Business Model Innovator: Increase Value Without Raising Prices Or Costs
Business leaders find thousands of ways to improve their business models. When you look at the most successful innovators, however, you find that more often than not they rely on three strategies to succeed. One of those strategies is to increase value without raising prices or increasing costs.
Less than five miles from my home, I found a memorable inspiration for improving a business by adding value without increasing prices or costs at Jordan's Furniture, a discount retailer. Jordan's had first drawn customer attention by being open late on Saturday nights at its sole store in blue-collar Waltham, Massachusetts.
Before or after the movies or a dinner out, you could shop for furniture while all the other stores were closed. The owners, Barry and Eliot Tatelman, kept the radio waves filled with humorous ads to remind everyone to come "where underprices begin."
Eventually, the tiny company (it had 15 employees when the advertisements began) opened a sprawling store on a green field site in another suburb, Avon, Massachusetts. Something else was new besides size and location, an entertainment attraction.
The appeal of this new store was so strong that the owners had to get on the air to ask customers not to come for a few days after the opening. In subsequent stores, the Tatelmans did more with entertainment, adding restaurants, IMAX theaters, Disney-type attractions, and entertaining shows.
People came from hundreds of miles away to see the stores . . . and some bought furniture. Soon, Jordan's became the most successful furniture retailer in the United States as measured by sales per square foot. The secret was no secret: Its "shoppertainment" concept of providing free and reasonably priced entertainment to shoppers attracted buyers better than the traditional approach.
The entertainment appeal was so strong in attracting customers that costs to serve customers as measured by percentages of sales dollars decreased dramatically due to the investment in shoppertainment. For example, Jordan's could now commission special factory runs to meet its specifications at lower cost and spend much less than the national average on advertising as a percentage of sales.
In the process, profits soared, the company grew from 15 to more than 1,000 employees in less than 25 years, and the owners sold out for a fortune in Berkshire Hathaway stock. Despite their wealth, the Tatelmans continue to run the company and look to add even more value to customers without raising prices or costs.
How can you add more value for your customers . . . and keep those prices and costs where they are, or lower them?
About the Author:
Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. Read about creating breakthroughs through and receive tips by e-mail through registering for free at
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