And yet, by struggling to get it right, Naylor worked her way toward a competitive approach that now informs every operating decision she makes.
* * *
It seemed back in 1992 that capitol Concierge should have been hitting its stride. Sales had risen to $2.4 million the year before. Profitability appeared near. Naylor employed more than 55 people.
Once an anomaly, concierge desks were a familiar trapping in prominent Washington buildings, and expansion possibilities abounded. Concierge to Capitol Hill? Naylor considered it. Indeed, she could consider lots of things, since she was no longer running around making rush-hour deliveries personally.
Naylor's start-up vision had suffered some revamping, but whose doesn't? When she chanced upon a story in 1987 about the first commercial concierge service, she was just two years out of college and only 24 years old. She visited the California company and saw guys in Hawaiian shirts running errands. She knew she'd have to create a more professional look for D.C. but went home excited nonetheless. Her mother lent her $2,000 and a room in the basement.
At the time, Naylor figured she could charge property managers $5,000 a month to put a concierge on-site (she was right) and knew she could cover her expenses and make a profit on those fees alone. She did, however, also see the potential for selling à la carte errand services to individual executives, middle managers, and executive assistants. A little market research revealed that an average office building's tenants could spend hundreds of thousands of dollars per year on catering alone and that the typical office worker spends an easy two grand a year on dry cleaning, flowers, film processing, and the like. But Naylor viewed the service sales as icing on the cake.
It took her eight long months to land her first customer. "Everyone said, 'This is a great idea, but I don't want to be your guinea pig. Come back when you've done it." The John Akridge Co., a well-respected regional real estate company, took a chance on Naylor. She hired her first concierge and ran around like a madwoman, picking up tickets, videos, food, and more. She wrote Akridge's tenant newsletter. "I did everything," says Naylor.
Then almost as suddenly as she was in business, Naylor had four competitors, who ate into her market share. Worse, their predatory pricing forced her to cut her own building fees by half. There went the profit model. When several rivals folded within a year -- the IRS saw to that -- Capitol Concierge picked up their "abandoned" buildings left and right. "It was great -- and insane," Naylor attests. And life-threatening. Her newly bone-thin margins left no funds for expansion. She raced from bank to bank and maxed out her credit cards to meet payroll. "Lifestyles of the poor and pitiful," she called it. With her accountant's help, she landed two angel investors, one the owner of a travel agency, in the nick of time. She managed to keep growing -- but sales of individual services weren't just a bonus anymore.
Those individual sales didn't come fast enough. By 1992, even as Capitol Concierge somersaulted toward $3 million in revenues, Naylor could no longer ignore the obvious: to become reliably profitable and give her company a chance to last, she had to shift her focus from getting more buildings to doing more business inside the buildings she had. "Adding buildings alone wasn't the answer," she says. Her managers -- several top-notch concierges who'd moved up in the organization -- knew it, too. "We started looking at the numbers more," says Dana Wright, who has devoted much of her time to developing customers rather than product lines.
This is what the numbers said: although total concierge-driven service sales had doubled and tripled nearly every year as dozens of buildings were added, they still lagged far behind the building fees. With all those people in all those buildings, that hardly seemed possible. Personal service was the hallmark of the business.
What was lacking, Naylor and her team concluded, was a consistent system for developing ongoing relationships with individual customers. So in the middle of 1992, Capitol Concierge began its three-year trek toward one-to-one marketing.
* * *
A close look at the service-sales problem told Naylor plenty. The performances of different concierges varied widely. Some concierges were naturals; Michelle Heskett went from 0 to 1,000 clients in a year. Others -- most, unfortunately -- wore a pretty smile but were more reactive than proactive in addressing customers' needs. As a result, lots of stressed-out middle managers remained unaware of Capitol Concierge's one-stop-shopping potential. Though the company had spent years painstakingly constructing a network of 50 vendors -- florists, courier services, travel agents, and the like -- to whom it could turn to meet its customers' needs, "many clients used us for only one service and had no clue about the rest," Naylor admits. She admits, too, that the service-sales marketing challenge was bigger than she'd imagined. "It takes a lot of trust for someone to hand over their to-do list."
Naylor blamed herself for some of the problem. She'd had little time to focus on relationship marketing during the go-go start-up years. She and her small staff were forever engaged in interviewing and basic training. Now she would make up for lost time.
She decided to take three specific steps. First, she and her managers would develop a system to formalize how the company would interact with current and potential customers -- a one-to-one-marketing system, though Naylor didn't know to call it that at the time. Second, she would train concierges to make the system work for them. And third, she would revamp her hiring practices to ensure she got potentially effective employees in the first place.
Steps one and two were taken together. Capitol Concierge's marketing manager was dispatched to the field to help install a consistent operating system. Previously, each concierge had her or his own marketing notebook, calendar, scrapbook, or photo album. Some kept "service cards" that tracked birthdays, anniversaries, and who was interested in which services. It was crude, but it was at least some record when concierges turned over, as they did every 18 months or so. The cards also allowed for some basic targeting of flyers. "But," notes Dana Wright, "if somebody says they're interested in dry-cleaning services, that doesn't tell you a lot about the person."
