Private buying club desires public awareness

Members of fitness or buying clubs purchase a concept, like future physical fitness or savings on future purchases.

Denny and Mary Otto own UCC TotalHome of Tucson, a private buying club for consumers. Their business is a franchise of a company organized 30 years ago but whose concept is not well known here.

The Ottos recently signed new lease and franchise agreements. They want to raise awareness levels about their services and got advice from business consultants Jeanette Anders and Csilla Gergely of Resource Core.

Benjie Sanders / AZ Star
Denny and Mary Otto, owners of UCC TotalHome, display catalogs of brand-name merchandise they sell in the showroom of their store.

Profile * The business: UCC TotalHome of Tucson; 120 W. Fort Lowell Road; (520) 293-3800 * Purchased: January 1999 * The owners: Denny and Mary Otto * The services: Savings from manufacturers' suggested retail prices, wide selection, one-stop shopping for home furnishings and accessories * Annual revenue: $2.2 million * The challenge: Create awareness in the Tucson area

Jeanette Anders, Ken Anders and Csilla Gergely own Resource Core. They specialize in strategic marketing and sales plans, business plans, corporate structures and strategic business alliances. They can be reached at (520) 544-2927 or at info@resourcecore.com.

By Charlie Rochman • ARIZONA DAILY STAR

The story

Denny and Mary Otto are from Minneapolis. Denny began working in supermarkets at age 14 and rose to store manager while in college at the University of Minnesota.

After 15 years in retail stores, he switched to wholesale grocery sales in Albuquerque and Grand Rapids, Mich., and became a company vice president in 1994.

The Ottos wanted to be business partners and their experience as UCC TotalHome members in Grand Rapids led to exploration of franchise opportunities. In 1998, they learned about an existing franchise in Tucson. They bought the store and franchise rights in 1999.

Denny is company president with sales and service responsibility. Mary is vice president with service and administrative responsibility. The Ottos work full time alongside 20 employees.

UCC TotalHome of Tucson is a private buying club offering consumers big savings on brand-name merchandise. Selection is divided into 26 categories, Denny says, including most home furnishings and accessories, consumer electronics, fitness and sporting goods, luggage, jewelry and more.

Brands are the same ones found in retail stores. But the parent company's buying agreements with manufacturers prohibit UCC TotalHome of Tucson from advertising discounts on brand-name merchandise.

Store revenue is made up of membership fees and merchandise sales. Because merchandise is sold at manufacturers' and their suppliers' wholesale prices, profits are derived solely from membership fees.

Membership fees depend on type and length of membership. Prospective customers can only learn costs and benefits of membership in presentations lasting about 90 minutes, says Denny. The typical customer is someone building, buying or remodeling a home.

In 1999, the owners' top goal was making change easy for the existing staff. In 2000, they worked on staff development and refinement of marketing programs, says Denny.

This year, the franchise agreement was renewed for 12 years and a new store lease was signed. The lease expands warehouse space and in 2002, the Ottos will remodel the showroom, adding a design center and playroom for children.

Sales increased 27 percent this year, says Denny, and 2002 sales are projected to go up another 33 percent.

The advice

Most people agree that buying brand-name merchandise without markups and sales pressure is a great concept, says Jeanette Anders.

"The Tucson showroom has been around for 13 years and is one of over 90 franchises," she says. "Yet the owners admit that most people in Tucson have never even heard of the company."

To create awareness, the Ottos should begin a promotional campaign using a small phone room staff to generate leads, Anders says. The target audience is the general public, so people should be invited to visit the showroom by means of a gift giveaway. A second marketing campaign should target people in the market for a new home, as well as those remodeling or improving their homes.

To make the most of these contacts, the company should refine its employee incentive plan and its training and evaluation process.

"The company offers an excellent package for employees and has an employee recognition and rewards program," Anders says.

Implementation of programs has been another matter. Because the Ottos and the sales staff work so hard to meet the expected savings and service levels of members, they sometimes lack sales momentum. They should step away from day-to-day operations long enough to develop programs they can consistently implement, she says.

The Ottos have come to know their staff since they purchased the store, says Anders. Staff roles should be examined and, if necessary, redefined and reassigned based on individual strengths and skill sets.

The owners should establish a partner program with builders, real estate companies and agents, and mortgage companies, particularly those specializing in "Title 1" home loans, Anders says. These loans require spending on home improvements.