How to negotiate like a super agent Featured

9:58am EDT July 22, 2002
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Doug Cheesman raised eyebrows and tempers when, shortly after he purchased Retail Planning Associates Inc. in 1991, he relinquished a major account — Disney.

Employees were “angry and surprised” to hear he’d turned away the $900,000 contract, Cheesman says. But as chairman and CEO, he thought the client asked too much of the firm for too little compensation.

“That was the epitome — we would have lost $200,000 to execute it,” he says.

That move was just the start. Cheesman also closed four out-of-state offices and reduced RPA’s client list by nearly two-thirds in an attempt to turn around the struggling company. After all, RPA had annual revenues of $8 million after more than 14 years of business, but it was losing nearly $1 million a year.

To remedy that, Cheesman decided, everything must fit into RPA’s three core purposes: integrity, profitability and fun. He pared back anything that didn’t fit the mold.

The change was almost immediate. RPA lost money the first two months under Cheesman’s management, but hasn’t since. In fact, the company is generating triple its revenues of seven years ago.

“Sometimes you have to be confident and stick to what you’re good at,” Cheesman says.

Gaining control

Cheesman took matters into his own hands when, shortly after he purchased RPA, employees could not answer the question of how many accounts they had.

“I went to accounting, and with a yellow highlighter I counted all the people we served: 160,” he says.

He immediately began to chisel the list to fit his mold for a more profitable company.

He eliminated the company’s offices — and some clients — in Boston, New York, Atlanta and Seattle. Each office had been an existing company when it entered the RPA fold, so Cheesman simply offered each one the opportunity to become licensees and they eventually weaned themselves away again.

“These [offices] were cash flow negative to RPA by several hundred thousands a year,” he says. “We went positive immediately.”

Eliminating those offices left him with 60 clients — and a game plan. That plan was to form extended relationships with these remaining clients and select future ones so they would use all, not just part, of the company’s retail strategy, design and implementation services.

“At that time, 48 percent of our business was with clients we had worked for the previous year. Today, that’s about 75 percent,” he says.

His actions brought an interesting result, especially when it came to turning down work that didn’t fit RPA’s new profit-driven strategy. “Not once in seven years have we not gotten business as a result of turning away business,” he says.

Cheesman won’t take a job that won’t be profitable and provide a value-added service to the client. Instead, he refers the work to others — even giving out the names of competitors if the competitors are good.

That honesty gains him credibility, which makes others come to him for business, he says. “We want to do as few things as possible that we’re very good at for as few people as possible without putting all the eggs in one basket,” Cheesman says.

Creating an identity

Cutting losses and advocating consistency, Cheesman says, was step one; step two was finding an identity for the company.

“I found 38 versions of our identity,” he says, referring to the company’s name and logo, which differed on letterhead, business cards and signs.

Again, Cheesman focused. He determined what RPA did best was “provide expert advice,” so he asked the marketing department to come up with a printed piece, not to sell RPA, but to position the company as an expert in the retail industry. “Retail Update,” which notes industry trends and facts, in addition to highlighting RPA projects, is sent quarterly to an international database of industry and company executives to whom RPA’s expertise would be most valuable.

“It was funny for marketing to write a document that did not sell our services,” Cheesman says. “This was meant to position us. People would open it and read it and say, ‘These guys must know everything there is to know about retail’ — and truthfully, we do.”

This, then, enabled RPA to act as an agency for clients and provide the start-to-finish services Cheesman wanted from repeat clients.

For Kodak, for example, RPA created campaigns to help Kodak’s store owners create an identity based on the emotional side of creating memories rather than the technological aspect of film development.

“We know how and why people are purchasing things,” Cheesman says. “We sold them expert advice that helps them sell more of their products.”

Those stores saw a 77 percent sales increase for the first five months compared with the year prior, he says.

Watching the purse strings

Overall, Cheesman says his plan for focus has had the biggest impact on turning RPA around.

“We’re a finite resource,” he notes. “If the object of the game here is to be who we say we are and make money at it and have fun, we have to use those resources as efficiently as we possibly can.”

Cheesman’s focus also has meant maintaining smart money practices. He financed RPA’s purchase so he could pay it off and gain a credit history. He funded all the company’s growth internally until September 1998, when he began raising outside capital for the $3 million launch of a new software product to create networks between RPA clients and their customers.

He’s also being careful with global expansion. RPA has offices in London and Mexico, but for the most part, Cheesman forms affiliations with firms and individuals to maintain the international clients that make up about one-third of his business.

Now, he and his employees have begun to ask themselves: How do we know we’ve reached success with our product? What is it going to feel like?

“We boiled it down to one line: They’ll be calling us,” Cheesman says. “We still work hard to market our services. We really are starting to get there to a certain degree.”

Joan Slattery Wall (jwall@sbnnet.com) is a reporter for SBN Columbus.

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