Welcome Wagon International Inc.

views updated

Welcome Wagon International Inc.

245 Newton Road
Plainview, New York 11803-4316
U.S.A.
Toll Free: (800) 77 WELCOME
Web site: http://www.welcomewagon.com

Wholly Owned Subsidiary of Move, Inc.
Founded: 1928
Employees: NA
Sales: $50 million (2005 est.)
NAIC: 541870 Advertising Material Distribution Services

Believed by many people to be a volunteer organization, Plainview, New York-based Welcome Wagon International Inc. is, in fact, a marketing company. Traditionally, Welcome Wagon's paid representatives, almost entirely women, have visited new families in a community (or brides-to-be, new mothers, and girls reaching their 16th birthday), bearing a gift basket filled with coupons and promotional items—bottle openers, pens, yardstick, etc.—provided by local merchants, who pay to be part of the basket in the hope of attracting new customers. The best of the Welcome Wagon ladies made their pitches so naturally that most newcomers never suspected they were being pitched to. However, times change, and since 1998, when the home visits came to an end, Welcome Wagon has done its marketing for local businesses through the Welcome Wagon Gift Book and through the company's web site, where new homebuyers can check out promotional offers in their community and request the gift book. This contemporary version of the housewarming gift not only includes coupons and other offers but also articles, tips, and home design and insurance records. Welcome Wagon distributes about two million copies of the gift book each year. To produce the product, the company maintains in own in-house printing operations, as well as a research department to compile homeowner data. Welcome Wagon is a subsidiary of Move, Inc., primarily an online real estate listing company.

FOUNDING THE COMPANY IN 1928

Welcome Wagon was founded in 1928 in Memphis, Tennessee, by an advertising man, Thomas Winston Briggs. Born in Memphis in the late 1880s, he was the son of a dairy owner and helped with the business until he was 22. Then, at the age of 22, he married and went to work in Houston for his father-in-law, James O. Jones, a longtime newspaperman. Jones had launched a business to produce special advertising pages that could be distributed as extra editions of newspapers. Briggs thought the idea would also work in Memphis and moved there to start his own firm, Thomas W. Briggs Enterprises. He was correct, the business prospered, and soon he had 300 people working for him and some 100 newspapers as customers. His inspiration for Welcome Wagon came from a chance comment made by a business associate while they were driving home one evening. The man was describing the difficulties a friend had encountered in moving to a new city where he had just been transferred: "He'll probably have to begin his civic and social life all over from scratch." Briggs was always a civic-minded person—who would later charter a foundation to carry on his philanthropic endeavors—but he was also an advertising man. Not only did he think it would be neighborly to welcome newcomers to Memphis, he did not see why he could not do it on behalf of his clients.

Briggs fleshed out his idea to greet newcomers by harkening back to frontier days, when boosters of small towns sometimes greeted passing wagon trains with gifts and supplies in the hope of convincing them to stay and join the community. They made their visits in Conestoga wagons, leading Briggs to call his fledgling operation Welcome Wagon. He never showed up at anyone's door with a gift basket, however. From the start, he considered that task suitable for "the ladies." According to the New York Times, he "built up a staff by recruiting what marketers today would call empty-nesters, church ladies and local influencers, creating what the company says became the country's largest female sales force—a harbinger of companies and brands like Avon, Tupperware and Mary Kay."

Welcome Wagon caught on quickly and began spreading across the country. In the first half of the 1940s the company had to contend with rationing imposed by the government during World War II. Unable to get enough gas and tires, the Welcome Wagon ladies had to walk, ride bicycles, go on horseback, or make use of a horse and buggy to pay their visits. In time, the morale boost provided by Welcome Wagon, which included 600 branches by 1944, persuaded the government to give the company gas ration coupons. For its work during the war years, Welcome Wagon received the Army and Navy E Awards for quality and service, and citations from the Treasury Department and the Red Cross.

