Survival Tips From NCOF

In a session at last month's National Conference on Operations & Fulfillment in Orlando, Fla., a panel of cross-channel marketers spanning a wide array of product categories presented tips on how their companies survived the economic pressures of 2009 to see the promise of 2010. Included on the panel were Lynn Jeffrey, head of operations, The Vermont Country Store; Lawrence Miller, CEO, Danforth Pewterers; Tena Perrelli, senior contact-center manager, Gardener's Supply Co.; Mark Nelson, vice president of finance and operations, Cuddledown; Lee Paynter, chief operating officer, J.W. Pepper; and Bruce D. Breckbill, vice president of direct sales, Lehman's. Here's a look at some of the top tips doled out at the hour-long session.

• Take advantage of “insourcing.” Vermont Country Store anticipated fewer hours being available for its variable labor — customer service (CS) and distribution center (DC) — last summer due to a slowdown in sales. However, the company wanted to maintain their employment for the increase in volumes in Q4. Vermont Country Store eliminated its landscaping contracts, providing the hours instead to a group of CS and DC employees who took over the gardening and lawn maintenance. The company saved money, and found that its grounds were maintained better than using outside contractors due to the employees’ personal investment.
• Go shopping. Tough times provide opportunities for acquisitions, Miller said. In conversations with its vendors, Danforth Pewterers learned that it was doing well last year compared to others — even as it was slow in paying some of those vendors. So the company took this information and went shopping, acquiring a small business at a good value. Integrating fulfillment, marketing and business offices yielded immediate, and significant, contribution margin improvement, and the company expects the coming integration of manufacturing will bring even more. Even the lawyers who worked on the acquisition came at a reduced rate because of the slow times, Miller said.
• Capture email addresses in the call center. In an effort to remarket to customers via email, as well as provide email order and shipping confirmations to save on service recontacts, Gardener's Supply Co. implemented a program in early 2009 to up the number of email addresses it captured in its call center. It first explained the value of email addresses to its customer service reps (CSRs) — increasing the capture rate from 39 percent to 45 percent would increase sales by $200,000 — then set a goal for each CSR to increase their own capture rate. Everyone who surpassed 39 percent each week was qualified for a $100 monthly drawing. Last year saw Gardener's Supply post an end-of-year capture rate of 43.5 percent, and 2010 is trending 5 percent above the same period last year.
• Open up your books to all employees. Cuddledown holds an annual companywide meeting to go over the previous year's performance and initiatives of the coming year. A recent question from employees at that meeting — whether the company president has a private jet; he doesn't, by the way — revealed that often employees know very little about the financial positions of their companies. To help make the company's financial standing more transparent to employees, Cuddledown has begun distributing financial summaries at the end of each quarter, and requires all employees to sign off. The analysis is written so that it can be understood by all employees, regardless of their accounting background, and has resulted in better informed employees who now have a better understanding of why the company does or doesn't spend money.
• Convert to standard box sizes. J.W. Pepper used to believe that all of its product had to be shipped in boxes sized for the product, said Paynter. By switching to standard-sized boxes, the company was able to access cheaper boxes. This resulted in competitive procurement practices becoming easier, allowed for just-in-time delivery of those shipping supplies, and for the use of boxes which were easier and faster to construct, saving J.W. Pepper time and money.
• Renegotiate everything. When times are tough for retailers, it's likely that they're tough for vendors as well, Breckbill said. Down times present opportunities for real deals. Within the last year, Lehman's has renegotiated paper, printing, cardboard, small parcel delivery, bank fees, vendor product costs and in-bound freight contracts. Bid your catalog printing every year, and make sure that FedEx and UPS know that you're talking to the other one, Breckbill added.