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Company Spotlight: The Longaberger Company
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Company Spotlight: The Longaberger Company
by Barbara Seale
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| Longaberger Home Office, Newark, Ohio |
When Jim Klein became president of basket maker and home-products seller The Longaberger Company in January 2006, he had a major goal: to restore and preserve the tradition of a great American legacy. He didn't simply walk into the building on Day One, rearing to get started. He was so passionate about his new job that on his first day as president, he presented a five-year plan for a return to growth.
"I've known Tami [Longaberger] for 20 years, and she and I talked a lot during the year before I joined Longaberger," Klein says. "I had a great fondness for the company. I value the family legacy and the American craftsmanship tradition they had created. When companies struggle, they tend to live day to day. They needed a vision and a plan to grow the company again."
Tami Longaberger, the company's chair of the board and CEO, and the daughter of the late founder Dave Longaberger, calls Klein the right person to get the company back to growth.
Longaberger had worked for the company since her college years and joined her father full time after graduation. "Being part of the company for such a long time puts you in a wonderful front-row seat to watch a business go through its life cycle and become a mature company," she says. "I was there as the business grew, changed and experienced the challenges of keeping itself current. I realized we had to move toward more professional management. We needed to build better processes and start putting them in place to be competitive as a 21st century direct selling company."
Lunch with Tami
Tami Longaberger loves staying close to the company's consultants and customers, so she invites as many as 300 of them to have lunch at her home every day.
"I was looking for a way to spend more time on a regular basis with our salesforce and customers but not have to be on the road five days a week," Longaberger says. "Early in 2006 I asked one of our top sellers how I could help them grow their business. I asked, 'Do you think sales associates would want to bring customers to visit my home?' She gave me a warm, enthusiastic reception to the idea, so I said let's try it and see if people want to come."
Come they did. About 22,000 of them in 2006. As part of company tours sponsored by sales consultants for their clients, two groups of guests enjoy lunch in Tami Longaberger's home almost every day.
Longaberger had such gatherings in mind when she built her home, which includes the large room where she holds the luncheons. The room also provides a warm, hospitable location that she uses when she entertains her salesforce, employees and community members. In July it was the venue for a breast cancer survivors' luncheon.
Of course, her home includes a basket collection complete with baskets the company made years ago-even one her father, company founder Dave Longaberger, made for Tami. She also had Longaberger's research and development team make some exclusive products that can only be seen at her home.
"It gives me the opportunity to greet people at their table, sign baskets, take pictures and bring associates together. I keep a scrapbook of every sales associate who has visited my home," Longaberger says. "Women enjoy getting together for lunch in a pleasant setting. People can go outside, look at the gardens and tour a few rooms of the house. It's just the best." |
Surviving the Storm
Longaberger notes that after her father's death in 1999, she added his responsibilities to her own. "It was simply too much for any one person. Dave DeFeo joined the company and helped get us poised for growth again," she says. After DeFeo's departure, Longaberger convinced Klein to come on board to help the company recover from what she calls "a perfect storm."
"In 1999 we noticed that the business was beginning to change, but we were also dealing with the 18-month illness of my father and his untimely death," she says. "Some companies have the luxury of time to transition from the management of a charismatic leader to a well-run organization. We were not afforded that luxury. Dad's death prompted a lot of emotion and pain for our employees and the salesforce. At the same time, while we needed to move to a more professional management team, we also had to deal with the impact of 9/11 and the downturn of the economy. It became a perfect storm for us. But it was also a perfect opportunity to learn what we're made of. Our salesforce, craftsmen and customers have done some heroic things in the last five years to restore the company."
The Longaberger Company has gone through major restructuring, improved its manufacturing processes, and reorganized teams in the management organization and the salesforce.
"We've had tremendous upheaval, but everything has been done in a thoughtful way," Longaberger says. "We've made changes we needed to make to ensure the company's success. Lately, we've recalled hundreds of employees, and we're seeing renewed engagement in the top 20 percent of the salesforce. You can feel the energy coming back."
Klein provides a big part of that energy. He brings executive-level experience with direct seller Avon, gift-and-toy company Applause Enterprises and Universal Studios, the country's largest guest-experience company. Through the lens of his experience, he sees The Longaberger Company as an exciting opportunity to connect the company's heritage, products, sales channel and even its status as a destination.
