#40 Curt Strohacker: He Turned a Hobby into a Big Business

Issue #40 – Tuesday, January 29, 2018

http://dennyhatch.blogspot.com/2019/01/40-curt-strohacker-he-turned-hobby-into_29.html

Posted by Denny Hatch

Curt Strohacker: He Turned a
Hobby into a Big Business

At Eastwood, work was play and

 the customer was the real boss.

By the time he was 18, Curt Strohacker had owned 46 automobiles.

     One at a time.

     The exception was a brief period when he owned four Austin-Healeys. Of course, in Chicago in 1963 you could buy a nine-year-old Chevy for $50, so buying and selling cars was a teenage rite of passage. Spend $100 and you had the wheels of a maharajah. This was possible because, as Curt said to me:

"Nobody took insurance very seriously. If you got into trouble, the neighborhood cop would confiscate your ignition keys and drive you home. I never had car insurance until I was in college. Things were different then." 

     Curt Strohacker founded The Eastwood Company. He mailed a million catalogs to shoppers whose passion was either restoring old cars or collecting limited edition miniatures—cars, trucks, fire engines, military vehicles, airplanes and outrageous roadside buildings.

     His domain: a cramped corner office overlooking Route 30 in the Philadelphia suburb of Malvern, where he presided over 50,000-square feet of modern offices, a spotless warehouse containing more than 2,000 items and a retail store guaranteed to send do-it-yourselfers and toy collectors into orbit.

The Beginnings

From 1970 to 1982, Strohacker was an industrial salesman for products ranging from steel to fire-fighting equipment. His last job was with 3M where he called on every imaginable kind of industry in the Philadelphia environs—from potato chip factories to U.S. Steel.        

     In his travels he learned about machinery—how things were made and how to repair them.

     When one of his customers who sold buffing wheels and compounds decided to call it quits, Strohacker felt he could make a go of it. In 1978 he invested $500 to form The Eastwood Company, taking the maiden name of his wife’s maternal grandmother. 

The Very First Eastwood Catalog

Curt printed an eight-page, black-and-white catalog at a quick printer in West Chester and tested two markets: antiques (the brass candlesticks crowd) and antique cars. In addition, he ran a space ad in Hemmings Motor News, which had 200,000 readers. He quickly found car restorers were his market.

     The first order was for $170, and he was on his way. Because Strohacker wanted to keep his sideline business separate from 3M, he signed the letter in his catalog—and all Eastwood correspondence—as “Fred Bailey.”

     One fascinating aspect of Strohacker’s approach to business: long-term loyalty that goes both ways. Framed in his office are the company’s first ad, its first catalog and the first order. That first buyer—White Post Restorations—is one of the leading restoration shops in America. Products from Eastwood’s first catalog are still carried and an Eastwood ad has appeared in virtually every issue of Hemmings since 1978.

     How did that first ad pull? I asked. Strohacker yanked a ring binder off the shelf and told me the precise cost per order. 

Expanding

As the business grew, Curt rented an office vestibule and put up shelving. Merchandise was delivered and stored there. He would take items home where he processed and packed orders in his basement; finished orders were then brought back to his little rented vestibule for next-day pickups by UPS.

     While he worked at 3M, Strohacker’s wife and father-in-law took phone orders from 9 a.m. to 1 p.m. In the afternoon, an answering service kicked in. His customer list was typed so it could be reproduced on 33-up Avery labels. Eventually he went to a service bureau. In 1979 a toll-free number was introduced. The 800-service went out of business the day the catalog dropped.

     By the early 1980s, revenues had reached $400,000. Strohacker was working 40 hours a week for 3M and more than that for Eastwood, plus he had a wife and small baby. His wife ordered him to fish or cut bait.

     In 1983 the 3M umbilical cord was cut and Strohacker went on his own. “3M couldn’t understand it,” he recalled. “I was making a lot of money for them.” 

The First Employees

About that time, a young college graduate named Jim Shulman came looking for a job. Rail thin with black hair, horn-rimmed glasses and an owlish mien, Shulman sported a degree in history and a nascent career that ranged from selling toilet cleaning chemicals to sets of china on the phone. “I could fog a mirror, type and file,” said Shulman. “I was alive, and I showed up.”

