Seeds of Change

By SmallBusinessComputing Staff | Posted June 01, 2000
by Angela R. Garber

Organic farming is nothing new, but in a society that favors high yields over environmental concerns, it has long been considered part of the "fringe." But now, as consumers start questioning the use of pesticides, herbicides, and genetically engineered foods, demand for organic products is growing rapidly. And for a farmer willing to invest as much in business technology as in agricultural technology, the payoff can be huge.

Johnny's Selected Seeds has been a seed breeder and merchant in Albion, Maine, since 1973. The 110-person company (75 full-time plus seasonal support staff) operates its own organic trial and research farm for seed production. Johnny's grows, breeds, and evaluates more than 4,000 new and experimental varieties of seeds each year. It sells these seeds ­ as well as garden tools and accessories ­ locally in a retail store, and nationally and internationally through a catalog and Web site. And with $8.3 million a year in revenues, it has done so successfully.

Johnny's relies on direct mail marketing ­ catalogs, post cards, promotional advertisements, and seasonal mailings ­ to promote its business. Thanks to direct mail software, some clever programming, and now the Internet, direct mail has gotten a whole lot easier, cheaper, and more effective.

Getting It Out The Door
Janet Dawes has been at Johnny's for 12 years, and as systems operator she's well acquainted with the direct mail process. Until about four years ago, the staff would print out the mailing list, affix the mailing labels, and send them out the door as third class mail. There was no easy way for Johnny's to check for duplicates, group and sort the list by postal codes, or do any of the other seemingly minor tasks that help companies get a break from the post office.

Then Johnny's purchased Mailers Plus4, postal automation software that processes mailing lists to meet all U.S. Postal Service regulations and to earn maximum postal discounts. It works in conjunction with Johnny's existing customer database that includes not only a name, address, and phone number for each customer, but also a complete order history, information about how each customer came to Johnny's, and a list of mailings each has received.

The mail program checks to make sure addresses are complete and include zip codes with the four-digit carrier route code. It also adds bar codes to expedite the mail. "The post office has to do a lot less work, we get a price break, and it allows the customer to get our catalog just that much faster," says Dawes.

When Johnny's does a mailing there are times when the same name and address or household might pop up more than once. Additionally, customers may move and forget to let Johnny's know. And as municipalities change and standardize addresses to work with the new 911 emergency system, old addresses may no longer be accurate. All of these errors can be costly for Johnny's.

"I had no way to check for and remove duplicate names before, so it cuts down on costs by doing that,"says Dawes." And Mailers sends us a CD-ROM every three months to give all the up-to-date information from the post office [for the new] 911-enhanced addresses. We just need to insert the CD and it overwrites what was out there."

Every six months Dawes sends the list to be NCOA certified ­ a program offered in conjunction with the post office to give companies new address information for postal patrons who have moved and filled out forwarding address slips. "Before we had to send it to a separate company altogether," she says. "Now it's just one option on the Mailers screen."

The software also gives Dawes the option of setting geographical parameters for a mailing ­ something that comes in handy, particularly when organizing mailings specifically for the retail store. "We can select any listing within a 25-mile radius of our retail store," she says. "Before we could only select a group by zip code, and we might not have gotten all of them."

Raking It In
Dawes says MailersPlus4 has saved the company a lot of time and money in the physical creation of lists, and in the cheaper postage rates and removal of clutter from the mailing list. In fact, on a recent mailing of almost 400 catalogs, she calculated savings at $430. But while an automated mail program might save money for a company, it can't make money for the company. And that's where the "marketing" part of "direct mail marketing" comes in.

"[Active] customers get an annual catalog. And [we send] seasonal mailings additionally," says Robert Johnston, Jr., founder and chairman of Johnny's Selected Seeds.

But, says Johnston, in order to determine whether those special mailings are successful or if they need to be re-evaluated, they must be tested. For each mailing that Johnny's sends out, it must hold back a control group for comparison. "Otherwise, sure it's nice to have the mailing go out, but you also need to know if it was worthwhile to do the mailing," adds Dawes.

"If we're going to mail out to 20,000 customers, I will keep 5,000 as a test group and we won't mail the piece to them," says Dawes, who codes each mailing and each group within the customer database. "As orders come in, we can track progress throughout the year and even next year."

There are programs out there that are created expressly for the purpose of analyzing customer response to direct mail marketing, but Johnny's worked with an internal programmer to customize its existing customer database to perform the same functions. Dawes can pull up any combination of the mailing codes and track sales generated from them.

For the most part, it's simple statistical analysis. But Johnston cautions against what he called taking a "dumb-dumb perspective" of simply relying on statistics and the computer to tell if the mailing was effective or not.

"You definitely need to have a good sample size to find the variance of distribution, and to get an acceptable standard deviation," says Johnston. "But you also have to have the perspective that if the numbers look koo-koo, you have to actually look at them and say, 'maybe there's something really throwing it off.' "

On The Net
Not surprisingly, Johnny's added the Internet to its sales and marketing arsenal in 1995, and it has been a boon for business. It has also helped cut some direct mail marketing costs, such as the cost of sending out catalogs to some new customers, as well as employee time and the error risk of keying in orders that might otherwise come in through the mail or phone.

Traditionally, most new customers have heard about Johnny's through advertisements in magazines or by word of mouth, and the only option for getting a catalog was to call Johnny's and request one. Now that the catalog is on the Internet and customers can place an order right on line, Johnny's doesn't have to go to the expense of sending out paper-based catalogs to each prospective customer.

"We have a lot of people come to us through an [Internet] order," says George Stone, director of Information Services and Finances, as well as the resident Webmaster, "which obviously isn't costing us a catalog. And I would say probably a third of the Internet orders are brand new customers."

All of this automation has not only helped Johnny's to send more effective direct mail pieces more efficiently and to get new customers, but it has also helped them improve customer service and retention. And as Rob Johnston says, "It's just as important to keep our present customers as it is to get another one."

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