As a pawnbroker, you’re sitting on a gold mine. It’s in your store. You’re so close to it. You can reach it, but you can’t see it. Once you identify and locate it, you still can’t get to it. If you have the tools to get to it, you don’t have the additional tools to do anything with it.
You protect it. You save it. You love it.
What am I talking about?
What Are You Currently Getting Out of IT?
Each year, pawnbrokers are falling further behind, and most run the business like it’s the 1960’s. Most pawnshops owners’ smartphones have 100x more computing power than their current pawn system.
The Regional and National Industry associations led by the National Pawn Association have focused on merchandising, customer service, legislation, and updates on regulations. The highlight of the annual expo is selling diamonds - rarely touching on the new industry trends.
Why Aren’t Pawnbrokers Demanding More?
It may be the lack of a better self-image. Most recently the pawnbroker industry has fallen into the dark cave of “Predatory Lenders” and further into Operation Choke Point.
If pawnbrokers don’t demand more, this industrious club will be much smaller and possibly legislated out of business just like payday.
Let’s have the discussion and start today.
Since the Gold Boom that started in 2006, most American consumers have cashed in and sold their broken chains, unwanted rings, and jewelry.
So, where is the gold?
There is a new way to mine value out of your pawnshop.
For years, pawnbrokers have been collecting information on their customers and the products that they purchase, trade, consign, and pawn.
Each of those transactions requires data submission to various agencies like the police, ATF, Department of Treasury, Department of Justice, and national database agencies. Each transaction demands time and resources of owners and their employees - costing a pawnshop around $1.00 to $10.00 per transaction.
Your time is worth a lot, and each time you process a transaction there are costs embedded into the transaction.
It’s time to turn some of your costs into an investment and drive a return from those dollars.
DATA is today’s gold rush!
Everyone is Talking About Data
An interesting parallel was born in the ’90s. The anachronism “data mining” similar to “gold mining.” Gold mining requires tools. The same holds true for data mining. With bigger and better tools, you can get more out of your investment.
If you are not getting money from your data investment, you are losing money and your future.
I am only concerned about your future.
For some of you, 5, 10, or 20 years of manual or basic systems yield worthless data.
Data has to be precisely planned, architected, and structured from the beginning. If you don’t capture it correctly, it cannot be used the way you will eventually need it.
In-store server systems like PawnMaster, PawnDex, and Hi-Tech, were built more than 20 years ago and before the Internet. These databases are not encrypted. Encryption is the most important and basic requirement for your business data.
These systems are running on obsolete operating systems. Most databases are out of business or are unsupported. Even Microsoft XP (70% of pawnshops still use XP) is no longer supported and is not receiving vital security updates. All of these server systems are a ticking time bomb.
Pawnshop server crashes were up 240% in the first quarter of 2016. These legacy software companies make big money recovering servers. They are not bragging about it, but these revenues drive big profits for these aged products.
Read our article "What is SaaS – Will it Take Your Pawn Shop to the Next Level?" to learn more about using a cloud-based platform in your pawnshop.
Anyone that is using an in-store server-based product should research on Google or ask your vendor for their list on today’s “best practices to place, store, and care for your database, in-store server, and network”.
A lot of pawnbrokers refrain from spending money on technology, but today most businesses believe that investment in tech is more important than location and even product.
Pawnbrokers should be spending 4-6% of revenues on technology, according to this study from StructurePoint.
The StructurePoint eBook goes on to say,“If you’re curious to know what other organizations, even your own competition, may be spending on IT as compared to overall revenue, a good place to start is with the data from CIO Magazine. The publication conducts an annual State of the CIO survey, and for 2013 it found that the average IT budget, as a percent of revenue, is 5.2 percent.”
The Pawn Industry is Being Held Back by the Lack of Technology the Industry Uses to Run the Business
How could this be? Look at the numbers. If you look at Cash America, EZCorp, and First Cash over the last 5 – 10 – 15 years, they are all writing fewer loans per store. Average loan base / average loan size, which translates to drastically fewer active customers per store.
There is less juice in the squeeze from the U.S. pawn customer. All of these public companies have led the way in legislating increased interest rates and fees, shortening terms, and directly increasing the cost of a loan to the customer. This is how these corporations keep their earnings sustained even when the juice is running out.
Cash America has been downsized all departments, including cutting and replacing senior store staff to maintain their bottom line. This is not sustainable in the long run. EZCorp continues to slash and burn, moving through four CEO’s in the last five years. EZCorp stock is down from $32.00 in 2012 to $2.98 on March 25, 2016.
Pawn customers today have more choices and they are defecting by the egregious strategy. There are fewer customers and the pipeline of new customers is bringing in lower quality pawn collateral.
How Does Technology Change All This?
The short answer is that it makes things:
- Easier,
- Faster,
- More convenient,
- Cost less,
- Save consumers time,
- More efficient,
- More transparent,
- Brings in new customers,
- Lowers marketing costs,
- Extends the business life of your customer,
- …and lots more.
How Much Will This New Technology Cost?
About 1/3 of what you are losing. Yes, you will spend more dollars each year on your technology, but there is a lot more you will get in return. If you retrench, learn what is out there, and use it well, you will get back all your money in a few months.
What to Do Next?
Research and learn what new technologies and platforms are out there (Mobile, Facebook, Google, Pinterest, Broadband, and hardware options).
Debunk and demystify “The Cloud”, “Wireless”, and “Payment Systems”.
Current server-based vendors all know the truth, but the market otherwise.
Do your research. Click here to learn more about Bravo's tech offerings.
Get Ready for the Switch
There are going to be major changes in tech in the next couple of years.
Derek Best (of Dazzle Pawn) is one example. Dazzle customers cannot get to their data. Derek put security measures into storing data so that it could not be retrieved by their transitioning former customers.
A part of the demystification is coming to terms (read your contract) that your server-based vendor has the keys to your data.
Bravo has the only decryption for Dazzle.
All other vendors will scrape reports and muster an old-time conversion. An old-time conversion translates into a painful experience.
Bravo users experience an instant response to all conversion-related issues and on average resolve 100% of all issues in 1 week.
Bravo will take all measures to ensure the conversion experience is a smooth non-disruptive experience. This includes investing $$$ to make our new customers happy.
We invested a lot of time and money ($25K) into a decryption device that Derek himself created for Bravo.
We are boarding, training, and turning on new add-ons to customers every day. Our platform was built to provide an extensive selection of features. We continue to add new features and will continue to into the future.
Each and every feature release relies on exercising data and leveraging every effort a pawnbroker conducts back to realize value.
This is what technology can do. This is what Bravo delivers.
About the Author:
Tally Mack is a fifth-generation pawnbroker and eCommerce enthusiast. She loves traveling, being outside, and working out.
Before taking the reins as CEO, Tally served as Bravo's Vice President of Business Development, leading the company's sales and marketing organization. She's been instrumental in leading and executing many of the company's strategic shifts, including the acquisition of CompuPawn and the recent launch of UsedGuns.com.
Tally earned her Doctorate of Law (J.D.) from DePaul University College of Law in 2013 after attending the University of Colorado at Boulder, where she earned her B.A. in Communication Studies. She also completed the Key Executives Program from Harvard Business School in 2013.
Tally is a pawnshop lover and eCommerce enthusiast—dedicated to the success of both her employees and customers!
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