An upscale catalog cuts its mailing list and increases sales

By: Samar Farah

The story behind Fairytale Brownies has all the charm of your classic rags-to-riches yarn: Two friends who first met in kindergarten decide in 1992 to launch a company with little more than a secret family recipe. Eileen Spitalny and David Kravetz bake their first batch of brownies in a kitchen borrowed from a friend, the culinary equivalent of an ’80s-era Silicon Valley garage. Sixteen years later, their Phoenix operation is the largest mail-order gourmet brownie company in the United States.

It’s the sort of story that inspires others to quit their day jobs and follow their entrepreneurial dreams. So one can hardly blame Spitalny and Kravetz if, along the way, they allowed themselves to get a little overambitious. Four years ago, the company hired an agency to help expand its customer list. On the firm’s recommendation, Fairytale Brownies acquired “all these lists,” Spitalny says with a sigh. That might’ve worked with a larger company, but for Fairytale, the strategy was risky.

Problems soon arose in the wake of this daring, unfamiliar new effort. To keep up with its expanding customer list, Fairytale increased its catalog production. By 2004, the catalog’s circulation had increased from 600,000 to 1 million. However, response rates and new customer acquisitions were barely enough to recoup the cost of the campaign. Shortly afterward, the brand dissolved its relationship with that particular agency.

The problem the company encountered was a common one among businesses of all sizes: Poor list management. Companies often learn too late that buying lists doesn’t automatically guarantee an increase in sales, or even that marketers’ messages are reaching the right people, especially if those lists are outdated or filled with the wrong types of consumers. And in many instances, relying on poorly maintained lists can create more problems than a company may anticipate.

In the case of Fairytale Brownies, Spitalny says, the company was swept up by the momentum and excitement of a large campaign. She recalls that many of the lists which the agency urged them to purchase were from compiled lists and trade associations a list of marketing directors at large companies, for example with the idea that these professionals would be looking for gifts for their clients. Not a bad idea on paper, perhaps, but in many cases the lists themselves provided no more than a corporate title and an address. Actual names were often missing.

“The strategy [the agency] recommended got more and more aggressive, and we’d always been growing so we were up for it,” Spitalny says. “But we went a little too far. We sent out catalogs without a specific name. That doesn’t break through the clutter.”

Spitalny’s company returned to managing its postal list in-house and scaled its list back. Then in 2006, Fairytale hired J. Schmid and Associates, a catalog marketing firm in Mission, Kan., with the hope of growing its list properly. This time, the mail order company was determined to be less reckless.