Winter 2002 In The Zone
Virgil Klunder didn’t know he was at risk for a heart attack—or anything else. That’s because he was adopted as an infant, and at a time (not so many years ago) when records were sealed. But when it became clear that doctors needed his full medical history, he decided to do something about it. So he mustered his determination, smarts and energy—traits that are characteristic of Klunder. In the weeks that followed, he not only found all the information he needed; in the process he also launched a successful business putting adopted children and birth parents together. And then in 1991 he wrote Lifeline: The Action Guide to Adoption Search, a how-to book on the subject that instantly became a top-seller.
The book and his personal story soon netted the attention of TV’s Hard Copy, which in turn got him on The Montel Williams Show. The day after the show aired, he says “Oprah, Sally Jessy Raphael and Geraldo were all calling my house.” At that point, Klunder had no idea there would be a good deal more to this story than his proverbial 15 minutes of fame. That initial exposure catapulted his tiny home-based business into what would become the largest private investigation agency in the world, with operations in all 50 states and in 32 countries. In almost no time, anything on television about finding missing persons or investigations meant that Klunder’s company was involved. During this same time, Klunder wrote two more books. Then in 1996, he sold the company.
End of story? Hardly. It’s actually just one chapter of this specialty retail entrepreneur’s history of success.
Like iceboxes for Eskimos
In the late ’80s, Klunder discovered The Heat Solution, a unique line of reusable heat therapy packs that are portable, safe and—best of all, from the retailing perspective—protected by four US patents. With just a click of a button, each pack instantly emits 130 degrees of perfect therapeutic heat for up to 30 minutes.
But it wasn’t just the product’s feel-good benefits that got Klunder’s attention: it was its profit potential as a retail item. And so in 1987, Klunder founded The Comfort Zone, a national cart program that operates in malls primarily during the holiday season, and at consumer shows and fairs during the rest of the year. As it turns out, The Comfort Zone now has the honorable distinction of being the oldest and most established cart program in the country. “In an industry where a program is typically considered successful if it has a one- to three-year life span, the fact that we are stronger and larger than ever, after selling the same products for 14 years, really makes a strong statement,” Klunder says.
Klunder’s enormous success with The Comfort Zone is firmly rooted in his core beliefs about product selection and business operations. “In the beginning, product selection is the only thing that really matters,” he says. “I believe that most small businesses of any kind fail because the owners fall in love with their product or service personally, instead of objectively looking for a product the market already wants. In the cart business, you’re usually either really right—or really wrong. There’s not a lot of middle ground.”
While product selection is the first key component in Klunder’s two-part “formula for success,” the second is systemization. In fact, he often refers to The Comfort Zone as “the McDonald’s of the cart industry” not only because of its size and established reputation, but because every location operates under the same set of uniform operating systems. “Great systems are key,” he says. “Like gears in a clock, each system is a set of policies and procedures that work together to automatically handle any situation that pops up.”
That’s the first part of his success equation. The “end goal of systemization,” he says, “should always be duplication.” He advises that it’s self-defeating to “grow a program and open multiple locations [before] your systems are working smoothly and etched in stone.” In this business, he adds, “your success as an owner will depend on either good people or good systems—and I’ll put my money on systems every time.” Klunder’s systematic approach includes a precise sales script that every employee learns verbatim and “can say in their sleep”; custom software that manages every aspect of the business; and personalized Web sites for every dealer, for generating repeat sales.
“Both owners and employees need great hands-on training and ongoing support from the home office,” Klunder says. For example, all new owner-operators undergo a rigorous training system, including three-day “basic-training” sessions, intense “boot camp”-style weekend training camps, ongoing mentoring, and extensive video and audio support libraries. “Basically, we strive to provide a level of training and support usually expected from somebody like a McDonald’s. We just don’t charge a fee for it.” Klunder’s success formula obviously works: today The Comfort Zone has approximately 320 locations nationally and around the world.
Believing in magic
Klunder retired in 1996—but he was still deluged daily by manufacturers wanting him to represent their products. For a product line to get his attention, especially now that he was kicking back, it had to clear two key hurdles: patent protection andup-front, exclusive distribution rights. “Products must be protected by at least one US patent—and that means patented, not [just] patent pending,” he says. “Otherwise, the more successful you are, the more you’re just advertising to large retailers like the Wal-Marts of the world—and especially other ambitious cart operators—to come after you. I’ve seen it happen again and again. Good programs with the potential to last get crushed in a year or two by aggressive knock-off artists who undercut any profitability [for that program]. And it all starts,” he says, “because the product wasn’t fully patented when it was released to the market.”
