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
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.
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.
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.
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
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."
"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.
• 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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