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We conclude our series sharing summaries of principles The Container Store follows to achieve its long-lasting success with a manifesto.

While not written as a manifesto, these words from page 25 of UNCONTAINABLE are inspirational, aspirational and actionable. Enjoy…



The Container Store MANIFESTO

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The Container Store posting series:

  • Hiring (Oct. 13)
  • Training (Oct. 14)
  • Selling (Oct. 15)
  • Leadership (Oct. 20)
  • Vendor Relations (Oct. 21)
  • Retailing (Oct. 22)
  • Manifesto (Oct. 23)
  • We continue our series sharing summaries of principles The Container Store follows to achieve its long-lasting success. These principles are detailed in the book, UNCONTAINABLE, written by Kip Tindell (co-founder, ceo and chairman, The Container Store).


    The Container Store Retailing Philosophy

    uncontainable_150Kip Tindell shares a great story in the book about a conversation he had with retailing pioneer Stanley Marcus of Neiman-Marcus fame. They were discussing the importance of a retail business having the right mix of products, service and price.

    Kip recalls the conversation…

    I loved to talk with Stanley Marcus about selection, service, and price. Stanley always said that if you do one of these things really well, you’ll be very successful. He said if you do any two of them well, you’ll have the number one business in your niche. Then he said you can’t do all three because price is absolutely mutually exclusive to both selection and service.”

    The best products with the best service at the best possible price is nearly impossible to do.

    Zappos can lay claim to selling the best products with the best customer service but not at the lowest price.

    Costco competes brilliantly on selling products at a very low price but that comes at a cost. They do not have the best selection nor do they have the best customer service.

    The Container Store would love to, in Kip’s words, “… hit the triple crown every day—offering a well-edited, carefully curated collection of 10,000 products, free expert advice and service that customers delight in, and prices competitive with the mass merchants.” But they can’t.

    The Container Store can deliver the best products with the best customer service, but not at the best price.

    As a former retail marketer for Whole Foods and Starbucks, I know firsthand the struggles dealing with price perception issues. Whole Foods especially struggles with the perception its prices are too high. It’s true that one can buy cheaper natural/organic food elsewhere and one can buy a cheaper latte from someplace other than Starbucks. However, Whole Foods and Starbucks have found retail success by not competing on lowest prices.

    I really like Kip’s perspective on a retailer competing with higher prices. Kip writes…

    We’re not the only retailer that gets an unfair reputation when it comes to price. But it’s the retailers that focus solely on price that get the credit for great pricing. And it’s surprising to me how overcredited discounters are for pricing and how unfairly retailers who focus on service and quality are marked as overpriced.”

    The Container Store, Starbucks and Whole Foods all suffer from being known as too pricey. However, these higher prices result in better products with better customer service. If I’m starting a retail business, I’d focus on delivering better products and service. Yes, prices will be higher but the overall experience will be richer.


    The Container Store posting series:

  • Hiring (Oct. 13)
  • Training (Oct. 14)
  • Selling (Oct. 15)
  • Leadership (Oct. 20)
  • Vendor Relations (Oct. 21)
  • Retailing (Oct. 22)
  • Manifesto (Oct. 23)
  • We continue our series sharing summaries of principles The Container Store follows to achieve its long-lasting success. These principles are detailed in the book, UNCONTAINABLE, written by Kip Tindell (co-founder, ceo and chairman, The Container Store).


    The Container Store Vendor Relations Philosophy

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    Kip Tindell gives credit to the strong vendor relationships The Container Store has developed as a major reason the company has thrived for three decades.

    In the early days of the company, The Container Store worked with other mom and pop shops. These small vendors were accustomed to big box retailers making demands and dictating how the vendor/retailer relationship would work. Kip recalls how these small vendors were astonished when The Container Store took a genuine interest in their success.

    The Container Store takes the time to understand the needs of it vendors and works directly with them to form a mutually beneficial relationship.

    The Elfa closet shelving system is the best-selling product at The Container Store. It’s a product Kip recalls as being very challenging to sell because it’s difficult to understand how to use it. However, once you learn how to use it, it becomes a simply elegant way to organize a closet. Other retailers refused to sell the Elfa product because it would require too much employee training. The Container Store didn’t shy away from the employee training needed and embraced the Elfa product to the degree that it is by far its most popular product.

