Roses are Red...Profits are Black

Jack's hobbyist customers purchased antique rose bushes each spring, but he had to start rooting plants months earlier. How was he to determine what buyers would want in advance?

Jack had a passion for roses. His passion wasn’t just any rose, but what the rose industry calls “antique roses.” Antique roses are the “rose royalty” whose provenance or lineage goes all the way back to a “mother bush” in England or Europe. Jack’s passion led him to collect one of the most complete inventories of antique roses bushes in the United States. In time his passion became a business as his rose lover friends wanted his varieties for their own gardens.

The typical rose hobbyist pores over color catalogues all winter, then purchases rose plants for spring planting after the danger of frost is past. The rose plant seller on the other hand, must start the cutting and rooting process months before the orders are placed and the plants shipped. The problem was that a variety in vogue one year might not be the big seller next year. If Jack grew the wrong ones, they had to be destroyed at great cost. For years Jack kept careful records of what he sold in trying to predict future sales. But his forecasting wasn’t good enough. His problem; how to determine what buyers would want, months after he selected the varieties to grow?

“The Customer Advisory Board” described in Chapter 3 of the book Living By Your Wits, suggested a conversation with his best customers. He named these customers—the ones who purchased regularly and often—“The Rose Club”—and it was by invitation only. It was convened in the late summer and fall by several telephone conference calls. Its purpose was to set up a two-way conversation with trendsetters across the country.

The Rose Club eventually led to “The Rose Letter,” a newsletter that was sold on a subscription basis to all customers. The newsletter announced the most anticipated varieties based on information gleaned from The Rose Club members input. Spotlighting the most anticipated varieties fed more demand for those cuttings. In this way, the available information allowed the production cycle to match the demands of the marketplace.

The many problems of a business often mask the most basic problem—knowing what the customer wants. The Customer Advisory Board, executed properly, will tell you what your best customers want and are willing to pay a premium price for. Every business has a limit on capacity. The challenge is not just to enlarge that capacity to pursue mythical economies of scale; i.e. lower costs. The real challenge is to use and sell your existing capacity at a premium price and therefore a premium profit. You can’t do this without up-to-date information on what the customer wants. The best place find that information is from your best customers.

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