Having established a solid reputation and recognition that would extend around the world, Welcome Wagon was well positioned to take advantage of the postwar population boom, as servicemen returned home, got married, the baby boom generation took shape, and countless families moved into the new suburbs. Invariably a Welcome Wagon lady would be there soon after they moved in to greet them and offer them a gift basket courtesy of the fine merchants, dentists, doctors, and plumbers in town. The business thrived, allowing Briggs in 1953 to buy a 17-story building at 685 Fifth Avenue in New York City to serve as the corporate headquarters.

DEATH OF FOUNDER IN 1964

In the early 1960s Briggs began making plans to take the Welcome Wagon concept to Europe, but this idea never came to fruition. In March 1964 he died at the age of 77, and Welcome Wagon was sold to an employee, Rosanne Beringer, who served as president and chairman of the company. Welcome Wagon established a presence in the United Kingdom and in 1967 expanded to Australia. The business of home visitation in the United States was reaching its peak around this time, as Welcome Wagon, employing 6,000 hostesses representing 100,000 sponsors in some 2,200 communities, made 1.5 million visits each year.

In larger cities, in particular New York City, the Welcome Wagon ladies were no longer warmly welcomed by the people they visited, however. The reasons given were the impersonal nature of cities and an urbanite's general distrust of strangers. "City dwellers just don't believe you're not selling something," one Welcome Wagon hostess told the New York Times in 1967. "In the suburbs, mention Welcome Wagon and the door flies open." In addition, an increasing number of women in the city held jobs and were not available to receive the hostess, and evening calls were often not appreciated. As a result, the New York Times reported that by the fall of 1967 there were just two Welcome Wagon hostesses in Manhattan, two in Brooklyn, three in Queens, and five Bronx hostesses who were folded into the Westchester County operation. Welcome Wagon also had difficulty tracking down the names of city newcomers, having to resort to paying for lists. In addition, whereas in the suburbs there was a waiting list of women interested in becoming hostesses, in New York City the company had to resort to running ads on local radio.

COMPANY PERSPECTIVES

Welcome Wagon has a variety of products, designed to help our customers—our partners—build their businesses. Each year, we reach out to almost 2 million new homeowners with our flagship product, the Welcome Wagon Gift Book. We know who the homebuying family is, what they want and how to reach them.

In October 1968 Welcome Wagon was sold to FAS International, parent company of Famous Artists Schools, Inc., provider of home study courses for commercial art, photography, writing, and other subjects. The purchase price was $16 million, including $12.4 million in cash and another $3.6 million in convertible notes. FAS's ownership of Welcome Wagon was short-lived, however. In order to pay down debt, FAS sold Welcome Wagon to the Gillette Company in July 1971 for a reported $7.6 million. Gillette's chief executive officer and chairman saw Gillette as more than just a razor manufacturer, fancying it a diversified consumer products company. Under his leadership the company became involved in areas such as personal grooming products like shampoo and hair coloring, as well as small electronics, such as digital watches and calculators, and even smoke alarms and fire extinguishers. Gillette used Welcome Wagon as a way to test new products by including them in the gift baskets. Like many of the acquisitions made during this period, Welcome Wagon did not fit in well with Gillette, and in 1978 it was sold to members of Welcome Wagon's management team, which took the company private.

By the time Welcome Wagon changed hands for the fourth time since the death of its founder, the company had clearly peaked. Hostesses had an increasingly hard time finding women at home during the day, and a growing number of people were reluctant to let the hostesses into their homes. By 1988 the number of communities with Welcome Wagon operations fell to 4,500. By the mid-1990s the total fell to 2,000, and of that only 1,400 were deemed active representatives. The number of annual house calls also dipped to 500,000. Moreover, Welcome Wagon had to contend with competing welcoming services, such as Getting to Know You, established in 1962 in Great Neck, New York, which produced a directory of local businesses filled with coupons.

