Direct Marketer of the Year Grolier's Dante Cirilli (3,801 wor
Was it fact or rumor, I asked Dan Cirilli, inquiring as to the truth of tales I had heard that he started out in the mail room at Grolier. Cirilli's response: "I grew up in the Bronx and attended the New York School of Printing, a special high school teaching the graphic arts. I then went on to City College at night. It was Robert B. Clarke, an important figure in the history of direct marketing who was executive vice president of Grolier at the time, who hired me, and yes, it was to work in the mail room!"
On his first day, Clarke promised the young Dante Cirilli: "In six months if you work out, I'll take you out of the mail room."
Cirilli remembers that it was, "six months to the day" when he was brought out of the mail room. It was an exciting time at the organization, Cirilli recalls, noting, "What had happened at that time was that Elsworth Howell, president of what was then Grolier Enterprises, had gone out and gotten the rights to Dr. Seuss. When I was brought up from the mail room, I was put on that project—the new Dr. Seuss Beginning Reader Program."
As Cirilli recounts it, "This was the first time a good children's book club was launched in the mail. There were a lot of small book clubs at the time, but none had achieved critical mass. We were getting 10- to 15-percent responses in those days."
Four Decades Later ...
That was almost 40 years ago. Today, Cirilli is president of the largest direct marketer of children's book programs. Somewhat surprisingly, he says, not much has changed in terms of how book clubs are marketed. "We used standard offers like three for the price of one, shipping one book a month. Now we may do eight for one. But it's still essentially the same business."
Since the days back in the early 1960s when it launched that first kids' book club, Grolier Direct Marketing's primary focus has been in the development and marketing of continuity book programs directed primarily to families with young children. In addition, Grolier Collectibles develops and markets collectibles and gifts such as ornaments, figurines and plates. All of the organization's advertising is direct response—primarily through solo and co-op direct mail and telemarketing—and results in more than 1 billion targeted impressions to consumers each year.
And all that direct marketing certainly pays off: Grolier Direct Marketing's 1998 revenues totalled $325 million, accounting for more than two-thirds of Grolier Inc.'s total revenues. (In 1988, Grolier Inc. was bought by Hachette, the French printing and publishing giant. Subsequently, Hachette was merged into Matr and is now referred to as Lagardere Group, an $11 billion company.)
Thinking on what he has accomplished at Grolier over the years, Cirilli is quick to make this observation: "If there's one thing I've learned in my career, it's that no one does it alone. Recognizing good people is something I've done throughout my career. And they've been instrumental in our success."
When Grolier first got involved in direct marketing, Cirilli was working on the operations side. "I was the low-level person at the time," he says, "and every thing was done manually in those days. We took on 300,000 orders a season, so I was working 10- to 12-hour days. And I did it all: I processed orders, I processed the mail."
By the time Cirilli had gotten his training from the ground up and was named as vice president of fulfillment operations in 1973, Grolier was phasing itself out of the door-to-door encyclopedia sales business and focusing more on direct mail. Cirilli says, "We were marketing four or five product lines, including children's continuity book programs back then."
Grolier also marketed some other products aimed at different markets, and not everything it tried in those days succeeded. In the 1960s, for instance, Grolier tried a Dress of the Month Club to sell house dresses. In the 1970s, it was a Nylon of the Month Club. Then there were a catalog of Galloping Gourmet Pots & Pans and a Dr. Joyce Brothers book club, neither of which currently exists.
Regardless of the product being sold, Cirilli's fulfillment position kept him in constant touch with the company's customers. "I was involved in processing orders. I would see and hear first-hand what our customers were saying," he says.
Around that time, Cirilli says, "The federal government started to get really involved in regulating consumer affairs." He notes, "As a result, I became very involved in consumer affairs. So we spent a lot of time improving our response to customers. We'd take what they were saying and share it with marketing. We started to focus on understanding the customer." Cirilli subsequently developed processes to monitor Grolier's customer service. This was his first foray into the world of marketing.
The Move Into Marketing
How did Dan Cirilli make the move from handling orders and customer service issues on the fulfillment side to creating and selling product on the marketing side? He created a new product himself.
Cirilli recalls the situation that led to the launch of a Grolier Yearbook back in 1976:
Everyone was hogwild celebrating the bicentennial. Grolier was not doing so well at the time. The catalog division we had back then went out of business and almost took the whole company with it. I thought I had an idea that might help make some quick bucks: a bicentennial yearbook. I went out and found a publisher that had such a book: each year from 1776 to 1976 had a page describing its history. I sold the idea to the company.
