Pushing The Envelope Mail order experts help one company reach the next level of success.

People start businesses every day. Some succeed quickly; somefail right off the bat; still others percolate slowly and growgradually, one day emerging as bona fide success stories.

At some point, every start-up business owner needs a littlehelp-a few pieces of sound advice from professionals to help steadya new business' sometimes shaky beginnings. But goodold-fashioned irony usually dictates that, just when they need itmost, small-

business owners can least afford to spare the time or theexpense to hire experts who can give them the advice they need.

Len and Greta Buffinton can identify with that. In August 1994,the newly married Len, 32, and Greta, 35, started a mail ordercatalog selling self-help, relationship and psychology books.Admittedly, they weren't experts on direct mail, but they'ddone extensive research to determine whether there was asubstantial market for their products. They also determined whetherthere would be enough subject material to keep the cataloginteresting and functional. In Len's words, they wanted thecatalog to offer books that were about "sensitive issues buttasteful, helpful and not just quirky."

After deciding there were more than enough books to fill adiverse catalog, the Buffintons settled on a name, BrownWrapper Bookstore, and a cover concept to match. Despite itsfurtive exterior, you won't find any X-rated tomes in theBrown Wrapper catalog-just reputable literature andvideos.

Designing their catalog would be no small endeavor-theBuffintons knew that. So instead of taking on the responsibilitythemselves, they hired a graphic artist to design the format andhandle all the pre-press arrangements. Greta wrote the copy; butaside from that and offering a few layout suggestions, theBuffintons let their designer do the rest. "We told her whichbooks should be in which category, and then we shut ourmouths," says Len.

The result was a 20-page black-and-white catalog, its coverprinted on full-color 100-pound stock bearing the appearance of apackage wrapped in brown paper and tied with string. A "SlimJim"-taller and wider than the standard mail ordercatalog-Brown Wrapper was designed to be sent in the mailwithout an envelope. The Buffintons printed 30,000 copies of thefirst catalog at a cost of approximately 50 cents apiece.

In deciding who to mail their catalog to, the Buffintonscontacted a list broker who supplied them with three rosters of5,000 names each. Unfortunately, mailings to these lists garneredan overall response of less than half of 1 percent, which Lencharacterizes as "just horrible." Later, the Buffintonslearned the list they'd bought was

8 years old. When confronted, the list broker told theBuffintons there were "no guarantees." "That mistakecost us a lot of money, time and effort," says Len. Lessonnumber one.

Even as the Buffintons were putting their first batch ofcatalogs in the mail, they were already beginning to suspect thatfinding their target audience was going to be a difficult process.That's why, in later mailings, they adopted the habit ofconstantly testing small lists. Keeping track of the multitude oflists began to pose its own challenge, so the Buffintons decided tohire an outside company to handle database management. Lessonnumber two.

As any budding entrepreneur knows, growth is a tricky thing.Grow too slowly, and you miss the boat; expand too quickly, and youmay harm the business. After their first fiscal year, theBuffintons' Brown Wrapper catalog had earned them$200,000, and they were eager to grow the company, but theydidn't want to do anything they'd regret. They are ascautious as they are enthusiastic-with a good balance of passionand prudence. From day one, they and their five employees havehandled fulfillment in-house, stocking inventory in a3,000-square-foot warehouse adjacent to their Old Saybrook,Connecticut, commercial office. Lesson number three.

The Buffintons have made some mistakes, but they've alsodone a lot of things right. How can they improve on their successand make their burgeoning business grow even more? For some sageinsight and advice, we've sought the help of a few experts.

Zeroing In On Your Market

Obviously, mailing to outdated addresses isn't the best wayto reach your target market. Finding a savvy list broker andsticking with him or her is. "[Using] one good list broker isa very good policy," says Maxwell Sroge, owner of MaxwellSroge Co. Inc., a mail order consulting firm in Evanston, Illinois."The broker learns which lists work well for [your company],and that knowledge is very valuable." This doesn't meankeeping the first broker you try; it simply means once you find oneyou feel confident with, stay with that person.

