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17 posts categorized "Business Practices of Drug Dealers"

January 25, 2011

Business Wisdom from Drug Dealers

I recently gave a VSOP ... Very Special One-time Performance ... at the ProductCamp 6 event in Austin, TX.

ProductCamp, like its BarCamp relative, is an unconference gathering of marketers, mainly product marketers, who network and learn from each other. It's a free event but the price of admission is participation by either leading a session, talking shop with others, and or volunteering to make the event run smoothly. I highly recommend you learning more about ProductCamp and definitely participating in one happening near you.

My VSOP for ProductCamp was titled, BUSINESS WISDOM FROM DRUG DEALERS. Long-time Brand Autopsy readers know this is territory I've covered before. Fans of 37signals know its founders recommend emulating drug dealers to find business success. While the topic is oddball, the lessons to be learned from street corner sellers are practical.

No video was taken of my presentation. However, you can re-live this talk by watching the following reenactment. (To recreate this prezo, I recorded one-take audio of me giving color commentary to the slides and to the transitions for the previously recorded video ditties shown during the prezo. Click play and all will make sense.)

BUSINESS WISDOM FROM DRUG DEALERS

>> Direct link to the video
SESSION DESCRIPTION:
Business Wisdom from Drug Dealers
Before you dismiss this as outlandish and ridiculous – think for a second. To build a successful venture, drug dealers must design their business and develop their products in the same ways legitimate businesses do. Drug dealers, like marketers, must address issues ranging from Launching New Products to Customer Acquisition Strategies to Brand Dilution to Procurement. In this session, you'll learn vital and actionable marketing insights from a most unlikely source, drug dealers.
PRESENTER BIO:
John Moore is a former "drug" dealer. For eight years he worked as a retail marketer with Starbucks Coffee selling an addictive drug, caffeine. These days, John leads Brand Autopsy, a marketing firm that consults with businesses aspiring to become a beloved brand. USA Today, Best Buy, Kraft, Little Caesars, and the Word of Mouth Marketing Association have all benefitted from John's past experience as a "drug" dealer.

April 15, 2010

Emulate Drug Dealers (part 2)

EmulateDrugDealers

The other day we looked at the advice from the founders of 37signals who write in their book, REWORK, “Emulate drug dealers. Make your product so good, so addictive, so 'can't miss’ that giving customers a small, free taste makes them come back with cash in hand.”

We also shared some more business wisdom from drug dealers on surpassing customer expectations, wholesale buying strategies, and selecting profitable customers.

If this idea of emulating drug dealers has you intrigued, reacquaint yourself with a vintage Brand Autopsy post sharing business lessons learned from the movie about a Harlem drug lord from the early 1970s, AMERICAN GANGTSER.

Americangangster_businesslessons

American Gangster synopsis:
Following the death of his employer and mentor, Bumpy Johnson, Frank Lucas establishes himself as the number one importer of heroin in the Harlem district of Manhattan. He does so by buying heroin directly from the source in South East Asia and he comes up with a unique way of importing the drugs into the United States. As a result, his product is superior to what is currently available on the street and his prices are lower. His alliance with the New York Mafia ensures his position. It is also the story of a dedicated and honest policeman, Richie Roberts, who heads up a joint narcotics task force with the Federal government. Based on a true story. [SOURCE]


AMERICAN GANGSTER | BUSINESS LESSONS

LESSON ONE
Mentors Matter


LESSON TWO
Launching New Products
LESSON THREE
Brand Dilution
LESSON FOUR
Leadership Qualities
LESSON FIVE
The Loudest is the Weakest
LESSON SIX
Winners Can Quit

April 13, 2010

Emulate Drug Dealers

EmulateDrugDealers

In the book REWORK, the authors, Jason Fried & David Heinemeier Hansson (co-founders of 37signals) recommend emulating drug dealers by offering free samples to customers. Drug dealers, as Jason and David point out, know by giving away free samples of a “product so good” and “so addictive,” customers will “come back with cash in hand.”

Businesses, according to the authors, shouldn’t “be afraid to give a little away for free” so long as they are confident in the products/services they sell. As cited in the book, ice cream shops confidently give away free samples knowing it will most likely result in a sale. Car dealers do the same by allowing potential buyers to test drive a car before buying it.

Why stop at emulating drug dealers by only giving away free samples?

Businesses have a lot more to learn from the business practices of drug dealers. From procurement of product to acquiring customers to satisfying customers, the parallels between a well-run drug dealing operation and a successful business run thick.