We published the product, binding it to match the encyclopedia set. It pulled huge numbers, around 20 percent, and brought in $3 million in sales at a very high profit. Bob Clarke was so thrilled he sent me and my wife to Acapulco. I was a hero.
In hindsight, Cirilli says that the product could have been marketed even more aggressively—and made a lot more money, too. "But," he laments, "we were a very conservative company at the time."
The Yearbook helped temporarily boost the company's numbers, but two years later, Grolier was still in trouble.
Bob Clarke, who by then was Grolier's president, knew a lot of people at Time-Life, which was having great successes in telemarketing at the time. Cirilli recalls, "Our marketing people were just playing with telemarketing. Clarke made a deal with Time-Life's Joan Manley, president of the book division at the time. She decided that since we weren't direct competitors it would be OK to help us out, especially since it would be a negative blow to the entire publishing industry in New York if Grolier were to go under."
The deal Time-Life laid out was this: "We'll let you send one person to visit our Alexandria telemarketing center for one day. This person may not take notes but may observe everything going on from hiring and training to scripts and calling."
Cirilli was the person chosen to go. "I went down there and spent the day taking it all in, everything I could see and observe, asking questions. Then instead of coming back that evening, I spent the entire night in my hotel room writing down as much as I could remember."
When Cirilli came back with all the information he could glean from the trip, Clarke appointed him to set up a telemarketing operation at Grolier. Within two years, the telemarketing center was up and running and making 10 million calls annually.
But before one call was made, Cirilli wanted to be sure it was done right. He says, "We developed a procedures book. We were going to use the basic principles of direct mail, including the way we'd judge our own success. Unlike other telemarketing operations, we would look at a list and judge its effectiveness based on the number of names we'd have to call, not on the number of connects."
The telemarketing center was finally ready to go. Cirilli likes to share a funny little story about the evening Grolier was set to place its first outbound calls. He says, "We were gathered in the call center, had opened a bottle of champagne and then the phone rang. Would you believe it was Time-Life Books calling to sell us books?!"
About 60 percent of Grolier's telemarketing is handled in-house by its three call centers in Milford and Brookfield, CT, and in Panama City, FL. Cirilli admits he actually prefers it to be in the 80-percent range most times "because that gives us more control when it's in-house."
Today, telemarketing is a big player in Grolier's media mix, accounting for 25 percent of its total direct marketing. Most of the calls are to Grolier customers, cross-selling within the house file database.
On occasion, Grolier also uses the phone as an information-gathering tool, sometimes adding a question or two to a script. However, Cirilli is quick to point out that "In telemarketing, cost is a function of time. So we don't spend a lot of extra time on the phone to collect additional information."
One adjustment the company has had to make as it grew its telemarketing business, Cirilli says, is how it views upfront versus back-end response. "There's the saying, 'God giveth, God taketh away.' Sure we were getting 20-percent response to our initial telemarketing offers compared to 3 percent on direct mail; but they don't have the same back end," he says, referring to telemarketing's reliance on bill-me offers. "Each medium delivers its own value," he concludes.
Formula For Success
Grolier's direct marketing business continued to grow during most of the 1980s, but by the time Cirilli was appointed president of Grolier Direct Marketing in 1989, the firm's direct mail response was starting to slack off. "We were down to an average of a point and half," he recalls. "We needed some new marketing ideas and a new philosophy to bring it back." That's when Grolier decided to aggressively up the target age of its customers and grow its product lines beyond the 0- to 6-year-old age group.
Says Cirilli, "Once we began to see ourselves that way, we decided to reject products that didn't fit this and seek ones that did."
Cirilli formulated a strategy for Grolier Direct Marketing to pursue three things in order to continue to be successful:
• variety in age;
• variety in content; and
• variety in form.
Explaining the concept, he adds, "I look at it like a matrix, trying to fill in the blanks with new products: perhaps add a video program, then a card program for each age."
Variety In Age
Grolier Direct Marketing's current marketing programs annually bring in more than 2 million new members, mostly families with children, ages 0 to 6. The company claims to have a 50-percent market share—meaning that more than half the children born in the United States will become a member of a Grolier Direct Marketing club. All told, its database of past and present customers totals more than 14 million families.
"So where do you get all the names?" I wanted to know.