    The Elfa brand and business would never have been realized if The Container Store didn’t develop a strong vendor/retailer relationship. This strong relationship resulted in Elfa being purchased by The Container Store in 1999.

    Most of the products sold in The Container Store are either proprietary or exclusive. This truly requires a strong vendor/retailer relationship where The Container Store needs to understand how these vendors define success so that everyone wins.

    With its runaway success, The Container Store saw lots of competitors trying to mimic it business. Local, regional and national chains have all tried to replicate The Container Store business model. None have been able to find the same success and most of these competitors have ceased to exist.

    Why didn’t these competitors successfully knockoff The Container Store?

    Kip Tindell rightfully believes, “You can copy a company two-dimensionally, but you can’t copy its heart and soul. That, to me, is the key. No one wants to build a business that’s so hiring- and training- and people-intensive. That’s usually the last thing people want to deal with in business.


    The Container Store posting series:

  • Hiring (Oct. 13)
  • Training (Oct. 14)
  • Selling (Oct. 15)
  • Leadership (Oct. 20)
  • Vendor Relations (Oct. 21)
  • Retailing (Oct. 22)
  • Manifesto (Oct. 23)
  • We continue our series sharing summaries of principles The Container Store follows to achieve its long-lasting success. These principles are detailed in the book, UNCONTAINABLE, written by Kip Tindell (co-founder, ceo and chairman, The Container Store).


    The Container Store Leadership Philosophy

    uncontainable_150The company culture at The Container Store is based upon communicating everything with everyone. Employees, according to Kip Tindell, feel included when everything is communicated with them. Kip delivers the same updates to the company’s board of directors as he does to employees. The only topic that’s off limits are salaries, everything else is discussable.

    Kip compares a business to a football team. Players on the football team need to know the score and need to know what the other players are doing, why they are doing it and where they are doing it. If one player doesn’t know what the other players are doing, a football team is sure to lose.

    Same goes for a business and at The Container Store, the leadership mindset is one of sharing as much information as possible to all levels of employees. Sales numbers and goals are shared every day with all employees for their store and for other stores in the region.

    Melissa Reiff (president, The Container Store) sums up the importance of communication to employees this way, “We must practice consistent, reliable, predictable, effective, thoughtful, compassionate, and even, yes, courteous communication every single day to successfully sustain, develop, and grow our business.”

    Instead of operating on a “need to know” basis, The Container Store follows a “must know” communication philosophy with employees. The company knows its employees will benefit from having more information because it will help them to do a better job, become a better employee and lead The Container Store to future success.


    The Container Store posting series:

  • Hiring (Oct. 13)
  • Training (Oct. 14)
  • Selling (Oct. 15)
  • Leadership (Oct. 20)
  • Vendor Relations (Oct. 21)
  • Retailing (Oct. 22)
  • Manifesto (Oct. 23)
  • We continue our series sharing summaries of principles The Container Store follows to achieve its long-lasting success. These principles are detailed in the book, UNCONTAINABLE, written by Kip Tindell (co-founder, ceo and chairman, The Container Store).


    The Container Store Selling Philosophy

    At The Container Store, we don’t immediately try to sell something to a customer; we can’t, because we don’t know enough about her yet. We simply start a conversation first, to open the door a bit, and earn her trust so we can begin exploring how to help her.” – Kip Tindell, The Container Store

    uncontainable_150The selling philosophy at The Container Store is known inside the company as “Man in the Desert Selling.” This sales approach involves uncovering customer needs and they use an analogy of a man in the desert to explain it.

    A “Man in the Desert” obviously needs water. But that’s not all he needs. Most retailers stop with solving the obvious customer need. Just like a Man in the Desert needs things beyond water like, shade, shoes, sunglasses, clothing, etc., customers have other needs than their obvious need. The Container Store trains its employees to uncover unmet and unknown customer needs.

    The Container Store employees are trained to (a) make an Approach, (b) establish a Connection and (c) close the Sale.

    As the earlier quote from Kip Tindell says, employees at The Container Store open the door to a potential sale by initiating a conversation with a customer. Instead of using throwaway lines like, “Can I help you?” employees are taught to use an Approach that is more conversational. Such as, “That’s a nice coat you have on.” Or, employees will see a customer holding a product and react by saying, “Let’s take this out of the box and I’ll show you how it works.”

    After the Approach, employees make a Connection by asking helpful questions, such as: What space needs organizing in your house? How big is the space? Who in the family uses the space?

