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Lesson #1: A Happy Customer Is Your Walking Advertisement
“When this business was founded, it sought to win public confidence through service, for it was my conviction then, as it is now, that nothing else than right service to the public results in mutual understanding and satisfaction between customer and merchant,” said Penney. “It was for this reason that our business was founded upon the eternal principle of the Golden Rule.”
When Penney started his first business with the butcher shop, it was a fast flop. But, it was not because Penney had bad business sense. Rather, it was because of his conscience. Penney’s biggest customer at the time was the local hotel. When the hotel’s meat cutter demanded a bottle of whiskey weekly as a bribe, Penney at first gave in. However, he forever regretted it and from then on, refused to give the bribe. As a result, the hotel withdrew its business and the butcher shop folded.
It was with this attitude of doing the right thing that Penney was able to create one of the largest retail chains in America. Penney’s parents had always preached to him the Golden Rule: Do unto others what you would have them do unto you. It was a lesson Penney would apply well in the business world.
When Penney first took over total ownership of the Golden Rule Stores, he operated in a completely different environment than that which we know today. Back then, store owners paid little attention to their customers. They were often treated rudely and sold poor-quality goods. Store managers would also routinely change their prices according to each customer, charging more to poorer people because they might not have known better.
Penney decided to change all of that. “The friendly smile, the word of greeting, are certainly something fleeting and seemingly insubstantial,” he said. “You can’t take them with you. But they work for good beyond your power to measure their influence. It is the service we are not obliged to give that people value most.” He took the store’s slogan – that of practicing the Golden Rule – with strict literalness. Penney pledged to give each customer friendly, reliable service, and guaranteed the same price to everyone.
“In setting up a business under the name and meaning of the Golden Rule, I was publicly binding myself, in my business relations, to a principle which had been a real and intimate part of my family upbringing,” said Penney. “Our idea was to make money and build business through serving the community with fair dealing and honest value.” To this end, Penney himself would often stop to help a customer on many of his random store checks. Penney’s strategy worked as word of mouth helped the company earn a profit margin of 29 percent in its first year.
“The store that sells its wares for less but pays little attention to the service it renders does not meet with the success of the store with courteous employees,” said Penny in 1954. “The public is not greatly interested in saving a little money on a purchase at the expense of service. Courteous treatment will make a customer a walking advertisement.”
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