     Pennsylvania was the ideal venue for Strohacker’s fledgling business. It had the highest number of registered antique car owners in the United States and the Antiques Automobile Collectors Association (AACA) was founded there in 1935 with headquarters in Hershey.

     As a result, two major antique auto shows are held annually—in Hershey and Carlisle, both prime events at which to move merchandise.

Corvettes at Carlisle 2018

2018 Automobile Show, Hershey, PA

        

A Curious Partnership

Strohacker and Shulman needed transportation. AEnter Brett Snyder who waited tables at a Chinese restaurant in nearby Devon. For his sideline business of peddling used books and magazines, Snyder had a van with bald tires and a rocky transmission.

     If Eastwood fixed the transmission and bought new tires, Strohacker wanted to know, would Snyder contribute his van to help do car shows? The first of many symbiotic relationships was formed; at that year’s Carlisle show, the van opened for business with Strohacker and Shulman purveying auto restoration equipment and Snyder selling old copies of LIFE.
     Snyder became Eastwood's operations manager; Shulman advanced to become director of new business before going off on his own as a consultant in 1997. 

A Company of Car Nuts

When he joined the company, Shulman was not into cars. Instead, he was an avid collector of fountain pens, wind-up Victrolas and 78-rpm phonograph records. His pride and joy was the tackiest American automobile ever, one of just 1,500 1962 Chrysler Imperial LeBarons designed by Virgil Exner. Shulman’s is metallic baby blue with white leather interior, freestanding headlamps, giant fins, rocket taillights, square steering wheel, and a 413 cu. in. V-8 engine that develops 350 horsepower and more gewgaws and chrome per square inch than any American car ever built.

1962 Exner Chrysler Imperial. “The tackiest American car ever built.”

Shulman’s vanity plate proclaims: THE MERM, a tribute to Stanley Kramer's 1963 comedy, It’s a Mad, Mad, Mad, Mad World. In a race scene, Ethel Merman whacks Milton Berle, who is driving this very model, and shouts, “We’re in the Imperial! Why are we last?”

     Strohacker, who had a weakness for little English station wagons, owned a Morris, a 1967 Austin Mini-Countryman and an Austin-Healey sports car. Product Manager Henry Hauptfuhrer has spent the past 30 years (on and off) restoring the 1960 MGA of his boyhood. Ask Marketing Director Kaye Broom what she drives, and she’d tell you a Toyota Camry. “Now ask me what I own,” she suggests.

     “What so you own?”

     “A 1950 Cadillac, a ‘78 Trans Am and a ‘64 Ford F-100 Pickup,” she replied. “Since I was a little girl, I have always loved speed.”

     Manager of Resources Charlie Sonneborn owned 15 collector cars including a 1941 Lincoln Continental Cabriolet, the same model driven by Bette Davis in Whatever Happened to Baby Jane?”  Sonneborn’s vanity plate: BABYJANE, naturally.

     About 80 percent of Eastwood associates—men and women alike—were car enthusiasts, Strohacker would have like it to be 99 percent.

     “The inmates are in charge of the asylum,” Shulman said to me. 

Listening to the Customer

When he started Eastwood, the most popular item was a restoration kit Strohacker designed—three buffs, three compounds and an instruction sheet. Actually the product that put Eastwood on the map was a $32.95 spot welder that could attach to any AC arc welder; it enabled the user to do factory quality work. Professional machines at that time were selling for $300 to $400. It was a top-seller with a price tag of $50.

     With the exception of some paints, Eastwood’s merchandise is not car- or model specific; tools are generic and the merchandise is skewed toward metal fabrication, welding, sandblasting, glass repair, interior care, rust prevention, painting and detailing.      

     The company was strictly a marketing operation that did no manufacturing. Strohacker and his team were constantly on the prowl for new products as well as wide open to suggestions on how existing products can be modified or new ones created.

     An example. Based on input from serious car restorers, Eastwood’s research and testing team came up with a design for a sandblast cabinet that can fit anywhere and would travel flat, thus saving the customer a small fortune in shipping charges. It was manufactured exclusively for Eastwood, which owns the patent. 

The Call Center

Fully 75 percent of Eastwood’s associates were required to spend a minimum of five hours a month in the inbound telemarketing facility on the ground floor. For the new hires, call center certification was the first order of business—learning how to talk to customers and then upsell.

