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Sunday, January 29, 2012

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.


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 a 24% revenue growth rate from 2006 to 2007. According to the 2010 Annual Report of, the Revenues are as follows:

Total Net Revenues
Gross Profit Margin

Source: 2010 Annual Report

The merger also allowed Cheryl & Co. to tapped into the 30M customers of providing the company a bigger pool to expand their business.  Currently, they have 10.8M customers under the Gourmet Food & Gift Baskets category.


How can Cheryl & Co. expand their customer list by tapping into the database?

  • To increase Cheryl & Co.’s customer database from 10.8M to 15.3M by December 31,2012.


  • ·      The group will take the point of view of Cheryl Krueger, President and CEO of Cheryl & Co. LLC.
  • ·      The group will use’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 database.

Ishikawa Diagram (Cheryl & Co.’s direct and interactive marketing operations)
SWOT Analysis (Cheryl & Co.’s Direct Marketing Efforts)

·       Cheryl & Co. has access to 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 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’s business making it a lesser priority for promotions.
·       Customer Acquisition through’s database.
·       Increase the revenue share of the Gourmet and Gift services of
·       Social E-commerce as a potential channel for customer acquisition.

TAKEAWAY: There is an opportunity to become the biggest revenue contributor to the entire 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.


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 and become the largest revenue contributor for the entire

As a result, the following alternative courses of actions are being considered:

1.     Cheryl & Co. will perform data analysis on’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 list an email of Cheryl & Co.’s online catalog and offerings. 


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 database but also provide promotions that will encourage trial and eventually convert them into regular customers. 

  1. Cheryl & Co. will perform data analysis on’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. 


Time Frame
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 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) 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