This is territory we’ve covered on the Brand Autopsy blog. In early 2004, we ran a 7-part series on “Street Corner Selling” which shared drug dealing business lessons from Bruce Jacobs' book, DEALING CRACK.

The lessons have held up well. Read for yourself...

Street Corner Selling Curriculum:

Lesson #1: Customer Acquisition
Don’t Act Desperate


Lesson #2: Ten Minute Rule
Surpassing Customer Expectations
Lesson #3: Procurement
Wholesale Buying Strategies
Lesson #4: Merchandising
Maximizing Sales Through Bundling
Lesson #5: Angel Customers and Demon Customers
Selecting Profitable Customers
Lesson #6: Developing Enthusiastically Satisfied Customers (pt. 1)
Generating Customer Referrals
Lesson #7: Developing Enthusiastically Satisfied Customers (pt. 2)
Making it Easier for Customers to Buy

January 18, 2009

Winners Can Quit

This is the last in a series of posts sharing business lessons learned from the movie, AMERICAN GANGSTER.


6_WinnersCanQuit

Setting the Scene:
Thanks to a misstep by Frank Lucas, who wore a “clown suit” Chinchilla Mink coat to the Ali/Fraizer III fight, the police became aware of Lucas’ success. The “Blue Magic” distribution arrangement with drug lords and mafia families resulted in an assassination attempt on Frank’s wife. And, the unique supply chain operations deal between the Vietnam-based heroin supplier and United States Army personnel was crumbling due to the American pullout from the Vietnam War.

Despite these major setbacks, Frank was recklessly determined to continue growing his “Blue Magic” business.


Winners Can Quit
No business is destined to live forever. Sustained success is difficult to achieve. Decades-long success is attainable. However, century-long success is nearly impossible to realize.

The average life span of a Fortune 500 company is less than 50 years. 33% of companies listed in the Fortune 500 in 1970 were gone by 1983. These businesses either died, merged, or were sold off as smaller business units. [SOURCE]

What goes up, will go down. We know this to be true from a basic understanding of both physics and business.

Lucchesse family Mob boss, Dominic Cattano, once warned Frank Lucas that, “Success has enemies.” It doesn’t matter if we’re talking mob/drug business or legitimate business, the more successful a business becomes, the more competition (or enemies) it will attract. And the more competition (or enemies) a business faces, the more difficult it is for that business to find sustained success.

A business is a means to an end. Nothing more, nothing less. The business owner(s) defines what the end is. This end could be about money, security, accomplishment, legacy, nearly whatever.

Frank Lucas defined his end as never-ending power and wealth.

By the time his supply-chain operations were crumbling due to the impending American pullout from Vietnam, Frank was a powerful and wealthy man. He was winning at the business game he defined. But winning wasn’t enough for him, he wanted to continue growing his “Blue Heroin” business by any means necessary.

Frank made a final visit to his heroin supplier in Vietnam. A rogue General in the Chinese Kuomintang army presided over the poppy farm where Frank purchased his heroin. Like Frank, this General was a wealthy and powerful man. Unlike Frank, this General understood business is a means to an end … and an end is inevitable.

During their last visit together, the General gave Frank Lucas brilliant business advice…

QuttingWhenAhead

Now that’s a line worthy of contemplation … “Quitting while you are ahead is not the same as quitting.”

In the must-read business book, “THE KNACK,” Norm Brodsky spends a chapter talking about the decisions entrepreneurs face when growing their business. He says, “Growing a business is a matter of choice, before deciding to grow, make sure you know why you are doing it.”

Norm continues, “Business is just a means to an end. The question is, what’s the end? Where do you want to go in your life? Where do you want to be in five years from a family standpoint? What do you want to earn? How much time do you want to take off?”

When you know why you’re growing a business, then it’s easier to know when to quit and totally reasonable to quit.

However, if you, like Frank Lucas, are growing a business for never-ending power and wealth, then you’ll never know when to quit. And thus, you will eventually lose in the game of business.

Frank didn’t know when to quit and he was eventually arrested. He was convicted of conspiracy to distribute narcotics and sentenced to 70 years in prison. Because Frank cooperated with government authorities leading to the arrest and indictment of crooked police and drug dealers, he served 15 years in prison.

January 15, 2009

The Loudest is the Weakest

This is the fifth in a series of posts sharing business lessons learned from the movie, AMERICAN GANGSTER.