     “I can’t make money selling a $4.95 can of paint,” said Hauptfuhrer. So what happens when a customer orders a $4.95 can of paint?

     The telephone sales representative (TSR) asks what the person was working on. Chances are Eastwood had the additional tools and supplies needed for that particular job and any related tasks. The upsell helps out the customer as well as turns an unprofitable sale into a moneymaker. Of course, car restorers love to talk about what they are doing and the TSRs has to resist the temptation to chat.

     What happened if the question is too technical? In 1986, it was determined that too many people were calling the order desk with technical questions, so Eastwood set up a separate help line where highly trained technical people could talk a customer through a difficult restoration problem.

     Complicated questions were bounced over to the help line. While advice from the help line was free, TSRs were fully trained in selling—and upselling. No one was exempt from duty in the call center; Strohacker himself would frequently be found with a headset, looking intently at a computer screen. 

Dealing with Order Overload

Until 1998, if an inbound overload occurred—such as the result of a television commercial—the word was quickly spread and qualified associates tore down to the call center to help out. During the great blizzard of 1996, 10 associates camped out in the office for three days so phones would be attended.

     “Companies spend thousands of dollars on corporate bonding and team-building seminars,” said Kaye Broom. “Here, all it takes is a good snowstorm.”

     Plus, as Broom suggested, call center duty blurs the difference between managers and workers that contributes to Strohacker’s philosophy of team building.

     Brooksmith Associates (later BSA, then Acxiom, then MorTech) designed Eastwood’s original telemarketing software in 1983 under the direction of Jim Shulman. “You have a college degree,” Strohacker said to Shulman. “You’re in charge of the computer.”

      In those days, Eastwood was getting an average of 30 orders a day; later the daily tally could be in excess of 1,000.

     In 1998, the MorTech system became operative throughout the building; associates could to take orders right at their desks rather than going through what Broom called “stair aerobics” to rush to the call center during an overload situation. 

The Ultimate Customer Contact: Auto Shows

The most important interaction with customers occurred at the annual convocations of auto enthusiasts. Just as hunters go hunting, some 50,000 autoholics converge on central Pennsylvania for their yearly fixes.     

     Returning to their roots, the Eastwood crew would fill up a giant tractor trailer with at least one of every item in the catalog and set up shop in a 40’ x 60’ tent that is completely electrified, enabling them to demonstrate everything from stitch welders to the new sandblast cabinet.

Overhead, a giant helium-filled blimp proclaimed Eastwood’s presence. The associates work like dogs from seven to seven, go off for a good dinner and start all over again the next morning. They sold in 110-degree heat as well as ankle-deep in mud.

     In 1994, the tent at the Carlisle show collapsed under the weight of a spring snow. “The tent company came and fixed it,” Strohacker recalled. “We were back in business in two hours.”

     “At shows, we reach different people than those who buy by mail,” Shulman explained.

"Like Brigadoon—the mythical Scottish town that comes alive one day every century—these people come out of the muck every year, often clutching a tattered catalog they picked up at last year's show. Sure as hell somebody will come back with a half-used can of paint he bought last year complaining it wasn't right. We apologize profusely, give him a new can of paint and check the old one in the garbage."

The eight to 10 shows a year they attended represented a minuscule percentage of the overall business. Shulman called it “Kamikaze Retail.”

     But the face-to-face contact with customers kept the company vital and supplied it with the ideas needed to keep coming up with new products.

     For example, an entire subculture of auto restoration is the 50,000 members of the National Street Rod Associations (NSRA)—fanatics who acquire pre-1948 vehicles and modify them with all kinds of garish accessories and paint schemes.

These folks have their own special needs, and Eastwood served them.

     Shulman himself attended about 40 auto shows a year and scheduled his vacations around these events. As a result of his travels, he discovered a trend: an upsurge in interest in ‘70s cars. This trend was mirrored in the kinds of products being ordered by Eastwood customers. 

Eastwood Automobilia

In 1989 Strohacker got it into his head to restore a 1951 GMC panel truck to mint condition and emblazon it with the Eastwood logo for use as corporate signage—much like Budweiser’s Clydesdale team and wagon. Restoration took far more time and a lot more money than anticipated. Could they turn the disadvantage into an advantage?