SOLD TO CUC INTERNATIONAL: 1995

In 1995 Welcome Wagon was purchased for $20 million by CUC International Inc., a publicly traded company based in Stamford, Connecticut, which offered discount coupon programs, fund-raising programs, and other services, including home shopping, travel, insurance, dining, and home improvement. CUC bought a company in Welcome Wagon that had seen its business erode steadily with the years, generating about $18 million in sales each year. CUC hoped to beef up the number of hostesses to 3,000, improve training, and increase home visits to 650,000 within the first year. The company had no interest in pursuing New York City and other major cities, instead targeting high-growth parts of the country, like Texas and Florida. CUC was initially drawn to Welcome Wagon as a way to market one of its products, Privacy Guard, a credit history service, but CUC came to believe that Welcome Wagon could be used to provide niche marketing for a variety of products and services. Hence, Welcome Wagon, which at one time turned down the business of weight-loss programs and vitamin companies, now opened up the gift baskets to any reputable company, as well as CUC services. With offerings from regional and national companies added to the mix, Welcome Wagon was drifting away from its longtime formula of introducing newcomers to local merchants and professionals.

In December 1997 CUC merged with HFS Inc., owner of real estate brokerages Century 21 and Coldwell Banker, the Avis car rental agency, and a number of hotel chains, to form Cendant Corporation. Several months later, however, Cendant ran into trouble because of a $100 million overstatement of earnings that resulted not only in a loss of investor confidence, but shareholder lawsuits alleging fraud. In the wake of Cendant's stock losing three-quarters of its value, a major shakeup was announced at Welcome Wagon, although management insisted the changes were not connected to the difficulties encountered by the parent company. In the autumn of 1998 Welcome Wagon announced that home visits would cease at the end of the year and all but about 500 hostesses would be dismissed. The ones kept would be retrained to sell ads as Welcome Wagon began shifting to direct marketing through the mail. Whatever role the difficulties at Cendant may have played in the changes at Welcome Wagon, the home visits had been growing impractical. The number of married mothers working full time, according to Census Bureau statistics, had increased steadily from 17 percent of households in 1969.

KEY DATES

1928:: The company is founded by Thomas W. Briggs in Memphis, Tennessee.
1953:: The company moves its headquarters to New York City.
1964:: Briggs dies.
1968:: FAS International acquires Welcome Wagon.
1971:: Gillette acquires the company.
1995:: CUC International acquires the company.
1998:: Home visits come to an end.
2001:: Move, Inc., acquires Welcome Wagon.
2004:: Welcome Wagon moves its headquarters to Plainview, New York.
2006:: The company launches a revamped web site, offering al local business directory.

Late in 1998, Cendant acquired Getting to Know You and merged it with Welcome Wagon. While the better known Welcome Wagon name was kept, the operation was centered around the address and coupon book developed by Getting to Know You for more than 40 years. In 1999 the company made 1.4 million mailings. In addition to the local address book, Welcome Wagon introduced a Pre-Move Planner, a mailing that helped merchants make contact with new homeowners before they moved. Welcome Wagon also made more use of the Internet both to attract new customers and increase distribution of its products.

Welcome Wagon again changed owners in February 2001, when Homestore.com acquired Cendant's Move.com unit, which included Welcome Wagon. Homestore subsequently changed its name to Move, Inc. A company spokesperson explained to the New York Times, "We saw their business as fitting in nicely with ours, especially in terms of the Internet and e-mail." The Welcome Wagon material was mailed to new home buyers only, not to renters. The average new homeowner was a valued marketing demographic: 38-year-old married adult with household income of $71,300. The newcomers among them were highly coveted because they were open to seeking out new relationships with merchants, service providers, professionals, and others. Coupons used by Welcome Wagon people, advertisers found, were more likely to result in regular customers than other types of coupons.

In 2004, Welcome Wagon moved its headquarters to Plainview, New York, and continued to refine its new business model, especially the incorporation of Internet capabilities. In July 2006 the company launched a revamped web site that offered a local business directory. In addition to special offers and local pages, the site offered consumer reviews, dynamic mapping of business locations, as well as articles and tips on home and gardening and living well.