As Cirilli recalls, early, early on in Grolier's direct marketing history, the source of the first direct mail list was people who bought encyclopedias! Another way Grolier knew of to reach kids was to mail to teachers at schools. The problem with this method, however, was that by the time the children reached school-age, they'd already passed the age of most Grolier book club products.
To get offers into the hands of kids' parents sooner, Cirilli says, "We buy any and every new birth list we can get our hands on, from the big compiled lists to lists such as Hasco's file of people who have their photos taken in the hospital." There are 3.7 million new births every year, creating a brand new source of names every year, Cirilli remarks, making the task sound almost easy.
Then, he explains, "We put them all in our database and massage them; 50 percent of the names we bring in every year are unique."
On the topic of reaching out to older kids, Cirilli says, "We still have to go out and buy lists to find older kids." He points out that this is done at critical points in the children's marketing cycle. "I break the children's market down into 0 to 3 years, 4 to 7 years and 8 to 12 years," he explains.
Cirilli also instituted an aggressive but controlled program to cross-promote within the house file. "We used to look at the list as the children's list. Now we look at the 1-year-old list, the 2-year-old list, the 3-year-old list, etc. We try to keep them in the family longer," he says. However, he adds this caveat, "I feel you have to control the exposures to a list. We look at where the response curve drops off. We don't mail the same offer to the same names over and over. Two or three times is the maximum, not six or seven."
Innovative Direct Mail
Grolier makes some powerful offers in its direct mail and advertising to draw in all these new members every year. And while the types of offers it makes haven't changed much over time, the direct mail packages have: They've become more attention getting and involving.
"As consumers' mailboxes have gotten fuller, we've had to become more intrusive in a way—use games, activities," says Vice President of Creative Glenn Peters, an 11-year veteran of the company. "We also do quite a bit of personalization on our mailings," he adds, but quickly points out: "If we use information—particularly the child's name—in a caring way, it's good for promotion."
Peters and his 22-person creative team are kept quite busy creating ads and mailing packages for the 12 to 15 products being marketed at any given time. "We typically have a control and a couple of tests for each of those, but not necessarily all in the mail at once and we don't necessarily test a new package each year for every product line," he explains, adding that 98 percent of all creative is done in-house.
All the creative testing and powerful offers are requirements of today's business environment, Peters says. "These days, we need a higher response to make direct mail work that we did a few years back due to higher postal and printing costs."
Variety In Content
It takes two to three years to launch a book club, including licensing, writing the books, creating a marketing campaign, testing, and finally rollout, according to Barbara Gregory, senior vice president and publisher.
Gregory says ideas for new product launches come from surveying Grolier's current customers, going to trade shows and watching for trends. "Marketing is the hub of control at Grolier, not product development," she admits. "I see my department as a service department. We look to see what will sell and then publish it."
Pointing to the historically slow roll-out time for new products, Gregory explains that in the past, coming up with the content—the licenses—often caused delays. Says Cirilli, "In the last couple of years, to fulfill this strategy, we've been going after licenses rather than waiting for them to come to us."
The recent Barbie Book Club launch is an example of the new "go-out-and-get-em" strategy. Gregory says, "In the 0- to 5-year-old age groups, we are the leaders. But it was time to expand to older kids. We started promoting the card programs to get into the next age group. We then started looking at new license possibilities to go even older. Barbie and Nickelodeon are our first licensed entries into the new over 5-year-old market."
Following a successful direct mail test, Grolier officially launched the Barbie Book Club this past summer. Of the launch, Cirilli notes, "This new license represents a significant expansion of Grolier Direct Marketing's traditional consumer base, enabling us to reach girls up to 10 years old."
To create the Barbie Book Club products, Grolier split the work with Mattel:
"They monitor the doll and her voice. We create the storylines," Gregory notes.
Once a product is developed, Cirilli says, the good news is these are "evergreen products"—not trendy items that are in one year and out the next. That's evidenced by the longstanding relationships Grolier has had with some of its licensing partners; it has published Random House's Dr. Seuss books as part of its Beginner Readers Book club for 38 years.
Grolier Direct Marketing's other licensing deals are with Disney Publishing, Walt Disney Art Classics, Mattel, Children's Television Workshop, Nickelodeon and Performance Unlimited Inc.
Variety In Form
The final key of Cirilli's three-part plan for success is variety in form. After much success in book club programs, Grolier Direct Marketing began launching continuity card programs for family products. "This opened up an enormous door for us," he recalls. "This was a new form for us."