Thinking Outside the Basket
Founded in 1973, The Longaberger Company began selling products through direct sales in 1978. Today its 55,000 independent home consultants show Longaberger products in home shows, where they earn a 25 percent commission they immediately take off the top of the shows' sales. The Longaberger Company describes itself as America's premier maker of handcrafted baskets. Under Tami Longaberger's leadership, the company added other products for the home, including pottery, wrought iron, fabric accessories and specialty foods. It also owns three guest destinations: Longaberger Homestead®; Longaberger Golf Club®; and The Place Off the SquareT. Already the destinations attract Longaberger home consultants and clients who come by the busload to take the basket-making tour and watch craftsmen create 40,000 baskets a day. Visitors make their own baskets, tour the original Longaberger workshop and family home, buy merchandise in the gift shops, play golf, dine in an array of restaurants and stay in the hotel. And then there's The Longaberger Company's home office-a seven-story replica of the company's Medium Market Basket and the dream of company Founder Dave Longaberger. Visiting Longaberger's Destinations is an experience CEO Tami Longaberger says helps solidify relationships between the salesforce and its customers.
"We bring American craftsmanship into our business opportunity," Longaberger says. "No place else in the industry will you find thousands of artisans working day in and day out to make products that their direct selling salesforce sells. That's particularly of interest to our salesforce, and it is showcased through Longaberger Destinations."
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| Longaberger CEO and Chair of the Board Tami Longaberger at Eschman Meadows with members of the sales field |
These properties are already popular, attracting almost half a million visitors a year. Some 60 percent are Longaberger home consultants. Jim Klein sees the destination properties as the centerpiece to his five-year Longaberger recovery plan.
"We are unique in that we have a place where you can come visit us," Klein says. "I worked in the largest direct selling company and the largest guest-experience business. Longaberger has both, but they've been operating separately. In 2007 we'll connect the dots to leverage both businesses as one. The best way for people to fall in love with Longaberger is to come visit us. The more guests come here, the more they love Longaberger, and the more they want our products. Starting in 2007, product sales in our destinations' stores will become commissionable for the first time. All our core direct selling products will be in one place-it will be like a giant home show."
The company will open a new attraction, as well-the first Longaberger Outlet Store. "That will be wildly appealing," Klein predicts. "The Longaberger name is meaningful to collectors. We'll have a vault of retired, revered, respected merchandise that will be public for the first time. And everything we sell there will offer full commission or savings for home consultants. It will make our opportunity even more attractive. Consultants will have a strong reason to visit us with their customers. That will result in more home shows. They'll earn every way they turn. By 2010 we'll attract a million visitors a year."
Klein views the changes as simply an extension of Dave Longaberger's original vision for the company. "Dave Longaberger defined us as a guest-experience company because our consultants entertain in their homes. These changes will open the doors to The Longaberger Company's home even wider and expand the ways we reach customers, therefore expanding the earning opportunity to Longaberger home consultants."
In 2007, Longaberger home consultants will also be able to sell through a new e-commerce Web site. Like its other sales opportunities, the Web site will pay commissions and overrides to consultants when customers buy through their Web site.
A Basket Full of Hope
The Longaberger Company has a long tradition of making charitable contributions that support projects and programs designed to strengthen communities, families and individuals. Under the direction of Rachel Longaberger Stukey, daughter of Founder Dave Longaberger, The Longaberger Foundation has given millions of dollars to support education, protect children and alleviate hunger.
But once a year it launches The Horizon of Hope® Campaign that raises money for the American Cancer Society (ACS) to support breast cancer research and education. The idea for the campaign came from Longaberger's home consultants themselves.
"Our salesforce is a national organization, and we wanted to find a cause that had a national presence that we could get them involved in and that would move money back into their communities," CEO Tami Longaberger says. "We asked the field to nominate and vote on an organization they wanted to support. Far and away, ACS and breast cancer support specifically is what they decided to support. It's their cause, their organization and their campaign."
Each year since 1995, The Longaberger Company has designed a special basket that is sold during the annual campaign. When a customer buys a Horizon of Hope Basket, $2 from the sale goes directly to the American Cancer Society. More than 3 million baskets have been sold since the program's inception, recently earning the company special ACS recognition.
"As much as we are proud of that, what is even more significant is the education we provide through home shows," Longaberger says. "We've given tens of millions of women information about early detection and monthly self exams. It has saved lives and made a difference in so many families."
