From the December 1997 issue of Startups

It's difficult to believe that a single household remains in the United States that hasn't been touched by Lillian Vernon. If its residents are not among those who have ordered from any of the half a billion catalogs sent out over the last 46 years, then surely they've received a gift from someone who did.

Last year, Lillian Vernon Corp. earned revenues exceeding $238 million, a phenomenal achievement for a company launched at a yellow Formica kitchen table by a newly married, pregnant, 21-year-old woman. Starting with one small ad in Seventeen magazine for matching, monogrammed leather belts and handbags, the company has burgeoned into an empire that mails 29 editions of eight different catalogs, each averaging 96 pages and offering more than 700 products. In addition, the company's wholesale division services corporate accounts and a retail division operates 15 outlet stores.

Lillian Vernon introduces more than 2,000 products each year--carefully chosen by Vernon, herself, and 20 buyers, who travel an average of 150,000 miles a year sniffing out intriguing items that will tantalize a large share of the 19.4 million people in the company's customer database.

While you may be your company's only buyer and unable to circle the globe in search of treasures, every small-business owner can learn from the lessons of the venerable Lillian Vernon. Here are her tips for choosing merchandise that sells:

  • Always be on the lookout for new products and ideas. "I keep a notebook to jot down ideas that intrigue me, and I travel to more than 30 countries a year to uncover new sources," Vernon says. "Whether in a car, in a store or on the street, I carefully observe the world around me, searching for the perfect product that will break all sales records."

You need not always look far to discover those record-breakers, though. One day, while walking through a New York department store, Vernon spied two girls carrying a box and searching for the store's buyer. When Vernon peeked into their box, she discovered adorable cupcake-shaped candles. She ordered thousands of them for her Christmas catalog, and they were a huge success.

  • Offer many exclusive products that can't easily be found elsewhere. This will establish your reputation as a source for the unique and develop a loyal customer following.

Vernon's first mail order products were not only exclusive, they were distinctive: the first-ever monogrammed handbag-and-belt sets available through mail order. With her own teen years not far behind, Vernon understood that young women wanted to be individuals, but not so much so that they would be considered different from their peers.

Her first ad in Seventeen addressed both the uniqueness of the products and the longing of her target audience to fit in with the crowd. It was a marvel of simple, straightforward salesmanship: "Be first to sport the personalized look on your bag and belt," the ad proclaimed.

That first success supported Vernon's instinct that people appreciate personal touches. Today the company issues one specialized catalog full of personalized items and, for more than four decades, no matter what the item, free personalization has remained a hallmark of Lillian Vernon.

  • Know who your customers are and offer products tailored to their needs. Customer surveys, focus groups and analysis of past sales trends will help you learn about your customers.

Vernon learned this lesson early on. After the Seventeen ad brought in more than 6,000 orders, Vernon tried to replicate her success with ads in other publications. The attempts bombed. "I spent a lot of my early profits on ads that failed," she admits. But she discovered the meaning of the words "Know your market."

"I had picked a bag and belt especially suited to the tastes of teenagers," she recalls. "What was I doing, advertising in magazines like Vogue that catered to an entirely different readership?"

Today, by using marketing tools such as customer surveys and focus groups and by analyzing buying trends, Vernon knows who her customers are. Ninety percent of them are women in their forties with an average household income of more than $53,000. More than half are employed outside the house and have children living at home. They want top-quality merchandise, great customer service and an ironclad return policy. (Lillian Vernon's is among the most liberal in the business; all products carry a 100-percent, money-back guarantee. When a customer wanted to return a 20-year-old, unopened box of dinnerware, Vernon dug through old catalogs for the price and refunded the woman's $79.98.)

  • Keep abreast of current trends, tastes, attitudes and needs. Read as many newspapers and magazines as possible. Then choose products that will make the lives of your customers better and easier. It's not always easy to stay ahead of the competition, but by arming yourself with knowledge about changing demographics, developing needs and the latest fads, your product choices should more closely align with your customers' needs.
  • Keep your customers' budgets in mind. Select products that offer good quality at affordable prices, and remember that "affordable" means something different to each group of customers. Offering inexpensive trifles to yacht owners can result in as much of a disaster as targeting college students to buy big-screen televisions. Sometimes, though, it's the quality that's the problem, not the price. Knowing whether you're selling to people who vacation in Aspen or at Disney-land helps focus your product picks.
  • Build good relationships with your suppliers. Because Vernon's father manufactured her merchandise the first year, she was assured of securing quality products at fair prices. But expansion demanded that she find new products and form new alliances. She knew that buying from manufacturers required more than simply choosing merchandise and signing checks. Manufacturers sometimes come up with ways to improve goods or suggest different products that might work for you. Once you've formed a relationship, you're more likely to be on the receiving end of good ideas and good deals.
  • Keep an eye on the economy. In 1981, Vernon learned another lesson when a deep recession played a major role in the quick demise of her upscale "At Home" catalog.

