Cheryl & Co.Bermudo | Pitoc | Tan

Case 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.

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.

Case Background

1-800-Flowers.com 5 Years Revenue Growth

2010 2009 2008 2007 2006

Total Net Revenues

$667.7M

$714M$739.2

M$725.7

M$584.8

M

Gross Profit

Margin39.8% 39.4% 42.2% 42.2% 40%

Source: 1-800-Flowers 2010 Annual Report

Case Background

As of December 31, 2010, Total Customers in 1-800-Flowers.com’s Database is 30 Million.

Cheryl & Co.’s share in the 30 Million list is 36% or 10.8 Million.

Source: 1-800-Flowers 2010 Annual Report

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 if 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)

Theoretical Framework

SWOT Analysis (Cheryl & Co.’s Direct Marketing Efforts)

STRENGTHS WEAKNESSES•Cheryl & Co. has access to 1-800-Flowrs.com Database (30M subscribers/customers)•Cheryl & Co. has constant database analysis to determine what products are best suited for their customers.•Cheryl 7 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.

THREATS OPPORTUNITIES•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 its 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

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.

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.

Action PlanActivity 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 AnalystProvide a list of potential customers that will fit the Cheryl&Co. target market profile.

E-mail Development 3 days Cheryl&Co. E-marketing departmentDeveloped e-mail template, content and trial promo offer.

Cross Promotion mechanics 2 days Cheryl&Co. Marketing deparmentCreate 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 teamAnalyzed open rates, bounce rate, unsubscribe rate and SPAM rate.

Data Analysis 3 days Cheryl&Co. Marketing DepartmentAnalyzed how many-purchased coming from the e-mail list and converted into a buying customer.

Cheryl & Co.Bermudo | Pitoc | Tan