5_LoudestWeakest

Setting the Scene:
The big city street life was new to Frank Lucas’ brothers and cousins. They were used to country life in the backwoods of North Carolina before being recruited into Lucas’ drug empire. Once in the game, these young men had instant status and inordinate wealth thrust upon them. It’s hard to stay humble when fame and fortune comes so easily.

Huey Lucas, Frank’s oldest brother, became friends with the flamboyant and always dapper Nicky Barnes. Soon after their friendship was formed, Huey began to dress less like his conservative brother and more in the superfly style of Nicky Barnes.


The Loudest is the Weakest
Much of Frank’s success as a drug lord can be attributed to his conservative and sophisticated outward appearance. He dressed like a CEO of a Fortune 500 company. Tailored suits. Crisp shirts. Sharp ties. Classy, without being attention-hungry.

The one quality, above all, Frank wanted to instill with his brothers and cousins was to stay humble in appearance so that one’s actions would always speak louder than one’s clothes.

When Huey Lucas flaunted his Nicky Barnes-like superfly outfit at a nightclub, Frank stepped in and dressed down his dressed-out brother. Frank told his brother he was “making too much noise” by wearing a “clown suit” that acted as a billboard to the police advertising, “Arrest me.

Listen to me,” Frank said to Huey. “The loudest one in the room is the weakest one in the room.”

Wow! Great line and so applicable to marketing where the loudest advertiser in the room, probably has the weakest product in the room.

It’s reasonable to assume weak and unremarkable products/services need the loudest advertising because it’s the only way they will get remarked about.

We’ll be seeing lots of “loudest in the room” advertising during the 2009 Super Bowl.

Most Super Bowl advertisers make lots of noise showcasing their “clown suit” gimmicky advertising with the hopes of grabbing our attention. The louder these companies talk, the weaker we can assume their product/service is.

Perennial “loudest in the room” advertisers are the major beer companies. The only thing worth talking about Bud Light, Miller Lite, and Coors Light is their loud advertising, certainly not their boring beer.

A recent example of “loudest in the room advertising” comes from Toyota. Their “Saved by Zero” campaign played incessantly during October and November of 2008. No one I knew was talking about how great the Toyota Tundra is or how unique the Toyota Camry is. Everyone was talking about how obnoxiously loud the “Saved by Zero” campaign was.

Think about this … when people talk about your brand, do they talk about the products/services your company does? Or, do they talk about the advertising it did? If people are only talking about the advertising your company does, then your “loud” advertising is potentially hiding a weak product.

Like Seth Godin, Frank Lucas believes in spending money to make products stronger and more remarkable rather than spending those same dollars to make the “loudest in the room” advertising messages.

For Frank, as we learned in an earlier lesson, this meant spending time, money, and action to make his brand of heroin, Blue Magic, more remarkable.

The marketing adage of Actions Speak Louder than Advertising fits right in with the Frank Lucas way of doing business.

January 14, 2009

Leadership Qualities

This is the fourth in a series of posts sharing business lessons learned from the movie, AMERICAN GANGSTER.


4_leadershipqualities

Setting the Scene:
“Blue Magic” has transformed Frank Lucas from a nobody to a somebody. Business is booming and Frank needs people he can trust to run his daily operation. For years Frank was estranged from his large extended family in Greensboro, North Carolina. However, family is family and he trusts his brothers and cousins to help him expand his heroin business. The Lucas family is uprooted from Greensboro to live and work in the new family business of “Blue Magic” heroin.



Lucas_brothers

Leadership Qualities
Frank’s brothers, Melvin, Huey, Dexter, Turner, and Terrance, were new to the drug business and to the informal social rules of street life. They needed mentoring, just as Bumpy Johnson once mentored Frank.

Frank spent quality time with his brothers teaching them everything he learned about growing a business, earning respect, and being honest. His brothers were in total sponge mode, soaking up every last drop of streetwise wisdom from their older brother.

In this pivotal scene, Frank Lucas shared the core necessities his brothers need to become successful businessmen:


Frank’s core business leader necessities include: Honesty. Integrity. Hard work. Family. Never Forgetting your Roots.

Plus, as evident in that scene, a business leader needs to make Bold, Audacious Moves in order to become a somebody.

January 12, 2009

Brand Dilution

This is the third installment in a series of posts sharing business lessons learned from the movie, AMERICAN GANGSTER.


3_branddilution

Setting the Scene:
Frank Lucas’ “Blue Magic” heroin became the market leader in New York City. Rivals said he had “upended the natural order of things” by selling heroin that is twice as good for half as much. Competitors left the heroin market because “nobody wants to compete with a monopoly.”

