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How Free Ice Water Turned into a $10M/Year Business (And What it Means for You)

This guest post is by Greg Miliates of www.StartMyConsultingBusiness.com.

In 1931, during the depths of the Great Depression, Ted Hustead opened a store in a tiny South Dakota town, population: 326, virtually all of whom were penniless. Over the following decades, Hustead grew his store into a $10 million empire, now famous throughout the world, still with one location in that nowhere South Dakota town which has, at last count, 766 people.

His secret?

Free ice water.

What does this have to do with running a blog and earning money online? Just about everything. But more on that in a minute.

A bad beginning and a big breakthrough

From the beginning, Ted barely made enough to scrape by. The Great Depression and the Dust Bowl had wiped out most of the families in town, and there was no relief in sight–certainly nothing that might help Ted’s business.

Nearly five years after opening his store, Ted, his wife, and son–and now they had new baby daughter–were no better off than when they’d first opened their store. To earn a little extra cash, Ted even resorted to studying veterinary medicine so he could help farmers with sick livestock.

But Ted’s luck changed on a hot day in July 1936.

Ted’s wife kept hearing cars roar through town on nearby Route 16 en route to Mount Rushmore some 60 miles away. On scorching, dusty summer days, she thought those travelers might want a cool drink, and told Ted that they should offer free ice water to travelers. Ted put up a few signs along the road, and by the time he got back to the store, his wife was scrambling to keep up with all the new customers, serving up ice water, ice cream, and whatever else people wanted.

Fast-forward to today, and during the peak summer season, Ted’s store can get 20,000 customers a day.

From ice water to a world-famous, million-dollar enterprise

Ted and his wife built up from those first days of free ice water, learning what else their customers wanted, and adding onto their store to accommodate their customers. Their store—the world-famous Wall Drug, still with just one location in the tiny town of Wall, South Dakota—now sprawls over 75,000 square feet. Over the years, Ted added a restaurant, gift shop, clothing store, theatre, an Old West frontier town, chapel, and even an 80-foot dinosaur.

But how did he do it?

Now, unless you have a boatload of cash–which Ted didn’t–how did he scrape up enough money to build that kind of enterprise? And how did do you get 20,000 people a day to go out of their way—literally in the middle of nowhere—to come spend money at your store?

Remember those signs along Route 16 on that hot, dusty day back in 1936? That was the key. After the Husteads saw the signs bring in customers, it was a matter of “rinse and repeat.”

But Ted didn’t stop with just a few road signs. He decided to go big—on a massive scale. If you’ve ever driven through South Dakota, North Dakota, Montana, Wyoming, Minnesota, or within several hundred miles of Wall Drug, you’ve seen signs for Ted’s store. Chances are, you’ve also seen lots of cars with Wall Drug bumper stickers too.

Strung out along thousands of miles of interstate highways, state routes, and other roads, there are hundreds, probably thousands, of billboards for Wall Drug, offering everything from free ice water, to a hot meal, cowboy boots, gemstones, a frontier town—even a roaring T. rex and the opportunity to pan for gold.

What Wall Drug means to you

That’s all great for Wall Drug, but what about your blog? Well, the free ice was a bribe. Everything else is an upsell. But there’s more to it.

Those first road signs back in the summer of 1936? Essentially, Wall Drug was able to bring in customers by tapping into marketing channels. Ted’s wife realized there was a steady stream of prospective customers hurtling past on Route 16; Ted just needed to give people a reason to stop by their store. And on a long, hot, dusty drive across the prairie, free ice water was it.

Tapping into your marketing channels—for example, by putting up billboards on virtually any road in the region—lets people know you exist.

The next crucial piece is giving people what they want—which can be different from what they need. People don’t need to see an 80-foot dinosaur replica. But what parent is going to turn down that request after being cooped up in a car and enduring hours of pleading for it? Damn right. The kids can see the darn dinosaur, and everybody can get a hot meal and stretch their legs.

How to magnetically pull people in

Educating prospective customers that you have something they want is necessary, but sometimes isn’t enough. Certainly not enough to create an empire in the middle of nowhere.

You need a little something to push people over the edge—to compel them not just to come to you, but to buy from you.

How? Emotional marketing.

For Wall Drug, curiosity and social proof—along with the desire to be part of a tribe—are powerful emotional triggers. There are other emotional triggers—like fear, jealousy, prestige—but curiosity and the need to belong are strong positive emotional triggers.

Back to all those Wall Drug billboards. Something strange happens as you drive along for those hundreds of miles, heading toward the national parks and other sights in the region like Yellowstone, Mount Rushmore, the Black Hills, or Devil’s Tower. As you keep seeing all those Wall Drug billboards—even if you don’t need anything they’re offering—you get curious. You think, “What the heck’s the big deal about Wall Drug? Why so many billboards?”

