It's in the Mail

Vermont's image breeds credibility and cash for mail-order companies.

by Virginia Lindauer Simmon

Vermont and New Hampshire have the highest proportion, per capita, of direct marketers in the country. Sound strange? At first blush, maybe. Shipping product would certainly be easier somewhere else. We're no transportation hub, at least compared to high-density areas like Los Angeles or Denver; but our states here in northern New England have something that money can't buy: a reputation for plain, old-fashioned values, hard work and quality goods. It's a set of characteristics that state economic development professionals have put lots of dollars and energy into marketing. Those who use it well translate it into hard cash for their companies.

We wondered how they do it. We also wondered what advice they'd have for entrepreneurs only now considering the leap into mail order. We called some of the profusion of Vermont companies that publish catalogs to find out.

Vermont Country Store, Manchester Center

"We'd have a hard time having a different address other than Vermont," said Bob Allen, president and CEO of the Vermont Country Store. "The Vermont address brings with it that sense that products are going to be good and that the company will stand behind its products like good Vermonters would."

Each issue of the Country Store's catalog opens with a Vermont-themed message from the company's owners, third- and fourth-generation storekeepers Lyman Orton and his sons Cabot, Gardner and Eliot. "Purveyors of the Practical & Hard to Find" is how the catalogs describe the products, which range from apparel, accessories, bath and bedding to shoes, furniture, kitchen items and toys. Old-fashioned items customers can't find anywhere else are featured: think Olivetti manual typewriters, Lifebuoy soap and Walnettos.

"We're about 90 percent direct mail and 10 percent retail," Allen said, adding that the direct mail number includes Internet sales, which have about doubled in the last year. "We're unusual in that we still get quite a few pieces of mail, where people put a check in or give us a credit card number and actually put a 37-cent stamp on it. Most people in our industry get no mail any more they get orders either over the phone or through the Internet."

The Vermont Country Store does not have a toll-free number for ordering, which is also unusual. "We've tested it many times and have never figured out how it would be beneficial from a customer standpoint."

Launching a mail-order catalog would be very tough these days, Allen said. "Certainly if somebody had a great idea, I wouldn't discourage them from doing direct mail, but the cost of entry into the business has gone up dramatically." He mentioned the three postal rate increases in the last 18 months.

"I've been at the Country Store for 20 years, and it used to be a lot easier to make money. You'd almost simultaneously have to look at a Web business, so in addition to developing expertise in mailing catalogs, you'd have to develop expertise in the Internet." He added that, while 20 years ago, there was a certain fascination with receiving a package in the mail, "I think today more people shop for price, so, again, it's gotten a lot harder."

Harrington's of Vermont, Richmond

The Vermont image "figures very big" in Harrington's marketing, said Carol Wisely, marketing manager for mail order. "We've been in mail order since the 1940s. The Harringtons felt that the Vermont label was important. Vermont had a feeling about it that people wanted to take away with them. It had a set of values. We've always used it, and many, many have copied us."

Harrington's mails its catalogs "to all 50 states, many times a year," said Wisely.

The Harrington's catalog focuses on its smoked meats, with its Spiral Sliced Party Ham as the centerpiece. The website is five seasons old and is increasingly successful for the company.

"You have to measure everything," said Wisely as advice to budding catalog retailers. "Every single piece of mailing you send out you have to count. Whenever possible, test what works; test it against something else; if it works better, carry on that way. Keep costs under control. You've got to make everything count."

Direct mail is wonderful, she said, "because it's a continuous daily opportunity to interact directly with customers. You can't ever get complacent about it. It's not like brand advertising, where you put it out there and say, 'Well, I think that worked.' With direct marketing, you know that worked."

Gardener's Supply Co., Burlington

"The way I see it, Vermont-made gives you an automatic advantage, but only for certain kinds of products," said Will Workman, catalog manager. "Otherwise, I think you still have to talk about the benefit of your products. They've got to be different or better in some way, and then Vermont will give you a little push."

