Billionaire John C. Bogle was the founder and former CEO of the Vanguard Group and creator of the Index Fund. He was born in 1929 at the start of the Great Depression and started delivering newspapers at the age of nine. In his interview in Money Master the Game, he is quoted as telling his children, “Sometimes I wish that you would have grown up with all the advantages I had.” To which they ask, “Don’t you mean disadvantages?” “No kid, I don’t. I mean advantages. Getting along in the world, working your way through it all.”
It is our struggles (especially at a young age) that help shape our view of the world.
T. Boone Pickens, Chairman and CEO of BP Capital Management, also started his career at 12 delivering newspapers. Each billionaire has their own unique “rags to riches” story, and most of them started out when they were incredibly young. I’m not a billionaire, but I totally resonate with these stories of youth empowerment that turned these people into massively successful business moguls and would like to share 5 key lessons I learned from my paper route that you can apply to your business today.
Lesson #1: Age Doesn’t Matter, Adding Value Does
At 12 years old, I landed my first job in California with Santa Rosa’s local newspaper, The Press Democrat. My first concern was that I might not perform as well as the 16 year old whose paper route I was taking over. The older boy had more experience and I was concerned that I might not be “good enough”, so I over compensated for my age.
Specifically, I made sure that every single paper landed on the front porch squarely on the “Welcome” mat. I always smiled and said hello to every person I saw. I held the door for anyone with their hand’s full and made a point to go above and beyond anything that could possibly be expected of me.
I added tremendous value in every way I could think of. Sometimes I would include candy inside the newspaper bag. Sometimes I would write a simple thank you note. I realized I had a daily delivery system and what was expected was the newspaper. Everything else I did was added value. Did anyone care how old I was? Not at all. They appreciated all the extra attention to details, surprise and delight and trust I had built by always being on time with the paper.
Lesson #2: Happy Customers Pay More
I also noticed that while the previous paperboy only had about a third of his subscribers paying a tip, nearly all of my customers tipped me and tipped me well. I saw that I was making more profit from my tips than my base business and that encouraged me to keep adding tremendous value. The more I gave to my customers, the bigger the tips I would receive and the prouder I became of my business. Not only did my happy customers pay more, but I had some of the lowest turnover in the neighborhood; they stayed with me because I was making their day just a little bit better every day.
Lesson #3: You Can Increase Your Customers and Reduce Your Profits
Naturally, like every entrepreneur, I figured that I should keep growing my customer base. More customers, more profits, right? Not really. I went from my original paper route of about 60 customers to more than double at 135 customers. Yet, when I did that things started to break down. No longer could I deliver all 135 papers as fast as I had previously. To get the papers out faster, I stopped delivering on everyone doorstep–it simply took too much time. All those little perks I had used to establish my route became fewer and less often as I felt overwhelmed with the demand of the larger route. You can see where this is going.
My tips plummeted, my turnover increased, and my once extremely happy customers were now calling to complain whenever their newspaper was late. I also realized that the amount of money I was making between folding papers, delivering the papers, and collecting the money due to me was much less on a per customer basis than I had with my smaller route. But since I couldn’t fire my customers to get back to my smaller size, I decided to give up my route to another delivery person and try my hand elsewhere in the company.
Lesson #4: You Can Make More Money in Sales, than Production
This was my first entre into sales. While it was completely commission based, I realized that while I was averaging about $1 per house per month, I could make $5 per sale with a lot less time and effort. I became the top salesperson in less than 6 months on the job. I was highly motivated and saw door-to-door sales as a way to meet people and add value to their lives. I wasn’t selling a newspaper, I was providing access to information–information that would help them make better decisions and improve their standards of living.
I used every rejection to educate myself on what people really wanted. I played around with my pitch and honed it into a laser focused opening that would make the person at the door laugh and loosen up. I knew that I was intruding and that most people didn’t want to talk to me, so I acknowledged that up front and quickly explained the value I wanted to give them–for free!
Lesson #5: More People Will Buy When You Remove Risk
Which brings me to my final lesson in this article. No other sales person was pushing the 90 day money back guarantee, but I used this as my ace in the hole. I knew that if they didn’t like the newspaper, they could get their money back, so I opened with that. When my sales manager went with me to see how I was outperforming the rest of the team, he was immediately concerned by my highlighting the reduced risk, so I made a deal with him. We’d track each of my sales and if more people canceled from my sales than normal, I’d stop using the tactic altogether.
But an interesting thing happened that surprised us both–my sales had a much lower cancellation rate than average. It turns out that the value I was selling (providing access to information that would help improve their standard of living) was resonating with them. Just to confirm my assumptions, I went back to a few of the houses where I had sold and asked them how satisfied they were with their subscription. The majority all had positive things to say and thanked me for encouraging them to subscribe. That’s not a tactic, that’s delivering real value.
So, by removing risk from the sale, I had a higher close rate. And, by focusing on the value that the product delivered, the customer agreed that the exceeded the cost of the product and stayed with their subscription.
When I think back to all that I learned from age 12, I’m really thrilled that I had the opportunity to try my hand at business at such an early age when the stakes were much lower, but the growth opportunities were incredible. These lessons have continued to inform my thinking to this day. Thank you, Press Democrat, I really appreciate the opportunities you bestowed upon me.
source: inc.com BY BILL CARMODY