To accelerate growth of the “Blue Magic” business, Frank arranged wholesale distribution agreements with other drug lords and mafia families. This shift in business strategy made competitors part of the “Blue Magic” family, with Frank Lucas as the all-powerful CEO and Chairman of the Board.


Never Dilute a Brand
Nicky Barnes competed with Frank Lucas and the success of “Blue Magic” hurt the financial viability of Nicky’s operation. Grudgingly, Nicky signed on as distributor of “Blue Magic.”

In an effort to increase profits of his “Blue Magic” sales, Nicky began diluting the purity of the heroin to increase his inventory and his margins. He sold the diluted heroin as “Blue Magic.” Frank Lucas wasn’t pleased and addressed his concerns just like a top-notch Chief Marketing Officer would to any rogue field marketing manager, maverick product manager, or renegade franchisee.

Follow the encounter from this modified script snippet...

Redmagic_script_3

Businesses “chop down” their products all the time. In the quest to maintain profits or possibly, grow profits, businesses make strategic decisions to dilute their offerings. And if done inconspicuously enough, customers will hopefully never notice.

Frito-Lay chopped down its 12-oz bag of chips to 10-oz. bags. Price remained the same.

Hellmann’s chopped down its 32-oz. jar of mayonnaise to 30-oz. Price remained the same.

Dial chopped down its soap bars from 4.5-oz to a 4.0-oz size. Price remained the same.

Bounty chopped down the number of towel sheets per roll from 60 to 52. Price remained the same.

Kellogg’s chopped down its Fruit Loops cereal package size from 19.7-oz. to 17.0-oz. Price remained the same.

Iams chopped down its 6-oz. package of cat food to a 5.5-oz package. Price remained the same. [SOURCES: USA Today ; New York Times]

However, customers have noticed all this chopping down. According to a Consumer Reports study, 75% of shoppers surveyed said they have noticed smaller package sizes from their favorite brands. And, 71% of shoppers believe the package downsizing is a clear attempt by brands to hide price increases. It's interesting to note, 50% of shoppers prefer brands stop chopping down their products and instead, keep their old package size and simply raise the price. [SOURCE: Consumer Reports]

The takeaway lesson is simple … when a business decides to dilute its products, it runs the risk of drawing ire from customers.

The action step is also simple … if you find yourself saying or thinking, “A customer will never notice that.” Chances are, they will. Be prepared to deal with their reaction.


That's just one angle to this "Brand Dilution" lesson from Frank Lucas. I'm sure you can think of other lessons. Share them in the comments.

January 09, 2009

Launching New Products

This is the second in a series of posts sharing business lessons learned from the movie, AMERICAN GANGSTER.


2_launchingproducts

Setting the Scene:
In the early 70s, heroin was widely available in the streets of New York City. Common practice was to dilute the heroin with sugars, chalk, flour, or powdered milk. By diluting the heroin, dealers were able to significantly stretch their product inventory and maintain their high prices without upsetting their customer base. Customers had come to expect lower potency heroin as the only choice despite a growing number of dealers.


Launching a Remarkable Product
Frank Lucas understood heroin customers would appreciate a richer, more potent product at a lower price.

To create such a remarkable product, Lucas had to go outside the established heroin supply chain. He cut out the middleman wholesale supplier and went straight to the source by forging a direct business relationship with a heroin producer in Saigon, Vietnam. He procured 100% pure heroin product and smuggled it into New York City using the US Army as the transportation channel.

And, instead of following the standard drug dealing practice of diluting heroin with adjuncts, Lucas made the strategic decision to differentiate his product by selling 100% pure heroin.

Plus, Lucas smartly packaged his heroin in small blue baggies and stamped each bag with the brand name, BLUE MAGIC. (“Blue Magic” references the purity of the product. When tested with chemicals, pure heroin turns blue.)

Frank Lucas simply followed the Purple Cow approach and the ZAG approach to creating a remarkable product.

Out-of-the-box thinking all-the-way. Just like other “Blue Magic” products and businesses … iPod … Starbucks Coffee … Method soap … Whole Foods Market … In-N-Out Burger … Amazon.com … and the list could go on and on.

January 08, 2009

Mentors Matter

This is the first in a series of posts sharing business lessons learned from the movie, AMERICAN GANGSTER.


1_mentorsmatter

Setting the Scene:
Bumpy Johnson was an organized crime kingpin in Harlem. His considerable wealth, street smarts education, penchant for violence, and charitable community efforts made him a larger-than-life figure. For over 15 years, Frank Lucas served as Bumpy’s driver, bodyguard, and collector. Everything Frank learned, he learned from Bumpy. So when Bumpy suffered a heart attack, Frank vowed to continue what his mentor started.


