Case Analysis: Cheryl & Co.
This is a case analysis for my Direct Marketing class and it focuses on how direct and interactive marketing helped make this startup company turned into a multi-million dollar company.
Cheryl & Co.
COMPANY BACKGROUND
Cheryl & Co. is a multi-faceted business comprised of
retail stores in Ohio, a high-traffic Internet business and a successful
Business Gift Division, all headquartered in the Columbus suburb of
Westerville, Ohio. A 2005 merger enabled Cheryl & Co. to become part of the
1-800-Flowers Family of Brands while maintaining the company’s mission to
provide the finest fresh-baked gifts and desserts. The company’s four divisions
are Retail (11%), Wholesale (10%), Business Gift Services (23%) and Internet
(56%) with the Internet business as the rapidly growing channel.
The merger gave 1-800-Flowers.com a 24% revenue growth rate
from 2006 to 2007. According to the 2010 Annual Report of 1-800-Flowers.com,
the Revenues are as follows:
2010
|
2009
|
2008
|
2007
|
2006
|
|
Total
Net Revenues
|
$667.7M
|
$714M
|
$739.2M
|
$725.7M
|
$584.8M
|
Gross Profit Margin
|
39.8%
|
39.4%
|
42.2%
|
42.2%
|
40%
|
 |
| Source: 1-800-Flowers.com 2010 Annual Report |
The merger also allowed Cheryl & Co. to tapped into the
30M customers of 1-800-Flowers.com providing the company a bigger pool to
expand their business. Currently, they
have 10.8M customers under the Gourmet Food & Gift Baskets category.
STATEMENT OF THE
PROBLEM
How can Cheryl & Co. expand their customer list by
tapping into the 1-800-Flowers.com database?
OBJECTIVE
- To increase Cheryl & Co.’s customer database from 10.8M to 15.3M by December 31,2012.
AREAS OF
CONSIDERATIONS
- · The group will take the point of view of Cheryl Krueger, President and CEO of Cheryl & Co. LLC.
- · The group will use 1-800-Flowers.com’s 2010 Annual Report as a basis for the 2012 strategy and execution plan for Cheryl & Co.’s customer acquisition program.
- · There is no change in the total number of customers in 1-800-Flowers.com database.
THEORETICAL FRAMEWORK
 |
| Ishikawa Diagram (Cheryl & Co.’s direct and interactive marketing operations) |
SWOT Analysis (Cheryl
& Co.’s Direct Marketing Efforts)
STRENGTHS
|
WEAKNESSES
|
·
Cheryl & Co. has access to
1-800-Flowers.com Database (30 Million subscribers/customers)
·
Cheryl & Co. has constant database
analysis to determine what products are best suited for their customers.
·
Cheryl & Co. has a unified front for their
entire multichannel marketing campaigns.
TAKEAWAY:
Cheryl & Co. practices good database analysis to provide the best
products and services tailored fit to their buyers’ need.
|
·
Decrease of customer list due to poor data
hygiene.
·
Since the Gourmet and Gift category of
1-800-Flowers.com accounts for 36% of the entire business, the level of
priority for dispatching their sales tool (emails and direct mails) are
geared towards their floral business making Cheryl & Co. a lesser
priority.
TAKEAWAY:
Cheryl & Co. is not the biggest contributor to 1-800-Flowers.com’s
business making it a lesser priority for promotions.
|
OPPORTUNITIES
|
THREATS
|
·
Customer Acquisition through
1-800-Flowers.com’s database.
·
Increase the revenue share of the Gourmet and
Gift services of 1-800-flowers.com.
·
Social E-commerce as a potential channel for customer
acquisition.
TAKEAWAY:
There is an opportunity to become the biggest revenue contributor to the
entire 1-800-Flowers.com business through acquiring the existing customer
list of the other subsidiaries.
|
·
Decrease of active customers/subscribers due
to non-relevancy of the things they receive via direct mail or email.
·
Social E-commerce is prone to negative PR
since social networking has the ability to damage a brand’s image at a faster
rate through it’s viral capabilities.
TAKEAWAY: Since Cheryl & Co.’s list of customers
are also being shared by other companies, there is a threat of losing active
customers because they will also receive promotions from other brands they
did not subscribe to and might end up being marked as SPAM and cancel their
subscriptions.
|
ALTERNATIVE COURSES
OF ACTIONS
Using
the Ishikawa Diagram, it has been found that the major success for Cheryl &
Co.’s direct and interactive marketing operations belongs to the Internet
Business division, which accounts for 56% of the entire business. It has also
been determined as the fastest growing channel of the company. Having that insight shows that the strategy
and tactical programs that needs to be developed should gear towards supporting
the Internet Business division while maintaining the business in the other
sectors.
The
focus of the SWOT analysis is to further analyze what contributes to the
success of Cheryl & Co. in terms of direct marketing and how the internet
channel would help increase their market share and therefore increase their
revenues. The way to do this
strategically is to cannibalize the customer list of 1-800-Flowers.com and
become the largest revenue contributor for the entire 1-800-flowers.com.
As a
result, the following alternative courses of actions are being considered:
1.
Cheryl & Co. will perform data analysis on
1-800-Flowers.com’s database and extract a subscriber list based on purchasing
behavior and execute a cross promotion campaign to penetrate and encourage
product trials using E-mail as the medium.
2.
Perform mass communication by sending everyone
in the 1-800-Flowers.com list an email of Cheryl & Co.’s online catalog and
offerings.
RECOMMENDATIONS
Since
Cheryl & Co. is known to have a solid data analysis program integrated in
their business model, the best way to achieve the objective of expanding the
customer list would be alternative action #1. This will not only target the
right audience in the 1-800-Flowers.com database but also provide promotions
that will encourage trial and eventually convert them into regular
customers.
- Cheryl & Co. will perform data analysis on 1-800-Flowers.com’s database and extract a subscriber list based on purchasing behavior and execute a cross promotion campaign to penetrate and encourage product trials using E-mail as the medium.
ACTION PLAN
Activity
|
Time Frame
|
Assignees
|
Feedback Mechanism
|
Data
Extraction
|
1
day
|
1-800-Flowers
Database Manager
|
Provide
excel document listing all potential customers with complete information,
mailing address and items they purchased through the 1-800-flowers.com
website
|
Data
Analysis
|
1
Week
|
Cheryl&Co
Business Analyst
|
Provide
a list of potential customers that will fit the Cheryl&Co. target market
profile.
|
E-mail
Development
|
3
days
|
Cheryl&Co.
E-marketing department
|
Developed
e-mail template, content and trial promo offer.
|
Cross
Promotion mechanics
|
2
days
|
Cheryl&Co.
Marketing deparment
|
Create
promo that will induce trial (i.e. Free Shipping, 20% off, BOGO-Buy One Get
One)
|
E-mail
Dispatch
|
30
days (1M subscriber per day)
|
1-800-Flowers.com
Email Dispatch Team
|
Email
Dispatch Report (success rate and total failed messages)
|
E-mail
Analysis
|
2
days
|
Cheryl&Co.
e-mail marketing team
|
Analyzed
open rates, bounce rate, unsubscribe rate and SPAM rate.
|
Data
Analysis
|
3
days
|
Cheryl&Co.
Marketing Department
|
Analyzed
how many-purchased coming from the e-mail list and converted into a buying
customer.
|
This is my entire case presentation in PowerPoint slides:
Cheryl & Co Case Presentation
View more presentations from Nj Lopez-Tan.
Credits to my awesome groupmates: =)
Mark Pitoc
Gen Bermudo
Gen Bermudo
0 comments: