A Chat with Arnie Zaslow, executive vice president, ATD American Co.
© Profile of Success, Catalog Success magazine, March 2007
Interview by Matt Griffin
Catalog Success: When was the catalog established?
Arnie Zaslow: ATD has been around since 1931. We celebrated our 75th anniversary last year. That’s not how long the catalog has been around though. We published the first catalog in 1957. The great thing about that is that last year we were in business for 75 years, and this year we celebrate the 50th anniversary of our catalog.
CS: What is your primary merchandise?
AZ: Institutional furniture and equipment for the business, education, and correctional markets. I think our biggest single market is the federal, state and local government market.
CS: What are your main sales channels, and what percentage of sales does each represent?
AZ: One of the things that makes us somewhat noteworthy is what I like to call “mix.” We have a mix of markets, which I’ve described already. We also have a mix of products. We sell textiles, furniture, safety and protective equipment, certain medical equipment. And we have a mix of selling techniques. We sell through our catalog of course, through which we do about 60 percent of our volume. Through the Web, which is comparatively new, about 13 percent. Our outside sales people bring in about 11 percent. The telemarketing team does 10 percent, and we do 6 percent through e-mail solicitation.
CS: How did the company/catalog get started?
AZ: We started in 1931. We started in the retail linens business. And by that I mean bedsheets, pillow cases, all that kind of stuff. We remained in the retail business from 1931 until 1952. In 1952, we started selling to institutions. We still sold primarily through the vehicle of competitive invitations to bid, which were generated by states, municipalities, federal agencies and the like. By 1957, we decided we wanted to automate the selling function. You started to see the beginning of automation in production, automation in accounting, but nobody ever was doing much in the way of automating their selling. The closest thing to automated selling is direct-response selling, where you send out a catalog and that’s the investment in technology. And then orders will come in as a result. We published the first catalog in 1957, and we printed 40,000 of them. It consisted primarily of textile products, and these were for hotels, motels, hospitals, prisons and so forth. But we also dipped in to changing some of our product categories to allow for bigger markups, because the textile field was an extremely competitive field. So we decided to go into allied products in the furniture field. And by that I mean commonplace items such as folding chairs, folding tables, stacking chairs. And that blossomed into business furniture such as desks and some case goods. And then peripheral products: lockers, bulletin boards. So by late 1959, we had a pretty full-scale book, and that continued to grow. Now today, we’re still essentially in the business of selling to institutions. One departure from that is that we own a textile plant in Thomaston, Georgia, where we manufacture bedsheets, but we sell them only to distributors that then sell them to institutions. But that’s the only departure from our core business.
CS: How long have you been working for ATD?
AZ: My late father founded the company in 1931. I was virtually born into it, but I do have a little plaque in my office that says I’ve been with the company for 60 years, because I started when I was about 16.
CS: Having been with the business for this long, what are some of the bigger challenges you faced?
AZ: Particularly in the early years, the thing that drove us into the catalog business, it was figuring out how to secure better margins. Early on most of our business was secured through competitive bids. Those were so competitive, the markups were infinitesimally small. And that was the real challenge. How could we increase our markup? And the answer was direct mail and cataloging. The biggest challenge we faced in early years was increasing markup. Of course, when we launched the catalog, we began to face the challenges faced buy all catalogers, how to keep increasing response rates and dollars returned per catalog. That’s an ongoing challenge. Another significant challenge are the changes in the U.S. Postal service. When we started postage constituted only a small contribution to the cost of the catalog, today, it’s a huge contribution. In many cases, the postage approaches the cost of catalog production.
CS: How do you deal with increased postal rate increases?
AZ: At the risk of using a phrase that’s already been kicked around a lot, we’re trying to implement smarter mailings. In the early years, we operated on the premise that the more dung you threw at the wall, the more would stick. And the idea was that if you wanted more business, just mail more catalogs. And that essentially was true, because the cost of the catalog wasn’t so great as to have an overwhelming impact on the bottom line. Today the cost of producing and mailing a catalog is such that you want to increase that response rate. You don’t want most of your catalogs at the bottom of a wastebasket or marked non-deliverable. So we’ve used a lot of the software and technology available today to determine who our best prospects are. We’re mailing more frequently to customers, but narrowing down the prospecting field, which historically has always been a huge source of our catalogs. And today we mail far less prospects than we used to, and the prospects we do mail have a far better return than we did 20 years ago.
