Catalogers of the Year

On the following pages you’ll meet the winners of the fourth annual Catalogers of the Year awards. We’re honored to recognize the contributions these three professionals have made to the catalog and e-commerce industries.

This year’s winners exemplify the astounding level of quality in branding, customer service and merchandising this industry enjoys. The winners include:

1. a former museum director who now sells museum shop-quality educational toys to a national audience via her catalog;

2. a transplanted Briton who has built a thriving company selling telephony equipment; and

3. an industry veteran whose reputation as a maverick in branding, direct marketing and channel-integration is unparalleled.

Awards Criteria

Nominees in the Consumer and B-to-B categories were asked to supply business metrics such as growth in their 12-month housefiles, annual revenues and operating profits. They also outlined specific innovations they’ve made in merchandising, marketing, prospecting, fulfillment, customer care, creative and/or production.

Nominees for Lifetime Achievement were judged on the following: their work for local and national trade associations; if they freely share their expertise with fellow catalogers and industry newcomers; and other direct contributions they’ve made that have enabled the catalog and e-commerce industries to thrive.

(Note: This year we did not name an Entrepreneur of the Year because we failed to get enough qualified nominations in that category.)

Methodology

During December and January, nominations were accepted from Catalog Success readers, advertisers and others. Catalog Success editors reviewed each nomination packet for the above-noted criteria, then narrowed each of the award categories to three nominees.

The nomination packets for those selected into the final round were then sent to a panel of three independent judges who named the winners. We thank the following industry professionals for their work on this year’s judging panel:

Bob Allen, former president and CEO of The Vermont Country Store catalog, and the winner of the 2004 Catalog Success Lifetime Achievement Award.

Lois Boyle, president, J. Schmid & Associates, a catalog consulting firm; and

Andrea Syverson, president, IER Partners, a catalog consulting firm.

—Donna Loyle, editor in chief

Lifetime Achievement Award
By Donna Loyle

It took Williams-Sonoma 40 years to become a $1 billion a year company, and only three years to get to $2 billion. And this year, it’s on track to reach $3.5 billion in sales.

One of the main architects of that successful growth strategy is Patrick Connolly, chief marketing officer, who has been with the San Francisco-based multichannel company since 1979. A recognized expert in brand-building and direct marketing, Connolly has helped the company’s direct division expand to eight catalog titles — Williams-Sonoma, Williams-Sonoma Home, Pottery Barn, Pottery Barn Kids, Pbteen, Pottery Barn Bed & Bath, Hold Everything and West Elm — and five e-commerce sites. This year, the company’s direct business is expected to achieve almost $1.5 billion in revenues.

Such growth is impressive but was not at all easy to achieve, Connolly concedes. A sound multichannel strategy, strong branding initiatives and brave leadership have helped Williams-Sonoma succeed.

Catalog as Growth Vehicle

Connolly, who holds an MBA from Stanford University, started in direct marketing in the 1970s, working with his brother-in-law who sold tennis shoes through the mail. Connolly then branched out on his own and started the SportsWares catalog. (His financial backer for that venture was tennis legend Billie Jean King.) Then in May 1979, he met Howard Lester after Lester had purchased controlling interest in the $4 million a year Williams-Sonoma.

The Williams-Sonoma catalog turned out to be a major growth vehicle for the retail company, but that fact was not a proven business model back in the late 1970s, says Connolly. He recalls very few companies successfully selling high-end merchandise via direct mail. “Companies such as the Horchow Collection and Neiman-Marcus went on to prove that luxury items could sell via direct mail,” he notes. “They served as a proof of concept for the rest of the catalog industry.”

The company went public in 1983 and maintained an aggressive growth strategy. But Connolly recalls mis-steps along the way, including the introduction of new catalogs that cannibalized one another. “And I was the architect of that action,” he says without hesitation in admitting his mistakes. “We had to crawl out of that and re-establish ourselves. People here really pulled together for it.” He credits Lester, still the company’s chairman, for his strong leadership during those dark days.

