BATA: It's the hanger holder. Look at that. I love the colors. I love the three different services here. I love it.
LEVERTON: You have 1,400, which should keep you busy for about two weeks and you certainly know where you can come back for some more.
BATA: All right. That sounds great. I appreciate that. Thank you.
VELSHI: And that's not all. FedEx Kinko's vice president, Tom Leverton, presents Amin with a demographic map to help him target his business expansion more effectively.
LEVERTON: What this shows is the income by neighborhood in your surrounding area. The darker the green, the higher income the neighborhoods are and the more likely they are to have those big elephants that you want to get.
BATA: I'm very optimistic about following up with the marketing plan.
VELSHI (on camera): Give me your sense of where Amin is on the road to a turn around.
KUSIN: Well, I think Amin has all the tools. He had it in him when he started. He has it in him now. I think the next 30 to 60 days are going to tell the story. I think he's good to go and I expect he's going to be spectacular. He understands what he needs to do to be successful. I give him an A plus.
VELSHI: All right. Now, whenever you get an A plus on something or any grade, there's always a little section with comments. I know that you got a couple of things you want to talk to Amin about. I'm going to let you talk about that alone.
KUSIN: OK. Great.
You've been drinking through a fire hose literally for three days and if you could only remember a couple of things I'd like you to remember these things: you are the CEO of your company. You're going to have to drive your outside sales. So you're in charge of marketing and sales and what marketing means is understanding your customers. It means pricing. You already identified a way to raise your margins and then being sure that every way that you face a customer from the front of your store to the materials that you leave behind with customers are up to the image you want to portray. I think that's going to be your keys to success, sales and marketing.
BATA: It's a big order. I'll work on it.
LEVERTON: I want him to see that this isn't just a one-time event. He needs to take this to the next level.
KUSIN: I'm going to give him an assignment. I'm going to tell him to call me in a month. I'm not calling him. He has to believe that there's some value ad in him picking up the phone and calling me and seeing if I'll meet with him or do whatever. If he does, I'll be all over it. But he has to care.
KUSIN: Amin, good luck to you.
BATA: Thank you so much.
KUSIN: You bet. Bye-bye. I can't tell you how much our whole team enjoyed this exercise. We had a spectacular talent in Amin and a great business. We loved it.
BATA: We're going to start a new day tomorrow. We're going to start with Gary's ideas, a new way of marketing, a new way of looking at our values, a new way of communicating those values. And we're going to start doing them every single day.
VELSHI: Now, some people would say you can't really turn a business around in three days. This certainly looks like a new business. A lot of changes in the front, in the marketing materials, and it's not just cosmetic. There's been a real change in Amin Bata. He's gone from being the guy who runs this business to being the guy who markets it. He has the tools to make a difference now. What he does with them is up to him. I'm Ali Velshi. See you next time on THE TURNAROUND.
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