March 02, 2015
Guts Lead to Glory at Usborne Books & More
by Barbara Seale
Headquarters: Tulsa, Oklahoma
Executives: Founder and CEO Randall White and Vice President Heather Cobb
Products: Educational children’s books
|Randall White and Heather Cobb|
It was a David and Goliath decision—one that would make any direct seller proud. More importantly, it set the stage for growth for Usborne Books & More, one of the direct selling industry’s few book sellers.
Usborne Books & More (UBAM) is the direct selling division of Educational Development Corp. (EDC), which has been in business in the United States since 1978. It sells children’s educational books primarily at parties, and some of the consultants also sell at book fairs, as well as to libraries and schools. UBAM has always been a bit of a rebel-with-a-cause, gaining its first steady market of home schoolers and being led by outspoken EDC CEO and Usborne Books & More Founder Randall White. The thorn in its side: Amazon.com.
Amazon was buying EDC’s books primarily from a wholesaler and slashing the retail price to the bone, including large orders sold to libraries and schools. If you’ve ever thumbed through a book at a retail store but then purchased it online at Amazon to save a couple of bucks, you have done what some Usborne Books & More customers have also done—much to the chagrin of UBAM consultants.
When the Usborne Books & More consultants who sold to schools and libraries—about 20 percent of the company’s business—encountered the practice, it didn’t just frustrate them. It threatened their business. The consultant might have gone through layers and layers of administration, making repeated presentations on book collections, getting enthusiastic, positive feedback, only to have the library make its final purchase through Amazon. It’s not a situation that leads to consultant retention. By 2012 the practice hit the company hard. Consultants started quitting, and sales dropped 20 percent.
By early 2012 White had had enough. He asked the wholesaler, which at the time accounted for 20 percent of EDC’s sales, to stop selling the company’s books through the online retailer. The wholesaler refused, but White was determined. He cancelled its account, all but eliminating the sale of EDC’s books directly from Amazon.com.
The action was bold, and it spoke loudly to UBAM’s consultants. They loved it. It told them that White had their backs. Even though slinging a stone at giant Amazon was a risky move, as White told The New York Times in his characteristic style, “You never have the chance to make 7,000 women happy in one day.”
White calls it the most important action he, as the company’s founder, has ever taken. Consultants were energized to hold more parties and approach more schools and libraries, knowing that consumers would purchase from them, rather than online. That confidence led to recruiting, as well. Fueled by additional incentives from Usborne Books & More, selling and recruiting have increased, creating a snowball effect. Growth has hit an all-time high. Since its low point in 2012, the company more than doubled its number of active consultants by the end of 2014 and now has 8,000 active consultants. More importantly, growth has continued.
From February to June 2014 revenue grew more than 22 percent. Then from June through December the rate exceeded 50 percent. EDC’s earnings release for the third quarter ended Nov. 30, 2014, said that Usborne Books & More had recorded 19 consecutive months of growth, with the past six months each posting monthly gains in excess of 40 percent over the same months in 2013.
Usborne Books & More Vice President Heather Cobb says that growth was caused by a perfect storm that brewed for two years. “It started with Amazon,” she reflects. “Plus, our new branding has been in place long enough to have taken effect. Our graphics have continued to get better—more on target—and our books continue to be the best. In addition, we’re offering the right type of incentives to consultants, such as a trip to Ireland. One of the things we do from the home office is set the bar of expectation. The higher we set it, the higher they reach.”
From Lukewarm to Life-Changing
Usborne Books & More, a division of Educational Development Corporation (trading as EDUC on Nasdaq), was created to concentrate exclusively on selling U.K.-based Usborne children’s books. According to its website, EDC has twice been recognized by Forbes magazine as one of “The 200 Best Small Companies in America” and three times by Fortune magazine as one of “America’s 100 Fastest Growing Small Companies.” In 2014, Usborne Books & More marked its 25-year anniversary.
CEO Randall White launched the company’s direct selling division in 1989 at the suggestion of the head of Usborne Books, but he wasn’t enthusiastic about the idea.