“Managing our growth over the years has been challenging,” Connolly says. “We have the leadership in place to make it happen, but it’s not a simple business. The brands you develop must fit your customer profile, and you need sufficient growth potential to merit the attention you’ll give to the business.”

Another challenge has been attracting and retaining great people. Williams-Sonoma believes in growing its talent from within. Indeed, many of the company’s senior-level executives, he says, “have grown up within Williams-Sonoma.”

Branding Expertise

Today, Connolly is responsible for the company’s brand direct marketing, public relations and marketing communications, creative services and e-commerce strategy. Three years ago, Williams-Sonoma reorganized its operations by brand and “de-siloed” the channels, which used to run separately. “Today, you simply couldn’t run eight different brands each by its own separate channels,” Connolly concedes. “It would be too difficult.”

When asked what he is most proud of in his work life, he points to the Williams-Sonoma leadership teams’ ability to execute a multichannel strategy. “We now have 560 stores, and our direct business will be about $1.5 billion this year. We’ve built that from almost nothing,” he says. “Here at Williams-Sonoma, many people have worked on that multichannel strategy, not just me.”

At Williams-Sonoma, he continues, there are no barriers to multichannel success. “At other companies, I think multichannel is too political,” he says. The problem is not that marketers don’t know how to execute a multichannel strategy; rather, “it’s the territorial nature of channel management,” he cautions. “We’re lucky in that we have a strong direct marketing background. We don’t try to drive customers to one channel or another. Rather, we try for customer loyalty and world-class customer service across all channels.”

That’s turned out to be a successful strategy indeed. Williams-Sonoma had two titles on this year’s Catalog Success Top 200 list, including Pottery Barn Kids (No. 12), which grew its 12-month housefile by a whopping 83 percent last year to 774,718. And Pottery Barn (No. 38) grew its housefile by 43 percent to 1.58 million.

Connolly says he’s passionate about cataloging. “The direct marketing industry is uniquely positioned to take advantage of the Internet,” he says. “The skill set used to analyze e-commerce is very similar to that required in the catalog/direct marketing business.”

Interestingly, when asked what he is most proud of in his personal life, Connolly again deflects the attention to others. “I’ve been fortunate that I have a wife who would drag me out of meetings in time to go to little league games.”

Industry Work

Connolly gives of his time and attention to other organizations as well. He is a member of the board of directors for both The Direct Marketing Association (DMA) and Norm Thompson Outfitters, a multititle catalog company. Moreover, he speaks passionately about industry-wide challenges, most notably consumers’ growing interest in privacy and data security issues and how they will impact direct marketers. “Every cataloger has to understand how these issues will impact their companies,” he says. “Then they have to be vocal about these issues to their elected officials, to educate them on the issues and what is responsible direct marketing. We need to get the officials’ support on the privacy and data security issues. Or we’ll find ourselves in a situation we find distasteful.

“We can’t rely solely on The DMA for help in these matters,” he continues. “Rather, every cataloger must reach out at their local level. And they must be responsible, be sure they’re using the best practices in data security and customer privacy.”

Always looking out for the well-being of others, Connolly is a pillar of the catalog industry, and Catalog Success is proud to bestow on him the industry’s Lifetime Achievement Award for 2005.

* * * Pat Connolly’s Takeaway Tips * * *

1. Branding is key: “People often forget that at the end of the day, all you have is your brand,” says Connolly. “It’s how consumers measure their trust in you. It’s the impression that comes to their minds when they hear your company name or see your catalog.”

He says marketers often forget how many media messages consumers get bombarded with each day. “Yet companies with the strongest brands can still capture share of mind. That’s why your catalog has to stand for something,” he notes. “People who like what you stand for will shop from you again.”

2. Develop a clear merchandising strategy: “You may sell new product categories now because the items are hot, like outdoor furniture is now,” he cautions. “That’s fine, but you have to be careful of how that brings people onto your customer file — people who may never buy from you again.” So the issue, he continues, is figuring out how to retain the quality of your customers. “That’s easy to say, but hard to do,” he notes. “Every day as managers we face decisions that may enhance our brands in the short-term, but not in the long-term.”

