In a red brick building in Salem, Mass., within a stone’s throw of the Atlantic coast, is a small company that uses local labor to handcraft a line of gourmet chocolates sold through multiple channels to customers worldwide. This company is demonstrating that a viable multichannel selling strategy needn’t be reserved for just the behemoths in direct marketing.
Harbor Sweets sells its luxury confections via a catalog, Web site, e-mail campaigns, retail channels and wholesale accounts, including Whole Foods Markets. Its overall sales have been growing 10 percent annually in recent years, and its average order value has increased 6 percent since 2004. Not bad for a company that started in someone’s basement.
From 75 Names to 500,000
Harbor Sweets’ founder Ben Strohecker was director of marketing at a candy company in Boston in the 1970s. But the company was struggling, and its managers started to make decisions, such as shrinking candy sizes, that left Strohecker less than enthusiastic about the company’s prospects.
“Ben felt you couldn’t fool consumers that way,” says Phyllis LeBlanc, CEO and now owner of Harbor Sweets. “He thought that if you produced a good piece of candy, packaged it nicely and charged a fair price, consumers would respect that.”
So in 1973 Strohecker struck out on his own, producing candy at his Marblehead, Mass., home and selling it at church bazaars and street fairs. The first pieces he produced were triangular-shaped and made of dark chocolate. One day, he didn’t have enough dark chocolate to complete a batch, so he dipped the tops of almond butter crunch candies into white chocolate instead. His son said the resulting half-dark/half-white confections looked like sailboats; hence the name Sweet Sloops for what is—even to this day—Harbor Sweets’ best-selling product.
To expand his customer base, Strohecker mailed product announcements to everyone on his Christmas card mailing list: 75 people in all. Today, Harbor Sweets has about 500,000 names on its mailing list.
Eventually Strohecker developed a catalog and moved the company out of his basement and into a building in Salem, Mass. The company remains in that same location, but has since expanded and now inhabits 25,000 square feet on two floors.
Most operations are carried out here, including candy production, warehousing, fulfillment, accounting, creative direction, customer service, marketing and management. Call center operations are outsourced to Taction, a company based in Waldoboro, Maine. The Salem location also houses a retail store, a mecca for chocolate-lovers worldwide, says LeBlanc. Guests are greeted by an employee offering chocolate samples on a silver tray.
LeBlanc began working for Harbor Sweets in the 1970s while she was a business school undergraduate at Salem State College. “I started out as a part-time chocolate dipper,” she recalls. But she took advantage of Strohecker’s policy of cross-training employees, and she learned many other duties on the job. Some days she made the chocolate, and other days she prepared the bank deposit or opened the mail. “I thought it was a little part-time job that would be fun and help me pay for college,” she says. LeBlanc continued to work at Harbor Sweets after graduation, eventually moving into marketing, operations and finance. In 1998, she bought a majority stake in Harbor Sweets. “It’s a rare opportunity to be able to buy a company that you know so intimately,” she notes.
Today Harbor Sweets makes four lines of chocolate. The Nautical Collection includes shapes inspired by the New England coast line where the company is headquartered. Dark Horse Chocolates are inspired by LeBlanc’s love of horses. Perennial Sweets is a line comprised of chocolate candy with a garden theme. And the Sugar Free line is lower in both sugar and carbohydrates than the company’s other offerings. It also sells jarred dessert toppings.
Billie Phillips, vice president of marketing at Harbor Sweets, says that once most people sample the luxury chocolates, they’re hooked. “Sampling is a grass-roots process for us,” she says. “Once people taste the candy, they buy it.”
That’s why Harbor Sweets supplies samples to the more than 100 retail stores across the country that carry its products, in turn encouraging store personnel to offer those samples to consumers. Harbor Sweets also offers free samples to attendees of the trade shows at which it exhibits, including wholesale gift, gourmet and fancy food shows, as well as to consumers attending the annual Boston Flower Show where Harbor Sweets exhibits each year. Says Phillips, “Sampling continues to be our core marketing strategy. It opens the gates to other sales channels. Our challenge is to find additional ways to get more people to sample.”
Browsing the company’s catalog might not offer the same gratification as a free sample; nonetheless the book is a feast for the visual senses. The thick glossy paper, expert photography and beautifully rendered product styling showcase the gourmet chocolate selections. However, the copy in the recently mailed Easter catalog could have been more compelling had it included a description of the laborious handcrafting method used to make the candy. Indeed, the product packaging is given more descriptive copy than the confections themselves, although that’s a not a bad tactic for a company that caters to gift-givers. Still, a prospect who has never tasted a Harbor Sweets’ treat might like to know why it’s better than its competitors.
The company’s Web site, which is designed by an outside firm, unfortunately suffers from the same lack of marketing copy. It appears to be more of an ordering channel than a sales channel. Harbor Sweets executives are trying to remedy this situation and recently started buying ad words on Google. Online sales have grown since the company instituted the search engine marketing campaign, although Phillips wouldn’t reveal the exact sales increase.
“The challenge for companies of our size is how to capitalize on new technologies without spending a fortune,” says Phillips. “It’s all part of the changing world of marketing.” The catalog/Web channel accounts for about half of Harbor Sweets’ annual sales.
Recently instituted e-mail marketing campaigns also are boosting response, and Phillips says the company is getting more aggressive in that regard. “In our e-mail campaigns, we’ve tried various offers such as free shipping, specials and reminders to order gifts, but we don’t yet know what are the primary drivers,” she notes. “We’re also trying to determine when is the best time to send the e-mails.”
