In just under four decades, 1-800-Flowers.com has grown from a single shop on Manhattan’s Upper East Side to a multi-million-dollar empire that delivers everything from chocolates and popcorn to fruit bouquets and, of course, flowers. Along the way, the company has enthusiastically experimented with many different technology platforms, including CD-ROMs, CompuServe, Second Life and Facebook. President Chris McCann credits his brother Jim, who founded the company, with establishing early on a culture that encouraged reinvention. Now, the company remains actively committed to keeping that culture alive. Lately, Chris and his management team are betting on the fast-evolving parallel trends known as So-Lo-Mo—social media, local and mobile-based marketing—to recreate the old shopkeeper’s instincts on a massive scale. Chris says that one of his secrets is hiring analytical minds—accountants and financial experts—for newly data-intensive roles in marketing. Another secret is to just keep trying new things.
1-800-Flowers.com seems to be in a constant state of reinvention. How do you keep that experimental spirit alive even when the company seems to be doing so well?
To be honest, it’s because we’re paranoid. We’ve seen how technology can utterly transform a business and an industry, and we know that we have to be on top of changes if we want to continue to be successful. If we’re not, someone else will be. That’s why I stay very actively involved in all areas of the company—especially e-commerce and mobile commerce. We’re constantly pressing our people to use technology to change their jobs or to change how we do things.
Not all of your experiments have been fruitful. Your Second Life store, for example. How do you handle failure?
You’ve got to be willing to experiment, but then also determine whether or not something is a success. Clearly the Second Life experiment didn’t warrant a continued investment, so we stopped. A similar thing happened with Facebook Stores. We were the first company to launch a store on Facebook, and we celebrated that. But it didn’t translate into much commerce, so we’ve moved on. Facebook has a different role for us now. I think being able to deal positively with failures is vital. It comes from a culture that encourages taking risks and learning when things don’t work out. I don’t like to say we celebrate failure, but we encourage people to constantly try new things. We also have to manage risk by asking about the downside before we invest to prevent failures when we can. All of that starts with the leadership of a company, but it needs to go beyond every managerial role to make sure that every team is encouraged to come up with new ideas and try new ways of doing things.
You mentioned Facebook. Can you describe your inroads into social media?
Broadly speaking, when we started with social media we thought it would be primarily a customer-service tool, but now it’s more of a brand-engagement tool and a business-and-management-engagement tool. We’re seeing it help us develop the same kinds of relationships with customers that we had back in 1976 when we had one small flower shop. Back then, customers would stop in our store and we’d have conversations with them. They’d provide input into what floral designs they liked. We got to know them, and it helped grow our business. Now social helps us do a similar thing, only at a massive scale. We reach out to our online fan base on Facebook and ask them to vote on which products they like best and then we do merchandising based on that feedback. That way our featured products are already approved by customers. That’s an enormous help when we make product-development decisions. Ultimately, it’s all about building stronger relationships with customers that result in more transactional activity.
How is mobile changing your relationships with customers?
We’ve actually decided to expand our retail presence with 1-800-Flowers.com and Fannie May chocolates because we firmly believe that social and especially mobile technologies are driving people back into the local community. People want the ability to transact locally through their mobile devices. We saw that with the early success of applications like Foursquare. As the leading florist in the country, we provide customers with gifts for all occasions, especially celebrations like graduations, parties and proms where they normally visit their local floral shop. Mobile is a way for our brand to expand into those areas and be much more a part of our customers’ lives. We’ve always had the philosophy that it’s our mission to be where the customer wants us and to make sure the transaction and experience is as good and easy as they expect it to be. Now, we’re seeing the opportunity to do this simultaneously on several different platforms, to be a true multi-channel retailer.
Have you made any forays into personalization?
One of the internal projects that we are undertaking right now is to revamp our whole customer database across the enterprise so that I can analyze data in close to real time. That will help us understand a customer better and make the right offers at the right time. For example, if there’s a lady named Liz on your “smile reminder” and we know that you have a very close relationship with her and that she has a birthday coming up, I want to be able to send you an e-mail that recommends different types of floral bouquets. To do that, we need to be able to understand the relationships you have with the people who are in your address book. It’s going to take some more work to get there.
Do you use technology or data to also drive internal efficiencies?
We use analytics and lean manufacturing processes to constantly drive improvement, especially on the food side of our business, with brands like Fannie May, The Popcorn Factory, 1-800-Baskets.com and Cheryl’s cookies. We also just adopted the whole Google Suite of personal productivity applications, which greatly enhances the sense of community throughout the company, as well as knowledge sharing. We’ve been very successful over the past three or four years in reducing our operating expense ratio. And we’re getting better every quarter. That’s all driven by technology and analytics. As far as data goes, around this time every year, I spend a great deal of time with the CFO of the floral division, who happens to also be CMO, listening to every part of the business give us reports. We’re constantly making adjustments and decisions based on the data that we’re presented.
You have one person serve as CMO and CFO? How does that work?
The man in that role, Tom Hartnett, has been with us for about 20 years. He was a public accountant and he worked in our finance team at first. Then a long time ago my brother and I asked him to take a little bit of a risk and move into operations where he led a couple of our business units. About three years ago, when the recession hit, the Flowers brand took the biggest hit. I felt like one way to turn things around would be to have a much more analytically driven marketing department. So I asked him to also take on the role of chief of marketing. And he’s done a fantastic job. I’m a firm believer that strong, financially driven analytics should be used more to help identify growth opportunities and to shut down areas that maybe aren’t providing enough return on investment. Having one person serve both of those roles gives us a better opportunity to successfully combine customer metrics, site data and performance numbers in a way that allows us to understand how to really drive growth.
Any final bits of advice on how to encourage experimentation in a company?
You’ve got to have a high tolerance for ambiguity. You also have to lead change in your organization, which means you have to be willing to continually learn. A couple of years ago I started calling these meetings with young people in the office. I’d take them to lunch and ask them to teach me, tell me how they live their lives. I wanted to see what they were doing with social media and mobile. I call this reverse mentoring. Once I asked them how often they were on Facebook during the day. The table got very quiet and finally they told me sheepishly that it was on constantly, all day long, every minute they were at work. I said, “That’s fine. I need to know that.” If that’s how they’re all living, I need to figure out how we can market most efficiently to everyone who’s behaving the same way they do.