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Does Sun, Burned by Competition, Need a New Business Model?
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Blossoming Relationship
The Wharton Small Business Development Center matches local florist with student consultant to yield a bouquet of new marketing ideas.
Bruce Robertson knew he needed to market his family's chain of flower shops better. He just wasn't sure how. Which is what motivated him to call the Wharton Small Business Development Center.
The Wharton SBDC offered Robertson the assistance of Todd Herrold, one of more than a dozen MBA-candidate consultants working for the SBDC. The Wharton center is one of 15 state-sponsored SBDCs, all of them located at educational institutions Wharton's is housed at the school's Sol C. Snider Entrepreneurial Research Center.
"We provide a way for students and professionals here at Wharton to help small businesses grow and get better," the Center's Director Therese Flaherty explains. "We leverage the school's knowledge and students' skills."
The Wharton SBDC dispatched Herrold to Robertson's Flower's main office and greenhouse near Philadelphia's Chestnut Hill neighborhood. The company, started in 1927 by Robertson's grandfather, also has three flower shops, including one in Chestnut Hill.
Lisa Roth, who works at Robertson's, remembers Herrold's first visit. "Todd sat here," she says, pointing at the big table in the company's conference room. "He pulled out his laptop, asked questions and typed and typed and typed. Then I took him to our stores, and he asked a lot more pointed questions." Before he left that day, Herrold promised Robertson and Roth that he'd have a report and marketing recommendations for them in a month.
Early on, Herrold had learned that Robertson wanted advice about advertising — how much to spend and where to do it. But Herrold sensed that Robertson's wasn't quite ready to take that step.
"I pulled them back, as often we have to do with entrepreneurs," he says. "They knew they had longstanding relationships with many customers, but they didn't know the value of different customers segments, the amount of revenue they produced or the frequency with which they ordered."
He'd asked for a copy of Robertson's customer database and, when he got back to Wharton, started to analyze it. "They'd been collecting all this information but they hadn't done anything with it. They had a wealth of information that was underutilized."
As Herrold crunched Robertson's numbers, a predictable pattern began to emerge: A small group of customers accounted for a disproportionate share of the company's sales. "Their top 18 customers made up like 50 percent of sales," he says.
As promised, Herrold returned to meet with Robertson and Roth a month later to present his findings in a booklet and propose steps they could take to improve Robertson's marketing.
"Todd had organized our customers into platinum, gold, silver, bronze and dogs," Roth says. "He also told us that four-time buying was the key to our keeping customers, that each time somebody buys from us our chance of losing them goes down 10 percent."
That led Robertson's to create "flags" in its computer system that indicated when a platinum customer was on the phone line.
Herrold also analyzed the zip codes from which Robertson's was receiving orders. That, too, produced surprises. Despite having no stores in Center City Philadelphia, for example, the company gets plenty of orders from there. That has led Bruce Robertson to consider opening a store there in hopes of serving the existing customers better and generating even more orders from the area.
Herrold says he learned as much from Robertson's as Robertson and Roth did from him.
"I brought the analytics, but the clients teach us in terms of the experience of what it takes to be an entrepreneur, both professionally and personally. Working at the SBDC gives you a clear idea of the risks and reward of running your own business."
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