Frank Lucas on Bumpy Johnson
“He was my boss. My teacher. He taught me a lot of things. He taught me how to take my time, Taught me that if I was going to so something to do it with care, with love. Taught me to be a gentleman.”

Mentors Matter
The benefits of having a mentor cannot be understated. Developing a one-on-one relationship with someone you respect for their know-how and daily demeanor is a critical factor for many successful businesspeople. Mentors offer guidance, connections, criticisms, and support that can only help someone reach their professional goals.

Lisa Denny Compton was my mentor. She was also my boss. Without her patient counseling and marketing coaching, I shudder to think where my business life would be.

A mentor doesn’t have to be your boss. Mentors can came from anywhere … your co-worker, your neighbor, your pastor, your aunt, anyone. If you respect someone for what they have done/are doing, they can be your mentor. You just have to watch, listen, and apply the lessons they teach you.

January 06, 2009

American Gangster | Business Lessons

Over the Holidays I watched AMERICAN GANGSTER again. Great movie. Great story, Great acting. Great cinematography. Great business wisdom.

Yes. Great business wisdom.

I know what you’re thinking … AMERICAN GANGSTER is a film about a drug dealer (portrayed by Denzel Washington) and the New York City cop (portrayed by Russell Crowe) who busted a big-time heroin ring. Business lessons to be learned?

Oh, yeah. Lots of business lessons to be learned, including: Mentors Matter, Launching New Products, Brand Dilution, Leadership Qualities, The Weakest Talk the Loudest, and Winners Can Quit.

[FYI … Long-time Brand Autopsy readers will recall a series of posts from February of 2004 highlighting STREET CORNER SELLING LESSONS from a book called Dealing Crack (Bruce Jacobs). So this isn’t new territory for Brand Autopsy.]

Americangangster_businesslessons

American Gangster synopsis:
Following the death of his employer and mentor, Bumpy Johnson, Frank Lucas establishes himself as the number one importer of heroin in the Harlem district of Manhattan. He does so by buying heroin directly from the source in South East Asia and he comes up with a unique way of importing the drugs into the United States. As a result, his product is superior to what is currently available on the street and his prices are lower. His alliance with the New York Mafia ensures his position. It is also the story of a dedicated and honest policeman, Richie Roberts, who heads up a joint narcotics task force with the Federal government. Based on a true story. [SOURCE]


AMERICAN GANGSTER | BUSINESS LESSONS

LESSON ONE
Mentors Matter (Jan. 8)


LESSON TWO
Launching New Products (Jan. 9)
LESSON THREE
Brand Dilution (Jan. 12)
LESSON FOUR
Leadership Qualities (Jan. 14)
LESSON FIVE
The Loudest is the Weakest (Jan. 15)
LESSON SIX
Winners Can Quit (Jan. 18)

March 03, 2004

Street Corner Selling Lesson #7

Today’s topic is: Developing Enthusiastically Satisfied Customers - PART 2

“No interest till 2005!” “No payments till 2005!” “Zero down, no interest.” “No credit history? – No problem.” These are common sales tactics used by high-ticket retailers in fields as varied as electronics, furniture, and cars.

Retailers selling high-ticket goods have seemingly become addicted to extending generous credit terms to consumers to secure a large dollar purchase.

The automobile industry got hooked on “zero down, no interest” deals following 9/11 in an attempt to arrest dismal sales. It worked. But, it may have worked too well. It has been over two years since the car dealers began offering car buyers lenient credit terms and it appears that they have become addicted to “zero down, no interest” deals in order to drive comp sales. These sweetheart deals are still widely used by car dealers. Some have gone so far to say that these generous credit terms have become the “crack of the car industry.”

Speaking of crack, street corner sellers have found that extending credit to buyers is a way to not only drive sales but also to develop enthusiastically satisfied customers. Dealing Crack author Bruce Jacobs tells us more.

In the world of street crack… extending the right amount of credit at the right time can forge brand loyalty and be profitable at the same time. Several sellers reportedly timed their [credit] offerings to coincide with the last week of the month, so that memories would be fresh when money became abundant the following week.

“Yeah, I give credit like around the first – if you know them and know they’ll come back. When they get their [public transfer] money, they gonna come back and spend it with me,” explained Benzo (street corner seller).

