Expanding into field and phone sales boosts first-quarter results
Business-to-business mailers that are beefing up their outbound telemarketing and field sales teams thrived during the first quarter of the year. Of the 18 publicly traded b-to-b and computer catalogers tracked by Catalog Age, 14 – or 77% – benefited from a rise in sales.
“Putting salespeople directly in contact with clients is paying dividends for many of these business-to business and computer catalogers,” says Jim Adams, managing director of Boston-based investment bank Ulin & Holland.
Merrimack, NH-based computer cataloger PC Connection is one company that attributes its first-quarter success to its growing outbound sales force. Thanks largely to a 75% boost in outbound sales staff, to 456 people from 260 last year, the catalog saw its first-quarter revenue rise 45%, to $326.1 million from $225.0 million. What’s more, earnings skyrocketed 61%, to $7.1 million from $4.4 million a year earlier. And the average order size jumped from $626 last year to $926.
“Outbound sales is becoming a larger share of our business,” says Matt Cookson, director of public affairs for PC Connection. “More than 85% of our business is to small and medium-size businesses, and the clients really like the face-to-face aspect and the accessibility that this kind of selling offers. And as these customers get more technologically savvy, they are buying more. For example, some of these businesses are now starting to buy servers from us.”
Although Groton, MA-based business forms mailer New England Business Service (NEBS) posted a scant 2% rise in sales, to $117.4 million from $115.0 million, its net income jumped 20%, to $7.4 million. Like PC Connection, the company credits its sales force with its improved bottom line. NEBS had acquired rival business forms marketer McBee Systems in May 1998 largely for its 300-person sales team, which covers the U.S. and Canada.
Outbound telemarketing sales, along with Internet sales, enabled desktop telephony tools marketer Hello Direct to more than offset a drop in catalog sales that followed an 8% cut in circulation. Overall revenue for the San Jose, CA-based cataloger was $23.7 million, up 22% from $23.6 million a year prior. The average order size increased 21%, to $320, and net income nearly doubled, from $891,000 to $1.2 million.
Looking beyond outbound sales
Outbound and field sales weren’t behind every cataloger’s success, however. For instance, sales at Moorestown, NJ-based Wilmar Industries, which sells housing repair and maintenance products, climbed 55%, from $48.7 million to $75.7 million, but that was due primarily to its December 1999 acquisitions of rival suppliers J.A. Sexauer and Trayco of South Carolina.
And then there were several catalogers that had little cause for celebrating during the quarter. Of the three companies that ended the quarter in the red, Torrance, CA-based Creative Computer had the biggest loss. The company, which changed its name to IdeaMall in May, posted a first-quarter loss of $6.8 million, nearly three times as much as the $2.3 million loss it suffered during the first quarter of ’99. The increased loss came despite a 35% boost in net revenue, from $176.3 million to $238.5 million. The company blamed the loss on its start-up subsidiaries, eLinux, a Web-based portal for Linux users, and eCost, a Web retailer of computer products and services.
Profits at Sport Supply Group plunged from $3.0 million to $1.0 million on a 2% dip in sales, from $35.4 million to $34.8 million. The cataloger, which sells sports equipment to schools and other institutions, attributed its downturn to an increase in backorders. According to the Dallas-based company, this resulted from customers ordering later in the quarter and buying more drop-shipped items, such as bleachers.