Whether you're targeting millionaires or middle-class customers, everyone is affected to some degree by the ups and downs of inflation, unemployment and even international trade issues. In times of economic stress, the urge to purchase luxury or nonessential items remains, but the means to do so decreases. During a downturn in the economy, even the wealthy cut back their spending on luxury items.

  • Listen to your gut. While research and knowledge are vital, never scorn intuition. "Something happens to me when I spot a hot product," Vernon says. "I feel it in the pit of my stomach."

Like any longtime business-person, Vernon has survived her share of mistakes. But because she knows her customers so well, it's not difficult to understand why her instincts have led to so many hits. From the earliest days of her company, some of Vernon's most successful offerings--monogrammed bookmarks, crocheted snowflakes and the "Hurry Door Knocker" (a joke gift that signaled slowpokes someone was waiting to enter the bathroom)--were based not on focus groups or questionnaires, but on that innate sensation that overcomes her when she knows she's spotted a gem.

You don't need to run a multimillion-dollar empire to put her tips to work for you. Follow the following advice from Vernon, and you, too, can become a product sleuth:

  • Never leave home without a notebook.
  • If you can't afford a buying staff, enlist friends and family to help with the search.
  • When you're at a party or a business function, ask lots of questions, such as: "What have you bought lately that you really liked?" "What items do you wish you could find but haven't seen?" "What items do you purchase most often as gifts?"
  • Frequent tourist hangouts and notice what the gift shops are selling.
  • If you're planning to start a specialized mail order company, ask local merchants about their hottest-selling items.

If you expect to stay in business, you're going to have to get to know your customers. Vernon sees her customer database as the company's number-one asset. Yours can be, too. From day one, make it a habit to record customer information in your database. Be sure to take names and addresses off checks and ask for them when customers pay in cash. Along with basic information such as addresses, set up a demographic database that catalogs customers according to age, gender, occupation, marital status and any other characteristics that might impact your buying decisions. While you can't come out and ask each customer about these factors, some information can be gleaned through simple conversation. In other cases, you might want to mail out surveys and offer gifts in return for the completed forms. If you offer a warranty, ask customers to fill in cards that provide demographic feedback.

Building good relationships with suppliers can be difficult for small start-up companies. After all, big companies like Lillian Vernon tend to grab manufacturers' time and attention. But you can follow Vernon's lead by treating suppliers with respect, paying on time and going the extra mile for them. Let suppliers know when customers rave about a product, and don't play one supplier against another to save a little money.

Having the perfect product or idea is a great way to start your own path to success; but Vernon's story proves that it's what you do with your idea that counts most.


Lynn H. Colwell, always quick to take advantage of any free offer, is proud to have gifted friends and family with dozens of personalized items from Lillian Vernon over the years.

Tips From Business Start-Ups

Here are some additional hints to turn you into a buying wizard. Some of them come from John Schulte, chairman of the National Mail Order Association in Minneapolis.

1. Study the competition. Only by knowing what's selling well will you be able to zero in on hits and avoid misses.

2. Join trade associations and subscribe to their journals. Many trade magazines offer yearly trend predictions, based on extensive research.

3. If you have only one great product, consider what will happen when the market becomes saturated. Always widen your perspective to consider piggyback products that will continue to generate income after the best-seller begins to fizzle.

4. Take a look at products outside your industry that match your niche--or could be adapted to benefit your customers. Most florists only sell flowers, for example, but they could easily market floral books, stationery or even flower-themed jewelry to their existing customers.

5. Give products a trial run if you can afford it. Find out if the supplier will take the products back if they don't sell.

6. Study the biggest companies in your field. Look for niche products you can sell to their customers.

7. Pick your best-selling product and brainstorm ways to change and improve it.

8. Hook up with local designers and craftspeople. Ask them to create something new and exclusive that you could feature in your store or catalog.

9. Cut out pictures of five products you're thinking of selling. Paste them on a sheet of paper and ask potential customers to rank the items in terms of appeal. Purchase only the top one or two.

10. Don't take vendors' words for product quality; ask for samples and test them yourself.

11. Talk to "people who have everything." What was the best gift they received in the last year? How about the worst?

12. Avoid products that are too complex or those for which the buyer needs to be educated. When computers first came out, for example, they only sold well in stores with knowledgeable salespeople who taught consumers how to use them.

13. If you have employees, don't designate only one or two as buyers. Encourage your entire staff to come up with ideas and reward those who pick winners.

14. If you are online, develop a suggestion database for customers.

15. Watch your costs. If you are selling a fragile vase by mail, you may have to pay through the nose to see that it arrives intact. Forget such additional costs and you can end up losing money on a hot product.

Contact Sources

Lillian Vernon Corp., (914) 637-5625, fax: (914) 637-5800

National Mail Order Association, 2807 Polk St., N.E., Minneapolis, MN 55418, (612) 788-1673, fax: (612) 788-1147, http://www.nmoa.org , schulte@nmoa.org