Progressive Rentals May-June 2003

Ridin’ High in Reno! How to Select a Security System by Phillip M. Perry

States vs. Feds: Preemption Demystified by Ed Winn III

APROfile: Wayland Russell—Somewhere Over at Rainbow by Katie Garza

Ridin High

RENTAL DEALERS WILL ONCE AGAIN BE RIDING HIGH IN RENO THIS SUMMER AS THEY TRAVEL FROM FAR AND WIDE TO ATTEND THE 2003 APRO CONVENTION AND TRADE SHOW. GEARED SPECIFICALLY TO THE RENTALPURCHASE INDUSTRY, MORE THAN 100 VENDORS WILL FILL THE EXHIBIT HALL AND EDUCATIONAL SEMINARS COVERING TOPICS FROM MARKETING TO HISPANICS TO HOW TO SPOT A LIAR, WILL GUARANTEE A PROFITABLE JOURNEY FOR ALL WHO ATTEND. THE ASSOCIATION OF PROGRESSIVE RENTAL ORGANIZATIONS IS THE NATIONAL TRADE ASSOCIATION DEVOTED TO THE RENTAL-PURCHASE INDUSTRY, WHICH IS COMPOSED OF BUSINESSES THAT RENT FURNITURE, APPLIANCES, COMPUTERS, JEWELRY AND OTHER HOME PRODUCTS WITH AN OPTION OF OWNERSHIP. ALSO KNOWN AS RENT-TO-OWN, THIS IS A $5.7 BILLION-A-YEAR INDUSTRY SERVING APPROXIMATELY 2.8 MILLION CUSTOMERS A YEAR

It’s no wonder that more than 5 million people visit Reno every year. A chain of high mountain peaks surround the region in every direction. The Truckee River flows through the heart of the city and among an eclectic mix of stately manors, quaint churches, sleek high rises, city parks and casinos. In addition to the area’s spectacular beauty, Reno/Lake Tahoe offers an extraordinary mix of history and culture, world-class ski and golf resorts and 24-hour gaming and entertainment. APRO’s 2003 host hotel, John Ascuaga’s Nugget, is well-known for its beautiful accommodations, tasteful dining and resort luxury. And it’s all there for you when you attend APRO’s 2003 convention and trade show!

RENTAL INDUSTRY TRADE SHOW

APRO’s exhibit hall is dedicated specifically to the rent-to-own industry and John Ascuaga’s Nugget again plays host to this premier industry event. You will be able to view more than 200 booths displaying products targeted to our industry: appliances, electronics, furniture, jewelry, special services and more. APRO encourages you and your company to “Buy APRO” by taking advantage of vendor specials during the show. Admission to the trade show is complimentary for those involved in the rental industry. Proper business identification is required to receive an entrance badge

RENTAL ADVERTISING EXCELLENCE AWARDS
Winners of the prestigious RAE awards will be on display during the APRO convention. The winning print, television and radio advertisement entries set new standards every year. Entries developed by rental dealers and entries developed by advertising agencies were judged separately. Check out this year’s winners in the exhibit hall.

2003 RTO EMPLOYEE OF THE YEAR AND RTO CUSTOMER OF THE YEAR

This popular contest enters its fourth year and the search is on for the best in the industry. APRO’s annual Rental Employee of the Year and Customer of the Year Contest will be recognized with presentations at the general session. This year’s entries again show the warm relationship between your customers, employees, company and the RTO industry. Many companies are holding their own contests as well as entering their employees and customers in APRO’s national contest. Look around—you may have the winner! Winners receive a complimentary trip to this year’s convention. Call APRO or visit www.APROVision.org for contest entry information.

THREE EASY STEPS

HOTEL RESERVATIONS. The deadline is July 7 to guarantee the special APRO rate of $93 single/double at John Ascuaga’s Nugget. Call 800/648-1177 and ask for the APRO room rate. PLEASE NOTE: it is very important that all APRO attendees book their hotel room through the APRO room block by calling John Ascuaga’s Nugget. Online reservations will not be credited to the APRO room block. To encourage reservations through the APRO block, there will be a drawing of those who book through the APRO block. The winner will receive a room free of charge for four nights during the convention.