Offering credit could mean a real windfall, particularly of customers made their repayment along with an additional (and perhaps quite large) purchase. Although Fade (street corner seller) emphasized the importance of extending credit only to “specific people that won’t play with your money.”

Interest rates varied by the offender and were usurious to say the least – from the more forgiving sum of $5 a day on a $20 rock to a mafia-esque 100% - regardless of the amount involved – to be paid the following day or week.

No matter how exorbitant the interest, those caught in the throes of an all-consuming addiction, without sufficient funds to continue using, may view getting crack on credit tantamount to getting crack free. Immediate gratification is essential and can occur at the expense of rational thinking.


Street Corner Selling Curriculum:
Lesson #1: Customer Acquisition
Lesson #2: Ten Minute Rule
Lesson #3: Procurement
Lesson #4: Merchandising
Lesson #5: Angel Customers and Demon Customers
Lesson #6: Developing Enthusiastically Satisfied Customers (pt. 1)
Lesson #7: Developing Enthusiastically Satisfied Customers (pt. 2)

Street Corner Selling – Lesson #6

Today’s topic is: Developing Enthusiastically Satisfied Customers

Businesses that focus on cultivating enthusiastically satisfied customers will typically generate a loyal customer base that will gladly refer that business to their friends and family. Drug dealers must also develop enthusiastically satisfied customers because nearly all of their sales growth is tied directly to customer referrals.

Bruce Jacobs furthers this thought in his book, Dealing Crack.

In the world of illicit street drugs, the mythic importance of a good connection cannot be overstated. Most people involved in the generic process of purchasing want the most and best product for the least amount of money, and crack buyers evaluate dealers by seeking out those who are perceived to offer the best deal.

A number of sellers attempted to target their market strategies accordingly. Selling the fattest stones, offering more product for the money than was customary, and giving credit were all geared to entice customers to seek them and them only.

Read these smart street-level quotes on how drug dealers develop enthusiastically satisfied customers:

Bo Joe -- “The bigger ones [rocks] you serve, the more customers you get. You don’t gotta worry about no one else getting’ the sale because they [users] want you.”

Ice-D -- “You give’em more than what you should because they look at their competitors and know that ain’t what so and so gave me [last time].”

Deuce Low -- “Everybody try to keep they own clientele. Homie spoiled a customer so much last night, he don’t wanna deal with me – only him."

K-Rock -- "Providing fat stones may hook customers into buying from a particular seller, but smaller quantities – provided sometimes at reduced cost or free of charge – keeps the addiction going. Cultivation is arguably most effective (and most appreciated) when users are at their height of desperation, In the twilight of a binge, for example, even the most meager form of generosity can look colossal and reflect positively on the dealer who is “compassionate” enough to offer a free or cut-rate nugget."

“When a customer’s geekin’ … I’ll break off some pieces like give’em a fifteen for a ten, or a ten for a five, or just break off like two and three dollar pieces. I kinda feel guilty – know that they got kids. So I don’t be taxin’ like that. You’re gonna lose money, but you're gonna keep your clientele. You know they get paid at the first of the month, and they gonna keep spendin’ with me [because I did that for them]. I’m true to the smokers. That why my clientele be so high.”


Street Corner Selling Curriculum:
Lesson #1: Customer Acquisition
Lesson #2: Ten Minute Rule
Lesson #3: Procurement
Lesson #4: Merchandising
Lesson #5: Angel Customers and Demon Customers
Lesson #6: Developing Enthusiastically Satisfied Customers (pt. 1)
Lesson #7: Developing Enthusiastically Satisfied Customers (pt. 2)

March 02, 2004

Street Corner Selling - Lesson #5

Today’s topic: Angel Customers and Demon Customers

Sometimes your most loyal customers are not your best customers. Many business books from Angel Customers and Demon Customers to Driving Customer Equity have tackled the issue of how to select a company’s most profitable customer base and how to nurture a relationship with those customers to fully maximize sales. Drug dealers must do the same.

Bruce Jacobs writes in Dealing Crack about how street corner sellers in St. Louis would many times leave the gang-infested north-side of the city for highly profitable sales in the south-side.

Any opportunity to go south and sell to consumers who were not dependent on public transfer payments was welcome.

Jimmy Hat [street corner seller] claimed that every Saturday his brother would take him to the south side. He spoke highly of these sojourns, claiming that transactions there were for fifties and boppers [$20 rocks], that “there are a lot of people over there with more money to spend, and that police ain’t too hot.”

