How Every Business Is Built Up
( Originally Published 1912 )
Every business is built up in the same way. No business which is worth having is built up in any other way.
What is the way to build up any kind of a business? If we are to answer that question, let us answer it right and start at the beginning.
A Cement Business
A building cement company is said to have spent one hundred to one hundred and fifty thousand dollars in magazine advertising.
Was that the way to build up its business?
In trying to find out whether this magazine advertising was profitable, the cement company was quite startled to find that some of its inquiries cost $3.00 each. Others cost $5.00, and some cost as much as $10.00 each—that is, if it spent $150.00 for a page advertisement in a magazine, and got only 15 replies to that advertisement, then each reply cost $10.00. Naturally, some people would say: "What! $150.00 for a page and only 15 replies—it don't pay."
So this company gradually stopped advertising in the publications whose replies cost more than $1.00 each.
Very few direct orders for cement came back from the people who wrote in reply to the advertising.
But the use of cement constantly increased. New uses were found for it. Inquiries began to come in, asking how to use this cement in ways which the company had not thought of. This company began to issue books on the different uses of cement.
Then, it began to put in each advertisement a list of books and called them the "Cement Library."
Did that build up its business?
Finally the government required 10,000 barrels of cement per day. Where did the government go for this cement? To this cement manufacturer, of course—but not because of the advertising or the cement library, although both of these were important factors. The government bought its 10,000 barrels per day of cement from this firm for another and far more vital reason, which you will see a little later.
A Department Store
Here is a retail store. It is an immense affair, beautifully planned. The owner has died. A new management has tried to run it. The business has gone into bankruptcy. A merchant from another city comes to town. He looks the building over, he studies the locality, he studies the city. He then assumes control of the business. Fifteen years later he is doing a business reported to amount to almost $25,000,000 per year.
How did the first man build up the business to a success?
What forced the second man into bankruptcy?
What made the third man so successful that he now does the largest retail business in that city?
It is exactly the same thing that made the cement company so successful. Different businesses, different conditions, different methods, different de-tails, but one and the same thing as the foundation of the success.
Here is a railroad that handles one-seventh of the total number of people carried on the steam rail-roads of the United States, and one-fourth of all the freight tonnage hauled by steam railroads.
How did that railroad get control of so much of the passenger and freight traffic of this country?
No, not politics. Not underhanded methods. Not wholly its naturally strategic position. There is a fundamental reason for its success. It was built up just as the big retail establishment was built up and just as the cement company was built up.
There is a magazine. Look at it. It has almost 2,000,000 circulation. It charges $4,000 per page every insertion. It often prints as high as 128 pages per issue, half of which will be advertising. If you are in Portland, Oregon, or in Portland, Maine, Muskoka, at the north, or Mobile at the south, or anywhere in between, you will see that publication.
Where did it get its circulation l How did it get so much business l By what means was its prestige built up until it is looked upon as the marvel of the publishing world l
The same as the cement company. The same as the retail store. The same as the railroad.
A Toilet Cream
Now look at an entirely different line. Here is a manufacturer of a toilet cream. He was once a chemist. Before that he was a clerk in a pharmacy. Before that he was an apprentice. When he was a chemist, there was no toilet cream on the market which did not spoil, turn rancid, smell, and if kept too long, or not in just the right temperature, be-come highly objectionable. Then one day, when making a large mortar full of toilet cream, he had an idea. He stopped a few minutes, and then said: "I will try it." He immediately made a toilet cream in a new way. That is now universally accepted as the correct way for making toilet cream. There grew up such a demand for that toilet cream that now an enormous building is devoted to its manufacture. It is sold all over the world. It has won grand prizes and gold medals in Europe and America. The chemist has, of course, become wealthy, but that is not what we are here trying to find out. What we want to know is, "Why and how was that business built up to such a size?"
Forty years ago a man whom other people thought was a dreamer, rented a little four-room cottage and began to live in a certain way. He persuaded other people to live in the same way. Some people thought he was a religious fanatic. Others thought he was probably crazy. His son followed in his footsteps. The number of people who began to live as this father and son lived, continued to increase. In a year or so, the little cottage was not big enough. A larger building was secured and then a larger and still larger. To-day it requires six big buildings, fifty cottages and a thousand employees to accommodate the people who come to this place for the purpose of learning how the son thinks that people should live. More than a hundred institutions throughout the world have been built by men and women who are trying to teach people to live in this way. Magazines and newspapers are published and libraries contain many books all teaching that this is the right way to live.
A Thermometer Business
About the same time two brothers began to make thermometers. The thermometers which they first made were looked upon by others as mere "trinkets," but the business grew and grew, until to-day it is known all over the world, and is making possible by its scientific temperature registering instruments, many of the great industrial, scientific and hygienic achievements of the present age.
A Sales Book Company
Let us come a little closer home. Go back a few years. Here is a building in which are buried hopes of a few men who believed that the merchants of the country were losing a large percentage of their profits because they did not use the right systems of handling business. They got hold of certain sales books and manifold forms, and invented others themselves for handling business in ways which they thought would stop the enormous losses. But they did not have the capital or the executive ability to carry through their ideas. Their business is in bankruptcy.
Along comes a man with a peculiar and commanding genius. He, like every other man, is the development of the kind of life he has lived and the exceptional opportunities that he has taken advantage of. He sees in that bankrupt company great possibilities for usefulness to the business world. He takes charge of it. It begins to grow. He picks out other men to help him. The business continues to grow. It keeps on growing until finally others who have been in the business longer and have built up a far larger business come to him and make overtures. They see in him and the men that he has gathered around him the very faculties and abilities which they have long desired to make use of, in their own great institutions. The end of the story is that the bigger companies and the little ones—four or five of them—all got together and put this man in charge of all of them.
Now, the interesting fact is, not that he was put in charge of these four or five companies, but why was he l What is the underlying basis of his success? It is just this ; here is his motto :
"Do Everything so Well, That They Will Want You to do it Again."
What does that mean? It means that this company which manufactures business systems and sales books has treated its customers so well that they will stick to it through thick and thin. It means that the thermometer manufacturer has made his goods so accurately that the doctor and the nurse, the steel manufacturer, the apple grower, and the poultry breeder and all other users of scientific thermometers know that this concern has made thermometers so good that they continue to buy them.
It means that the sanitarium and the toilet cream manufacturer and the magazine and the railroad and the retail establishment and the cement company have all made their enormous success through REPEAT ORDERS.
"Repeat Orders" The Real Foundation
One sales book was made so well that many more had to be made. One thermometer was made so well that they must thereafter be made by the car-load. When one magazine was read, it was enjoyed so much that it must be duplicated by the thousands, tens of thousands and millions.
Of course, every business man knows this. It is an old story; but many of them do not act accordingly. They do not always act as if they were convinced of its absolute and fundamental proof.
Stated in simple language, it is this :
No business can be made a success unless its customers are so well pleased with the goods and the service which they get that they will continue as customers and try to get other customers for you.
Any business house—be it a little store on some four corners in the country, or the greatest establishment in the world—cannot build up its business or keep its business built up on dissatisfied customers. It costs more to get a customer than your immediate profit on that customer. That is a general rule that absolutely holds true. Getting a new customer is an investment. The profit that you make on the business that you do with that customer is a dividend. You do not and cannot immediately get back your principal. You must depend upon repeat orders and continual patronage to earn enough dividends to pay you back your investment.
The Buyer Should Not "Beware"
The old policy of "Caveat Emptor "—" Let the buyer beware"—should be as dead as the most shrivelled-up "Egyptian mummy." Modern business, if it is to attain its fullest possibilities, must be done so well that the world will want it done again.