Smart Answers columnist Karen E. Klein recently spoke with Rabinowitz about how the family-owned company is capitalizing on the unlikeliest of trends. Edited excerpts of their conversation follow:
Q:hen did you realize that Martha Stewart's poncho was going to affect Lion Brand in a big way?
A: It was a Thursday night around midnightwhen she came out of jail. There was something very striking about the poncho she was wearing. The following Monday, we had a company meeting, and our Webmaster mentioned that she wasgetting e-mails from people wondering if the poncho was our pattern. It wasn't -- apparently another inmate at the prison made it for Martha.
The next day, I could see that it was stillgetting a lot of attention. For instance, I noticed that "Martha Stewart" was the No. 2 most-searched-for term listed on my search engine. I called our design department and suggested that we should create a pattern, but they were very busy preparing for a major customer who was coming in with an entourage for a meeting the next day.
Q: So you knew something major was happening, but it was tough to persuade your colleagues to jump on it?
A: Well, they were preoccupied. Knitting and crocheting have had a big resurgenceover the past couple of decades, and in the last few yearswe've seen a tipping point in sales. There were 15 employees when I started here 10 years ago. We have close to 90 now. So they have a lot on their minds. I let the poncho thing go another day, but by the next morningI realized it was huge, and we had to jump on it.
Q: How did you know it was so important to act immediately?
A: By that time, the e-mails were really building up. Overall, we got several hundred requests for the pattern. I was so excited and determined not to ignore this that I went to our director of marketing and said, "Frank, I have two words for you: Martha's poncho!" I told him there was no way we could let this go. We got the one designer who was not involved in the big client meeting and hooked her up with an outside designer, who I hoped could work on this right away.
Q: It sounds like you take customer e-mail requests very seriously.
A: We absolutely do. We'll act on a new pattern based on a dozen e-mails because we know those dozen represent interest from many, many more people. Likewise, if we got five negative e-mails, we'd stop doing something. So getting hundreds of e-mails was very significant.
Q: Was the outside designer able to come up with the pattern?
A: Yes, it was incredible. Our in-house designer studied the pictures and decided the poncho had probably been made with our yarn. We tried calling the prison to contact the woman who made it, but the prison officials wouldn't talk to us or allow the inmate to talk to us.
So, we overnighted our freelance designer the yarn, with pictures, and she had it at 6:30 the next morning. She crocheted all day and sent us back the completed poncho and the pattern that night. The next day, we had the pattern and the poncho, and we sent it right into the photo studio and announced that we were putting it up on our Web site.
The momentum has been amazing. We've had more than a half-million pattern downloads off of our Web site, and all our major customers -- like Wal-Mart (WMT
), Michaels (MIK
), and Jo-Ann's (JAS
) -- have put it up on their Web sites, too.
Q: You're giving away the pattern for free. But does the interest translate into increased sales for Lion Brand in the long run?
A: Oh, sure. It's the patterns that drive yarn sales and inspire people to knit and crochet. A ball of yarn doesn't do it, but a picture of a finished object gets people excited about making something with our yarn. So we have some paid patterns in our catalog and online, but we also provide more than 550 free patterns on the site, and we add more every week.
Q: Your sales come mostly through retailers, but you've developed a big following online. Why has that become such a priority?
A: Direct-to-consumer marketing has become very important to us. When our customers feel that they're being listened to, and that we react to their interests by giving them new products or new information, they reward us with an amazing amount of loyalty. When they go into a craft store, they know the Lion Brand, and they look for our products.
Q: How did you build that loyalty?
A: The company owner, David Blumenthal, has a son who was a high school student in 1995, and he built a very basic Web site for us. Since then, we've been slowly building and improving. The site teaches people how to knit and crochet, answers questions, tells inspiring stories from readers, offers hints and tips, and lets people know about opportunities to knit and crochet for charity. It's like having a friend who sits and works with you.
We have a very active consumer community of about 370,000 that subscribes to our weekly newsletter. We get about 13,000 e-mails a month, and we have a customized system that receives them and sorts them by category. A dozen of our staff members spend at least part of their time answering those e-mails.
Q: How do you then use that feedback to better run the company?
A: Anything very positive or very negative gets forwarded to me, so I can take the customers' pulse. If the employees see something out of the ordinary or start to notice the slightest trend -- if nobody has ever asked for a pattern for dog sweaters before and then five people ask, for instance -- I want to know about it. There's no better way to anticipate trends and tastes. It's great market research that comes right to us directly from our best customers.
Have a question about your business? Ask our small-business experts. Send us an e-mail at Smart Answers, or write to Smart Answers, BW Online, 45th Floor, 1221 Avenue of the Americas, New York, N.Y. 10020. Please include your real name and phone number in case we need more information; only your initials and city will be printed. Because of the volume of mail, we won't be able to respond to all questions personally. Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues