Decorative flags may adorn the outside of many U.S. households today, but back in 1984 they covered Pam Stewart’s kitchen table. Stewart’s flag-making hobby soon became a hit with her neighbors — her first customers — and she formed Flag Fables, drafting a pamphlet to market her flags at craft shows in small towns near her hometown of Springfield, MA.
As demand for the appliqué flags increased, in 1988, Wendy Diamond purchased the company from Stewart. Diamond produced the company’s first color catalog in 1990 and has grown the business by prospecting through space ads in publications such as Yankee and Country Sampler magazines. She tested list rentals from upscale gift catalogs in the mid ’90s but while Flag Fables’ buyers are predominately upper-income females, the lists proved too broad for the decorative flags niche.
The company has had greater success with the Shop at Home catalog request vehicle. Flag Fables pays Shop at Home a commission for each prospect who requests a catalog. The conversion rate of prospects to buyers is higher than that of rented lists, Diamond says, and the cost is less.
The Internet is another growth vehicle for Flag Fables. It launched a nontransactional site in 1997, which it made transactional in 1998 and then redesigned in 1999. Diamond made sure to register the company with search engines such as Yahoo! to direct potential buyers to her Website. “In 2000, Web sales accounted for 10% of our total sales yet required less than 10% of our total budget,” she says.
In the years since Diamond bought Flag Fables, everyone from discount retailers such as Kmart and Wal-Mart to other catalogers have started selling decorative flags. But Diamond says she doesn’t fret about the increased competition: “These marketers only increase the popularity of decorative flags and that benefits us.”
Flag Fables, Springfield, MA
Annual sales: $1.2 million
Annual circulation: 175,000
Number of pages: 32
Trim size: 8-1/2″ × 11″