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

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It was not as if Successories hadn't already given a lot of thought to the Internet. A year earlier, Carroll had hired a small consulting firm, Shay Digital, to analyze Successories' website, which was a simple online version of its print catalogs. Shay provided the company with a plan for updating the site, which Miller and Carroll had intended to gradually implement over several years. Now, Carroll was urging quick action: Slash catalog mailings by two-thirds and put the savings toward installing a new state-of-the-art website as quickly as possible.

As a print man, Miller was skeptical of shifting the business focus from direct mail to the Internet, especially in a rush decision. He also wasn't comfortable about the investment required to make such a radical shift. The new Web system was going to cost $400,000, money Successories could ill afford.

But Carroll was insistent. He had commissioned a survey of customers that showed they tended to spend roughly the same amount whether catalogs were mailed out frequently or infrequently. At the same time, Shay estimated that a revamped website with full e-commerce bells and whistles, such as showing customized products or suggesting products based on customers' previous purchases, could generate 20 percent more sales while reducing production costs from 25 percent of sales to 15 percent or lower.

To assuage Miller's concerns over costs, Successories' chief financial officer, Saritha Arellano, argued along with Carroll that the company could heavily discount overstocked inventory to quickly raise cash. Others suggested allocating nearly all of the annual marketing budget toward raising the rest of the money.

The Decision Once Miller was convinced the company could swing the expense, Carroll's argument won. Successories would immediately scale back catalog printings and move full speed ahead on the Web initiative. "I sure as hell didn't want to die a death of a thousand cuts," says Miller. If the gambit failed, though, he knew the company would be in even deeper trouble. Still, he admits he violated one of his own cardinal business rules: Never depend too heavily on one single investment. "This is a bet-the-ranch kind of gamble," Miller says. "You come to that sometimes."

The new website will be up and running in September. After years of frustration with trying to fix Successories through traditional means, Miller and his team are filled with renewed optimism about the move online. But it's still early going. "It's a balancing act for companies where traditional methods of marketing aren't working," says Steve Shadrick, a partner at Shay Digital. "Everyone is looking for the silver-bullet answer, but there isn't one."

Miller knows from experience that big changes often take a lot longer to pay off than expected. He's not hoping to see any real sales boost or cost savings from the new site before 2009. Until then, Miller is resigned to soldier on. "This is a new position for me to be in," says Miller. "There is no Plan B. We just need to make sure we get through this."

The Experts Weigh In

The Web will help

Successories is making the right move for a good reason: cost savings. But there are other compelling reasons to transition from a print to an online catalog. An online catalog system will provide real-time flexibility to change inventory or pricing at any time and enable short-term promotions that are targeted and timely. This will make the company nimble and more profitable. Also, with the green movement in full throttle, the environmental benefits of reducing the number of print catalogs should be emphasized.

Rick Blabolil
President
Marketing Innovators
Rosemont, Illinois

It's not about the Web

This is an example of short-term thinking that can kill a company. How does changing the sales channel offset the problem? The economy is still awful. Corporate buyers don't care where you sell; they're just not buying. Selling the inventory at deep discounts could prove unwise. If the new sales are realized, Miller will have to replace that inventory with high-cost-to-produce items. He refuses to hear the smoke detectors blaring away. It's like staying in a burning building and spending another $400,000 before having to run out.

John L. Herman Jr.
Founder
Equity Partners
Lutherville, Maryland

Focus on the customer

An all-or-nothing gamble isn't usually the smartest business decision, but sometimes it's necessary. We'll see a number of direct businesses, like catalogs, migrating toward the Web, and the smart ones will move quicker rather than slower. A lot of the challenge becomes helping customers through this change. No doubt there will be some customers who are not comfortable on the Web. Focus on the benefits -- why this is better for them. This is a tough but very doable transition.

Jim Okamura
Senior Partner
J.C. Williams Group
Chicago

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