“Peter Usborne told me that his company, which is our supplier, had a home sales division in England and suggested that I should start one,” White recalls. “I wasn’t crazy about the idea, but he talked me into it. I thought, I’ll do it as long as we don’t mess up our real business: selling to stores. Then someone talked me into going to a DSA national convention, and oh, my gosh, it was life-changing for me. After they scraped me off the ceiling, I knew we had to do this.”
He appreciated that as he prepared to launch his new division, industry icons such as Doris Christopher and Dave Longaberger freely offered their expertise and advice. He held his organizational convention, knowing that he had to reach out to everyone who had expressed interest. About 30 attended, including a woman who became the company’s top producer.
In late 2008, EDC acquired Kane Miller Publishing, an internationally known publisher of award-winning children’s books with more than 20 years in the industry, and added it to the lineup of books its consultants could offer. By late 2014 the company’s sales library had grown to 2,000 titles.
Growth has been a roller coaster for the company. Initially it grew steadily, but hit a financial rough patch when EDC struggled through nine years of declining revenues. It turned the corner in 2012. By December 2014 EDC reported that Usborne Books & More had achieved 19 consecutive months of growth. In October TheStreet.com recognized its strong dividends, rating it third in its short list of buy-rated dividend stocks.
Today, White’s reluctant creation, Usborne Books & More, is EDC’s largest division, and his definition of his “real business” has turned around along with company revenue. Usborne Books & More is now a $20 million company.
Setting a high bar isn’t just about trips. Smaller incentives have had a big impact, too. For example, at its last convention in June 2014 the company introduced a simple incentive that has netted stellar results. They offered a two-piece, hard-sided, 360-degree rotation, customizable, branded suitcase set from Spot My Bag. The crowd gasped. To earn the set, consultants had to sell $5,000 of books—wholesale—in any one month from July through December. That equates to $7,000 in retail sales in a single month. It would be a stretch for distributors in many companies, but especially for Usborne Books & More consultants. The average price of a book is less than $10. The outcome? More than three times the number of consultants reached the monthly goal than in the previous year.
When White first heard the suitcase idea, he wasn’t sold. “I was skeptical,” he freely admits. “I was wrong.” Cobb believes that the effect of the incentive was psychological. “We had enough faith in them to say that we would give them a prize to reach that level,” she notes. “They knew that we wouldn’t give them the challenge if we didn’t think they could do it. So many have thanked us for stretching them. The biggest benefit has been that they learned so much in the process.”
|Founder and CEO Randall White reinforces the company’s culture of accessibility by writing daily personal notes on outgoing packages at the company’s distribution center.|
Repeat sales are relatively easy, according to White. Once a customer attends a party and experiences Usborne Books & More’s high-quality books, they welcome an opportunity to buy more, he says. He notes that some of his customers become fanatics—Usborne and Kane Miller “freaks,” as White calls them. The Kane Miller brand is an internationally known publisher of award-winning children’s books, which EDC acquired in 2008.
Those Usborne and Kane Miller freaks return for more books, which are often offered as a series. When parents buy the first book of a series and see how much their children love it, they come back for more. Plus, as Cobb notes, “New babies are born every day who need to learn their 1-2-3s and A-B-Cs.”
Most consultants and customers are young moms—a built-in millennial market—or grandmothers who have experienced the books’ benefits and want to share the educational wealth. Usborne Books & More is flexible about party presentations. Some consultants do presentations that focus on the books’ educational and developmental features. Others get creative with a fun demonstration. Usborne provides plenty of statistics supporting the importance of reading aloud to small children and the effects of lifetime literacy.
|New leaders are crowned like princesses at Usborne’s annual convention.|
The improved branding and communication that Cobb introduced when she joined the company in February 2011 guide consultants to recruit during their presentations, as well. For example, consultant training in addition to catalogs now lead with Five Ways to Save: collections of similar types of books; monthly customer specials at a reduced rate; combined volumes, which include two or three books under one binding; hosting to earn free books; and joining the team, which offers a lifetime book discount, plus a starter kit stocked with books. The idea was developed years before, but with her background as a direct selling consultant, Cobb put it front and center.
