A Direct-Mail Pioneer Fights Back As His Catalog Business Struggles

Will a move to the web save the day?

Jack Miller should be at the point of his life at which he's kicking back and enjoying his success. The 79-year-old direct-mail pioneer built his Quill Corporation into a giant office products catalog business that he sold to Staples for $700 million in 1998. Not bad for a company Miller started, back in 1956, in a corner of his father's north Chicago poultry shop.

But Miller isn't a kicking-back sort of guy. Soon after selling his company, he invested in Successories, a catalog business that sells motivational signs, awards, and bric-a-brac from its Aurora, Illinois, headquarters. Its customers include the Internal Revenue Service, Citicorp, and Ryder, the truck-rental company. Long a fan of Successories, Miller joined the board, figuring that it would help keep his hand in the business world. Boy, did it ever.

Almost immediately, he recognized that the company had veered seriously off track and was losing money in ventures like retail stores and golf products. He upped his investment to keep the company afloat. Then, in 2003, Miller bought control of the company, which, at the time, was publicly traded.

Instead of enjoying a cushy semiretirement, Miller threw himself into the rescue of Successories. For a while, the business was improving. But in recent months, as sales have sagged and the cost of printing and mailing catalogs has soared, Successories has found itself struggling to stem losses. After years of traditional cost-cutting, Miller started weighing the pros and cons of radically restructuring the company by transforming it from a catalog- to a Web-based business. Would moving to the Web save Successories? Or would it just mean more trouble for Miller's golden years? "I bought that company for some obscure reason," says Miller. "I should have had my head examined."

Despite its financial headaches, Successories remains a presence in white-collar, cubicle culture. Founded in 1990 by Arnold "Mac" Anderson, the company makes posters with uplifting messages and photography, such as one with an eagle soaring that urges employees to work together and strive for excellence. Other popular items include a happy-face stress ball and a stuffed frog wearing a T-shirt that reads: "Leap to Success!" Successories' posters have shown up in television shows like The Office and have been parodied by Dilbert. The company's sometimes overly earnest maxims also inspired the creation of Despair Inc., a company that mocks Successories' products with its own snarky, de-motivational sayings.

As Miller struggled through five tough years of restructuring, he might have taken comfort in his favorite Successories aphorism: "A ship is safe in a harbor. But that's not where it's meant to be." To keep this particular leaky ship from going down, Miller's first move was to plug the holes. He saved $5 million a year with steps such as scaling back on some color printing and discontinuing unprofitable brand extensions. Taking the company private saved $500,000 annually in regulatory expenses. Miller's efforts to make Successories leaner started paying off in 2007: The company posted its first profit in seven years, on sales of $20 million. He also put the finishing touches on Simply Success: How to Start, Build, and Grow a Multimillion-Dollar Business the Old-Fashioned Way, a book about his career.

Then the economy went south. At the start of 2008, sales began to slip. By mid-March the business was going downhill fast, with no sign of a turnaround in sight. Annual sales fell 15 percent as the number and size of orders declined. In eight weeks, Successories had moved from the peak of a long, slow climb back to profitability to the prospect of eventual failure. "Ours is not a need-to-have product," laments Miller. "It's just something that's nice to have."

Miller was suddenly in a new kind of bind, all the more so because it seemed there was no more fat to trim after years of cost reductions. The company's expensive office space was locked up in a long-term lease. The staff of 100 was bare-bones enough that Miller felt he couldn't make cuts without hurting customer service. Aside from rent, Successories' biggest expenses were paper and postage. The cost of producing and mailing catalogs has risen 55 percent over five years. For a company that sends 24 to 30 fat catalogs a year to tens of thousands of prospective customers, that represents a huge outlay. Yet cutting back on mailings seemed out of the question. As Miller had long ago learned in the direct-mail business, the more frequent the mailings, the bigger the sales. Yet the old rules no longer seemed to apply.

On a blustery Monday morning in March, Miller sat with his eight executives and asked each of them for ideas on how to save Successories. Some of the suggestions Miller had heard before: tweaking the catalog mailing schedule or sprinkling in new promotions. But this time around, Miller had a sense something more would be needed. Then Successories' president, John Carroll, urged Miller to dramatically scale back on the catalog mailings and make a full-on push to the Web.

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