Gardener's is primarily a mail-order company, having only one retail shop and one discount outlet. Products range from tools, clothing and decorative items for the garden to bulbs, from compost bins to greenhouses, from live, Vermont balsam wreaths to aromatherapy, from bath items and some food products.

"Our customers are about 50 years old on the average, two-thirds women and one-third men," said Workman.

Gardener's does an increasing business on the Web, which Workman said generates its own business rather than taking business from catalogs.

"The catalog business is a business of nickels and dimes," he said, when asked for tips to pass along to catalog wannabes. "You have to really understand production expenses, really understand product margin. It's very analytical, and if you don't understand that analysis, you don't have a chance. Twenty to 25 years ago, all kinds of people could start a catalog and see what would happen; but the market's matured now, and a lot of competition has arisen. If you want to make it, you have to be providing something nobody else has.

"Your view of your products has to be unique," Workman continued. "Take for example the Sundance catalog. They have a lot of exclusive products, but also a lot of furniture and household items, but they show them in that desert setting and grouped together, and you think, 'Boy, if I bought into the Sundance experience, it would make my whole house look like this.' It really shows you the way."

Dakin Farm, Ferrisburgh

"Vermont is our niche, our calling card," said Dakin Farm's owner Sam Cutting III, who runs the business his father acquired in 1960. "We've been working on brand identity and a new slogan Dakin Farm: What Vermont Tastes Like.

Cutting joined his father in 1980, and his desire was to dramatically increase the mail order business. "We really started investing heavily in it in 1981," he said.

"Vermont is our niche, our calling card."

Sam Cutting III

The company's catalog features its signature products: smoked meats, cheeses, maple products, preserves and mixes, along with other New England food traditions, such as an authentic French Canadian Meat Pie and a Vermont Style Quiche. Mail order has grown to be 50 percent of the business, including e-commerce, and 50 percent retail, which includes two stores and a new corporate program, for which Cutting has hired a full-time salesperson.

Cutting sees one of the basic rules of mail order as having to do with the "lifetime value of the customer. The initial sale, typically, is to build a relationship with a customer and not necessarily to make a profit off the bat," he said. "It is so important to do a good job with customer service, quality and shipping and also with follow-up to develop that relationship."

When a company places ads for its products, he said, "people don't have a relationship to you; they're looking mainly at price, so frequently you have to offer a very low price. The acquisition cost of buying an ad and buying this relationship is high. It's just so important to look beyond that first order."

To further the relationship, Cutting suggested segmenting the buyer files and mailing appropriately to the various segments. "The best customers should be treated specially, perhaps getting discounts on an ongoing basis."

Orvis, Manchester

"Vermont is certainly a large part of our business, not just to sell products, but something we live every day," said Corey Trimmer of the marketing department. "Because Orvis started here in Vermont 150 years ago as a fly-fishing company, we use that as the inspiration for everything we do. The lifestyle we lead and our travels abroad help us develop products and activities our customers enjoy."

Orvis catalogs are published by topic: for example, there's a catalog for hunters, one for fly fishermen, clothing catalogs for men and women, a gift and home catalog, even a "Dog Book." Catalog themes line up with the company's mission statement, which promises to provide customers with the "authentic products, knowledge, experience and services that define and support the distinctive country lifestyle ...."

While the company does not disclose information about what percentage of its business is mail order, Trimmer said it is "traditionally our leading source." Orvis has 27 retail outlets, including 11 in the United Kingdom, and an International Travel Service was launched in 1998.

Orvis boasts an award-winning website that's generating rising sales. "We think a fair amount of it is plus-business, said Tom Rosenbauer, vice president, "because a fair amount of people shop without using a source code," which would be found on a mailed catalog.

Rosenbauer responded quickly when asked for tips that might help aspiring catalog retailers: "Probably don't do it," he said. "It's not exactly the heyday of mail order." Most important is to do the math first, he added.

