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.