Jimmy Hat describe his strong desire to focus his selling efforts on the south side only, “South side, ohh man, I wish I could be there seven days [a week]! They ain’t comin with no five, ten dollars over there. They comin’ with twenty, twenty-fice, thirty, fifty dollars. Money be comin’ like this. I makes ‘bout eight-hundred fifty dollars [over a week] in the south side.”


Street Corner Selling Curriculum:
Lesson #1: Customer Acquisition
Lesson #2: Ten Minute Rule
Lesson #3: Procurement
Lesson #4: Merchandising
Lesson #5: Angel Customers and Demon Customers
Lesson #6: Developing Enthusiastically Satisfied Customers (pt. 1)
Lesson #7: Developing Enthusiastically Satisfied Customers (pt. 2)

February 27, 2004

Street Corner Selling – Lesson #4

Today’s lesson is MERCHANDISING

In Lesson #3, you learned how street corner sellers procure their product. In Lesson #4, we take a look at how drug dealers merchandise their procured product. As with the previous lessons, this inisght into the business practices of drug delears comes from Dealing Crack written by Bruce Jacobs.

After purchasing their “bundle,” the sellers package individual quantities for retail.

A bopper purchased wholesale (for $100), might be broken down into ten $20 rocks – yielding $200 in sales or double the investment. Quarter-ounces purchased wholesale (for $250) might be broken down into some combinations of fifties, twenties, and tens that equaled, when retailed, $500. Half-ounces purchased wholesale (for $500) might be broken down into boppers, fifties and twenties equal to $1,000 at retail.

The goal is to double one’s money. More often than not, this is a goal and nothing more. As K-Rock explained, “The only way to double your money like that for real is to sell twenties. You need twenty sales to make a straight profit.”

On the street, dealers confront desperate and financially strapped users wanting to “get over” – soliciting twenties for $12, fifties for $40, or tens for $3 or $4. Buyers would sometimes reportedly bring the full amount to a transaction and attempt to either hide this fact or more brazenly, ask for change from the dealers they were trying to short.

To maintain profit margins, dealers might bite open a baggie, break off the quantity requested, and sell the remainder later for its marginal value – or even at full price to some dupe. Breaking off pieces; however, is inconvenient, imprecise, messy (crumbs might be dropped, and time-consuming. In the meantime, a sale might be lost to competition or, worse yet, observed by police.

To avoid this, a small number of $5 and $10 rocks might be prepackaged. Such nickel and dime sales, however – referred to as “kibbles and bits” – were disliked. Like most merchants, crack dealers want to make the fewest sales for the most money.


Street Corner Selling Curriculum:
Lesson #1: Customer Acquisition
Lesson #2: Ten Minute Rule
Lesson #3: Procurement
Lesson #4: Merchandising
Lesson #5: Angel Customers and Demon Customers
Lesson #6: Developing Enthusiastically Satisfied Customers (pt. 1)
Lesson #7: Developing Enthusiastically Satisfied Customers (pt. 2)

February 25, 2004

Street Corner Selling – Lesson #3

Today’s lesson is PROCUREMENT (“Copping One’s Supply”)

In business, procurement is the process of obtaining goods, services, supplies, and equipment. Once something is procured, it can be retailed. Without procurement, no business would be in business. Same goes for drug dealers -- without product to deal, no deal to be made. Bruce Jacobs writes in Dealing Crack about how street corner sellers approach the procurement process.

Customary purchases were fifties ($50 worth of crack wholesale, about a gram), boppers ($100 worth of crack wholesale, about ten $20 rocks), quarter ounces ($250 wholesale), and, less frequently, half-ounces ($500 wholesale). Fifties and boppers comprise the modal purchases and generally could be bought within the neighborhood.

Price and quality, though fairly uniform, varied enough so that sellers had an incentive to shop around. Convenience was overriding, but if individual sellers thought they could readily get a better ‘play,’ they would look for it.

As Prus (street corner seller) notes, buyers want a good product at a fair price, but “buying is far from a static or simple dollars and cents exchange.” It requires a degree of “reflective planning” and is “strikingly qualifies” by the activities of those whose services buyers seek.

Sellers typically purchase their supply already rocked up (prefabricated product). As Fade explained, “It’s best to get the shit hard. They [sellers] already know how much to put in of what – how to cut it up, how much water and all that.”

Though buying is always a gamble … procuring a prefabricated product eased sellers’ fears of being swindled. Nonetheless, inexperienced sellers benefited from bringing smokers with them to verify a purchase’s authenticity. More seasoned vendors did not bother with “tasters” because they were able to discern product quality by smell, touch, and sight.