AIRLINE/CAR RENTAL RESERVATIONS. You can find discount travel Web sites on the APRO Web site at www.APROVision.org. Simply go to “Travel Channel” and click on “Travel Center” for links to all major airlines and discount travel sites. Remember to book your flights early, as each airline offers a limited number of discounted seats. Once those are taken, you may have to book at a higher price.

APRO CONVENTION REGISTRATION. To receive the discounted registration rate, your registration form must be received by July 7. The final pre-registration deadline is July 18. After July 18, registrations will be accepted on-site only at the convention. Call 800/204-2776 for additional registration forms or visit www.APROVision.org to register on APRO’s Web site.

How to select a security system

When a Southern California store owner needed a new security system, the owner asked for advice from a neighboring store that had taken the plunge a year earlier. It turned out that the neighbor was very enthusiastic about his equipment, which seemed to operate without problems and had recently done a great job sounding the alarm when a vandal broke the front window.


Presented with such a glowing endorsement, the store owner installed the same system, which consisted of microwave motion detection devices linked to a remote reporting station. Disaster followed. One false alarm after another summoned police.Adding injury to this insult were some steep monetary fines, thanks to a town ordinance that penalized false alarms.

What went wrong? The store owner’s sensors were being set off by ceilingmounted displays which started bouncing around when the building’s ventilation system kicked in after hours. Faced with the prospect of removing attractive displays with lots of customer appeal, the store owner ended up replacing her microwave system with a motion-friendly infrared one.

KNOW YOUR STORE

Our opening story drives home an important point: A security system that’s right for one store may be wrong for another. “Every store has different security needs,” says Robert A. Gardner, a Ventura, CA-based security consultant who was called in to solve the store owner’s problem. “When you buy a system, you have to consider a number of environmental factors,” says Gardner. These include the types of merchandise and displays, the configuration of doors and windows, the positioning of ventilation ducts and neighborhood crime statistics and patterns.

More store owners are studying these issues as security takes a higher profile. A downturn in the economy often causes an increase in burglary and robbery. And everyone has started thinking security since the tragic events of 9/11. “We are all going through an assessment phase,” says David Saddler, associate executive director of the Security Industry Association in Alexandria, VA. “While we are all pretty confident that most of us are not targets of terrorism, the events have caused people to ask, ‘have we created environments as safe as they can be for ourselves, our employees and our customers?’ People want to know they are coming to a secure environment.”

To temper the expense required for a system, store owners are starting to strategize their security investments. For example, they are checking their insurance companies to see how better equipment may help reduce premiums. If planned well, security expenses can be partly offset by marketing gains. “Consider a camera positioned at the front of the store for security purposes, for example,” says Saddler. “Then think of the data a store owner needs to make marketing decisions: Can customer counts gathered by the securitycamera pay off in terms of increased knowledge about customer response to advertising campaigns?” The answer is often “yes.”

THREE LINES OF DEFENCE

Store owners design security systems at three levels of protection: perimeter, interior and dedicated. Let’s consider each of these in turn.

The first line of defense for a store lies in perimeter security, which consists of a technology that has been around for decades: An electrical wire is linked to magnetic contacts mounted on points of entry such as exterior doors, windows and skylights. “The perimeter security system is pretty standard today,” says Merlin Guilbeau, vice president of the National Burglar and Fire Alarm Association and president of his own security firm, Browns Security Systems in Natchitoches, LA. “When a burglar breaks the circuit by entering through a protected door or window, an alarm sounds.” (For a rundown on costs of such systems, see the sidebar on “How much does Security Cost?”)