CS: How do you narrow down your prospects?
AZ: We utilize that time-worn concept of recency and frequency. We measure very carefully who our best prospects have been. We try to identify and profile those prospects, then duplicate them in the prospect market. After prospects have been converted to customers, we ask “who were the people who were converted?” We carefully examine our customer list and constantly update the criteria to make sure we’re identifying our customers with every attribute that’s available. We overlay those attributes on the prospect file.
CS: What’s the biggest mistake you ever made in business, and how did you recover?
AZ: That’s an easy one. We were really late in the development in our Web site. And I think there were a lot of people guilty of the same sin in the institutional market. In the early years of Web sales, a lot of the B-to-B people were saying this was just a tool for the consumer market. The L.L. Bean’s of the world, while they were enjoying the fruits of their Web sites, we sat back and said that our customers weren’t going to buy that way. And we were wrong. Fortunately, it didn’t take too long to realize we were wrong. We immediately took steps to correct that. We developed a Web site four to five years ago, but it was rather primitive compared to what we have today. Now we have a very sophisticated transactional Web site where customers can come, check every item in the catalog, place orders, arrange payment, etc. It’s been a very successful method of marketing. And I’m confident that in the years to come, our Web presence will generate a lot more than the 13 percent it currently generates. And I don’t believe it will all be a matter of replacing other sales from the mail or telephone. I think we’ll be broadening our market and bringing in new sales from the Web site.
CS: What made you realize your customers would be using the Web?
AZ: We started to speak with customers, as we always do. We have a squad that contacts customers to ask questions, survey-type questions, asking them what they want. We started getting responses with increasing frequency that they would like to see a Web site where they could check out all of our product and prices without having to go through a print catalog, although I’m a strong proponent of the idea that the catalog and Web site work hand-in-hand. The print catalog generates interest on the Web site, and I think the Web site generates interest in the catalog. The customer wants to have a hard copy as well. And we’ve increased the size of our catalogs to a point where they have much greater retention value than they used to. I can remember not too long ago when we would send out 64-page, saddle-stitched catalogs. Today we send out 200-page, perfect-bound catalogs. So the retention value of those book is much greater than it used to be.
CS: What sets your company apart from others?
AZ: The only problem I have with this is when I tell you, you’ll think that it’s just the same old story everyone gives. But what sets us apart is our people. We’re very fortunate. Our people care about the company, the customer, but above all, they have fun. I’ve often said to young people that come in for interviews, “If you’re not having fun, then you’re doing the wrong thing for a living.” You should have fun. I will quote some numbers because I keep these handy in my office. It’s hanging on my wall actually. Out of our 200 or so employees, 94 have been with us for more than five years. Forty-nine have been with us for more than 10 years. Thirty-seven have been with us for more than 15 years. And 23 have been with us for more than 20 years. To put it another way, the 10 associates who’ve been here the longest have a total of 387 years of service, or an average length of service of almost 39 years per person. That’s highly unusual today, because people have a lot of mobility in their jobs. They don’t stick to one company. They jump around. But when you have this kind solidarity in your staff, they treat the customer that much better because they understand the customer is king. The realize the customer pays their salaries, and without the customer, you have nothing. But I would say our awareness of the needs of our customers, and the awareness of the needs of our staff are the two things that set us apart from many companies today.
If you call our company, we have all the automated phone equipment, but you should only get voicemail when nobody is in the building, when we’re closed. We feel people want to talk with people. They don’t want to talk with a machine. That’s essentially what I feel sets us apart from many others out there.
CS: What do you do to keep things more fun?