3. Believe numbers. “React quickly when you see things aren’t right,” Connolly advises his cataloging colleagues. “I’ve seen people get lulled into thinking problems are short-term when they may not be.”

4. Watch competitors, but don’t overly stress about what they do. While it’s wise to pay attention to industry-wide metrics and benchmarks, at the end of the day you can control only your own operations, says Connolly. “If you’re doing your job right, you don’t have to worry about your competitors. Worry about yourself instead.”

5. Repeat your good efforts. “If things work out well, figure out why, and copy it or learn from it,” he notes.

Consumer Cataloger of the Year
By Matt Griffin

Not satisfied simply with educating her portion of the world, Marilynne Eichinger 10 years ago left her job in the nonprofit world of museums to bring her passion for lifelong learning to a new endeavor: the Museum Tour catalog.

Always interested in how families communicate and interact with their children, Eichinger wanted to bring museum shop-quality educational toys to a nationwide audience, says Marcia Mantz, creative director at Museum Tour, Portland, Ore.

And it’s an interest that’s fostered growth, as the catalog has increased in size from a 32-page book with a circulation of 600,000 when it was founded in 1995, to a 96-pager with a circulation of 1.5 million. Add in the book’s 4.4 percent typical response rate, and Eichinger’s business plan seems sound.

But don’t think she has forgotten from whence she came. In the 10 years the catalog has been in business, the company has donated $120,000 to its 22 museum members. These museums paid an initial fee for membership and lent their names to Museum Tour when it was starting out.

Merchandising Mission

Eichinger’s mission is to sell products not simply associated with a museum gift shop, but with a shared educational experience.

Says Eichinger, “When I was at the museum … I found that parents wanted to help their kids, but they didn’t know how to do it. Maybe they don’t remember math or science or things like that.” To that end, she says, the catalog doesn’t focus on those individuals who wish to homeschool their children, but rather on those simply looking to share in their children’s educational experiences.

In speaking of her 10 years as director of the Oregon Museum of Science and Industry prior to starting the catalog, Eichinger notes the goals of a museum as an institution are to both enrich its visitors and act as a supplement to the school system. “Our catalog is trying to take that a step further and help parents and family members enrich their children’s lives,” she says.

It’s that museum connection that Eichinger credits for the success of her catalog. And she credits Museum Tour’s usual 4.4 percent response rate to both the credibility that comes with being associated with institutions of learning and the higher level of merchandising it has allowed her to pursue.

“I’ve seen other catalogers who merchandise according to the mass market, what’s going to be the very biggest seller. We don’t use that method. We merchandise by asking people what will educate them the best,” says Eichinger.

Taking that concept to its fullest extent, Eichinger admits she’ll include in a catalog an item she knows won’t be a best-seller but that might round out a person’s education. Museum Tour doesn’t simply provide products for sale, she notes, but delivers an opportunity to achieve a more holistic and balanced education. In an effort to achieve that goal, the catalog has added more language arts and history items to what initially had been primarily a science- and math-based offering.

One of the reasons she’s likely able to include these items is the unique way products make it to the catalog pages. Vendors buy space in the catalog and make 75 percent of retail on each sale. While individual museums offer merchandise in the catalog from time to time, most products come from traditional vendors, says Eichinger.

Each product pitched by a vendor is screened by Eichinger and her staff, which includes former teachers, for both quality and relevance to the catalog’s theme.

Creative Decisions

Eichinger takes her layout and design cues from the museum atmosphere she hopes to evoke. Each spread is billed as either an individual museum or exhibit hall. Products are grouped together, for instance, based on whether they illustrate the principles of electricity, develop language skills or teach history. Browsing the catalog is like taking a tour through a museum, with similar products grouped together and described in the same way you’d find exhibits in a museum. Eichinger also uses creative to develop the relationship between parent and child. The catalog features what Eichinger calls “side-by-side products” — grown-up versions of many popular children’s products. The idea, she notes, is to provide items for adults so they can become an inspiration to their children and participate in lifelong learning. The most recent catalog, for instance, pictures an adult using a full-sized pottery wheel alongside a smaller-scale children’s version.