That's what the Buffintons eventually did. After theirinitial bad experience, they obtained the name of a list brokerwith a reputation as "the guru of mailing lists." But,Sroge adds, "you can never sit back and say 'It'sover; we've done it. The list is complete.' " Over thelast 10 months, the Buffintons have tested 15 or 16 differentlists, each bearing some 5,000 names.

Even large, well-known mail order companies aren't exemptfrom the need to continually test new lists. "L.L. Bean,Land's End and Spiegel rent lists," says Don Chilcutt,owner of Chilcutt Direct Marketing, a mailing list selection andmanagement company in Oklahoma City. "They've got toconstantly feed the pot because some of last year's buyerswon't buy again."

If there's one thing the Buffintons couldn't have beenmore right about, it's the concept of continual change-both intesting mailing lists and in tinkering with their product mix tomeet their customers' needs. The Buffintons believed from theoutset that if customers wanted something, they'd betterprovide it.

For example, when customers said they would prefer to receivethe Brown Wrapper catalog in an envelope, the Buffintonslistened. The second catalog, a 32-page full-color booklet, wasmailed in an envelope. And when customers said they would beinterested in a series of relationship videos, Len found some andincluded them in the catalog.

A few months into the business, one thing surprised theBuffintons about their market: It was 65 percent male. With theBrown Wrapper catalog teeming with books like Get MarriedNow and Men Are From Mars, Women Are From Venus, they'dexpected most of their customers would be women. So the Buffintonsslightly altered their marketing plan by concentrating less onfemale markets and more on those that were nongender-specific. Lensays this taught them a valuable lesson about flexibility. "Inmail order," he says, "the successful companies are theones that find a new angle or market they didn't think wasthere."

Chilcutt says offering your customers endless opportunities tobuy from you is the best way to ensure continued patronage. Hecalls the practice a "continual massaging of your customerlist"-and the Buffintons are already doing it right. Soonafter they began mailing the second catalog, Len began puttingtogether a "jazzy" response package that rewardedcustomers with a free book. "If you believe in yourproduct," says Len, "making an offer isn't sodaring."

Head Count

There are numerous variables in mail order, but the one constantis that running a mail order business means finding a way to managea multitude of names and addresses. Smart, consistent databasemanagement from the outset is a crucial ingredient for success.That's one reason the Buffintons decided to outsource BrownWrapper's database management duties.

John Schulte, chairman of the National Mail Order Association,believes the Buffintons made the right choice. He says a lot ofsmall to midsized companies hire a service bureau when their listgets beyond 5,000 names because at that point, managing a databasebecomes too complex.

"When you're developing a database from scratch, dealwith a professional," says Schulte. "From the beginning,all your information has to be standardized so it'sconsistent." This includes uniformity of basic information,like address abbreviations, as well as knowing what additionalinformation you want to collect regarding the people on your lists.As Schulte points out, such decisions require careful, deliberateplanning at the outset.

"To determine what data they want to capture now, [mailorder entrepreneurs] have to think about what they want to do inthe future," says Schulte. When, what and how much a customerhas bought are important tidbits to cull; date and purchase detailsof their first inquiry or order are also helpful. However, the mostpowerful piece of information you need is the source of the inquiryor purchase (which mailing list did the name come from or whatadvertisement did they respond to?).

All this can be somewhat mind-boggling if database managementisn't your forte-and most mail order entrepreneurs start theirbusinesses out of a love for their concept, not because they'redying to contend with humongous databases. "There are so manyother things for an entrepreneur to think about," saysSchulte, "it's best to have professionals helping you incertain areas."

Room To Grow

No matter how much guidance you get when starting a company,nothing can make or break your business like your own decisions. Inmail order, this lesson is especially important. Because theircatalog has been successful so far, the Buffintons are consideringseeking venture capital to expand the business. "We'redefinitely looking to grow," Len says. "But at what pointdo you consider bringing on venture capital to take that next stepin the marketing plan?"