And when you finally get to Wall Drug—and you surely do—you see tons of people crowded into the store, some sporting hats, T-shirts, and other paraphernalia promoting Wall Drug. If you’re a savvy marketer, you realize that Wall Drug has created massive social proof—and its own tribe of fans. It’s the brick-and-mortar equivalent of Justin Beiber’s Facebook page.

How you can copy Wall Drug’s strategies in your own business

Now that you understand how Wall Drug got so successful, let’s apply those ideas to your blog.

  • Tap into your marketing channels: Ted put signs on Route 16, then expanded to other roads and the interstate highways. Find channels where your prospects are, and be there to educate and entice them. What’s your Route 16?
  • Understand your prospective customers: Know what they want, and let them know you have it. Road-weary travelers and families want a cool drink, a meal, and something memorable. Offer your bribe—free ice water, an ebook, a video—to get people in the door. Being part of a tribe (“I’ve been to Wall Drug”) is icing on the cake, and gets others to do your marketing for you.
  • Build buzz, engineer social proof, and create intrigue that magnetically draws prospects to you: Being everywhere and having other customers promote you creates social proof. Your prospects will also be curious what they’re missing out on enough to seek you out and join your tribe.
  • Adapt and offer additional products and services to meet customers’ needs and wants: Ted added a restaurant, entertainment for kids and adults, an art gallery, and souvenirs so people could show they’re part of the tribe. How can you give visitors what they want and generate revenue at the same time? Though lots of bloggers make money through advertising, some savvy bloggers realize that consulting can be very lucrative, and offer consulting services as another way to monetize their blog. If you aren’t offering consulting, you’re losing out on a potentially significant revenue stream. Look for other ways to meet customers’ needs and wants that also create revenue.

Next, answer the following questions, then experiment with implementing your answers to see what works best in your niche.

  • What are your marketing channels?
  • What are your prospects’ wants and needs?
  • How can you make people curious, create buzz, and build social proof for your site?
  • What other ways can you fulfill your prospects’ wants and needs? What other products or services could you offer?

Ted Hustead built Wall Drug into a large and successful business—in a tiny town in the middle of nowhere—by using strategies that you can apply to your site. Understanding how he did it gives you a blueprint to follow.

Greg Miliates started a consulting business in 2007, quadrupled his former day-job salary, and ditched his day job along the way. His blog (www.StartMyConsultingBusiness.com) shows you how consulting can change your life, and gives specific tactics, strategies, and tools for starting and running a successful consulting business on the cheap.

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Comments

  1. Dhruv Bhagat says:

    The strategies that Ted implemented was really amazing!!
    At that time, it was not easy to build such a big empire..
    I usually see bloggers asking his blog visitors on what topic does he should write next? This is a great way to know about needs and demands of your audience..
    Now, I will be working on those things that will make my blog visitors curious.. This is one of the big point that every blogger should follow to stand out from crowd..

    • So true! Building an offline business–especially facing the challenges that Ted did (the Great Depression, virtually no customer base in his town, etc.)–can be even more difficult that building an online business.

  2. Jeff Bronson says:

    Ted’s story is fantastic. When things weren’t going well, they came up with a simple and effective idea.
    This idea changed everything for them! It’s amazing he made it so many years at first, when a specific need wasn’t being filled.

    • I had the same thought when I was researching Ted’s story: how the heck did they tough it out for nearly 5 years? Most people would have called it quits long before. That persistence and determination is part of what makes for a successful entrepreneur.

  3. Ehsan Ullah says:

    A great success story here. Copying wall drug’s strategies and trying to give people what they want is the key to get success.

    • Very true. The more I learn about marketing, the more it comes down to the fact that it’s not about you, it’s about your customers and giving them what they want. Shifting our focus to our customers isn’t always easy, since we start our businesses with an idea in mind, and it can be difficult to shift our perspective–especially if the market tells us our idea is lousy and needs to be abandoned.

  4. brian hosier says:

    Thank you for this excellent idea. Like one of the well known phrases of success “You can get everything you want by helping other get everything they want” (paraphrased), giving something of value can go a long way to developing a business relationship.

    I am about to launch a new webinar service and by giving away the first webinar for free to a business, this has the potential to provide true value to prospective customers and show them how webinars may align to their overall strategy.

    Identifying customer needs and meeting those needs with an irresistible offer is often forgotten as a compelling launch strategy. Thank you.

    • You’re right, Brian! I’d go so far as to say that meeting customer needs isn’t just a compelling strategy, but it’s the ONLY strategy to succeed. Too many businesses fail because their owners are focused on pushing their idea on customers, despite feedback that customers either don’t care, or care much more about something else. Too many entrepreneurs ignore what customers are actually interested in.