     Ertl, a manufacturer of collectibles, was selling a 1:43 scale model of the very panel truck with a slot in the roof for use as a bank. Eastwood ordered 2,500 replicas of the truck, which it then offered in the catalog for $15.95. It was an immediate sellout.

     A second edition of 5,000 sold out the following year. Suddenly Strohacker found himself in the limited edition miniature collectibles business with a catalog he titled Eastwood Automobila; it catered to a completely different audience—with merchandise at a far lower price point—than Franklin Mint or Danbury Mint. 

The Ertl Double-cross

Subsequent developments in the model collectible business were not kind to Automobilia. Ertl and others decided that since they manufactured the unpainted scale model blanks for others to decorate and sell, it, too, could paint up its blanks and sell them.

     In effect—and in actuality—Ertl went into direct competition with its own customers. Not only that, Ertl created infinite numbers of these little models, thus blowing the whole concept of limited editions out of the water. 

The Sears Connection

In 1994, Strohacker saw a photograph of Sears Direct Marketing President Vachel Pennebaker standing next to a vintage MG and called him cold. The result: a symbiotic, highly profitable relationship in which the Eastwood catalog was given a Sears Shop-at-Home Service cover and mailed to Sears buyers.

     Yes, Sears made a lot more money than if it simply rented its list to Strohacker (which it wouldn’t), but results were higher when a Sears book went to a Sears customer who could use a Sears charge card.

     From Strohacker’s point of view, he was reaching a vast, virgin universe of car tinkerers outside the mainstream—not members of antique auto clubs or associations, not readers of Hemmings Motor News, but those who are restoring cars.

     For Eastwood, the Sears Shop-at-Home connection was an eye-opener. Quality standards were high, as Sears required all suppliers and partners to adhere to the letter of the law because of its fluorescent profile. As a result, Sears worked with Eastwood to help improve everything from the accuracy of catalog descriptions to customer service. Many Sears suggestions were incorporated into Eastwood’s own catalog. For example, Eastwood did not sell vises. Its vise mount metal brake was shown gripped by a Craftsman vise—as a tip o’ the hat to Sears. 

The Egalitarian Corporate Culture

People who worked at Eastwood were “associates” rather than employees. Instead of top-down management, teams were created. On walls throughout the company, interspersed with giant prints of great old automobiles, were posters that proclaimed: TEAM (Together-Everyone-Achieves-More).

     Only Strohacker and Shulman had private offices, and Shulman’s was demolished. Freestanding partitions separated the associates’ workspaces; like call-center duty, this tends to blur the difference between managers and workers. “It’s tough,” admitted Strohacker. “Some people don’t want to be on teams. They want to be told what to do. I’ve got to change that.”

     Where was Eastwood headed? Did Strohacker have a master plan? “I’ve more than fulfilled my personal needs,” he said. “No, I have no master plan. Let’s just see what evolves over the next few years.”

     He added: “It’s hard to tell sometimes whether we’re working or just having fun.” 

Takeaways to Consider

• Curt Strohacker was an intuitive marketer. He did not need to learn about his customers. He was his own customer.

• If Strohacker had not started the Eastwood Company, as a restorer of vintage automobiles he certainly would have been an avid buyer of its products (or the products of some other company that would have filled the niche Eastwood discovered).

• Because Strohacker was his own customer—and because the majority of his associates were car aficionados and, therefore, customers—the entire company was structured from the customer's point of view.

• The first exercise for any new employee was to become call center certified. This applied mailroom personnel on up to the newly hired V.P. Required were:

—Weeks of learning the various product lines.

—Being able to communicate knowledgeably with technically oriented customers.

—Above all learning the art of upselling. This meant turning an unprofitable $4.95 order into a highly profitable $49.95 order.

• Strohacker created a customer service department—an elite cadre of phone representatives on a free help line who could listen to a customer’s concerns or problems and offer help on the phone. These were not order takers; they were experts in automobile restoration.

• Eastwood engendered absolute trust in its customers. Remember Jim Shulman’s description of kamikaze marketing at the car shows and how the company will replace a year-old, half-used can of paint gratis.

• This is reminiscent of L.L. Bean who once said: I never consider a sale complete until the merchandise has worn out and the customer is satisfied. 
                      

Eastwood, 2018    https://www.eastwood.com

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