Entrepreneur: It's in the mail

FindArticles > Entrepreneur > Feb, 1997 > Article > Print friendly

It's in the mail

Heather Page

Welcome Addition

Making your business more profitable with mail order

For years, the J.W. Renfroe Pecan Co. in Pensacola, Florida, existed solely as a wholesale pecan dealer. But when times got tough in the early '70s, the company began looking for other revenue sources. In 1972, it opened a retail location to sell its premium pecans directly to consumers. And in 1976, the owners purchased a small catalog company and began offering their pecans and pecan-related products through the mail.

The move wasn't nuts: During the busy holiday season, the J.W. Renfroe Pecan Co. draws hundreds of orders for its chocolate-covered, spiced and glazed pecans. While the family business is still primarily wholesale, chairman John W. Renfroe estimates the mail order side of the business now accounts for roughly 15 percent of total sales.

Adding mail order to your existing company doesn't have to be a complicated business. "Think of mail order as just another way of doing business," says John Schulte, chief manager of the National Mail Order Association. "It's really just another method of selling, marketing, advertising and promoting."

The first step to consider? Developing a complete database of your existing customers, says Schulte. In addition to starting your mailing list, the database can also be useful for other things, such as determining which best-selling items to include in a catalog or zeroing in on your most loyal customers to offer them special promotions.

When building your database, err on the side of collecting too much information. A clothing store, for example, might want to consider tracking a customer's name, address, telephone number, amount purchased, size, color, product description and anything else you deem useful. Systems should also be in place to make sure all entries are uniform (such as all capital letters or no capital letters) and that no duplicates are entered.

As for catalogs, the best advice is to start small. It's better to test the waters with just a few products directly related to your core business, says Schulte. Then you can move up to a larger product selection and a snazzier mail piece. It took years for the J.W. Renfroe Pecan Co. to grow from a two-page black and-white mailing to its cur rent 16-page color catalog. "We try not to be too sophisticated," says Renfroe.

Once you've made the commitment to developing a mail order business, be sure to back it up with the necessary resources, says Schulte. In some cases, this might include finding extra office space or adding personnel to process phone calls and fill orders. Renfroe, for example, eventually built a second facility to support approximately 40 full-time and temporary personnel who handle calls as well as enter and fill orders.

If you're willing to do it right, chances are you'll find that adding mail order to your existing business boosts sales - and a whole lot more. "More people know about us because of it," says Renfroe, "and the name recognition helps [sell our] product."

Perfect Fit

Physical addictions Inc. wasn't an overnight sensation. On the contrary, the Indiatlantic, Florida-based vitamin wholesaler came close to shutting its doors.

"It was a nightmare for about two years," says co-founder Rick Martis of his and 43-year-old partner Frank Heinze's early entrepreneurial struggles. "But we didn't give up. We kept working really hard."

Happily, the pair's hard work paid off. Former workout partners, Martis and Heinze first flexed their business muscles in 1989 by leasing the vacant store next to their gym. "We had always worked for other [people]," explains Martis, 43, "and were both looking for something to do on our own."

At the outset, says Martis, the idea was to sell vitamins and aerobic gear to the fitness crowd. Exercise enthusiasts though they were, Martis and Heinze had to hit the books to boost their sports nutrition knowledge.

To keep afloat financially, Martis moonlighted in a variety of sales jobs - but even that didn't fully cover expenses. "I had three roommates," he recalls. "I rented out my whole house just to help pay the mortgage."

So what turned the tide? Martis was leafing through classified ads in fitness magazines one day when it occurred to him that Physical Addictions should place a few ads of its own to expand beyond its retail store. "Sure enough, the phone started ringing," says Martis. "We started with two and three orders a day - and we thought that was a big deal."

Big or not, it was enough to keep then-3-year-old Physical Addictions going. And, slowly but surely, Martis and Heinze began to pump up the sales volume. By promising to beat any price, providing free shipping and handling, and, perhaps most critically, using knowledgeable phone operators who could help consumers make educated purchases, Physical Addictions broke $1.4 million in sales in 1995.