The second level of defense consists of a system of interior traps that detect motions made by burglars who move around the store at night. This system not only backs up the perimeter defense, but also helps catch burglars who manage to hide themselves in closets or stock rooms prior to closing time.

Of the available technologies that trap interior motion, says Guilbeau, the most popular are passive infrared and microwave. When the former detects body heat from a person who moves around a cooler room, an alarm is triggered. Microwave, in contrast, detects the motion of the burglar.

Unfortunately, both technologies can trigger costly false alarms. Passive infrared can be triggered by a building’s heater coming on at night or by the front window heating up when struck by rays from the morning sun. Microwave can be triggered by ceiling-hung decorations that are too close to air vents or by a passing cat or rodent.

You can avoid most false alarms, however, if the installation is planned properly. “One common way to reduce false alarms is to combine passive infrared for thermal with microwave for movement,” says Guilbeau. Each system’s detectors are carefully positioned to maximize the chances of detecting a burglar while reducing the risk of false readings. For example, microwave but not infrared detectors will be placed near heating vents. Infrared but not microwave will cover the area where hanging ceiling displays bounce around.

SPECIAL DEVICES

Yet a third level of security is provided by dedicated devices. Here are some examples:

GLASS BREAK SENSORS. These come in the form of audio sensors that are usually installed in the ceiling and activate only at the sound frequency of glass breaking. “We personally like these devices in retail applications because quite often glass will break without someone entering and rain and wind can come in and damage merchandise,” says Guilbeau. “Also, it’s nice to have an alarm go off before the burglar actually enters the premises and activates the interior sensors as it gives the police more time to respond.”

PHOTOELECTRIC BEAM DEVICES

can protect large stock room areas where microwave and passive infrared are not practical. They are also installed to broadcast beams along the inside of store walls that are thin and can be easily breached by a burglar with the right tools.

PANIC BUTTONS

when pressed, send a signal to the police station or private reporting service and come in many forms. Some are mounted just under the counter. “Dollar bill traps” activate a signal when the last dollar bill is pulled out of the drawer. Or the store owner can use “wireless pendants” that send electronic signals to a central station. These can be worn anywhere, including parking lots where help can be summoned.

Confer with your local police before installing panic buttons, as some designs have caused too many false alarms. “Police don’t like sending in crews with guns drawn because a store owner made a mistake,” says Howard Levinson, president of Howard Services, Franklin, MA. “One solution is to install only devices that have protected triggers: for example, the store owner must press buttons on two sides of a box or reach down inside a box to reach a panic button.”

“WATER BUGS”

are small devices that are installed around boilers and other water sources and sound alarms if they detect water. “I’ve seen more damage from water than from fire in my career,” says Levinson.

“ACCESS CONTROL” SYSTEMS

restrict certain areas of your premises to designated individuals. To gain entrance through protected doors, the individual must use a device such as a proximity card, which is keyed with a code on a magnetic strip or keypads that are only activated with the entry of a string of numbers. “These access control systems are very flexible,” says Guilbeau. “They can allow access to certain areas only during designated hours, for example. And different employees can have access to different areas. Finally, the systems also serve to keep customers from wandering into sensitive areas.”

Using traditional keys, when an individual left employment it was often necessary to re-key all of the locks.With access control systems, the manager need only log onto the controlling computer and limit the access of the departing card holder.

PUTTING IT TOGETHER

Over the past two years there has been a drive to integrate all of the devices in a security system into a single functioning network with the aid of closed circuit television (CCTV) cameras. With integrated systems, cameras are activated only when a sensor or panic button indicates that a break-in or other problem is occurring. “These cameras work well with access control systems,” says Saddler. “The camera can be programmed to come on when someone uses the system to access a restricted area. The image tells you who is trying to gain entrance. You call the police if it’s an outsider.” The cameras can also be programmed at checkout to activate when a cashier presses a special key.

“Today you can also view what your cameras see remotely,” says Saddler.“You give each camera an IP (Internet protocol) address, then call up that address on your Web browser from home or a laptop computer when you are traveling.” This is a great way to make sure everything is all right at your store while you are attending trade shows.

