"If you see a company having a private-label diaper, and then you see it also as a diaper service, it reinforces its visibility," he explains. "But more important, if we're going to supply diapers to our franchisees, ultimately we need to come up with our own diaper, a product of consistent quality."
* * *
With his plan complete, Gold got down to work. At the outset, he analyzed the other diaper services in the Washington area and listed customers' complaints. Foremost was a health matter. People seemed concerned about getting back strangers' diapers. Gold resolved that by hanging a net in each client's diaper pail. His delivery person can simply yank out the net, fasten it with a giant safety pin (engraved with the customer's account number), and toss it in the van. The diapers can be washed right in the net and returned clean and folded to the same family.
Another complaint was that women were mistrustful of male delivery people. Gold solved that one by planning to employ as many female drivers as possible.
To pursue the upscale market he was targeting, Gold set his prices slightly above the area norm -- $12 a week on a three-month contract but dropping to $10.50 for a year's service. (One of his largest competitors, Nu-DyPer Baby Service, charges $11.20 a week; another, Dy-Dee Service, charges $10.65.) "I knew our pricing would turn away a small segment of the market," he says, "but we don't want everybody, just the solid middle-to upper-middle-income group."
Gold and partner Goldman set up operations in a 3,000-square-foot warehouse space in an industrial park just off the Capital Beltway -- for a mere $250-a-month rent -- and by last June they were ready to roll. They had thousands of Chinese diapers, a driver, and a 12-foot van that had been carefully customized to segregate dirty diapers from clean ones and from the ancillary products. The truck is decorated with a Dapper Danstyle logo -- a baby sporting a top hat and a cane, like an infant Fred Astaire.
Gold set conservative projections. He forecast 400 customers by the end of his first year, with an average of 600 in the second, and 1,000 the third year out. If those numbers held true, and if the add-on products sold as well as he expected, revenues would rise from $422,500 the first year to $1.7 million in the third, with before-tax income climbing from $35,124 to $362,037.
That seemed feasible. As the business plan described it, Washington's baby-product market is approximately $150 million a year. Diaper Dan's was initally seeking to capture just 0.05% of that, and Gold designed a three-pronged marketing approach to meet his target.
First he took aim at what the industry calls "influencers." Where better to find customers than in childbirth classes? And who better to promote cloth diapers than the Lamaze teachers and nurses who run the programs? Gold visited 12 area hospitals to meet with the teachers and nurses, and found them receptive to his plan. As part of their instruction, they included lessons on diapering with both cloth and disposables. Procter & Gamble was giving them information packets with disposables and free coupons in hopes of building brand loyalty. The teachers who used the cloth diapers had to buy them themselves, and so they got the cheapest possible.
What Gold devised for them instead was what he called edpacs (ed stood for education) -- comprehensive cloth-diapering kits that he'd provide free of charge for classroom use. They included a diapering instruction manual, a brochure on Gold's service, a dozen luxurious Chinese diapers stamped with Diaper Dan's name (which cost him $8 a dozen), and 12 Velcro-tabbed covers. The cover manufacturers, hoping to boost their own sales, were happy to provide them at no cost.
Next he approached the regional La Leche League, an organization that promotes breast-feeding and would be receptive, Gold figured, to using natural cloth diapers. Asking only that he be the corporate sponsor, he volunteered to underwrite the cost of its one-page telephone directories. The group was happy to accept. Gold had 2,000 of them printed up, at a cost of $30. These are the kind of things league members would stick on their refrigerators, and of course Diaper Dan's name and number are at the bottom.
Finally, Gold visited every area store that handles children's goods -- furniture, clothing, strollers, and the like. "I just went up to them and said, 'Help me out -- let me display my business cards and brochures here.' And most were very generous about it. I also asked them to speak to their sales force to kind of promote us when people came in for cribs or cradles. So now we have a few key stores recommending our service." What's in it for the retailers? They provide Gold with promotional coupons for their merchandise, which he distributes to his customers.
All that legwork quickly paid off. By December -- only four months after its formal launch -- Diaper Dan's was crashing past all expectations. Its customer base stood at 350 and was growing geometrically. Referrals came from referrals. Gold distributed and advertised in a local magazine for parents, but many leads were generated by word of mouth. The company's very name helped. Diaper Dan's just sounded right. "We have people request our service because they say their mothers used Diaper Dan's," marvels Goldman. "They thought we'd been around for years."
By Christmas customers were signing up at a rate of 35 a week. He now thinks he'll have at least 1,500 customers after the first year, four times his projection. He's already preparing to expand his sales territory to include Annapolis, Md., and second-tier counties beyond the Washington Beltway.
The add-on items began moving rather well, too, thanks in part to Gold's use of door hangers, the kind of checklists found in hotel rooms. A customer not at home to take delivery simply jots down her or his order and leaves the hanger on the front door. Roughly half of the accounts make regular purchases of the add-ons, and a quarter of them have standing orders for certain items. Weekly tickets are averaging $20, meaning that the typical customer is buying from $7.50 to $9.50 worth of ancillary merchandise.
