What is the highest performing stock in terms of total return over the over the course of the past 40 years?
Its not Microsoft. No, its not Cisco Systems. It’s not GE. It’s not even Intel.
Its Walgreen’s Drug Stores.
Walgreen’s? You gotta be kidding me! The drugstore chain? Yep, its true. How they did it is even cooler than that fact that they did it in the first place.
In his book Good to Great, Jim Collins investigates how they actually did it. And the answer is very simple. All that Cork Walgreen, the founder of Walgreen’s did is that he took a long hard look at what his business did really well and then channeled all his energies into that one thing. In essence, he figured out exactly what Walgreen’s could be the best in the world at and channeled all of their efforts into achieving that one thing.
So what exactly was this “breakthrough” concept? Simply this: to have the best, most convenient drugstores, with a high profit per customer visit. That’s it. That’s the formula for creating the single most successful company in terms of market return in the past forty years.
When Walgreen’s first started out, they had businesses in a lot of different areas, and they didn’t do any one of them particularly well. First they had restaurants (named Corky’s after their founder and CEO), which didn’t do so well, but were more of an emotional attachment to those that worked at Walgreen’s. Founded in the 50’s Corkys was a legendary stop for travelers passing through small towns in the Midwestern United States and along side motels in the deep South. Corky’s consistently pumped out steady profits, selling their hamburgers, shakes and ice creams.
In the 70’s Cork himself realized the future of the company was elsewhere and despite the emotional attachment to the Corkys chain, he sold it all a competitor so he could focus on his drug store business full time. As soon as Cork made this decision, he poured all his efforts into the drug store side to become the #1 drug store chain in all of the United States.
On the other hand, Walgreen’s main competitor, Eckerd Drug did the exact opposite of Walgreen’s, diversifying their businesses into video rentals, security services, department stores, candy companies and food service organizations. While Cork Walgreen was divesting businesses that took away from what he could be the best in the world at, his main competitor was diluting their efforts in the drugstore business by acquiring completely unrelated businesses. Eckerd took their eye off the ball and began losing market share to the ever nimble and convenience-centered Walgreens.
Cork knew that if he could buy up real estate that was convenient to consumers, place stores in high traffic spots which with multiple entry and exit directions and add convenient high margin services such as film developing, check cashing, drive-through pharmacies and automatic teller machines, he could get the walk in traffic as well as the high margins that would make his company and its profits soar. He was right.
More convenience led to more customer visits which led to more profit per customer visit and so on and so on.
Meanwhile, Eckerd was ultimately bought out by a private investor group in the mid-80’s. For the next decade Eckerd swung from strategy to strategy, trying desperately to fin that one “home run” strategy to complete against the well-entrenched and highly focused Walgreen’s chain. They were fully acquired by JC Penny in 1997. Walgreen’s was the clear winner.
Before you start teaching and coaching your salespeople to sell, you first need to determine what to sell. In an ever-increasing world of commodity selling, this lesson will focus on determining which products or service of yours will give you the best chance of un-commoditizing yourself.
OK, so you and your competition are virtually the same in so many ways; they provide a good service and so do you. Your internal operations people screw up regularly and so do theirs (or course it’s never the sales guy’s fault!) Their product does what it says it will do and your product does what it says it will do. They have service issues, you have service issues.
However, when you really take a look at what they sell and what you sell, there have to be some small differences. Even an infinitesimal, minor, only is certain circumstances difference has to exist between you and them. Maybe your service plan is slightly better. Maybe your customer care people are open a little bit longer and are more helpful. Or maybe there’s a big difference that you just never thought much about.
You need to find that one or two features of our product or service that beats the competition every time on. It exists.
As a top performing sales manager you need to find your “Walgreen’s Concept” and teach it to your reps every day – every moment of every day.
To find out more about how to motivating your sales team, visit my blog about sales management at http://www.topsalesmanagerblog.com