AZ: I thought you’d never ask. We have an ERC, which is our Employees Recreation Committee. We have picnics, pizza days, dress-down days, pretzel days, water ice days in the hot summer months. We have two types of events. Some of them are free, because the ERC has different methods of fundraising. And those funds are used only for the benefit of our associates. These kinds of things build the solidarity among the staff. They care about each other. Unfortunately, but realistically, people will have a death in the family, or are sick enough to require medical attention, and I’ve seen our people take up collections. I can think of one case where they raised $3,000 that they just gave to an employee who had a medical problem. These are the kinds of things that people remember. The other day, we all got an e-mail from one of our people who just had a heart valve operation. It thanked everyone for their kindness following his operation. It was very heartwarming. That’s what really counts. You need to get people who care about the other people they work with. They’re more than just working associates. They’re friends. Sorry for being so verbose. My wife says I can’t say good morning in 75 words or less. I get very enthusiastic over our people. I don’t know too many other companies where the people there care so much about one another. Part of it is that today there are so many public companies in our business. And there’s a huge difference between a public company and a privately held company, especially a family company. We have a corporate family and a blood family. We have nine Zaslow family members working in the firm, and so far not one bum in the bunch. That’s a very nice feeling, to know that so many people recognize that the fact that someone’s name is Zaslow doesn’t give them special privileges beyond what anyone else has. Everyone has to swing their own weight. It’s as simple as that. We’ve been fortunate because when people look at each other as a family, they have more fun.
CS: What is your current biggest business challenge and how do you plan to resolve it?
AZ: I’d have to say that with the consolidations we’ve seen out there... well, this isn’t a challenge so much as a windfall. As many catalogers become bigger through consolidation, and they lose that personal touch, it’s been a strong plus for us. I’m struggling as I’m thinking here what our current challenges are. I suppose I’d have to say the cost of producing and mailing catalogs, particularly the postage aspect. It’s gotten so huge, as the Web continues to grow and as e-mail solicitations develop more solidly, there are great temptations to mail fewer catalogs. But maybe UPS will come along one day and tell the U.S. Postal Service, “Let us deliver bulk mail because we can do it more cheaply than you.” Don’t quote me on that. But it’s a challenge. And constantly trying to improve response rates and dollar returns per catalog. Those are the greatest challenges today.
CS: Have you had any mentors?
AZ: Oh yes. I come from a close-knit family. And I’ve worked together, for the last 60 years, with two brothers. And my late father and my brothers always have been mentors to me. It sounds peculiar at my age, but I’m the baby. My two older brothers always have guided me. And even to this day, we do consult with one another on virtually every subject. Our lives are very intertwined, professionally as well as personally.
CS: What about the business appeals to you?
AZ: Everything, particularly the challenges. It keeps you on your toes. I like the catalog business because it has virtually unlimited potential. If you want to build, add more product, add more mailing lists, build more customers. It’s all within our reach. It’s like the old phrase, “Build a better mousetrap, and the world will beat a path to your door.” You see people out there who’ve been unusually successful because of their imaginative efforts. We would like to think that we have been blessed with some of that imagination. Every face of this business attracts both me and my brothers. That’s why we’re still in it. Let me answer that question a better way, and I apologize in advance if it’s a little lengthy.
At my age, I enjoy going to high school and college reunions. And the most frequently asked question at any reunion is “Hey Arnie, what are you doing now?” My favorite answer is “I’m retired.” And they ask, “How do you spend your day?” And I say, “I go into my office every day.” And they ask what time I go to work. I say, 7:15 or so in the morning. And they look at me even more quizzically and ask when I leave. And I say about 5:30 or 6:00 at night. Then, almost contemptuously, they ask “I thought you said you were retired.” And my stock answer is this: I am retired. When you’re doing what you want to do, you’re retired. When you’re doing something because you have to do it, you’re working. And I never worked a day in my life. I’m very lucky that way. I feel very sad for those people who get up in the morning and the first words out of their mouths are “Ugh, another day’s work.”
CS: What are your hobbies?
AZ: I guess I’d have to say family. I enjoy that. That to me is the greatest hobby in the world. I enjoy being with my wife, my children, my brothers. We have a very closely knit family. I share two responsibilities. Aside from being EVP of ATD American, I’m also the managing director of the Zaslow family office. And the Zaslow family office is comprised of 42 family members. And these are children, grandchildern, who do a great many things together. And not just family picnics and cruises, but doing practical things, like investing together. We do a lot of things together. So I spend a lot of time doing that. I enjoy mentoring as well. Whether it be family members or going back to my old high school and making presentations and mentoring. I enjoy serving on panels of family businesses. There are a number of family business organizations around the country, and I get a kick out of participating in those activities.