Milby says he still recalls a customer survey that was completed while he was with RentWay where customers repeatedly maintained that they did not mind paying more for quality.

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Bill Milby - In twelve short months he has grown to a total of six free-standing Home Express stores and five Home Express kiosks in Ashley Home Stores. Download the current issue of RTO Magazine, the Rent-to-Own industry's leading trade magazine.

Just one year ago, former Rent-A-Center Regional Director Bill Milby, 43, opened his first Home Express Sales and Lease store. In twelve short months since then, he has grown to a total of six free-standing Home Express stores and five Home Express kiosks in Ashley Home Stores. Oh, and did we mention he took on the CEO role for those five Ashley Home Stores, as well?

With responsibility for 450 employees and the long-term prospect of franchising his successful Home Express concept, Milby has come very far, very fast. Here's how he's doing it.

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For years, big rental companies have tried to create a process to quickly and efficiently reach out to customers who were turned down for financing. It appears an up-and-coming independent operator may have finally figured it out.

After successfully managing 65 RentWay locations, then 47 Rent-A-Center stores, it's safe to say Bill Milby knows a thing or two about RTO. Milby thought about opening his own stores for a long time, and he even had the name Home Express already chosen. Milby also knew exactly where his first Home Express store would go – Shepherdsville, Kentucky, a county seat of about 8,300 residents, located 20 minutes south of downtown Louisville.

"Basically, it was one of those markets where I'd drive by and say if I ever take the opportunity to open my own store - this is where it's going to be. There was this big Kroger shopping center and I could just visualize my store being there," said Milby.

Since opening that first store in Shepherdsville on August 15, 2007, Milby has added five more Home Express locations and simultaneously embarked on an ambitious program where Home Express Sales and Lease kiosks are placed directly into Ashley Home Stores.

"My partner, who is a majority owner of five Ashley Home Furnishings stores, asked if I'd be willing to put Home Express inside his Ashley stores. We put the first one in to see how it would go and the growth really ramped up fast. We ended up adding Home Express to his four other stores within one month," said Milby.

"Basically, we operate each kiosk as a rental store with no inventory. There may not be merchandise, but we manage collections, generate revenue, create a forecast, and have daily and monthly goals to reach."

Milby says the customers who use the Home Express payment option in the Ashley stores are different than traditional RTO customers.

"These are people who own $250,000 - $300,000 homes, they own their automobiles, they've been on their job for 10 or 15 years, and they might make $50,000 to $100,000 per year. But they might have gone through a divorce, or they might have just purchased a home, so their credit score is not where it needs to be."

Milby declined to reveal the credit scoring standards used by those Ashley locations. But he did say that once a customer learns they have not been approved for traditional financing terms, directing that customer to the Home Express kiosk by one of Ashley's product specialists is fairly streamlined.

Milby feels his choice of company name – calling his kiosks and stores 'sales and lease' instead of 'rental purchase' - has helped non-traditional customers embrace the RTO financing proposition.

"If we talk sales and lease, the customer understands it. We're selling you a product. You can buy it or you can lease it to own. It's really not that hard of a sale. The customers have already picked out the furniture that they want and need."

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Milby says there is a lot of signage throughout the Ashley retail stores promoting the Home Express option and many customers choose a 90 day or 120 day same as cash option.

"The benefit is that the customers will tell you up front that (same as cash) is how they plan to pay for the merchandise. It also allows you to collect a good deal of revenue at the beginning of the agreement."

The Home Express kiosks have been operating for 9 months, so it's too early to say exactly how the percent of customers acquiring ownership of their Ashley product might differ from traditional RTO. But Milby says keep rates are already much higher than anything he's seen before.

"It was surprising to me. The customers are keeping their merchandise. That 25% we always say (in RTO)? It's not like that in the kiosk."

Milby says collections are atypical, as well. For starters, all agreements through the kiosk go out on monthly terms. There are no weekly agreements, and Home Express takes no payments by check. All payments are made on either a debit or credit card. While a few customers come back into the store to shop some more and make their payment, many customers choose to call in with their card numbers.

