Jacob Burns talked with Jeff McDonald at Ball State University on April 6, 2018.
JB: So, Jeff can you tell me a little bit about your career? I saw that you worked with Sears for over 33 years.
JM: I graduated college in 1972. I went to DePauw, and was one of the first students to create their own major. I majored in creative writing, and radio and TV, and cultural anthropology. Through an internship I got a job at a radio station right out of college as a music director in Chicago, which was a pretty big deal. I never took a music class and can’t read music. I’m a musician, and do everything by ear. I wanted to get away from Chicago and somehow came to work for Sears. It was a great company at the time, the biggest retailer in the world. I had a thirty-three career there and by the end of my tenure I was managing stores. But I could see that the company was going in a bad direction, and I kind retired for a few years. But one of the stops for Sears had been in Fort Wayne back when Chuck Surack, the founder of Sweetwater, was first starting his home studio. I was one of Sweetwater’s very first studio customers. I play the acoustic guitar and got to know Chuck and recorded a few albums and jingles, and then I moved five or six more times, and a few years later thought, “I wonder if that guy Chuck still has that Sweetwater thing going up in Fort Wayne." I went up there and recorded another album, and before I knew it, I was the Human Resources manager there. The company is just growing like crazyWhen I started there was 175 employees. Now there are 1250, so I've been busy.
JB: I have never actually been to Sweetwater myself, but have friends that have been there, and they say that it is just the coolest place.
JM: It’s a great environment and culture. It’s also open to the public, so you should just walk in sometime and check it out. It is sort of like Google headquarters, there are so many cool things there and amenities and things of that nature.
JB: I am a Professional Selling and Business Administration major, so I am interested in how I can apply the Sweetwater philosophy to other business. How could putting the customer first, exceeding expectations, having your own support department where they have 2-year repair coverage at no charge to the customer, and having things like Gear Fest—all lead to 20% growth year after year?
JM: I met Chuck Surack when he was 24, so I would say that I have a unique perspective on that. He has grown and developed over the years, but his core and personality has stayed the same. He has always been about doing the right thing, having integrity, having a servant mentality, and helping other people. These are the principles of which we call the "Sweetwater Difference": be the expert, do it better, smarter, and faster than the other guy, always add value, never meet someone’s expectations—always exceed them. That is why Sweetwater is successful. Unfortunately, it is rare that corporate America does these things, but we just do it naturally. Like, why wouldn’t you do it that way? That is why it is beautiful that the company is privately held. Chuck doesn’t have to worry about stock prices, stock holders, or a board of directors, He can do it his own way, and that has been successful for him. This culture is unique today, and is especially unique for the customer. They finally experience real customer service and they are, like Wow, I would do that again!" It goes back to building long-lasting relationships. For me, it started when I bought PA speaker there when Sweetwater was just a studio, and Chuck didn’t have a store, but he helped me, and started a long-lasting relationship. I like to say that Chuck was into the friending business before Zuckerberg was even born.
JB: That is interesting that you brought up the importance of relationship building. That seems to be at the core of every successful business.
JM: Most people think of retail as price, availability of product, and some atmospherics—the store looks good, people are nice, it's clean, checkout is fast. We're just taking that to the next logical evolution. At Sweetwater we have all that stuff, but also when the customer needs help they can talk to an expert that has a servant mentality, and is there to help that customer, and not just looking for the next one. What Sweetwater has done is to create that in the Internet environment. Amazon is the leader in Internet shopping industry right now. But where they go wrong is when there is a problem with a product that was shipped. They have very little customer service, and don’t handle the issues well because of it. What happens at Sweetwater is when you buy a twenty dollar cable, and an hour later you will get a call from a sales engineer saying, “Hey, how you doing? My name is Jeff, and I just saw that you just bought a twenty dollar guitar cable. I want you know I do have it in stock and it will be at your house by Monday, but before I ship it to you, what are you plugging this into? I am a musician just like you, and just want you to get the right product, so what kind of guitar you playing?" The consumer on the other end of the phone is just amazed and doesn’t expect such in-depth customer service. And my job isn’t necessarily to sell you a thirty-dollar cable, in fact there may be a fifteen-dollar cable that will do the same job for you, and I will tell you about it. And now the customer is really interested. The goal of that conversation is to build a long-term relationship and build brand loyalty. After a few years I know you so well because of our long-term relationship.
JB: It seems obvious that every other company would be doing this.
JM: They don’t do it because it is expensive. For example, in every Sweetwater package there is a small bag of candy like Tootsie Rolls, Starlight mints, and a Thank You card. Corporate America would look at is as an expense, but we see it as an investment. I can’t tell you how many times a customer brings the candy and card up in a conversation. So, when a customer enjoys us they become our friend, but not only do they become my friend, they become my evangelist and tell their other musician friends.
JB: It seems almost to be the philosophy of the Golden Rule.
Jeff McDonald: It isn’t almost the Golden Rule, it is the Golden Rule. We are very selective in our hiring process. We don’t hire people, we select people. Out of every hundred resumes I get I hire twelve people. Yah, you must meet our qualifications, but is as or more important to have you fit our culture. We are looking for upbeat, positive, proactive individuals. If I was hiring a basketball team, I would hire all point guards, people who say "Give me the ball, let me take the ball down the court through all the defense, not so I can score, but because you are wide open under the basket and I can see you and give you the ball and you can score." So, it is all about winning. We tend to hire people like that, so we don’t have a lot of negative or grumpy individuals.
JB: What advice do you have for business students who aren’t in the music industry, about how they may apply the things you have learned in the music industry to any industry.
JM: If you do the right thing and form a long-term relationship you are setting you are setting yourself up for success. There is this Dr. Seuss story of the Zacks. These Zacks only walked one way—in the opposite direction. When they come to the middle and meet each other, neither one will change direction to let the other person get through. And sadly, in business that is how a lot of people work, where people say "This is who we are, and you need to do things our way." Business is about a relationship. So, my philosophy is always to meet the customer more than half way. The goal is not to serve what I want, but what the customer wants and needs. So, you may sell that product at a high or low price, but if that product isn’t the right product for the customer, they are never going to come back. So, you way win in the short term but you will lose in the long term. The best asset you have is the returning customer. My advice to a college student would be to take a speech class. At the end of the day we are all in sales, some of us just don’t know it. I like to say Sweetwater isn’t in the music business, we are in the dream business. Our business it to help other people achieve their dreams.
JB: Is there anything I can do for you as far as getting your name out there?
JM: We spend millions of dollars on advertising each year, but as I said this afternoon during my presentation, the best way to get our name out there is by word of mouth. You yourself may not be musically inclined, but you may know five musicians who are. Tell them about us.
JB: I actually have a buddy in a band called “Former Vandal”. I will definitely tell him about you guys, but I’m sure he already knows a lot about you guys. But, hey, Jeff it was great to sit down and talk with you, and I enjoyed learning from you. Thanks!
JM: Thank you.