hanna Andersson Creates Synergy in People and Profits

Doctors prescribe them. Mothers of fussy children swear by them. Young consumers request them by name. Employees are dedicated to the family-like business and the community in which they live. Suppliers are truly honored to be part of the team. Result: customers are so loyal, some describe them as "cult-like."

What is this miracle product, described simply by the company as "soft clothes of the nicest European quality for kids and their families"? And who is this company, hanna. Simply hanna.

About hanna Andersson
Hanna Andersson Corporation (Portland, Oregon, USA)

Overview: $70 million mail order and e-commerce company established in 1983, employing 300+ and servicing 2.5 million customers worldwide.

Product: European quality clothes for kids and their families.

Mission: "We market clothes to enhance the lives of our customers through quality, functionality, durability, and design. We keep a commitment to the values of respect, integrity and responsibility in all we do."

"Maintaining a long-term positive relationship with the customer is the best way to accomplish (profitability)."
—Phillip Bulebar, VP of Marketing and International

Weaving ideals into the fabric of the firm
Gun Denhart, founder of hanna Andersson, started the company in 1983 as a kitchen table business. Today, this $70 million retailer continues to showcase its customers as its centerpiece. The Portland, Oregon-based company is now 300 employees strong and serves 2.5 million customers worldwide, with a catalog mail order division, an e-commerce site (www.hannaAndersson.com ), two retail locations, and four outlet centers. Mission: "We market clothes to enhance the lives of our customers through quality, functionality, durability, and design. We keep a commitment to the values of respect, integrity and responsibility in all we do."

"There are companies, like hanna Andersson, that believe that the road to success is lined with the human touch," states Customers for Keeps (Adams Media, 2001) author Lois K. Geller. This need for the human touch has strengthened the fibers from which hanna Andersson was woven.

Hanna Andersson practices real CRM because of its commitment to the customer through boom and bust times. For hanna, the term "customer" encompasses a lot of players—from the phone order client to the customer service representative. "Customers" also include the company’s original material supplier from Sweden and the communities of which all are a part.

Connecting and developing long-term positive relationships starts with a guarantee. "If you are unhappy with a product, just send it back. It’s as simple as that," explains Louanne Wach, hanna’s public relations contact. "We look at product dissatisfaction as the perfect opportunity to make a positive experience."

The company’s focus on customer satisfaction starts with the first phone call, using a personal touch. "We want our customers to feel like they’ve called a friend, not a computer," says Wach." Although technology plays an important role in superior customer service at hanna, that role is quite secondary. "Our customer service reps play the initial role." Wach says that it’s up to the sales rep to decide how to deliver information to the customer because, "this is where a lot of relationships are formed."

"The ideal role of technology in the call center," explains Michael Cusack, author of Online Customer Care: Strategies for Call Center Excellence (American Society for Quality, 1998), "is to streamline the customer transaction while at the same time providing valuable business intelligence." Hanna’s comprehensive sales ordering system can handle either telephone inquiries or Internet sales. About 30 percent of hanna’s revenues are generated online.

Inclusive, Relationship-Centric Approach
"Internal customer relationships" are placed high on the priority list at hanna. "The emphasis has always been on work/life balance programs and benefits," explains Gretchen Peterson, VP of Human Relations. "We offer flexible scheduling to accommodate employees' personal lives." Bill Brendler, an expert on organizational change and implementation, agrees with these priorities: "It is a fact there is a direct link between the relationships an organization has with its employees and the relationship it has with its customers."

Suppliers are expected to read and follow the hanna playbook. Hanna has strict requirements, using only a small number of suppliers that understand the company’s needs and will be loyal. "We are a quality company; we want quality partnerships," says Wach.

Loyalty extends into the community. "It's vital for businesses to give something back to the community," explains Denhart. "We donate five percent of our profits through a variety of programs." Family is a critical component of the hanna philosophy, and community giving is part of the hanna brand. Customers help through hannadowns—used clothing donations to needy children.

All this attention to relationships pays off in loyal customer behavior. "There is a customer in New York who shops the Minnesota outlet store by phone," shares Wach. "They know all her children's sizes and she knows every employee by name. She called from the hospital after giving birth to her seventh child to let everyone know 'it's finally a boy.'"

Charting the Payback
A customer-centric business strategy doesn’t come without challenges. The company experienced several years where expenses had to be reduced and efforts refocused. "Fast growing entrepreneur companies almost always experience growing pains," says President and CEO Phil Iosca. "We recognize we have a brand position and everything we do needs to support that. You can’t improve it if you can’t measure it, however."

Results are now measured and shared internally. However, measurements and goals do not compromise customer service. "We have guidelines for call times and calls per hour, but they are that—just guidelines," explains hanna’s Director of Customer Service, Lisa Petrovski. "Every customer is different and shops differently. Every call cannot be handled the same."

At hanna, all employees are part of the CRM Team. "Customer service metrics are presented to the company at a weekly meeting, along with overall sales," explains Phillip Bulebar, VP of Marketing and International. "In the long run, this is one of the best measurements of how well we are doing." He continues, "Keeping these metrics in front of our employees reinforces our commitment to maintaining a high level of customer service." As a company in the "direct" business (including mail order and Internet), performance indicators include catalog response, retention, reactivation, and new customer acquisition rates. While hanna won’t disclose confidential figures, the company says "all of our numbers are very favorable." In fact, hanna has witnessed a direct correlation between its customer-centric approach and business fundamentals. The company’s 12-month buyer file has grown at double-digit percentage rates annually since the 1999 repositioning, while maintaining or exceeding profitability goals.

Real CRM at Work

• At hanna Andersson, people are the primary component of the CRM strategy, which is all about developing long-term positive customer relationships.
• Hanna's 12-month buyer file has grown at double-digit percentage rates every year since the repositioning in 1999 while meeting or exceeding profitability goals.
• All employees are continually exposed to metrics involving customer-centric initiatives.
• Technology plays a role in CRM efforts, although secondary and "behind the scenes."

Taking The Long View
The CRM program at hanna Andersson is about people, not technology. The company does not focus on short-term sales or profits. "In the long run we have to be profitable to stay in business," agrees Bulbar. However, "the more profit we make, the more we can give back through our community involvement programs. Maintaining a long-term positive relationship with the customer is the best way to accomplish profitability."

"Everything that touches the customer should be in the spirit of treating your customers like human beings," says Denhart in Customers for Keeps. With hanna’s commitment to the customer experience, hanna customers will be sharing European comfort for many generations to come.