"Like I said, these aren't typical customers. When you make a courtesy call about a late payment, within minutes they react. We haven't had any issues with the collection piece."

The value of the merchandise placed through the kiosk onto a rental agreement is outside of industry norms, as well. Most Home Express kiosk customers are renting-to-own anywhere from $2,500 to $5,000 worth of Ashley merchandise. Terms typically range in the 24-month range, and despite the high dollar value of some of the merchandise, Milby chooses not to extend the term.

"We have to be profitable and we have to price it correctly but I won't go past two years. I won't go 30 or 36 months. When you set terms longer than a two year period is when you run into problems with collections."

But even with the higher-than-expected keep rates, rental merchandise does get returned to the Home Express kiosks. And that is where Milby uses his freestanding Home Express stores to his advantage.

"That product gives my stores a different look. It's a higher quality product. When we have a return like one of those Ashley four poster beds and customers come in and see a $3000 bedroom suite they can put on a weekly, biweekly or monthly rental agreement, they are thrilled."

Milby says he still recalls a customer survey that was completed while he was with RentWay where customers repeatedly maintained that they did not mind paying more for quality.

"I kept that survey and put it in my binder and referred back to it when working on this concept. The one thing the survey emphasized over and over again is that customers want good, quality merchandise. What I've found is that by putting a better quality product in the store and making it available for customers, they're not backing down from the rental rate."

Milby's commitment to stocking quality merchandise in his free-standing Home Express stores extends beyond furniture to include upper-end electronics.

"I carry 73" Mitsubishi 1080p television sets. I've found that the higher-end product tends to stay out longer."

The Home Express rental store product mix has electronics nearly even with furniture, despite the influx of higher-end Ashley furniture product from the kiosk.

Milby has grand opened six stores in one year, and he has plans to open three more free-standing stores before the end of 2008. The free-standing Home Express stores average between 5,000 – 8,500 square feet, and are located in high-traffic shopping centers.

Home Express stores strive to be very involved in their local communities, and Milby is proud of the fact that the mayor of every town where he's opened a store has attended his grand opening.

"Being involved in the community is the most important thing when you're starting a new store. We always join the local Chamber of Commerce and before we open our doors, our employees are out in the community canvassing fellow businesses."

The Home Express five year plan calls for 50 stores, with an additional 50 – 65 Home Express kiosk operations. Milby says most, if not all, of those stores and kiosks will be in Kentucky, Tennessee, and Indiana. With such a strong concept located in fairly limited geography, would Milby consider franchising his Home Express concept?

"Absolutely. I've got people today who have approached me saying that because I've already got the back office work done, I should let them open a couple of Home Express stores. However, we're not there today. I don't want to do it and then say we'll figure it out later. I want to wait until we're 100% and have all the processes in place. But absolutely. We'd love to franchise."

Milby is quick to give credit to the strong mentors he's had throughout his career – and gives specific accolades to Ron Semelsberger and current Home Express President Chris Caprio.

"I've worked for so many great people over the years, and it's been rewarding to be out on my own and to be an entrepreneur. One thing I talk a lot about is from 'the top down to the bottom and the bottom up to the top' we've all got to be on the same page, and doing the same job. Really, I work for the account managers."

Milby has added personal touches to his marketing program, and includes pictures of not only his children but also his employees' children in advertising circulars.

"I want to have a little ownership from everyone who is a part of this company. When employees and their families see their pictures on Home Express flyers, the reaction is pretty incredible. Even our delivery trucks feature pictures of my twins and our son playing with a Wii game. I think personalizing our business and having fun – that's what we've done. It's just exciting to get to come to work every day."

Milby believes the kiosk business has plenty of room for expansion, but feels as though the lightening-fast growth his company experienced this year won't duplicate itself in 2009.

"We've talked to several other Ashley Home licensees about the Home Express concept, but it will likely be 2010 before we really ramp it up. We've had so much other growth; we need to manage it properly. But I can say that we have got the kiosk business down to a science."