Part 4

Blunder #6

You’re Lying.

It used to be much easier to lie in advertising. You could emphatically announce that your detergent got sheets “their whitest white” because, seriously, who was going to challenge you about it? Today however there may be web sites (I haven’t actually checked) that publish data on “reflectivity and perceived luminescence of white cotton sheets as a factor of leading laundry detergents.” And there will likely be Digg, Buzz, Fark, Stumble, and other personal comment/review options on the page, so anyone can lend their voice to the matter.

Lies of course, come in all shapes, sizes and degrees. Most common to our industry are the lies of exaggeration. In my posting “Blunder #3” I called out Pioneer for their use of over-the-top hyperbole. (Coincidentally, last week Pioneer announced they are getting out of the TV biz. I claim no responsibility.) That was perhaps the most egregious example, but who hasn’t at one time or the other peppered their advertising claims with modifiers such as ultimate, spectacular or awe-inspiring.

To most people, that’s just so much chin music.

Lies of exaggeration aren’t just a waste of words and media dollars, they’re actually corrosive to your credibility. You’re the little boy who cried “state-of-the-art” so many times that no one believes you anymore.

You’re the little boy who cried 

“state-of-the-art” 

so many times that 

no one believes you anymore.

Other lies are the result of wishful thinking. Your advertising can claim that when someone comes into your store, they’ll get “friendly, expert advice.” But you know in your heart-of-hearts that, while they may get that kind of promised treatment from your 15-year veteran salesperson Anything-to-Help Hannah, there’s also the likelihood that they’ll run into Snobby-Audiophile Andy or Rookie Ricky, both of whom you’ve received complaints about.

And if you’ve heard complaints from a few customers directly, think of all the people who didn’t bother with that approach, and instead prefer to share their experiences on the World Wide Web. They’re out there, I assure you. Check it yourself.

Now, we’ve examined here what could be considered little white lies. (I’m going to assume that you never want to be purposely deceptive.) You’re just using age-old “truth stretches” to persuade people to visit your store. But you can’t get away with that anymore. The Internet is a lie-detector (with the same dubious accuracy), and anyone who wants can look at the readout.

Reflections on Magnolia Hi-Fi, from someone who worked there 25 years.

Note: This article is in response to the February 12, 2009 announcement of Best Buy assuming direct control over Magnolia Audio Video and the subsequent closing of many of its retail locations.

There’s the danger of making statements of opinion sound like statements of indisputable fact. I want to be clear, upfront, that what you read here is strictly a perspective–one man’s take, unintentionally yet perhaps unavoidably tainted by the fallibility of memory and the melancholy of looking back on a big, important piece of my life.

But I was indisputably there. My first visit to Magnolia Hi-Fi was in 1974. I was so impressed that I applied for a job there. Not with a resume, but with a long personal letter to company owner Len Tweten. I ended up sending two. It took eighteen months to get an interview with his son Jim. I was hired in 1976, probably more for the reason that my future brother-in-law already worked there than from the fact that I had already been selling hi-fi gear for a couple of years. I felt like I had been admitted to Kennedy’s cabinet of the Best and the Brightest.

There were parallels between Magnolia Hi-Fi and Nordstrom: Both founded in Seattle by folks with strong Scandinavian roots, both family-operated businesses, both renowned even more for their high level of customer service than for the high quality of products they offered.

Len Tweten is one of the few people I’ve known who I would characterize as truly eccentric. All his customers seemed to revere him and all of the people who worked for him seemed to fear (and, admittedly, admire) him. To be dressed down by Len Tweten was akin to being sprayed with a verbal sand blaster. He had odd manners of language during those episodes, seemingly inventing new cadences of profanity, delivered always at Klipshorn volume levels.

Customers were correct about getting treated well at Magnolia Hi-Fi. Len gathered around himself people who shared his vision of prosperity through people-pleasing. He gave his employees the authority to act independently to solve problems. He bristled (and sometimes exploded) at the suggestion of putting together a company policy manual. To Len, doing the Right Thing for his customers came naturally. But it has to be said that for us–his employees–the greatest incentive was avoiding the Wrath of Len should one of your customers call him with a complaint.