PICK THE RIGHT COMPANY

Because you are revealing your retail operation’s hidden vulnerabilities, finding a reputable and knowledgeable security company is the most important battle in the security war. “Once you have decided on a reputable alarm company that you can trust to give you good advice and to provide good equipment, you are 99 percent there,” says Gardner. Find out if the company has the required state and local licenses such as an alarm company license, a contractor’s license to install electrical wiring and a local business license.

The firm must also be knowledgeable and in more areas than just the various technologies available. “Make sure the alarm company knows about your local ordinances,” says Gardner. Some towns now require permits to install an alarm system and many have instituted fines for false alarms. “Alarms in general are a wonderful thing, but a major headache for law enforcement,” says Gardner. “More than 90 percent of alarms are false. It can cost you a lot of money if you screw up.”

Lack of knowledge can be a particular problem, says Gardner, if you are located in a smaller suburb. An alarm company in a nearby big city may not be familiar with your local ordinances. “Call your local police department for advice,” says Gardner.

Both Gardner and Levinson advise conferring with a consultant who does not sell alarms. “An independent consultant has no interest in selling you a particular product,” says Levinson.“He just sells advice.”

Above all, remember that a successful security system needs to be tailored to the needs of your store. “There is not a cookie cutter solution for all store owners,” says Saddler. “What needs to be done is a process. Work with a professional who will talk about every aspect of your business and determine what technologies will secure your points of vulnerability.”

Phillip M. Perry is a free-lance business writer based in New York City.

STATES VS FEDS

This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any thing in the constitution or Laws of any State to the Contrary notwithstanding. — UNITED STATES CONSTITUTION, ARTICLE VI, CLAUSE 2

The debate over federal regulation of rental-purchase transactions in the last Congress devolved from a debate over how best to regulate the industry at the federal level to debates over preemption, the doctrine of federalism and states’ rights. Most rental dealers are conversant by now with their industry’s disclosure and consumer protection issues. Their eyes may glaze over, however, when the discussion turns to constitutional issues, particularly preemption. This article will summarize the debate to date and explain why the issue persists at the federal level.

Preemption as a legal doctrine allows a superior legislative body to override the otherwise lawful enactments of inferior legislative bodies. Under the U.S. political framework, the federal government has the power to preempt the acts of state government under certain circumstances. This is so because of the Supremacy Clause in the constitution cited above. Likewise, most state constitutions empower their state executive and legislative branches to preempt local governments.

When the country was founded, it was not at all clear what the relationship would be between the new federal government and the sovereign states. The constitution acknowledges the final supremacy of federal over state law in order to create a cohesive union of states, but it also acknowledges the integrity and independence of the states in the 10th Amendment:

“…the powers not delegated to the United States by the Constitution, not prohibited by it to the states, are reserved to the states respectively, or to the people.”

And so, the federal government cannot preempt the states in all things, much as it might like to do so. The U.S. Congress can only exercise the powers granted it in the Constitution. Only the federal government can, for example, make treaties with foreign nations. For the purpose of legislating controls on rental-purchase transactions, Congress looks to its powers granted under the commerce clause which gives Congress authority to regulate interstate commerce, generally. That means highways, train tracks, air space and, over the years, the commerce clause has been very broadly interpreted to include most kinds of businesses that Congress has seen fit to regulate. With the size and breadth of the rental-purchase industry today, no serious argument can be made that the rental-purchase industry is beyond the reach of Congressional power.

As the size of the federal government grew during the 20th century, preemption became an increasingly important issue in the courts. According to the U.S. Advisory Commission on Intergovernmental Relations, as of 1992, 50 percent of all federal preemptions were enacted since 1970. The trend has continued since then as the federal government has inserted itself into most areas of American life.