    According to Kip Tindell, “… the Sale comes when we devise a solution that makes the customer excited about conquering a problem in a way she probably never would have imagined on her own (after all, she’s not the storage and organization expert—we are).”


    The Container Store posting series:

  • Hiring (Oct. 13)
  • Training (Oct. 14)
  • Selling (Oct. 15)
  • Leadership (Oct. 20)
  • Vendor Relations (Oct. 21)
  • Retailing (Oct. 22)
  • Manifesto (Oct. 23)
  • We continue our series sharing summaries of principles The Container Store follows to achieve its long-lasting success. These principles are detailed in the book, UNCONTAINABLE, written by Kip Tindell (co-founder, ceo and chairman, The Container Store).


    The Container Store Employee Training Philosophy

    uncontainable_150The Container Store trusts its employees to make meaningful connections with customers and to share their organizational expertise at every opportunity with customers. This trust comes from knowing they’ve hired great employees and trained them well.

    Astonishingly, full-time employees at The Container Store receive close to 300 hours of paid training in their first year. Read that again… nearly 300 hours of paid training. Not 30 hours, but 300 hours. Part-time employees get almost 200 hours of training and no employee gets put on the sales floor without first receiving 40 hours of training.

    That’s a major commitment to training. A commitment very few retailers have the courage to do.

    The Container Store training philosophy is about building an employee’s intuition muscles.

    Kip Tindell explains it this way, “We want our employees to use their intuition—their wonderful life experience—to anticipate the needs of our customers and to recommend the appropriate solutions.

    All the training employees receive prepares their mind to handle most any situation at the store level. It also prepares employees with product knowledge and organization expertise that helps them to explain to customers some of the complicated products The Container Store sells.

    As it relates to training employees, Kip Tindell stresses its importance by saying…

    One reason training is more important at The Container Store than at other retailers is because our motto is ‘We sell the hard stuff.’ We actually tell our buyers to look for products that are hard to sell. Why? Because we know other retailers won’t touch those products, giving us an exclusive and yet another reason for customers to shop with us.

    Let’s revisit the nearly 300 hours of training full-time employees receive at The Container Store. How can a retailer justify such an outrageous expense?

    For The Container Store, training employees so well results in a turnover rate of less than 10%, which saves the company millions of dollars in recruiting, interviewing, hiring and training people. And since they sell complicated products, vendors can trust employees at The Container Store to tell the story and purpose behind each of the products sold in the store.


    The Container Store posting series:

  • Hiring (Oct. 13)
  • Training (Oct. 14)
  • Selling (Oct. 15)
  • Leadership (Oct. 20)
  • Vendor Relations (Oct. 21)
  • Retailing (Oct. 22)
  • Manifesto (Oct. 23)
  • uncontainable_150One of the most successful retail businesses that grew from a single shop into a much loved and highly profitable multi-unit concept is The Container Store.

    The business began in 1978 by selling all sorts of boxes, bins and doodads to help people organize all their stuff. Today, they have grown to 60 locations all over the United States with revenues around $750 million.

    The Container Store is a classic category killer concept that has carved a niche in the retail world by following seven foundation principles. Kip Tindell, co-founder and ceo of The Container Store, has finally published a book detailing the principles behind the success of The Container Store.

    Over the next two weeks, the Brand Autopsy blog will be sharing summaries of each principle The Container Store follows to achieve its long-lasting success. We’ll address important retail business matters from hiring to training to leadership to vendor relations.

    Let’s start with The Container Store hiring philosophy…

    1 Great Person equals 3 Good People

    Finding great employees isn’t easy for any business. It helps to have the reputation The Container Store has to attract great employees. Many people want to work there, but less than 3.0% of the people who apply to become front-line employees at The Container Store get hired. Once hired, people rarely leave. The Container Store enjoys an unheard of store-level employee turnover rate of less than 10%.

    One of the long-standing hiring principles practiced by The Container Store is 1=3. As in, one great employee will do the work of three good people.

    The company is very selective in whom they choose to hire. They strive to hire only GREAT employees and they pay them well. The typical full-time frontline salesperson at the Container Store makes nearly $50,000 a year, that’s about double the industry average. Payroll as a percentage of sales at the store level is 11.5%. That’s high, much higher than most retailers would dare to do.