Len and Jim were both gamblers, and their willingness to take risks was unquestionably a key factor in Magnolia’s success. For example, they took chances by choosing to carry what were, at the time, audacious products, such as a $1000 cassette deck (from a hitherto unknown company called Nakamichi) and the first projection television (the Advent Videobeam). Bob Carver came first to Len Tweten with the prototype of what would become the world’s first super high-powered amplifier (the Phase Linear 700). Jim was instrumental in convincing his father to gamble on more locations in the Seattle area. These new stores were often staffed by ex-employees of other CE stores that had gone under while trying to compete with Magnolia.

Sure, there were some losing hands, but they’re not worth much of a mention. There were the troubles that inevitably accompany growth–communication problems mostly. And there was the issue of erosion of company culture. Again, this was in parallel to Nordstrom. During the time when it was a regional (Pacific Northwest) player only, Nordstrom had a relatively easy time hiring salespeople who understood The Nordstrom Way, as the company often simply hired people who had been life-long customers. That became tougher to do when the company expanded into new markets. Magnolia experienced similar challenges when opening stores in Oregon and California.

The really big payoff for the Tweten family of course was Best Buy’s acquisition of the company in the fall of 2001.

Personally, I wanted to believe the propaganda I was fed by Best Buy–that they bought Magnolia because of what it was, that they recognized a winning formula and didn’t want to alter it (much). And to this day I feel certain that–at that time–they believed it also.

But I was in a position, as Director of Advertising, to be in daily contact with “the hive” (BB HQ, then in Minneapolis suburb Eden Prairie) and, abetted by my natural cynicism, I was aware of significant changes almost immediately. I won’t bore you with the details, but suffice it to say that the primary responsibilities of my position changed gradually but inexorably from creating advertising to pouring over spread sheets. Eighteen months after the acquisition, I left. (Postscript: Magnolia’s “in house” advertising department lasted another year and a half or so after my departure before it was entirely eliminated.)

Funny. To many observers, the “Golden Age” of Magnolia Hi-Fi was the stage where it operated around half a dozen stores. Last week, Best Buy announced the closing of seven out of thirteen stores. Two of the remaining stores are also among the oldest. It appears at this stage that Best Buy is content to allow these few stores to continue, albeit with direction coming now solely from Richfield, Minnesota. (We’ll see.) Perhaps a retail model such as this is intrinsically limited in terms of scale, like a complex wristwatch that can’t be mass-produced and still maintain its quality and specialty.

Part 3: Yet More Blunders

Blunder #5
You’re advertising your price list.

Advertising is a terrible thing to waste.

Let’s say you spend a couple grand for newspaper space, a radio spot, a billboard or a blimp and get in return…bupkis. In this case, you might have been better off simply leaving a 50-inch plasma out on the sidewalk for someone to carry away. (When their friends ask them where they got their great-looking TV, the new owner will almost certainly mention your store’s name. And we all know word-of-mouth is the very best form of advertising. Right?)

A proven money-wasting strategy is to “advertise your price list.” In this case, you create an ad that provides a model number and selling price, unencumbered by filigree such as reasons to buy from you. The consumer can simply check your price against your competitors and make his or her buying decision. Your competitors particularly like it when you advertise in this fashion, as it makes it easy for them to determine their own selling prices (e.g. lower than yours). This form of advertising seems particularly popular with camera stores, whose (print ads, at least) often appear indistinguishable from one another, except for the logo at the bottom.

Now, it should be acknowledged that sometimes this price-list technique can work in your favor. You may indeed have the lowest price out there and will therefore have a better chance of a shopper choosing your store. However, customers for whom “lowest price” is the only criteria in choosing a dealer are not commonly considered a good foundation for long-term profitability.

My recommendation? Reserve this form of advertising exclusively to “blow out” events where the goal is liquidity, not direct profit. Use it to advertise customer returns, discontinued models, demos, exchanges, that sort of thing. But–and this is really important–price this detritus at the very lowest prices you can stomach. Preferably prices lower than even your competitors can stomach. Do the quick hit–turn some boxes into cash–and then get back to trying to sell the profitable stuff.