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How My Company Grew

Lillian Vernon



Business is a subject close to my heart. Forty seven years ago, I was an expectant mother with two thousand dollars to gamble on a new idea. In fiscal year 1998, Lillian Vernon posted sales of over $258 million dollars.

I can only marvel at what my doctor never told me about the consequences of pregnancy.

Today I will tell you a bit about how Lillian Vernon grew…and more importantly, why. I’m going to explain my effort to fuse the entrepreneur with the professional manager.

Some people say the two cannot mix, but I consider their interaction a marriage made in heaven. I try to use the best of both in the Lillian Vernon of today.

To put things into perspective, in the past I first thought my success was based on luck…the right idea at the right time. I designed a belt and a purse, and monogrammed it with my customer’s initials, free of charge. I paid $495 for an ad in Seventeen magazine and received $32,000 in orders in 12 weeks. This certainly beat my friends odds at cards, so I tried again with a personalized bookmark…and sales more than doubled.

After a while, it happened too often to attribute to mere good fortune. In 1970, Lillian Vernon posted sales of a million dollars! A million dollars may not seem like a huge amount today, but it was beyond my wildest fantasies when I wrote my original ad.

By the time I hit the million mark, I considered myself more than just lucky. The word entrepreneur was rarely used outside of French class, but that is what I was and what I still am today!

I make quick decisions. I take chances relying on what I consider my golden gut. I try to keep my catalogs creative, giving my customers the proverbial offer they can’t refuse. And most importantly, I keep my fingers on the pulse of my company.

In the early days, it was my only choice…there was nobody else to do the work. During the day, I mailed out the merchandise, and at night, I worked at home doing financial analysis. Even after the business was established, I seemed to hang on to most of the responsibilities.

I did all the buying and wrote the catalog copy…tried to do it all. It worked pretty well for the first half of my career.

But things changed after that million dollar year in 1970. I couldn’t do it all. Not only was there too little of me to go around, but I was facing a harsh reality.

Growing from a million to a multi-million dollar company involved areas such as finance, list management, computers, large-scale fulfillment– realms that were beyond my expertise. To me, M.B.A. meant make better assessments.

So I did what needed to be done and did it quickly–I acted. I tried to cover my shortcomings by surrounding myself with experienced veterans of large corporate cultures, usually from outside the direct marketing industry. There were so few experienced direct marketers in the early 1970s that I filled my ranks with managers from all different walks of life who generally were very savvy to the ways of big business, and they almost killed us.

I don’t want to generalize, but some of the executives I hired just couldn’t make a decision. They took analysis to the point of paralysis. Every major consideration had to first be studied by a committee.

I hate more than anything to wake up and find that one of my competitors is already doing something that I was planning on.

Part of being an entrepreneur is learning from your errors. My mistake was not in hiring professional managers, it was letting them work in a non-entrepreneurial fashion.

Which brings us up to the present, and how we run Lillian Vernon today.

If I’ve learned anything over the past years, it is the importance of drawing from the best qualities of both the entrepreneur and the professional manager. These are the left and right sides of the business brain, and they must harmonize in a healthy corporation.

Decision making at Lillian Vernon has always been–and continues to be entrepreneurial. The spirit of the entrepreneur has controlled all my major moves.

First I decided to launch a catalog when the field was controlled by well-established giants. Secondly, we increased the number of catalogs from two per year to our current 29 editions. We decided to source products from China while Nixon’s footprints were still warm from his groundbreaking visit. We built our national distribution center in Virginia Beach in 1988–even the recruitment of professional managers. All of these decisions were made without looking back.

In each case, I got the facts … let them fly … then let it be. I agree with a definition of a committee–a group who takes minutes and wastes hours. How many truly successful committees have you worked on? Committees usually don’t provide you with information as much as they insulate you from it.

You don’t need a weatherman to tell you which way the wind is blowing. You do need to gather the important information, act on your best judgments, acknowledge and correct any mistakes.

In direct marketing, thou shall know thy customer is certainly one of the ten commandments for survival. But unlike our competitors, we take a very tactical approach in making their acquaintance. We don’t spend twenty thousand dollars on formal market research to predict a products success. We use space in our catalog to do the same thing. At the very worst, the product bombs. Yet, even then, we only lose a few thousand dollars.