    Kip Tindell explains why paying employees more works…

    Our approach to payroll is easy to justify because we are convinced that our 1=3 approach really works. Our employee wins, because she is making far more than anyone else than another company is likely to pay her for that position. The Container Store wins, because it gets three times the productivity at only 50 to 100 percent more the cost. And the customer wins because they have this superb salesperson who actually cares about working in the store.”

    The Container Store believes it can pay its employees twice as much and still come out ahead because one great employee is as productive as three good employees.

    It’s not easy to get hired by The Container Store. The interview process is time-consuming. It begins with an online application. A phone interview is next for those that make the initial cut. From there, candidates are given a homework assignment and brought in for a group interview. Then, a variety of one-on-one personal interviews take place. This entire process takes time but The Container Stores takes this time in order to find GREAT employees.

    Hiring the right employees and paying them well is at the center of The Container Store’s success. Kip Tindell believes, “When you surround yourself with hugely talented, passionate, dedicated, and genuinely kind people, you will succeed in whatever you do—there’s no doubt in my mind about that.


    The Container Store posting series:

  • Hiring (Oct. 13)
  • Training (Oct. 14)
  • Selling (Oct. 15)
  • Leadership (Oct. 20)
  • Vendor Relations (Oct. 21)
  • Retailing (Oct. 22)
  • Manifesto (Oct. 23)
  • badprofit2__

    As customers, we’ve all experienced the pain of feeling nickled and dimed. It could be the $7.95 so-called convenience fee added on to each concert ticket purchased online. Perhaps the $19.95 fee to access the Internet at a glitzy hotel rankles you. How about your bank docking you $25 when your checking account falls below the minimum balance? Or, your neighborhood restaurant charging you a $5 plate sharing fee.

    These add-on fees are classic example of bad profits that undermine the happiness of customers.

    Airlines are notorious bad profit mongers leading to very unhappy customers. We’ve all had to pay far more than we think we should to check a bag. And, we’ve all had to fork over an exorbitant change fee to simply alter our flight reservations.

    The other month my travel plans changed and instead of paying the change fee plus the difference in the airline ticket fee, it was cheaper for me to buy a new ticket and eat the cost of the old ticket. (We’ve all been there.)

    This concept of bad profits was first framed up to me in Frederick Reicheld’s book, THE ULTIMATE QUESTION. In this book, Reicheld outlines how to measure the likelihood of customers to recommend a business in order to better understand the growth potential of that business.

    A major factor in whether or not a customer is likely to recommend a business is based upon if the business profits from good or bad profits.

    Reicheld writes, “… bad profits are earned at the expense of customers, good profits are earned with customers’ enthusiastic cooperation.” In other words, bad profits result in creating customer detractors while the result of good profits is the creation of customer promoters. Detractors talk bad to others about companies while promoters talk good things to others about companies.

    Recently I read how rental car companies are drawing the ire of customers feeling nickled and dimed from fees charged to them when using toll roads. More and more toll roads are going cashless through the use of an electronic transponder on car windshields and no more old school ‘toss your coins in the bin’ toll booth. This change is having an impact on the rental car business.

    To address this change, rental car companies offer drivers a flat daily fee anywhere between $2.95 to $5.00 to use an electronic transponder plus the cost of the toll. That flat daily fee is a bad profit but not nearly as bad a profit if you choose to decline the daily flat rate fee and rack up toll booth charges. For example, a Dollar Rent a Car customer declined to use the electronic transponder and was hit with a $30 administrative fee for two tolls that totaled $2.74. (Ouch.)

    That one horrifically bad profit will produce one unprofitable relationship because there is no way that customer will ever use Dollar Rent a Car again. A customer lost for life. (Double ouch.)

    A rule of thumb I learned many years ago that can help you identify a bad profit (as well as any bad customer touchpoint) is this:


    If you find yourself saying “a customer will never notice that”… chances are, they will.


    If you think the typical customer will never notice or think twice about the $7.95 convenience fee or the $19.95 Internet access fee, you’re wrong. Same goes for a customer never noticing the $30 administrative fee charged to them for two tolls.

    Remember, bad profits undermine customers. Good profits overjoy customers.

    Customers that feel abused from nickel and diming practices might do business with you once and only once. Stringing together bad profit one-night stands with customers is sure to come back to haunt your business and lead to unprofitable relationships which will undermine the long-term success of your business. So don’t try to profit from bad profits.


    Did you like this post?