Insofar as the rental-purchase bills are concerned, the federal Truth In Lending Act has a limited preemption standard for disclosures in consumer credit transactions. Passed in the 1970s, TILA was an attempt to standardize how interest rates are disclosed to consumers, since prior to its enactment there were several inconsistent ways of doing so,which some lenders used to take advantage of consumers. Under TILA, state consumer credit laws are preempted if they are “inconsistent with the federal law, and then only to the extent of the inconsistency.”

Previous versions of proposed rental-purchase legislation going all the way back to 1981 adopted this language with the intent of allowing the states to continue regulating rental-purchase transactions as they saw fit with a federal “floor” of disclosures that rental dealers must make to ensure adequate consumer protections.

In the late 1990s, court decisions in Minnesota and Wisconsin and the attorney general’s rule in Vermont called into question whether the TILA “inconsistency” preemption standard would work to keep states from re-characterizing rental-purchase transactions as credit sales, which is what the industry has always wanted from a federal law. The Minnesota Supreme Court ruled that in spite of a comprehensive rentalpurchase statute, arguably the most restrictive such statute in the country at the time, the transactions were still credit sales and therefore subject to the state usury law limit of 8 percent.

Wisconsin courts of appeal have ruled that there is no way to structure a rental-purchase transaction in that state that will not be considered to be a consumer credit transaction under the Wisconsin Consumer Act. The Vermont attorney general has decreed that even though the state legislature enacted a law declaring rental-purchase transactions to be leases and not credit sales, state rental dealers must nonetheless disclose an “effective annual percentage rate” by pretending that the difference between the cash price of the rental property and the total rental-purchase price is all interest.

In the face of these kinds of aberrant rulings in the states, the industry has sought language in more recent federal bills that would ensure consistent treatment of the transaction everywhere. Here is the language in H.R. 996 and S.B. 884 that has been added to the TILA “inconsistency” language:

“…this title shall supersede any State law, to the extent that such law (1) regulates a rental-purchase agreement as a security interest, credit sale, retail installment sale, conditional sale, or any other form of consumer credit, or that imputes to a rental-purchase agreement the creation of a debt or extension of credit; or (2) requires the disclosure of a percentage rate calculation, including time-price differential, an annual percentage rate, or an effective annual percentage rate.” (S.B. 884, sec. 1018(b))

While the issue is debated as being federal preemption of state law, in fact, this language would not overrule any state legislative enactments concerning rental-purchase transactions. This language would overrule state court decisions in Minnesota, Wisconsin, New Jersey and the attorney general’s rule in Vermont. This is a distinction with a difference. State legislatures are political entities far more sensitive to the will of the people in the state than are state judges, who are not supposed to try to implement political agendas from the bench, but often do. It should cause members of Congress, even those with strong states’ rights beliefs, less concern to “preempt” a state judge’s ruling in the interest of national consistency than to overrule the enactments of a state legislature, subject as those enactments are to the tug and pull of state politics.

Last fall, in the previous Congress, it was no particular surprise to industry watchers when most of the House members from Minnesota, Wisconsin, New Jersey and Vermont voted against the Jones bill, not on its merits as consumer protection legislation, but because they were championing their own state’s rights—in this case to be able to regulate rental-purchase transactions any way they wanted. What was surprising was that a number of other Republican House members who generally would have supported the bill since the industry supported it, also voted “nay” on states’ rights grounds.

If the rental-purchase bills in the Congress today are preemptive, they are barely so. State legislatures remain specifically free to continue to regulate rentalpurchase transactions as they see fit. They can regulate disclosures and they can regulate the economics of the transaction if they so choose. They can limit fees. They can set cash prices. They can limit the total rental-purchase price. They can dictate early-purchase option formulas. They can regulate anything about the relationship between the rental dealer and the consumer, except that they cannot call the transaction a credit sale or impose interest rate disclosures or limitations on the transaction.