But Klunder says even patent protection isn’t enough to guarantee a program’s lasting success. “A manufacturer has to have a ‘war chest,’ money set aside at all times to aggressively defend their patents in court at the slightest hint of a challenge,” he says. “And they have to be completely and totally committed to carts and kiosks as their only distribution channel.” No matter how good a product might look, he says, “unless I’m contractually guaranteed exclusive distribution rights going into the deal, I pass.”
After nine years of looking at one product after another, Klunder finally happened on something that met all of his stringent criteria—and ended his retirement just last year. The concept was “magic”—literally. And the products are a core line of the best-selling patented magic tricks in the world.
Enter The Magic Zone (aka The Instant Magician), a year-round “shoppertainment” program designed to revolutionize the cart/kiosk industry. When shoppers enter this “magical” zone, they’re treated to a full-blown magic show every 15 minutes. The shows routinely draw huge, wide-eyed audiences of all ages. “Everything about this program is blazing a whole new trail in the specialty retail industry, and it’s very exciting to be a part of it all,” Klunder comments.
At the foundation of Klunder’s success in the field of magic is his partnership with D’Lite Products, Inc., a New Jersey company that’s the largest manufacturer of patented magic tricks in the world. From his first meeting with the three owners of D’Lite—Bill Hennessy, Roger Mayfarth, and world-renowned magician Rocco—he knew that, together, they had all the ingredients of another winning program.
“Right off the bat, I was impressed by three things: First, their track record within the magic industry; second, their willingness to commit exclusively to the cart/kiosk industry; and third and most important, the strength of their patents and a proven track-record of defending them,” Klunder says. “Early on in the growth of their company, several extremely large retailers tried to knock off their products. And in each instance, these three ‘little guys’ were successful at crushing every challenge.”
Nothing works the way magic does in getting shoppers’ attention. “In all the years I’ve been selling things on carts, I’ve never seen anything that draws crowds like magic,” he says, having a little fun with the play on words. Even if a customer doesn’t buy then and there, they always leave laughing. And, of course, they do buy. “We know from experience that as long as the customers can fool their friends [with a magic trick] when they get home, they’ll probably be back to buy more tricks.” Not surprisingly, then, Klunder developed a highly effective system in the form of fully customized Web sites for each of his owner-operators to help make repeat sales happen. “Once a customer buys from one of our [locations], they’re immediately directed to that owner’s Web site, where they can get discounts, sign up for free training seminars, download instructional video clips—and, of course, purchase more tricks.”
After waiting nine years to find another product, Klunder says, “I didn’t come out of retirement just to open a few magic shops. I’m here to take over the entire magic industry!” But not all at once, of course. In keeping with his “walk before you run” history, he allowed only 20 retail locations during the Christmas 2001 season. “It was actually pretty hard to keep the program that small the first year. But it’s important to everyone’s future that the entire program was rock solid before rolling it out nationwide,” he says. “Now that we’ve got all the systems down, we’re looking for a few good operators who want to make a lot of money for a long time.”
Based on his 14-year track record and the response of specialty retail leasing agents who have gotten wind of Klunder’s program, he expects to have between 700 and 800 of his unique, hybrid cart/kiosk locations in malls by the Christmas 2002 season. “The malls are really excited,” he says. “Everyone wants one.”
The difficulty isn’t in finding operators who want to open Magic Zone locations, but in “finding the right ones who are willing and capable of following precise, military-like systems down to the smallest detail.” To effectively screen all the applicants who are already lining up, he requires each potential owner-operator to start the approval process by getting the program’s business start-up kit, which explains everything. From that point, Klunder will rely on a thorough application process, backed by letters of recommendation from leasing agents.
Mentor and model
On a broader plane, educating and inspiring young entrepreneurs is Klunder’s real passion in business. Despite his degrees in international finance and computer science (which he says are just enough to make him dangerous), Klunder firmly believes that mentoring and role-modeling are just as important as a formal education. And so he spends most of his summers traveling and teaching young people about entrepreneurship, goal-setting and career-planning for Eagle University, a non-profit foundation that holds leadership conferences for students, middle school through college, around the country.
Klunder’s “success philosophies” routinely produce rewards all around. For example, every spring the top Comfort Zone operators in the country are treated to an all-expense-paid, four-day vacation on the beaches of Mexico. And this year, he’s working on a reward program that will allow him to give away his prize Lamborghini Diablo to the highest performing owner-operator. (By the way, the car will be at the ICSC Conference in Dallas—come take a look!) For Klunder himself, the rewards of his success as a specialty retail entrepreneur surround him daily, not just on carts and kiosks or P&L sheets, but at home as well. He and his wife Kathy, their two young daughters and three golden retrievers live happily on a five-acre, gated estate complete with their own lake, private beach, island—and a 100-foot waterfall that Klunder helped construct. It’s their own private, magical comfort zone, the result of this savvy entrepreneur’s vision, smarts, and success.
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