One smart strategy it employs: Campaigns designed to drive customers to the stores that carry Harbor Sweets’ products. “We’re more aggressive these days in getting catalog and e-mail customers to the stores,” Phillips recounts. “We want to support our wholesale accounts, plus we want people to sample our products.”
Store sales account for about 30 percent of Harbor Sweets’ annual revenue. In its quest to drive such sales, the company includes a list of retail clients on its Web site and in every catalog it mails. Most appear to be gourmet food and gift shops in the New England and Mid-Atlantic area, including the famed Dean & DeLuca in New York City and the highbrow Robertson’s of Chestnut Hill in Philadelphia. However, people in states as far away as Florida, Indiana and New Mexico can buy Harbor Sweets candies in local stores.
Harbor Sweets spawned its retail channel several years ago by selling its products first in its own shop, and then to another retailer in Salem, Mass. Today it uses the services of an independent sales representative to garner more accounts. The rep’s recent coup: Harbor Sweets candies are now sold in select New England stores of the supermarket chain Whole Foods Markets. “We’re very proud of that new account,” says LeBlanc, “and we hope to continue to grow with them.”
Promoting Interaction and Sales
In each box of chocolates, you’ll a find high-quality, glossy, tri-fold brochure that includes a short letter from LeBlanc denoting her start with the company, a plug for the company’s product lines and a prompt to visit the company’s retail locations. The rest of the brochure offers depictions and descriptions of the Harbor Sweets products. And the brochure includes the company’s address, toll-free phone number and URL, so even after the candy is long digested, the brochure may prompt customers to order again or gift recipients to buy a box for themselves.
Harbor Sweets also drops into each box a self-addressed, postage-paid postcard on which customers can note their thoughts on the product. A check-off box encourages customers and giftees to inquire for more information on Harbor Sweets products. It asks for an e-mail address to send news and special offers, and it denotes the company’s URL, further promoting multichannel shopping. No doubt it’s these and the other savvy marketing tactics it employs that have enabled Harbor Sweets to boost its average order value for retail customers from $83 in 2004 to $88 last year.
Harbor Sweets does not regularly use other types of insert media, such as package inserts in other companies’ outgoing orders. “We tried those and did not get a satisfactory response,” says Phillips. She does, however, buy space ads in national magazines to tout the Dark Horse Chocolates product line, and during the holiday selling season, she runs ads in Boston and Salem periodicals to drive store sales in that region. “In all, our main marketing efforts lately have been in the wholesale and Web channels,” Phillips recounts.
The company also is transitioning its customer service team into an inside sales force. “We’re training the reps to segue into more sales conversations with customers,” says Phillips. “We’re giving the team members more tools, introducing new products to them, so they know how to talk about them with customers. For example, if we have a wholesale client who calls about one product line, we train the reps to say, ‘You know we have a candy bar that has the same ingredients as those chocolates you ordered for your store. Would you like to try those?’ We use that customer service process to expose more products to more people.”
Phillips says the conversations are not scripted for the inside customer service team, although she anticipates it may create scripts for the outsourced call center reps Harbor Sweets uses.
The company does most of its prospecting in the fourth quarter, says John Martin, a circulation and marketing consultant who specializes in catalogs and who has been working with the candy company for the past 12 years. “The company does less prospecting than many other companies its size,” he notes. “Almost all prospecting is done through cooperative databases.”
It does, however, periodically use single-source rental lists, he continues, but they have not been as successful for the company as cooperative databases. Its rate of prospecting has been pretty steady during the past several years.
Until recently, Harbor Sweets has produced three catalogs per year:
• holiday, sent to about 300,000 names spread over four mailings from September through the end of November;
• Valentine’s Day, with a main mailing to 50,000 names, and a smaller follow-up book to 12,000; and
• Easter, with two drops—end of February to 65,000 and mid-March to 20,000.
This year, however, it’s testing a fourth catalog, Mother’s Day, mailed to 15,000 names. LeBlanc wants to lengthen the candy-buying season.
Currently about 70 percent of Harbor Sweets’ annual sales come in the fourth quarter. Catalogs are mailed mostly to proven buyers and former giftees, says Phillips.
To help get a better handle on customers’ buying behavior, Harbor Sweets is a beta site for Longbow, a new Web-based marketing service being developed by Loyalty Builders.
Harbor Sweets is using Longbow to help target customers who are ready to buy and to determine what products they’re likely to select. Longbow will help identify upsell prospects and create an early-warning system for customer defection so that Harbor Sweets can create marketing campaigns targeted at customer behavior patterns, according to a representative from Loyalty Builders.
Says Phillips, “Our goal is to be able to respond more quickly, to react to our marketing landscape. Where are our prospects? When do they hear our messages? When should we mail? When are buyers lost to us? When do they have less of a reason to buy from us? All of that information will help us to shape our marketing campaigns. That’s our challenge as marketers.”
Although Harbor Sweets is
cautious with its prospecting efforts, the customers it has hooked are buying more and in more channels. In this way, LeBlanc and her team hope to keep growing corporate revenues by double digits for many years to come.
About Harbor Sweets
Products sold: chocolate candy
Channels: catalog, Web, e-mail campaigns, retail, wholesale
Headquarters: Salem, Mass.
# of employees during peak Q4:130
Primary customer demographics: female, age 40 and older, affluent
# of SKUs: about 150
List manager: D-J Associates
Cooperative database memberships: Abacus and NextAction
Annual sales growth: 10 percent in recent years
2006 average order value: $88 (up from $83 in 2004)
Donna Loyle is the former chief editor of Catalog Success magazine. You can reach her at firstname.lastname@example.org.