    If so, sign-up to receive the monthly Brand Autopsy newsletter and you would’ve already read this. As a bonus for anyone signing up for the newsletter, you’ll receive a two-page tip sheet for encouraging customer advocacy.

    Talking Word of Mouth Marketing

    Jay Ehret is relentless in teaching small businesses how to get the most out of their marketing. He’s been blogging and podcasting about it for years and he’s also been a good friend over the years.

    Recently Jay started a new podcast series, The Marketing Plan Podcast. His goal with this podcast series is to share practical advice to help businesses develop smarter, more effective marketing plans.

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    One episode has Jay guiding listeners on how to craft the story of your brand. Another episode has Jay talking with Luke Sullivan, author of HEY WHIPPLE, SQUEEZE THIS!, about effective marketing messages. All really good stuff.

    Jay invited me to talk about Word of Mouth Marketing in episode #9. For this, I shared three ways a brand can become talkable by being Original, Informational and Cultural. Enjoy the show…

    *** CLICK TO LISTEN ***


    SHOW NOTES:
    Talkable brands are Original
    The more obvious you are, the more talkable you become. Being obvious is about expressing a company’s unique personality, not just for one day, but every day a business is in business.

    Talkable brands are Informational
    For word of mouth to happen, someone needs to gain some knowledge from either personal experience, or through conversations, or directly from the brand. The best way to deliver word of mouth information is through stories. Three enduring stories brand can use to spark word of mouth are: (1) Improve a Live, (2) Right a Wrong, and (3) Make Good Better.

    Talkable brands are Cultural
    Company culture starts with your people. It’s people who will make your brand talkable. Competitors can replicate your product, your programs, your services, but they can never replicate your people delivering your product, programs and services.

    Hiring Fantastic People

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    I’ve begun helping former Starbucks marketers, Shannon Jones and Paul Williams, with their online Local Store Marketing Guide. It’s simply called the LSM Guide (@LSMguide) and it contains much of what we learned from doing field and corporate marketing at Starbucks that can help local businesses increase awareness, drive traffic and become a good community neighbor.

    It’s ridiculous how much practical and proven marketing advice these LSM Guides share ranging from New Store Openings to Annual Promotional Planning to an exhaustive Catalog of Marketing Activities. Retail businesses from the smallest mom and pop shops to franchisees of the largest brands can benefit from these guides.


    SPECIAL OFFER: The first five people who email me will receive one-month free access to the entire LSM Guide library.


    The newest LSM Guide is the Hiring & Staffing Guide.

    Retail operators know better than anyone that the people you hire are the most important part of your business. Your competitors can replicate your products and programs but they cannot replicate your people. It’s your people who live and breathe your company culture.

    The truth is… finding, hiring, training and keeping the best people is the most critical step to long-lasting success as a retail business.

    One story shared in the Hiring & Staffing LSM Guide involves the hiring practices at the Container Store.

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    The Container Store is a Dallas-based retailer of storage and organization items including boxes, bins, shelving and anything else needed to keep your stuff tidy. The business has been around since 1978 and is routinely ranked by Fortune magazine as one of the best companies to work for in America.

    It’s people, more than its products, that separate the Container Store from its competitors. Kip Tindell, ceo and co-founder of the Container Store, sums up the importance of hiring the best people by saying, “The best thing you can do for your employees is to surround them with people who are fantastic.” (Whoa!)

    Perhaps the most interesting thing the Container Store does to hire fantastic people happens during the job interview process. Usually, a store manager brings in a small group of employee candidates and conducts a group interview in the middle of the store during the middle of the day. At some point in the interview, the manager will ask the candidates to go out in the store, find a product they love and then tell the other candidates why they love that product.

    Upon hearing and seeing the potential employees tell stories about the products, the Container Store manager can quickly tell who is a cultural fit because of the passion and enthusiasm they display. Obviously, the passionate and enthusiastic people stand a greater chance of getting hired on as the next fantastic Container Store employee.

    This job interview best practice from the Container Store is a simple test to determine how much passion a potential employee has. It’s easy to hire warm bodies to fill an open employee position. It’s much more difficult to hire somebodies, not warm bodies, to join your team.

    Never underestimate the importance of hiring fantastic employees.

    As mentioned earlier, your competitors can replicate your products and programs but they cannot replicate your people. It’s your fantastic people who live and breathe your company culture that will make your business a long-lasting success.