  5. Alan Reeves says:

    Wall Drug is a must see in South Dakota. I have been there several times; only about a 3000 mile round trip from Mobile, AL. It is amazing to hear that it all began with free ice water. The little details are what really matters. Who would have thought that something as simple as water could end up attracting 20,000 visitors a day.

    • Exactly! That humble beginning is a powerful lesson. A lot of times, we over-complicate things by thinking we need to provide customers with some fancy offering–when what they really want is much more simple.

  6. This is really charming story Greg! You are always unique in your content and I like the way you do encourage other bloggers and beginners! Loved the story about bad beginning but big breakthrough! It is really encouraging since people think being a successful beginners will be that way till the end, there must be a hard work and challenges; otherwise if you can’t be careful, you will get screwed up! Thanks a lot for helping us!

    • Thanks so much for your kind words, Carla!

      It’s really easy to get discouraged when you don’t get any wins early on. But keeping at it, trying new things, and being determined in a smart way by experimenting and iterating is what grows our success. It doesn’t happen overnight; even for Wall Drug, it was a hard 5-year slog to get to that overnight success with the free ice water, and even then, it still took years of hard work to grow their business to the scale it is today.

  7. Shelby Roth says:

    Amazing story Greg! I feel so much encouraged by this and really hope to be turned out from ice water! Nothing just comes as a miracle; we need to be good fighters so as not to remain free ice water. The problem is that we don’t like knowing how we do it to be world’s successful people and there is where we are going to start. I’m so thankful since your content turns me on and I have a great believe of being one of the successful people too, I promise that thanks much!

    • Thanks, Shelby!

      I truly believe we can all be successful, but that it takes persistence, determination, a willingness to experiment, focusing on our customers’ needs & wants, and learning to focus on high-value tasks. There are no born entrepreneurs; it all takes hard work.

  8. Hi Greg,

    This story about Ted and his wife is indeed very encouraging. I love the strategies they used and how they led to their success. Thanks for sharing.

  9. What an inspiring story! Greg, I am glad you decided to share this with us. Actually I have reason to admire the couple a lot. They pose a great challenge to myself and all other writers who still don’t know what strategy to adopt! I am impressed I must say. Thanks again for sharing.

    • Thanks, Carmen!

      One of the things that resonated with me about Wall Drug’s story is how Ted and his wife worked together. In my own consulting business, my wife’s help has been HUGELY helpful. There’ve been innumerable times I’ve struggled with something, only to run it by my wife, and have her come up with a great approach.

      The myth of rugged individual making it on their own is wrong: we need to tap into others for input, support, and encouragement along the way.

  10. Greg,

    I agree with everyone else, that was a great story. It was not only a great story but it was great storytelling. You did what most writers/marketers are trying to do and I see preached all the time, you told an interesting story from the beginning to the end. I usually skim a story, skip parts, but you held me to the end. Great job,

    Jenn

    • Thanks, Jenn! There were a lot of ways to take the story, but I tried to keep it focused and tie it in to what the Problogger audience cares about.

      I originally got the idea after stopping at a gas station in the middle of nowhere in New Mexico (I actually live in Albuquerque); what struck me is that the place had a crude handwritten sign on the door saying “bathrooms for paying customers only”–which irked me. Then I remembered Wall Drug and its hundreds of signs and what an amazing success it is–in the middle of nowhere.

      So, the question to me was: what made the difference between Wall Drug and a run-down place that touts “bathrooms for paying customers only”?

  11. Wendy Harns says:

    Interesing article, thank you. I had some great ideas for implementing this strategy come to mind as I read it!

    • Thanks, Wendy!

      One of the interesting things about Wall Drug’s story is how many lessons there are for online businesses–from a traditional brick-and-mortar business.

  12. Kenny Fabre says:

    Greg

    Ted’s story is a great story of perseverance and faith, as bloggers we must use and harness those qualities to grow our blog.

    • Absolutely, Kenny!

      Perseverance is one of the biggest challenges. With an online business, it can be tough to get any feedback–especially if you aren’t getting any traffic. Working in your own little bubble can be isolating, and networking with others who can provide guidance and support is crucial.

  13. George says:

    There’s no doubt to the fact that Ted’s story is amazing but Greg’s story is even more amazing. Millions of people might have had their eyes on the billboards, millions others visited those stores. Few thousands knew the story of Ted but then only one did the amazing story of linking it with blogging. Hats off.

    • Thanks, George!

      It’s not always easy to spot those stories. Same with business ideas. Sometimes ideas are right in front of you–like the cars roaring through Wall, South Dakota. Recognizing opportunities requires us to look at the world from a different perspective: instead of seeing problems, we need to look for opportunities. It takes practice, but the more we do it, the easier it gets.