Challenges Continue

One of Eichinger’s future challenges is the development of a year-round business. With most of its sales coming in the fourth quarter and most business functions handled in-house, Museum Tour grows from 17 employees in the off season to about 125 in season.

To balance the business, Eichinger hopes to grow the school market. While the catalog is printed only once per year, alternate covers are used on catalogs sent to teachers. Many products also are being made available in bulk quantities, such as teachers might buy for their classrooms.

Equally difficult when so much of her business focuses on the holidays, she notes, is maintaining a high level of customer service. Although Eichinger and her team have considered outsourcing the call center function, they’ve rejected it because they want to maintain a greater level of control.

Instead of outsourcing, Eichinger’s operations team has become more selective in its hiring process, raising the educational requirement for customer service representatives. And more time is dedicated to training reps on the catalog’s educational objectives.

Future Plans

Eichinger’s passion for education extends beyond the reach of the catalog. She recently led the formation of a nonprofit organization called the Informal Education Research Corp. Focusing on how families use educational toys, games and products in the home, the organization seeks to gain a better understanding of how parents teach and children learn.

Still in the beginning stages, Eichinger hopes the organization will develop best practices for educational products manufacturers. For example, she wants to know the best way to provide instructions in a science kit, so parents easily can understand and communicate the objective to their children.

“It’s this constant passion and realization of the need I think we have in the United States to further our children’s education in a time when school budgets are being cut that keeps us going,” says Eichinger.

Catalog Success congratulates Marilynne Eichinger on her continued passion and for winning this award.

B-to-B Cataloger of the Year
By Donna Loyle

During the past two years, Headsets.com, a San Francisco-based Internet and catalog merchant of telephone headsets to businesses, has recorded a housefile-growth increase of 270 percent, from 22,882 to 61,783. And its annual revenues have gone up 268 percent to $17.2 million during that time period.

Not too shabby for a company established just in 1998 that’s been mailing a print catalog for only the last three years.

Its founder and driving force is Mike Faith, a Briton who, in 1990, came to America with his wife and two suitcases after selling everything they owned. Faith worked in sales and marketing before striking out on his own. He started two companies, bought headsets for those companies, and found that the products were not as good as he had anticipated.

A born entrepreneur, Faith invested $40,000 in a new venture he called Headsets.com, asked two of his former employees to work at the new venture, and in only five weeks, they were open for business on the Internet.

Customer Service is King

Faith and his team at Headsets.com are well-regarded as customer service fanatics. Faith defines great customer service in this way: “The customer service team takes responsibility for customer satisfaction. They own the customers and their jobs.”

Like other catalogers, Headsets.com uses several methods to measure and track its customer service results, including returns rates and reasons, traditional metrics such as percentage of calls answered within four rings, and so on. It goes a step further than most, however, by setting benchmarks such as answering all e-mails in two hours or less.

The company also actively solicits direct customer feedback. For example, every outgoing package includes a customer survey, and customers who complete it get a $10 voucher good on future purchases. The surveys, says Faith, are designed to ask questions in a way to solicit constructive criticism, not just praise. Customers even are asked to rate, from excellent to below average, the customer service representative (CSR) with whom they dealt. “Anything below excellent is considered a failure,” he says.

Faith gets about 150 completed customer surveys a week, and he reads every one. “Some of the feedback helps us to get a feel for what’s going on, what’s important for customers,” he says. “The responses help us to measure the tempo of the company and our customers. If the customer has a specific problem, I will send that to the appropriate person in our organization to fix it.” Faith even reads some of these surveys in weekly staff meetings, reiterating to his team the company’s culture of customer support.

