Deborah Fine is pretty good at shaking things up.
Three years ago, when she joined Direct Brands, the largest distributor of physical multimedia products such as books, movies and DVDs was in desperate need of transforming its business model to better compete in an increasingly changing marketplace.
Fine’s problem was pretty straightforward: Many of the company’s holdings had strong brand recognition, such as Rhapsody, The Literary Guild, Columbia House, QPB and The Book Of The Month Club, but those and other brands had lost their luster. And with the shine went some of the corporate revenue.
Aiming to provide more for the customer and recapture brand loyalty, Fine introduced a largely fresh marketing team and implemented new Web and social media strategies. She also took a new look at traditional, proven methods.
“We realized pretty quickly that between the database of scale and owning the ability to power a direct consumer channel, inherent in those lie two very, very large opportunities for growth,” Fine says.
Smart Business sat down with the former president of iVillage to discuss what it took to turn Direct Brands into a digital age company.
Q: On day one, what challenges did you walk into this job and face?
I walked into the success of a model that was largely unchallenged for decades, so there was nothing wrong with this model for a very long time. A mere three years ago, this was a billion-dollar business. The challenge is that the landscape changed so quickly. This is a company that saw throughout its legacy Red Box, Amazon and the changes at Barnes & Noble. It saw radical change around it, and frankly, it didn’t respond with the speed that the company now thinks and executes with.
Q: Did you find there was an urge to leverage your existing resources to expand outside the company’s core competencies?
Yes and no. We identified our growth strategy on several fronts. The first job was to go back to our roots and execute against core, direct marketing tools and best practices to increase loyalty retention — all the things that belied our heritage.
The second was to take the 24 businesses we own — those in physical form as well as their digital companion sites — and bring related business into the fray. For example, if we have amongst our audience several hundred thousand members of The Good Cook, (we have) a reasonable opportunity to monetize that audience and sell them the related casserole dish, spices and kitchen gadgetry.
The third (job) was recognizing the turnkey legacy value and expertise needed to power that model — with best-in-class distribution and customer service components — enabling us to enable others.
Q: You’ve been in industries where disruptive innovation is necessary. How are you bringing disruptive innovation to this organization?
Most disruptive about what we’re doing is exposing the company to new ways of running a business, as well as bringing in new disciplines. Titles such as ‘head of business development’ and ‘chief transformation officer’ were not titles that existed before. So I think I say it sort of in jest, but not really — the biggest change was showing up and bringing in a CEO to transform the entire management team. I changed 80 percent of the management team in my first year. Talent is the silver bullet, and there are very few business practices that are silver bullets.
Q: How are you balancing traditional channels with the new channels for doing this business?
It’s really a hybrid. When I arrived at the company from working as president of one of the largest online sites for women at NBC with iVillage, the perception was that I was going to show up with the world’s largest shredder and literally shred every piece of paper, every catalog and every piece of collateral material that we used to run our business. But no business today, regardless of genre, is able to throw the baby out with the bathwater.
So for us, I subscribe to test, learn, repeat; test, learn, repeat. And that’s what we are doing. Social media is a great example. There’s no way I’m going to walk away from 60 million pieces of direct mail, 500 million e-mails and 27 million cartons that can be marketed in, on and around in favor of a new discipline that may or may not work for us. But common sense says that because our demo is there, because our customer is connecting online, because our customer is active in social media, we have to be there.
Q: So how does this look in practice?
We’re certainly not abandoning our traditional tools, tactics and strategies, but based on demography, it’s the fastest growing segment. It’s requisite for us to be there, and I think it’s a combination of analytical tools, research, training, learning and business processes.
As a example, we had a situation where we had a consumer registering a complaint and posting it. Actually, we had two situations happening at the same time because of that: We had customer service react almost immediately, people who are monitoring those pages, but then we also had our loyal fans, de facto brand ambassadors, come to our defense.
You can go on the site and read their posts: “I’ve been a member for 20 years, 30 years, 40 years, you know. I‘ve never had this problem with the company. The service has always been a hallmark.”
So re-engineering the company is as much about new systems and processes as it is about changing the psyche.
How to reach: Direct Brands, www.directbrands.com
Interviewed by Dustin S. Klein / Story by Jessica Hanna