Turning Obstacles Into Assets

In an era of traditional list companies boasting about full-service DM, Chilcutt Direct Marketing makes no apologies. Chilcutt does the basics: managing and brokering lists and providing consulting on list matters to the outdoors niche market.

“We made a decision several years ago that we couldn’t be all things to all people,” says founder Don Chilcutt about his family-run business in Oklahoma City. “We are involved in all facets of the service we provide.”

Board chairman Chilcutt is semiretired. His son Matthew, who came of age in the business, is now president.

Their niche strategy has paid off. Chilcutt manages more than 200 lists, about two-thirds of which are also brokerage clients. Giant catalogers Recreational Equipment Inc. (REI), Seattle, and Campmor Inc., Paramus, NJ – with nearly half a million last-12-month buyers each – have been clients since Chilcutt’s start. Those big guns drew in smaller companies and the client tally today includes catalogs, magazine and book publishers, and alternative media in the camping, fishing, hunting, sports, horticulture and military areas.

When the elder Chilcutt started out in 1980, any business strategy would have been irrelevant. To be “legitimate,” a list company needed a name the industry recognized and an East Coast address.

Chilcutt had neither.

The solution was to affiliate with then-independent Direct Media Inc., Greenwich, CT, as the larger firm’s outdoors list division. By the mid-’80s, that unit had 100 clients.

“Where we’d started out with two people, we suddenly found ourselves with billings as large as medium-to-large list companies,” says Chilcutt. “It became evident that we could stand on our own.”

The parting was amicable. Still, he felt the company needed some support. “We didn’t feel we could go from the first grade to the 10th grade.”

Chilcutt joined with Walter Karl Inc. (now part of InfoUSA in Omaha, NE) in 1988, but it never was a good fit. The feeling of autonomy the Direct Media affiliation instilled was consumed by a sense that “the relationship was we were a Walter Karl company,” he explains.

He realized that with his sales department thriving, all that was keeping him from independence was a lack of accounting and data processing departments.

Accounting was set up, and Chilcutt’s son Scott, who later founded data-card company Marketing Information Network in 1989, formed a data-card research division in house.

The break came in 1990. A lawsuit over money Walter Karl owed to clients overshadowed the split, but the action was dropped when all debts were paid, says Chilcutt.

Meanwhile, Matthew had come on board, starting at the bottom as assistant to a broker. He grew with the company, Matthew says proudly.

Among clients, growth has slowed in recent years.

“I think the outdoors market grew in proportion to the catalog market,” Matthew observes. “During the late 1980s and early ’90s, there were more people entering the catalog business as small start-ups, so there was growth.

“Now there’s larger companies buying smaller companies so they can continue to grow. Small customers of ours have gone belly-up. Diversification is probably one of the top ways of growing a business,” Matthew adds, pointing to REI’s addition of women’s and children’s catalogs and retail stores as examples.

For a time, the most lucrative client – and most notorious – was not an outdoors DMer, but the upscale apparel cataloger J. Peterman Co.

Peterman has also been a notorious disappointment. When the Lexington, KY, business went bankrupt in January, it owed Chilcutt more than $100,000. Just as disappointing, Indianapolis department store chain Paul Harris Stores Inc., which purchased Peterman’s assets, has let the cataloger’s lists lie fallow. The aging names decrease in value every day.

“We’ll never see the money,” says the elder Chilcutt without ire.

He recalls when, 10 years ago, co-founder and chairman John Peterman first asked to meet in Lexington to discuss Chilcutt handling his 40,000-name file. Don Chilcutt told Peterman: “`I don’t go anywhere for 40,000 names. You come here.’ Peterman did, and had a three-day course in direct marketing,” he reports.

The Chilcutts are circumspect about Peterman’s rise and fall. The rather prissy New York eccentric portrayed on the TV series “Seinfeld” is “One hundred percent different in real life,” according to Chilcutt. “Instead, he’s a gentleman farmer who’d rather be out on his farm raising horses than being in New York.”

Still, he lent an air of celebrity to an industry not known for its glamour. And, Chilcutt points out, “John created a mystique that was incredibly successful.”

More important to Chilcutt, at the summit of Peterman’s success, the cataloger’s file held the names of 200,000 last-12-month buyers – and Peterman’s list was handled exclusively by the company that taught him the ropes.

Though Chilcutt will hazard an opinion about Peterman’s downfall – joining the Abacus cooperative database diluted the file’s exclusivity and value – his personal loyalty to Peterman is unwavering.

“I slept at the guy’s farm and we listened to the coyotes howl,” Chilcutt says in describing their friendship.

Moreover, Matthew maintains that both he and his father respect Peterman as a marketer. “I think that the industry will be seeing more of John,” he says.

Of course, success softens potential resentments. Yet, part of the way the Chilcutts have made their name is by turning obstacles into assets.

Even the vast prairie miles between clients have been tackled in the singular Chilcutt style.

“Several years ago, we were doing so much flying that I got back problems from running though airports,” says Don Chilcutt, pointing out that some clients are in such hard-to-reach locales that visiting them typically amounted to a $1,000 airline ticket per person, plus a day lost traveling.

“We realized we could get to them much faster by flying,” Chilcutt says. So the list company bought a used tour bus from race-car driver Mario Andretti. They’ve since replaced it with another business coach – equipped to sit 18, with sleeping accommodations for four.

Like country-and-western singers, the firm’s executives barrel around the Midwest in their “broker bus,” and “pull up to our client’s driveway and have our meeting,” Chilcutt says.