Street Corner Selling Curriculum:
Lesson #1: Customer Acquisition
Lesson #2: Ten Minute Rule
Lesson #3: Procurement
Lesson #4: Merchandising
Lesson #5: Angel Customers and Demon Customers
Lesson #6: Developing Enthusiastically Satisfied Customers (pt. 1)
Lesson #7: Developing Enthusiastically Satisfied Customers (pt. 2)

February 20, 2004

Street Corner Selling - Lesson #2

Today’s lesson is the TEN MINUTE RULE.

Like many customer-service focused retailers, Starbucks has a standing policy that instructs their stores to open ten minutes before they are supposed to open and to stay open ten minutes after they are supposed to close. Implementing the Ten Minute Rule is a relatively easy way for retailers to surpass customer expectations and to get an edge against their competition.

Some drug dealers take a similar approach. Dealing Crack (Bruce A. Jacobs) tells us how street corner sellers apply the Ten Minute Rule to their business.

Sellers used a number of tactics to achieve “separation from the crowd.” The simplest method was to be out early and stay out late, monopolizing sales during inconvenient time slots. “Best time to sell in the mornin’. Six, seven a.m. Ain’t got to worry about nuthin’ for real. No cats [rivals], no police trippin’ on you. They [police] think you are on your way to school.” Skates - street corner seller

I like sellin’ late at night – three a.m. – ain’t nobidy out. The few car that do come through, they fixin’ to spend some money. When you see a car hit the corner, you already know who it is. Only a buyer … come through that late.
Fade – street corner seller

Late night, off-time sales also tend to attract the truly desperate crack fiend – one who probably is not able to spend a good deal of money or one who may ask for credit or try to pull a scam. Yet, given the fierce competition an stagnating demand, stray sales become more important than ever.


Street Corner Selling Curriculum:
Lesson #1: Customer Acquisition
Lesson #2: Ten Minute Rule
Lesson #3: Procurement
Lesson #4: Merchandising
Lesson #5: Angel Customers and Demon Customers
Lesson #6: Developing Enthusiastically Satisfied Customers (pt. 1)
Lesson #7: Developing Enthusiastically Satisfied Customers (pt. 2)

February 17, 2004

Street Corner Selling – Lesson #1

Over the next few weeks I will be sharing with you some illuminating insights about marketing and business through a most unlikely source – drug dealers.

The insights are from a book titled, Dealing Crack authored by Bruce A. Jacobs. The intent of the book was not to parallel street corner drug dealing business models with legitimate business models. However, when I read this book some years back, I couldn't help but draw the parallels myself.

Before you automatically dismiss this as outlandish and ridiculous – think for a second. Drug dealers must design their business in the same ways that legitimate businesses do. From procurement of product to making strategic real estate (location) decisions to acquiring customers … the parallels between street corner selling and running a legitimate business are endless.

As business practitioners, we can learn from our street corner selling counterparts.

Today’s lesson is on Customer Acquisition: Bum Rush and the Myth of First Mover Advantage.

In this competition (bum rushing), at least two sellers – but usually more – would make an entrepreneurial wind sprint to a newly spotted customer. Whoever arrived first would get the sale or, at least, would be in the best position to get it. The more desperate for money one or more sellers were, and the more of them convened in space and time, the more prone to bum rushing they appeared to become. As A-Train (street corner seller) put it, “It be like ants tryin’ to get a piece of crumb.”

Being surrounded by throngs of hucksters, all proclaiming the superiority of their product, spitting rocks into their hands, clutching rocks with a death grip, shoving each other out of the way, and jostling the buyer in the process, is no doubt disconcerting to the buyer. The buyer does not know whom to deal with, who is selling the real thing and who is not, whose rocks are the biggest, whose rocks just look bigger by virtue of clever packaging, and if or when the police will appear.

Transacting with the first seller on the scene – though expeditious – is not necessarily wise. Taking the first stone offered may allow users to leave the area quickly and reduce their risk of arrest, but they might not come away with the real thing. A better deal might be forthcoming with a little patience.


Street Corner Selling Curriculum:
Lesson #1: Customer Acquisition
Lesson #2: Ten Minute Rule
Lesson #3: Procurement
Lesson #4: Merchandising
Lesson #5: Angel Customers and Demon Customers
Lesson #6: Developing Enthusiastically Satisfied Customers (pt. 1)
Lesson #7: Developing Enthusiastically Satisfied Customers (pt. 2)