"What could they possibly teach me"?
That is what I thought when Vernon and his team first walked through my door 3 years ago. Boy was I wrong. I had 27 years of experience in the pawn industry and I felt like “what could he possibly teach me”. Since then, his team has only grown and grown and I even ended up working with him helping pawnbrokers like you and I become more successful! What Devoted Pawn Consulting taught me was life changing for me and my business and it can be for you as well!
What Did I Learn?
The single most important thing that Vernon and his team taught me was that this industry is still a great business and that we are not dying, but instead, need to re-establish ourselves and tweak the way we have done business in the past. He took the best of what has always worked well for us and added the new age twists that helped us get in front of millennials so that we could reach a new market and not only grow our pawn book but also grow our sales! He helped take us from not making a profit in over 2 years, to making our first profit in about 4 month’s time! Currently we are still experiencing record sales, have put some of our competitors out of business and what he taught us has lasted years and we have only gotten better at it.
Key Metric Tracking
The most eye-opening thing for me was when he asked me to print 5 reports from PawnMaster. We entered that data into his KPI form and he began to explain what my numbers and data meant in a way I never knew before. He told me all the problems I had (and many more that I was unaware of) without even stepping into most of our stores.
They showed me that my team was writing bad loans because most them were not collecting interest. The day and age of loaning the maximum amount on items with the hopes of growing the pawn book and increased interest collection was over. We needed to grow the pawn book in a good way with good loans only.
The numbers alerted me to the damage that my 10-10-10 layaway program had done. We believed this was the best thing ever because it “grew our sales” and was touted not only by NPA, but other famous pawn consultants in the past. In reality, in my 5 stores, we had $1 million dollars in tied up “inventory” that wasn’t selling and wasn’t being paid on. 70 percent or more of these layaways totaling over $1million dollars, never got picked up or paid in full. Hard goods such as electronics died on the vine and lost so much value in that 10-12 months before we pulled them that we often sold them for a loss at a later date. Even worse, to save the customers (who didn’t follow through on their commitment to pay each month), we offered them store credit (minus a restocking fee) to use toward another purchase or layaway. And to top it all off, we paid a sales commission each time to an employee who sold the items or took payments. We thought we were doing the right thing but it as killing us and destroying our cash flow and profitability. Vernon and his team taught us how to sell without needing to become dependent on the 10-10-10 as well as helping us make a better, shorter layaway program.
The numbers also made It very clear that our bonus and commission structurewasn’t working. In fact it was part of the problem. Part of our manager bonus was made if and only if they hit key metrics such as gross profit percentages. All this did was make them markup products for sale to meet the margin and their bonus. What we didn’t know was all that this did was prevent many sales because our customers were savvy on prices and drove up our aged inventory (while it depreciated and became worth less money). In addition, we paid our staff an industry favorite commission structure. We paid them a combination of a % of sales and productivity (based on amount of loans written). We were told that this would grow our pawn book while inadvertently growing our inventory and we would sell more as well. In reality it incentives our staff to loan more than they should and write bad loans because at least then they qualified for the productivity bonus. They knew it was easier then trying to sell something that was overpriced. Vernon taught us a brand new never before seen or used commission plan that is a first of its kind. I can now monitor my stores from afar and see whether they are following the processes we put in place or not and makes my job easier!
I recommend that you #takethechallenge and find out how good our commission plan is compared to anyone else!
Pawn Associate Training
Everything we mentioned above was awesome and made me open my eyes, but the major changes were actually made when the Devoted Pawn team worked hands on with my team and managers. They had (and have continued to improve on) a trademarked pawn process that allows you as an owner to train your staff to minimize customer walk outs (even if you are far apart on price), write more good loans (that actually collect interest and are re-loaned) and grow your pawn balance, create relationships with customers, how to merchandise and price the sales floor better and for more sales, teach your team to sell more and with less discounts, and lastly how to advertise and market to your customers internally. This in conjunction with the commission structure that reinforced these changes in operations and daily behavior made a major impact in our business. I cannot put into words how much this improved our business. It has, in time, put two competitors out of business, lowered our turnover, made our customers stop using our competition and made me more profitable all at the same time.
If you are a pawn broker and like me, are thinking, “what can they teach me”, I can only say one thing. Take The Challenge and find out for yourself! Contact us today to take advantage of our free one-hour consultation, our free Pawn Health Check®, or call us to find out more about us at 952-582-4669. You can also email Dan Directly at Dan.Reynertson@devotedpawn.com for more details about his experience or what we do!