Beyond the rental-purchase bills, preemption is currently a hot issue in Washington. The doctrine is at play in local smoking ordinances, gun control, environmental laws at every level, local zoning and building code laws, Internet taxation, workplace and employment rules, consumer credit, payday lending, and the list goes on and on. To some extent, the merits of the rental-purchase bills have become hostage to the larger political issue of preemption. Rental dealers have a duty to protect their businesses by understanding how the preemption issue affects movement of rental-purchase legislation at the federal level and to be able to discuss the issue persuasively with their representatives. It is important that the true merits of the proposed legislation, which are significant for all concerned, not get lost in the brouhaha over preemption.

Ed Winn III is APRO’s general counsel.

WAYLAND RUSSELL AND RAINBOW RENTALS: A CUSTOMER-FRIENDLY BUSINESS OFFERING USER-FRIENDLY PRODUCTS

In 1996, Wayland Russell was reading the newspaper when he came across an article about personal computers. According to the article, the “PC frenzy” was over because only 60 percent of households had personal computers. Russell cracked a smile and shared the news with his associates at Rainbow Rentals, a rent-to-own company based in Youngstown, OH. + “We laughed because we knew the other 40 percent were our customers and every one of them would like to have a computer,” he says. “So that’s what we did.We focused in on computers and they’ve become a staple product for us.”

Today, Rainbow Rentals, one of five publicly traded rent-to-own companies in the world, leads the market in personal computer rentals. From laptops to desktops, Rainbow’s 120 stores carry a wide variety of cutting-edge, flat-screen computers, in addition to the standard offerings of furniture, appliances and other electronics. + According to Russell, Rainbow jumped headlong into computer rentals about five years before the rest of the industry made the leap. The company launched a $2 million campaign to acquire the inventory and transform its employees into tech-savvy consultants.

“Each of our account managers had to take a computer home and perform certain functions on it, like sending e-mails and e-faxes and so forth,” says Russell. “They had to learn all of it and fully understand it.” The employee computer training included learning several user-friendly software applications, to which Rainbow bought the licenses and installed on their computers. “Back then, they didn’t have bundled software to make it interesting to our clientele,” he says. “We wanted to give our clientele computers that they could really use and enjoy, instead of just playing solitaire until they got bored.”

Rainbow’s employees weren’t the only benefactors of the company’s impromptu computer training; the customers also reaped the rewards. “We actually teach our clientele how to use the computers they rent from us— things like how to get on the Internet,” he says.

A Rainbow in cyberspace
According to Russell, teaching customers how to surf the Internet was “part and parcel” to launching a Rainbow Rentals store in cyberspace at www.rainbowrentals.com. Shoppers can browse through virtual showrooms, hunt for specific namebrands, learn about the latest money-saving deals, place orders or locate the nearest store.

“Today, about 2 percent of all our orders are coming from the Internet; we’re getting a minimum of 400 orders a month,” says Russell. “That’s pretty material. I mean, how many companies out there would like to increase their top line by 2 percent?”

The multi-million-dollar campaign to bring personal computers into Rainbow customer households has paid off. Company financial reports have shown that the core stores are bringing in more than $250,000 per location in computers alone.

Such an ambitious campaign to utilize Rainbow employees as ambassadors of technology could not have been achieved with a “revolving-door staff,” says Russell,who attributes Rainbow’s strong employee loyalty to solid internal communications initiatives. The average manager has worked at Rainbow for more than six years and most regional managers hold 10 years or more with the company. “It’s not farming in different talent with different ideas all the time,” Russell says. “We want those different ideas, but we want continuity.

I can tell you that the low turnover rate that we’ve enjoyed at Rainbow Rentals for many years was instrumental in us introducing a sophisticated product like computers five years before the industry ever thought it would be a viable product.”

Technically speaking

Ironically, Rainbow senior management relies strongly on the same computer technology it brought to its customers to cultivate a dedicated company culture. “Communication is technology’s great reward,” Russell says. “I can turn on my Blackberry, type a message with complete security to every human being in the company and hit ‘enter.’ Within a very short period of time, everyone in the company is reading that e-mail.”

