Family Business

How We Beat the Chains, Spring 2000

Consulting the Experts

Marty and Louise knew that before they could take the business to the next level, they would have to sharpen their business practices. From the time they conceived of starting a coffeehouse, they have relied on professional advisers to guide them. “When we began,” Louise says, “we promised each other we’d never compromise on quality. That goes for the coffee beans we use and for professional advice we get. A lot of family run coffeehouses fail because they cut corners and don’t get the professional help they need.”

Marty had read an article about a Long Beach retail consultant, Bob Phibbs, who had helped save a local coffee house, Polly’s, that had operated in the same location for 20 years. When two Starbucks opened nearby, Polly’s almost sank. Marty liked Phibbs’s approach and called him up.

Phibbs, 41, calls himself “the retail doctor.” He has been an independent consultant for seven years. An energetic personality, he has helped some 60 small, independent businesses in southern California, including Bay Shores Inn and Haute Links restaurant, cope with chain-store competitors. Like any good doctor, he is most effective with clients who are willing to change old habits. “It’s not the big who will kill the small,” says Phibbs, “as much as the creative who will devour the passive. Too many small, independent businesses blame all their problems on the chain stores. They keep crying ‘poor me’ but they don’t change how they do business.” One way to survive is to find a niche the chains don’t fill. Phibbs is currently writing a book, Just Because You See Icebergs in the Water Doesn’t Mean You’re on the Titanic, that sums up his consulting philosophy. It boils down to focusing on three areas: facility, marketing, and sales.

Phibbs began working with Marty eight months ago. He gave It’s A Grind high marks on its facilities. All were clean, attractive, well-lighted, professional looking and, he was happy to see, had no handwritten signs. Marty and Louise’s marketing and sales methods, however, needed improving. They had been offering coupons in the local papers. To capitalize on Marty’s native roots, the ads included the tag line, “Born and raised in Long Beach.” Phibbs believes a more effective marketing strategy is direct mail advertising. “Marketing doesn’t have to be expensive as long as you know your target,” he says. “The best place to start is with your customers.”

Marty had been trying to put together a mailing list for four years without much luck. Phibbs suggested in-store promotions that are fun and encourage customers to bring family and friends. Two recent promotions included a drawing to win a trip for two to Las Vegas, and free balloons, some of which had prizes inside for free drinks. To participate, customers had to fill out their names and addresses on a card. The cards build the mailing list, which Marty and Louise then use to announce other promotions. Marty and Phibbs are now gearing up a new promotion to increase the business’s name recognition. They’re printing It’s A Grind bumper stickers. License plates of cars spotted carrying the stickers will be posted in the stores and the vehicles’ owners will receive free coffee for a week.

Simultaneously, Phibbs revamped It’s A Grind’s sales methods. “Marty and Louise had established lots of policies,” Phibbs says, “but what was missing from the training was teaching the staff how to sell.” Phibbs says this is a common mistake among service businesses, which become so focused on providing good service that they forget about salesmanship.

Phibbs began with more advanced training for all of It’s A Grind’s 85 employees. “A lot of college students don’t know how to talk to people,” he says. “I tell them that all selling begins with a relationship. You have to greet the person first as a friend and then as a customer. If a mother comes into the store with kids in soccer outfits trailing behind, ask her ‘How was the game?’ before taking her order. And don’t say, ‘May I help you?’ to her. Instead, ask ‘What can I make for you today?’ That makes her feel special.’”

Phibbs preaches that selling is nothing more than a transfer of feeling from the salesperson to the customer. When the salesperson is enthusiastic about the product, the customer is likely to be, too. “Most people order the same drink every day,” Phibbs says. “To introduce them to the variety of drinks served, the employee might say something like, ‘Have you ever tried a chocolate espresso bean shake? It’s my favorite. If you like a strong espresso taste, you’ll really like this.’ Adding flavoring increases the price of the drink by about 50 cents. The result is that you’ve given the customer a new experience and you’ve increased sales.” Phibbs’s approach has proved so successful that he has taken over all staff training, freeing Louise to concentrate on quality control.

At the end of each month, Marty totals employees’ average sales from the computerized cash register. Those who score the highest on sales per transaction win prizes, which vary each month. “The employees like the competition,” says Marty. “It gives them recognition. It’s also a reminder that the business is a sales organization, whether the employees think of it that way or not. Bigger sales mean more money for the company and bigger tips for the staff.”

Marty attributes a good portion of the business’s 28 percent increase in sales last year to Phibbs’s guidance. Sales were even up in January, traditionally the slowest month. As important as the specific changes have been, Marty says the best thing Phibbs has done for him is to hold him accountable as a manager. In the past, if an employee wasn’t doing a job properly, Marty would step in and do it himself. “Bob got me out from behind the counter. I was so caught up in the day-to-day ordeals of running a business that I didn’t have time to think about the big picture.” It wasn’t that Marty didn’t have new ideas. If anything, he was generating too many ideas and going in too many different directions. Now when he comes up with a new idea, Phibbs draws a bull’s eye target and they talk about where the idea falls. If it falls in the center, then he knows it is worth pursuing.

Dangers of fast growth

Success, of course, comes with its own costs. Since opening their first coffeehouse, Marty and Louise have had little time for much of a life outside the business. They were on call 16 hours a day. When employees got sick or didn’t show up to work, or there was a problem at any one of the stores, they had to take care of it. They have since delegated those responsibilities to a regional manager and an assistant manager. “We realized we couldn’t do it all,” Louise says. “There’s no price tag you can put on preserving your sanity. I can’t stress enough the importance of having employees you can trust.”

Expanding further will add to the demands on their time. Marty is seemingly indefatigable. Even when he worked in corporations, he routinely put in 14-to-16-hour days. Louise, however, had reached her limit. After working seven days a week, 52 weeks a year, with no vacations for five years, she wanted to cut back. “I was mentally and physically exhausted,” she says. “We would come home from working all day and have time only to walk the dogs. Then we’d fall asleep and start all over again at 5 a.m. the next morning. We had nothing to talk about but the business. We needed some other input in our lives, and it was easier for me to reduce my hours than it was for Marty to reduce his.”

Marty and Phibbs continue to meet for a half day once a week and talk by phone several times a week as questions arise. With Phibbs as his coach, Marty has someone other than Louise with whom he can talk about the business.

That outlet, along with Louise’s more reasonable 35-hour week, has helped reduce the stress on the couple’s marriage. With their life and business more under control, Marty and Louise feel confident that having Starbucks as neighbors will not affect their business. “We’re not worried,” Marty says. “We do a great job. Yes, Starbucks does the same things we do, but we do them better. Besides, we like the competition. It gives us something to measure ourselves against.”