Although Physical Addictions still operates its retail store, mail order sales derived from the ads now account for 95 percent of revenues, which reached $2 million in 1996. This year, Martis expects sales of $3 million.

Enthuses Martis, "I now know there's no stopping [this business]."

Making History

He's been to Europe more than a dozen times, but Michael J. Stopka doesn't take overseas travel for granted. "It's still a rush," says the 40-year-old entrepreneur. "I don't think there's anything more exciting."

Except, perhaps, running your own $12 million mail order company. As the founder of Arlington Heights, Illinois-based Design Toscano Inc., Stopka brings a world of historical European reproductions of gargoyles, statues and tapestries right to the doorsteps of catalog readers. "We almost have a cult following," says Stopka of the faithful consumers who enthusiastically peruse each and every issue of his company's masterfully designed catalog. "People look forward to the different covers we have and the product mix."

Clearly, there's reason for them to do so. Featuring some 600 different Gothic and classic-styled products, the Design Toscano catalog offers variety - and visionary splendor. "You want to shoot the products [in settings] people expect to see them in," says Stopka, explaining the rationale for photographing his merchandise in European settings as majestic as the Notre Dame cathedral in Paris.

Yet for all the smart moves he's made at the helm of Design Toscano, Stopka is the first to concede that his foray into mail order was more accidental than intentional. A former high-tech consultant, Stopka became interested in selling statuary after striking up a friendship with a man who owned just such a company. To expand his friend's customer base, Stopka entered into a business arrangement whereby he placed advertisements - and took orders - for the company in upscale publications like Architectural Digest and The New Yorker. Shortly thereafter, in 1990, Stopka launched Design Toscano.

Just six years later, Design Toscano has grown into an international company that boasts two retail stores (both in Illinois) in addition to its flourishing mail order business. Now, Stopka and his wife, Marilyn, 36, are looking forward to 1997 sales of $15 million. And yes, many more trips to Europe seem to be in their future as well.

First-Class Ideas

5 steps to mail order success

"A mail order empire isn't going to happen overnight," says John Schulte, chief manager of the National Mail Order Association, "so be prepared to be in it for the long haul." Besides having a solid commitment to your venture, Schulte and other leading mail order experts offer the following tips to ensure mail order success:

1. Be familiar with your product. Getting involved in a mail order specialty you don't have any prior knowledge of is usually a big mistake, says Maxwell Sroge, owner of Maxwell Sroge Co. Inc., a mail order consulting firm in Evanston, Illinois. "You want to go into an area where you can bring some special knowledge or talent to bear."

2. Hit the books. Before spending a dime, Schulte recommends spending some time educating yourself. Analyze what you like and dislike about other catalogs (this might include a catalog's length or product selection). Join various mailing lists or make a few catalog purchases to learn more about order-processing methods.

3. Contact a list broker early on. If you wait until your catalog or mailing has already been printed, you run the risk of being stuck with a design that's inappropriate, warns Don Chilcutt, chairman of Chilcutt Direct Marketing, a mailing list selection and management company in Oklahoma City. Working simultaneously with list brokers and designers is the best way to ensure tracking codes get included and the correct amount of catalogs are printed for the lists you'll be renting.

4. Check out the merchandise. Identify a specific market, then choose a variety of merchandise those consumers are most likely to be interested in. Says Sroge, "It's far more important to select the right merchandise than to take the right [catalog] picture."

5. Know the code. Studies show nearly 60 percent of today's companies aren't taking advantage of the potential savings from last year's mail classification reform. Find out about the new postal requirements, and you'll reap sizable postal discounts.

Electric Avenue

The Internet revolutionizes mail order sales.

Thanks to the Internet, mail order shoppers can now point, click and have products shipped directly to their doors. Many mail order companies have eagerly invested in developing their own Web sites. And some catalogs have bypassed the traditional format altogether, instead selling solely via electronic means.

Admittedly, few mail order companies are being bombarded with orders from the Web. But they are reaping other kinds of rewards. For one, the Internet has proved to be a relatively inexpensive way to market products. Second, creating an electronic catalog can provide entrepreneurs with something both difficult and expensive to come by - international exposure.