Rainbow Rentals also utilizes computer programs to stay on top of the company’s bottom line. “We have a very sophisticated POS computer system that tracksevery single account,” says Russell. “It’s not an average of the averages. It knows how much is due on every single account every single day to the penny. It’s all Windowsbased proprietary software on an Intranet system.”

Furthermore, every Monday the company releases the RINO [Rainbow Is Number One] Report via e-mail, which lists every stores’ gains and collectible dollars versus actual dollars collected for the week. Keeping employees informed of how their stores figure into the company’s bigger financial picture can be a great motivator, says Russell.

“We’re paying on a performance base and these guys make more money than the average store manager in the industry makes,” he says. “Our average core stores are right at $1 million in sales per year, which eclipses the industry average. We close under 3.5 percent, week in, week out, all the time.Nobody I know in the industry does that.”

Yet financial stats and projections aren’t the only topics communicated through cyberspace to Rainbow’s 120 store locations. The company also disseminates employee news, such as family birth and death announcements, and posts information about upcoming charity events, a germane interest to Rainbow Rentals’ company culture.

“Rainbow Rentals generally does not tell people about the philanthropic work we do, but we’re a publicly traded company and everybody knows that we give 10 percent of our trailing earnings to good works every year,” says Russell. “It suffices to say that we plug in locally and personally to everything that we give to. We find local ministries and charities and watch their financial statements and stay involved.We take that responsibility so we know exactly where our money is going.”

Heartreach Ministries, an outreach program for inner-city youth, is a long-standing, favorite cause for Rainbow Rentals. The recreational complex was established with the assistance of several Youngstown businesses and churches, including the church Russell and his family attends. Many Rainbow Rentals employees have continued to support Heartreach through donated time and money.

Serving the community as a company can foster a sense of community among Rainbow employees, yet Russell says his company encourages more than a team environment. Rainbow Rentals promotes ownership among its employees.

“Taking ownership of their stores is critical to making our business model work,” he says. “We refer to our associates as associates, not employees.We believe employees are hired hands—that you buy their loyalty one hour at a time. We don’t believe that’s what our associates are about.”

To facilitate ownership, all managers were given stock options when Rainbow Rentals went public. The company also pays 100 percent of employee health benefits and associates can buy products at cost from the stores. Rainbow’s top store managers are recruited to participate in MAC, or the Manager Advisory Committee, which meets up to three times a year to discuss the company’s future and the industry’s future. When Russell attends furniture or electronics shows to scope potential inventory, store managers are invited to accompany him.

“Managers can tell us what’s going to move and what customers want,” he says. “There’s communication up and through the ranks at all times.”

Through the Rainbow Rentals Account Manager Program, a training method developed by Russell over his 26 years in the industry, supervisors communicate the company’s core values to new recruits before they ever interact with the customers. The orientation involves an intense two-week training period about customer relations.

“New account managers have to understand that the cornerstone of what we’re doing here is founded on respect and dignity,”Russell says. “Rainbow Rentals was a company founded on Judeo Christian principles. Simply stated, we treat everybody the way we’d expect to be treated given the same circumstances. If you’re going to write an article about Rainbow Rentals, you can’t be correct without making that statement.”

Consistently communicating the company’s founding principles and business methodologies leads to high keep rates, says Russell. “It all starts from the very beginning— having a very strong representation, explanation, demonstration and reassurance sale,” he says. “Before that, it’s about answering the phone on the first ring and greeting the customer before she hits the third tile on the floor to let her know that you recognize a human being has just entered the store and you want to do business with her.

“We believe you can get all you want in this world by just helping enough people get what they want,” he says. “Our credit program isn’t about credit, it’s about sales; selling the customers on the advantages of having their accounts up and current with Rainbow Rentals at all times. That’s what we do.”

Katie Garza is a free-lance writer living in Austin, TX.