Faith also publishes his own direct phone number and e-mail address on every order and catalog mailed. “I make it easy for customers to give us comments directly, whether it be criticism or praise. And I get those responses early, not months later through filtered internal channels,” he says.

Staff Training and Incentives

To entice employees to strive for that high level of customer service, Faith employs several tactics, including training and incentives. Shaun Masterman, of Headsets.com’s marketing and technical services department, says customer service staffers are “measured and motivated by customers’ ratings of their service, rather than individual sales figures. Both customer ratings and sales figures are open to every employee.”

The employee-incentive program is based on company-wide sales, returns and hours worked, “so that everyone has a vested interest in the productivity and efficiency of the workforce,” Masterman explains. “Employee responsibilities are given out based on employee strengths, rather than seniority.”

Says Masterman, who nominated Faith for this award, “Mike believes that productive employees are happy, rather than the more usually cited ‘happy employees are productive.’”

To find employees who relish working in the Headsets.com environment, applicants are asked to supply more information than a usual application would offer. They also are given IQ tests, and they spend a half-day in the office listening to calls and meeting other CSRs. Applicants then must complete forms that ask them to evaluate each customer call they’ve heard. In this way, says Faith, managers can determine applicants’ listening skills and level of patience.

Once on the Headsets.com team, employees have access, via telephone, to a business psychologist who helps them flush out negative feelings or resolve communication problems they’re encountering with other employees. Faith also employs a voice coach, as well as a managerial and organizational specialist to help employees develop skills such as time-management. While speaking to these specialists is voluntary for employees, it’s mandatory for job applicants, says Faith.

This relentless pursuit to hire and train ideal employees no doubt has helped Headsets.com keep its staff turnover low and its customer-service ratings high.

Offers and Promises

Another way Faith and his team improve customer service is by making rock solid offers. For example, they offer a 60-day free trial on their highest-priced item, a $300 wireless headset. “This was a risky gamble for the company,” Masterman concedes. “Customers can return the product on the 60th day.” And yet the offer has performed well, he notes. “With our attention to local, specialist and live post-sales customer support, returns are very low. Customers are actively encouraged to call us should they have questions or concerns.”

Product support FAQs, Masterman continues, are not included on the company’s Web site. Instead, it prominently displays its toll-free number, and “98 percent of calls are answered by a live rep who is knowledgeable about the products and can answer any and all questions,” he says. “If a customer does want to make a return, he or she is given the same smile and ‘thank you’ as those who keep the product.”

Faith gives his customers several promises, including for example: 110 percent price protection in case they find an item for a lower price elsewhere; full advance replacement of products during their warranties; free telephone support; and a guarantee that the product will be compatible with the customer’s telephone.

Says Masterman: “We simply remove all the barriers to ordering from Headsets.com.”

Opportunities and Challenges

With success inevitably comes growing pains, and Headsets.com is no exception. Says Faith, “We need to manage the pace of our growth, whether it’s through systems, resources or premises. We have to over-specify up front and live with the extra for a while in order to have that over-capacity when we need it.”

To that end, the company recently moved into a larger facility. “We’re growing quickly, doubling in size every 18 to 24 months,” Faith explains. That leads to another challenge: cash flow. The company took only one small round of financing in 2000, and has been self-financed since then. “It’s harder to grow this way,” he admits, “but it’s the right policy for us.”

The difficulty, he says, is that growth — while encouraging — also can be “a constant distraction to what we do, which is sell headsets.” Still, growth is hard to pass up for one as entrepreneurial as Faith. Recently the company began shipping products to Canada, its first foray into international markets. “We’re seeing promising results,” says Faith. “We don’t treat Canada like it’s just another state, like other U.S. marketers tend to,” he notes. “We did some research on how Canadians want to be treated, and we think we found the right approach.”

With his relentless pursuit of superior customer service and his methodical approach to sound corporate growth, Mike Faith of Headsets.com exemplifies the savvy merchant most catalogers strive to become. Catalog Success is proud to present the 2005 B-to-B Cataloger of the Year Award to Mike Faith, president and founder, Headsets.com.