Cobb says that the consultant demographic is gradually becoming younger and younger because of the branding, programming and incentives. In addition, White notes that Facebook is changing the company’s traditional sales model. He says that consultants began holding Facebook “home parties” that produced $800 in sales. Facebook created new dynamics for the consultants holding them. Prospective customers and recruits may be less intimated to attend an online party, and the consultant can even momentarily “leave” the party, click into another group online to ask a quick question while guests browse, and return to the party almost without being missed. And online parties are typically over in 30 to 40 minutes. The experience results in sales and also entices prospective recruits with its simplicity.
“It opened up a whole new avenue for people to recruit,” Cobb notes. But having that first new recruit or two in another state challenges most consultants’ comfort level. “Most people don’t know how to work with someone who lives across the country. They can’t be there for their launch party to help them and to cheer them on in person.”
At the same time, though, that person could sign up in the afternoon, have their e-commerce site and consultant ID instantly, and hold their own Facebook party that night, even before their physical starter kit has time to reach them. Facebook lets the sponsor “attend” the party online and provide the benefit of her experience.
Sales that Lead to Savings
But when online sales were to consumers in multiple states, Usborne Books & More’s cost structure for shipping had to change. The company had spent as much as $9 to ship an order through UPS—Usborne Books & More is the largest UPS shipper in its Tulsa, Oklahoma, hometown—so it started exploring more options. It asked the U.S. Postal Service to make a proposal. Their pitch was so attractive that the company now uses Priority Mail to ship small orders, especially to Alaska and Hawaii, as well as UPS. The impact was great enough that in its December earnings release the company noted that improved shipping rates negotiated during the quarter would materially affect the earnings for that quarter and future quarters.
Usborne Books & More continues to invest in technology that supports its consultants’ business. In early January it announced at its leadership conference that it would launch new financial and direct-selling software, which rolls out this year. Some of the features of the software have been available cafeteria-style to consultants in technologies that UBAM built in-house, but the new outsourced software—made financially feasible by recent growth—consolidates and simplifies their use. It will also be available for about $100 a year, compared to the $20 a month subscription consultants currently use. White believes it will help drive growth.
“We’re finding that the new people joining—young people 25 to 30—have grown up in the smart phone generation,” White notes. “They’re impatient with anything that’s not quick and slick. Growth has allowed us to invest significant money to have the latest thing available to consultants.”
White is bullish about the future. “We are a debt-free company; the last few months have been spectacular; so I think there’s a huge market we can tap,” he emphasizes. “I think we can hit $100 million in four or five years.” He adds, “Literacy is so important. It’s the key to everything.”
High Touch and Tiaras
Every woman should get to feel like a princess. At least, that’s the philosophy Usborne Books & More executives adopt at convention time.
Along with motivating music, training and incentives, the company has one more flagship tradition. Everyone who reaches the company’s leadership level is brought onstage and crowned with the company’s trademark tiara, which they proudly wear for the rest of the convention.
“People want that tiara!” says company Founder Randall White. “It’s the recognition, and you can never have too much of it. It’s the outward sign that you’ve reached the leadership level. We give it as early in the convention as possible. It’s a status symbol to wear it at the convention. People walk up and ask how you did it, how long it took.”
The tiara is just one symbol of the company’s unique culture. Accessibility is another. Executives are so approachable that when White travels on business, consultants often invite him to stay in their homes. And he does. He also talks personally with any consultant who calls the home office and asks to speak to him. He reinforces the culture by making a daily visit to the company’s distribution center, selects several outgoing packages and writes on them: Hi! (smiley face) Randall White. He also writes personal notes to the top 50 salespeople each month, and he “friends” his consultants on their Facebook pages. Each month he personally writes “Randall’s Ramblings” for the consultant newsletter, often describing personal events and connecting them to some element of the Usborne Books & More business.
“We’ve tried to create a culture of family and fun,” he emphasizes. “Doing these things shows that I care about each one of them and wouldn’t do anything that was harmful to them because I know them and their families.”
While White acknowledges that some of those practices will be hard to maintain as the company grows, he wants to do it.
“It’s my life,” he says, “and I love it.”