"I have a friend who started a mail-order hunting business. He had all the merchandising talent in the world, was terrific with vendors and knew how to get product, but he didn't know anything about direct mail, and he lost a bundle of money," said Rosenbauer. "He had one mailing list. There's no such thing as a mailing list."

The difficult thing is, he said, "somebody has a great little Vermont product and a great list of people who visited their store, so they mail to a list of 3,000 people, and half the addresses are bad, half the people never order through the mail, and there you are."

King Arthur Flour, Norwich

"Vermont does have a pull," said Shannon Zappala, media relations manager. "People think of Vermont and think of people who bake. It makes that 'homey time to bake' feel that comes across."

King Arthur, which calls itself "America's oldest flour company and New England's oldest food company," dates back to 1790. Fifty percent of its business is mail order, through a catalog that's about 12 years old, and Web sales. In 2000, the company built its own bakery and baking education center, and it considers itself a Vermont destination as well as a catalog retailer.

"We're part of a self-proclaimed triangle," said Zappala. "We hear so much about people coming up to do King Arthur, Ben & Jerry's and Cabot Cheese, and it's kind of fun to be part of that. We mention Vermont on our flour bags across the country." Some of the company's mixes have just been awarded the Vermont Seal of Quality, "and we'll feature that on our packaging, because that does speak of the Vermont quality," she said.

"The Baker's Catalogue" features flours, flavorings, pans, utensils, stoneware, oils, recipes and small appliances, such as a deep fryer, tortilla maker and griddle. The company's 100th catalog comes out this winter.

The first thing an aspiring catalog retailer should do is "contact the Vermont-New Hampshire Direct Marketing Group," Zappala said. "They're fantastic and great at guiding people starting out. They would be able to work as a networking resource." She recommended touring businesses similar to the one being considered. "The New England association is also wonderful," she added, "and their website could help guide people." Solid business experience is a must for anyone even remotely hoping to succeed, she said.

Cabot Creamery, Montpelier

"As far as the whole Vermont persona and ambience, I'd say Vermont's cachet figures into our success 100 percent," said Connie Bancroft, specialty sales manager. "People know Vermont not only for maple syrup, but for Vermont Cheddar so Vermont is important not only in our mail order, but as a company.

Cabot has been a farmers' co-op since 1919. In 1992, it joined with another New England cooperative, Agri-Mark Inc. Cabot cheeses, many of them award-winning, are sold from coast to coast in supermarkets and specialty shops. Because Cabot is part of Agri-Mark, sales figures are combined, said Bancroft, so "consumer mail order is less than 1 percent of the company's sales. That amounts to about $1 million, "pretty minuscule compared to the larger part of the business."

Cabot's catalog is small, seasonal and focused almost exclusively on Cabot cheeses.

"Our mail order is a very important part of public relations for Cabot," said Bancroft. "It's not just strictly for profit. If a consumer out there wants to get some cheeses they can't get anywhere else, we'll mail it to them."

"It's a real competitive and hard field to get into," said Bancroft on catalog sales. "We used to do it out of a corner of our warehouse until about three years ago. The problems are often so geared toward a short period of time, it's hard to gear up that labor force [call center and fulfillment personnel] and all the pieces that go with that for quick turnaround. We found that the way we were doing it was not being profitable."

Cabot outsourced its fulfillment to a Williston company, American International Distribution Corp. The benefit was that the company had a "nice, medium-sized call center with local Vermonters, just like the people we would want to hire, so we still have that 800 number going into this nice, friendly Vermont atmosphere, and they're efficient and can do it for a much cheaper price during the holidays."

Bancroft stressed having a handle on the fulfillment end of things "and the Web. Half our business goes through the Internet. So tips are: Really look at the operation efficiencies; research that through; and if you're big enough, look at someone who does UPS handling, and you focus on the sales and marketing."

Originally published in December 2002 Business People-Vermont