"Going onto the Internet has increased our ability to reach international consumers," says Dwight Reisdorf, co-owner of Equine Concepts, a Minnetonka, Minnesota-based mail order company specializing in horse-related gifts and home furnishings.

Another benefit to placing a catalog on the Web? Immediate feedback regarding your company's products. Thanks to the Web, Reisdorf and his partner, Amber Himes, were able to incorporate consumer responses about their company from the start of their business.

To prepare to make the most of this new technology, it's crucial to get up to speed on the medium now. Learn to use the Internet, start tracking Web catalog companies, and stay abreast of industry developments.

Experts say the biggest barrier for mail order entrepreneurs on the Web is the medium itself. So far, systems aren't yet in place to make the Internet as convenient as traditional catalogs. Most modems can't handle the detailed images and graphics catalog companies need to pitch their products effectively. Yet once these speed bumps are overcome, mail order companies that put their catalogs online will find a whole new way to reach worldwide markets.

RELATED ARTICLE: Soft Sell

The latest mail order software

Want to make sure the check's really in the mail? Check out the newest mail order software.

* Mailer's+4: This Windows-based mail-sorting software from Mailer's Software has several interesting features. First and foremost, it saves you postage and printing costs by cleaning up your mailing lists. It also helps with telemarketing by checking each phone number for a valid area cod plus prefix combination then updating it. There's also a Demographic Profiler that lets you analyze he customers on your list. A 30-day trial of the program can be ordered by phone at (800) 800-MAIL or on the Web site at www.800mail.com. A one-year subscription is $995.

* Pitney Bowes SmartMailer 2.0: SmartMailer is a mailing management and postal processing application for reducing mailing costs. The program is available is DOS and Windows versions and can be combined with the AddressRight System (a computer/printer combination) for perfect address printing. The CD-ROM includes the National Address Database, which contains all "deliverable" addresses in the United States along with their ZIP +4 codes. SmartMailer 2.0 starts at $995. Call Pitney Bowes at (800) MR-BOWES and ask for program 8539, or visit www.pitneybowes.com.

* D&B MarketPlace: If you want to target your business to the right audience, D&B MarketPlace may be the answer. Based on data from Dun & Bradstreet, this CD-ROM lists more than 10 million businesses, including addresses, phone numbers and other key marketing information. It runs under either Macintosh or Windows. The list price is $849. To test D&B MarketPlace, visit www.mktplace. com, or call (800) 590-0065.

* Smart Marketing Suite: Group 1 Software's Smart Marketing Suite standardizes and corrects U.S. addresses and validates ZIP codes against the U.S. Postal Service National Database for greatest postal discounts. The system also presorts, prints and barcodes directly from your own database. An integrated interface lets you process multiple tasks with just one job setup. Everything from address correction to presorting and label printing are handled efficiently. The program comes on a CD-ROM and works under Windows 3.1 or Windows 95. The list price is $1,369; for information, go to www.g1.com, or call (800) 368-5806.

* MyMail List: MySoftware-Company has a whole line of MyMail List products, ranging from MyAdvanced Mail List ($59.95) to MyProfessionalMailManager ($119.95). My Professional-MailManager prints addresses in the bundle and tray order required and fills out the necessary post office forms to submit with mailings. The program lets you manage up to 100,000 names and addresses with 250 different fields. You can print on any size mailing label, and many pre-defined labels, such as Avery, NEBS and Cheshire, are included. For more information about this Windows-based program, call MySoftwareCompany at (800) 325-3508, or visit www.mysoftware.com.

* Avery LabelPro 3.0: If your mailings aren't your bread and butter, but you aim to do the job well, Avery LabelPro could be the ticket. This product promises to help the unsophisticated computer user create sophisticated mailing labels. For example, a formatting option lets you match your business card style with the labels. This Windows-based program costs $39.99; call (800) 862-2227, or visit www.avery.com.

- Cassandra Cavanah