Maxwell Sroge doesn't believe Brown Wrapper needsventure capital to expand. He says he has nothing against venturecapital groups but warns, "You have to give away an awful lotof your business to bring them in." Instead, he suggests theBuffintons continue to mail small quantities, building theirretained cash, and gradually increase quantities as they learnwhich lists work and which don't. "I would hold off goingafter venture capital groups for as long as possible," saysSroge, "because it's the most expensive money you canborrow."

In addition to sticking with small mailings, Sroge suggestsgoing back to previous customers time and time again. "Thefastest way to make money in the catalog business is to mail morefrequently to your known customers," he says.

Schulte and Chilcutt agree. "You can't neglect thecustomers who have already paid you money. They've alreadyproved themselves," says Schulte. "Your in-house list isthe most valuable. You should create new offers to sell to thesepeople. Direct marketers are not necessarily concerned with thefirst sale but the second and third. That's where a lot of[business owners] miss out because they don't think aboutcross-selling or any other type of selling to their house list asmuch as they should." (See "Returns to Sender" onpage 124 for more on cross-selling.)

The experts agree that keeping Brown Wrapper'sfulfillment in-house is an inspired idea. "There's nothingbetter than talking to customers yourself," says Sroge. Usingan outside service is fine for huge mail order companies, accordingto Sroge, but he urges the Buffintons to continue to handlefulfillment themselves because "nobody will ever take bettercare of your customers than you."

Take It Under Advisement

According to the experts we consulted, the Buffintons are on theright track-and they have 18,000 customers on their house list toprove it. Cautious growth seems to be the best course of action.For the foreseeable future, Brown Wrapper's fulfillmentwill be handled in-house, and database management will remain anoutside job. Meanwhile, Len recently streamlined the business'soperations by setting up a live 24-hour ordering service.

Other than that, the Buffintons seem to have found a formulathat works for them. They're already heeding the advice ofveteran Sroge: "Stay with your game plan-and even when you getbored with it, keep doing the same thing. You may be bored, butyour customers certainly aren't."

Returns To Sender

"The fastest way to make money in the catalog business isto mail more frequently to your known customers," says MaxwellSroge, owner of Maxwell Sroge Co. Inc., a mail order consultingfirm in Evanston, Illinois. In addition to that advice, Srogeoffers the following pointers to mail order entrepreneurs who wantto beef up their profitability:

1. Create packages, and offer them at a savings. Put togetherbundles of related products, and sell them as a package at adiscount.

2. Up-sell or cross-sell. When a customer is on the phone, tryto increase the volume of the order. This is calledup-selling-offering a special on two or more products of a similartype. Another idea is to try to sell related products to thecustomer (this is known as cross-selling). "Once somebody ison the phone and you're doing business with them, it'susually easy to move them into another category," says Sroge."It's the same telephone call; it just takes a few moreminutes."

3. Ask suppliers to pay for space in your catalog. Also known asco-op advertising, this can be a great way to make printing yourcatalog mutually beneficial to you and your suppliers.

4. Ship fast. The rule in the mail order business: The quickeryou ship, the more orders you'll receive. "People wantthings very fast today," says Sroge. "They want immediatesatisfaction."

5. Offer bonuses for large orders. Reward customers who buy inbulk with bonuses (this might include discounts or additionalmerchandise). After all, by purchasing large quantities of yourproducts, they rewarded you first.

Contact Sources

Brown Wrapper Bookstore, P.O. Box 647, Old Saybrook, CT06475, (860) 388-0362;

Chilcutt Direct Marketing, 9301 Cedar Lake Ave., OklahomaCity, OK 73114, (405) 478-7245;

Maxwell Sroge Co. Inc., 522 Forest Ave., Evanston, IL60202, (708) 866-1890;

National Mail Order Association, 2807 Polk St. N.E.,Minneapolis, MN 55418-2954, (612) 788-1673.