Longaberger finds the program personally satisfying. "I've received around 30 letters over the last few years saying thank you for Horizon of Hope. They say that because of the campaign, 'I had a mammogram and my breast cancer was detected early and I could start treatments early.' It makes all the effort worthwhile." |
Great American Companies
In January, Klein will tell consultants about an expansion of a new practice it innovated in 2006-taking Longaberger Destinations on the road. The company's first experience was at John Deere, the farm equipment company whose properties are tourist attractions in themselves.
"The Longaberger Company is a great American company, and there are other great American companies all around this country," Klein says. "Last year we visited John Deere during one of its events. We took 50 basket makers with us and did a basket-fest at their location, giving visitors an opportunity to make a basket while they were there. Basket makers are like rock stars! People love them. We put the word out to our consultants, and they organized trips with their customers. John Deere was flabbergasted that we got 50,000 people to come to their location. But it's a good brand fit-two great American companies with the same eager marketplace. So we approached other great American companies with the idea and, so far, there have been no no's. We'll be at Jelly Belly in February, bringing earning opportunities on the road with us. We're developing a scalable Longaberger Homestead that travels. It will be the same experience they have when they visit us in Ohio, just a different size."
Those same great American companies will get an invitation to visit Longaberger next. "We want our partners to do events at our destination to increase its attraction. The whole concept adds to the overall definition of who we are as a great American company," Klein says. "We're already adding buildings and infrastructure to our property to accommodate the increased number of guests we expect. No one else does this kind of thing. It's revolutionizing direct selling."
Hostess and Home Harmony
Klein's vision extends to new products, too. In July at the company's convention, known as "The Bee," Klein introduced a jewelry product line. The line is inspired by Rachel Longaberger Stukey, Tami's sister.
"Rachel is a walking, talking, fashion-and-beauty role model. You could start a direct selling company just with Rachel," Klein says. "So we created a jewelry line that reflects her sensibilities. As we were developing the designs, people kept saying, that is so Rachel! That became the name-So Rachel. We introduced the jewelry very successfully this year and will introduce bath and body fragrances next. They become more reasons to do a home show and invite guests."
Tami Longaberger agrees. "Our baskets have always been the most important product line and will continue as far as I can see into the future. They're the heart of the company -the family craft, heritage and legacy," she says. "Everything else we bring into the line is a part of the supporting cast."
That supporting cast is all design-coordinated. Baskets, pottery and even jewelry are in the same color palettes and shapes, and are designed to harmonize in the home and on the hostess.
"We continue to evolve each product line to make them current," Longaberger says. "We had to work to reach a younger customer base. As the products evolved, we tried to stay true to loyal customers but also create new designs that appeal to the next generation. The line of jewelry is a piece of that. The colors and pieces are designed to align with the at-home products."
Fired Up Salesforce
The reaction of home consultants has been enthusiastic. In her reserved manner, Longaberger says that the new products have been received quite well. "People are joining the company. We seem to be reaching the markets we hoped would be attracted to those products."
Klein is far less reserved. "Our top 10,000 home consultants are on fire now. They're rocking again and leading the way. We'll talk to more folks at our February leadership meeting and will introduce the new tools to help them grow next year."
Growth is high on The Longaberger Company's agenda. A privately owned company, it doesn't disclose its earnings, but Tami Longaberger openly talks about recent tough times and her outlook for a brighter future. "In 2006 our organization was flat after a couple of years of decline," she says. "We feel good about that. We're poised and looking forward to a great 2007. We have the right team and the right experience now."
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| Jim Klein, Longaberger President |
She also notes that the company's growth goes beyond revenue and numbers of consultants. "Our product line has grown," she says. "And with the challenges of the last four or five years, we're growing in maturity as an organization. I believe that our maturation and converting the organization from a large family-owned business to an organization that can support what we need to be a lasting organization is an important part of our growth. We've done that in many ways. We've had tough lessons over the last few years, but they'll make us so much stronger."
Klein says, "I've been involved in turnarounds before, but we're going farther than that. We're having a transformation. First, we're restoring our craft tradition in a way that is fresh, vibrant and exciting with new colors and weave patterns. Our product line never looked so good. Second, having all products made in America isn't possible any more, but we'll have more products that are. All our Collector's Club products are made in America, and at our storefront we'll have a defined group of products that are made in America. Finally, our direct sales channel: We're expanding the ways we reach customers and providing broader earning opportunities to Longaberger home consultants."
Reflectively, he adds, "I'm a student of Dave Longaberger. I watched every move he made. He was a remarkable leader. He built an idea that he left unfinished, like a treasure map. Every time I turn around, I uncover another treasure. I can complete the vision that Dave had." |