And while its focus is still on print products, Grolier has not let the Internet revolution pass it by. Grolier Direct Marketing promotes two CD-ROM programs: Interactive Kids, a club for children ages 3 to 6, featuring Living Book products developed by the Learning Company; and CornerStoneHome, an award-winning, basic skills teaching program for kids in grades 3 to 8.
Today, Grolier Direct also has an e-commerce presence through its Grolier Online Store, a Web site offering Grolier products, and in the future, products from some affiliated book and electronic publishers.
"We look at it as another marketing medium and much more," says Cirilli.
"Some smaller programs may go to the Internet if they can't use direct mail efficiently any more. Others will simply add the Internet to an existing marketing mix."
Plans were in place for a new Grolier Direct Marketing e-commerce site to launch September 15. "It took one and a half years to build it," Cirilli says, pointing out that, "the most challenging part was connecting to our legacy systems."
The site will sell several one-shot products, offer sign-ups for book club memberships and promote Grolier's new Book of Knowledge Online—a product originally built for schools and libraries which has now been converted for consumer (student) use. "For a yearly subscription of $29.95, your child can be part of it. It not only includes history, facts and figures, it helps kids organize research on a topic, suggests articles to read, links to other sites that are American Library Association-approved," Cirilli says. The product will be updated with new information weekly.
Barbara Gregory says plans are also in the works for more tie-ins from Grolier's book club products to the Web. "It's going to be a new direction for us," she says, explaining that a Barbie book might, for instance, drive readers to the Web site for more information on the story or to play a related game. "We will go where the audience wants us to go," she says.
Adds Cirilli, "The Internet is here to stay. Our franchise has to transition to the new business environment." In response to the changes, Grolier recently set up an electronic marketing group. Cirilli says to watch for more stand-alone Web products to come soon.
Cirilli pulls no punches when it comes to lists and privacy issues. "We absolutely have to have children's names to do business," he asserts.
He's been an outspoken advocate of proper list use in the direct marketing community, even testifying before Congress in 1996.
Cirilli explains how that situation unfolded: "There was talk that pedophiles were using lists to get to kids, which was an absurd concept, but it got the people in Washington fired up."
We went to Washington, D.C. to talk to Gary Franks, a congressman from Connecticut. He said to me, "if you want to do something really valuable, go and talk to the House subcommittee that's set to have a hearing on the Children's Privacy and Parental Empowerment Act tomorrow." I decided this was important enough that I'd stay over, so I went out and bought a shirt and underwear and got a hotel room for the night.
At the hearing, Cirilli says he learned that the congressional committee members really didn't understand the implications of what they were ruling on—both for businesses and for families.
Says Cirilli, "I showed them the books, I held up the Disney books ... I explained what we did, how we needed list information and how putting a stop to our business would hurt their constituents—families whose joint incomes are $40,000. These are our customers."
According to Cirilli, list restrictions that have been proposed in the past (and will likely be again) would "destroy the economies of scale we have in making these books available." Not only would it kill the book club business, he says, it would be detrimental to young families with lower incomes who are Grolier Direct Marketing's primary market.
Grolier has not forgotten the international market for its direct marketing products. Most recently, Grolier Inc. bought Weldon By Mail, an Australia-based direct marketer of children's book programs. In Australia and New Zealand, Weldon currently has license with Disney Marketing for the Disney Book Club and with Random House for the Beginner Readers Program, featuring titles by Dr. Seuss.
Grolier Direct Marketing already has established operations in the United Kingdom and Canada. "It took seven years for us to establish a foothold in the U.K.," Cirilli says. "Now that business has increased almost tenfold."
Grolier has made tremendous progress in international markets such as the United Kingdom by introducing American direct marketing concepts such as sweepstakes, three-for-one offers and telemarketing, Cirilli explains. "We take our packages, do a knock off version especially for the international market we're mailing to and mail from there."
More Growth Ahead
While Cirilli has seen Grolier go through much change and growth in his four decades there, he says there's still more opportunity to tap in the children's market. In Cirilli words:
What's happened is that we settled down in the book business, and we focused in on the young children's market. And even though I've been head of this division for 10 years, we've only begun to tap our potential in terms of expanding our product lines' reach into more age brackets.
To grow its Web business, for instance, the company is currently investigating the feasibility of taking the credit-screening system it has for direct mail orders to the Web. Cirilli explains, "We have our own database analysis group so we can review the back end. Now we're working on a new accounts receivable system that will be able to tie-in to the Internet so that we can create the same kind of a seamless buying experience online."