At best, we have a popular new product out in the selling arena, while our competitors still have it in their research files. It’s an entrepreneurial approach and one that works. About eighty-nine percent of our products make money.

Lillian Vernon’s operating environment is very entrepreneurial. Though our business has multiplied in recent years, I’ve kept our management team lean. We are probably one of the few organizations our size to operate with a senior staff consisting of a president and fourteen vice presidents.

I am available whenever they want to discuss anything, but I leave most of the departmental decisions to them. In the beginning I felt like I was sacrificing my career … but it made sense. I encouraged my staff to act on the good instincts I hired them for and keep me posted on their activities. There’s nobody to second-guess their decisions or filter information before it reaches my desk. There is nobody to cover up their mistakes. Entrepreneurs must stand or fall on their decisions … and if one of my employees consistently cannot do that, we must part company.

I’m sure this hardly strikes you as a breakthrough in effective management, but think about the number of large corporations that don’t operate this way. They shuttle an underperforming employee through several departments.

But if Lillian Vernon has marched to the beat of an entrepreneurial heart, I know that it must be tempered by a managerial head if we are to continue to grow.

My managers are as important to me as my customer list. They have the expertise I lack. They provide invaluable advice and information. At first, they were a necessity. Now, they are priceless. Thanks to the professional managers, I get informative monthly reports on every aspect of our business.

Using the latest computer technology, our financial and list management experts can pull together data I would never have otherwise imagined to help make better entrepreneurial decisions.

We have frequent strategic planning sessions. This was a great leap forward considering my immediate goal used to be to remain solvent and sane.

Mixing entrepreneurs and managers the oil and water of business, is not only possible and profitable, but it’s also fun. Both sides learn from the other and grow both as individuals and together as a team.

To those of you who make your careers in business, I’m not being overly optimistic in forecasting a bright future for those who can leverage both entrepreneurial and managerial talents.

Our business will continue to grow in the foreseeable future. Our service improves all the time, while it continues to deteriorate in retail stores. In the past three years, retail sales have increased at a much slower annual growth rate than mail order sales.

There is a glut of catalogs currently on the market–you only have to check your mail to realize how many of us want your business. We are bound to see some direct marketers fall by the wayside especially in today’s business environment and with the fluctuating prices in paper and postage. The ones who best manage their growth and provide consistent service over a period of time will be around in the long run.

Direct mail is so much more competitive than it was when I started with a purse and a dream. These days, we have to approach potential customers with an entire line, a solid marketing plan. And we have to stay on top of a million details … many of which happen after the sale.

Professional management becomes crucial. If an employee misspells the name on a child’s coat rack, we better be as concerned about it as the child’s mother. As soon as we ease up on the details, we will be wondering why our orders disappeared.

To those of you in a position to invest or start a business, give your entrepreneurial spirit a chance. It’s one of life’s ironies that the more you can prove that you don’t need a loan, the better your chances usually are of getting one. This is especially true for start-up businesses.

When I needed money to buy my first major warehouse facility in 1972, my bankers asked about my tangible assets. But my biggest asset, then and now, is intangible. It is my list of over 19 million catalog buyers, and it is far more valuable than anything else Lillian Vernon owns.

Some bankers were ready to show me the door. They didn’t understand that this list, not bricks and mortar, was my guarantee of future profits. Our research shows that customers on our house list buy twice as much merchandise from our catalogs as the average customer on a rental list. In other words, that long list of names translates into very healthy profits on the bottom line.

Lillian Vernon has taught me a lot over the years, but nothing more than good old-fashioned common sense. I try to use common sense in all of my decisions–perhaps common sense is the core ingredient in the entrepreneur.

For years, my friends ask why I am still so involved in merchandising now that the company is so big. No one can pick a product, approve a transparency, or make a piece of copy sing like a born merchant with good common sense. That is the force behind my catalogs–the common sense way with product, picture and words, and with management!

So plan your hunches and use your heads and mix in a heavy dose of common sense.

I’d be happy to answer your questions.



Copyright 1998 by Lillian Vernon. All rights reserved.



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