Data Management for Marketing Alpaca Products

Project Overview

FNC14-958
Project Type: Farmer/Rancher
Funds awarded in 2014: $22,335.00
Projected End Date: 12/31/2015
Region: North Central
State: Missouri
Project Coordinator:
Dr. Mary Licklider
Heartfelt LLC

Annual Reports

Commodities

Not commodity specific

Practices

  • Education and Training: decision support system, farmer to farmer
  • Farm Business Management: budgets/cost and returns, marketing management, value added
  • Sustainable Communities: new business opportunities

    Summary:

    PROJECT BACKGROUND
    Heartfelt LLC is a partnership of three alpaca farms and one fiber artist located within a 10-mile radius in Boone County, Missouri: The Alpaca Company, Curly Eye, and Coats High Ridge Farm. The three farms raise 70 alpacas and harvest about 500 pounds of fleece annually.

    Through Heartfelt LLC the three farms purchased a FeltLoom and collaborate to produce felted alpaca fiber products including trivets, rugs, coasters, wall art, birdhouses, insoles and bowls. We have created a website, a Facebook page and a LinkedIn page for Heartfelt products and include these products when our farms sell items at craft shows across Missouri.

    Mary Licklider of Curly Eye led this project. She is a grant writer with 25 years experience writing grants, running grant-funded projects and teaching grant writing. This expertise ensured that the project was implemented as proposed, funds were expended appropriately, and reports were filed on time. Her years of involvement with MOPACA (Midwest Alpaca Owners and Breeders Association) as an officer, Board Member, and volunteer helped to lend credibility as project results were disseminated to other alpaca breeders. Curly Eye Alpacas began in 2002 with five alpacas and has grown to 20 animals. Mary holds a BA in English and an MEd and PhD in education with an emphasis in organizational dynamics.

    Diane Peckham of The Alpaca Company was one of the first two farms to introduce alpacas to Missouri in1990. Diane was a founding member of MOPACA and her expertise is widely respected among alpaca breeders. Diane has a BA in biology and an MS in journalism. While working as a medical technologist, she also edited newsletters for MOPACA and the local Little League Hockey Association. For 20 years her technology job and alpaca farm work overlapped, but she is now retired from hospital work and has more time to devote to alpacas and fiber endeavors.

    Linda Coats of High Ridge Farm has raised alpacas and horses for many years and is employed by the University of Missouri in the Career Planning Center. She has long been a member of the Spinners and Weavers Guild and has excellent design skills. She participates in numerous art and craft shows throughout the year and enjoys introducing people to her alpaca fiber products and her animals.

    Carol Brown has a BA in textiles and has run her own business, Carol Brown Custom Sewing,
    for 15 years. Her skills in textile management and design are of great value as some of our
    projects include fabric incorporated into the felt object. Her design ability is well used when
    making alpaca felt products. She is involved in the marketing and sales of Heartfelt products.

    SUSTAINABLE PRACTICES
    Alpaca farms are inherently sustainable businesses due to the characteristics of the alpacas:
    • Alpacas live very lightly on the land. Their soft padded feet and their light weight mean that they don’t tear up the landscape.
    • The fact that the dung piles are cleaned up daily means that there is a minimum of run-off
    from alpaca waste.
    • Alpacas have three-part stomachs that digest hay and grass very efficiently. They don’t eat a great deal, nor do they require or even do well on rich, high-protein diets. This means that the need for herbicide and pesticide application on their pastures is minimal if you use them at all.
    • Alpacas don’t challenge fences. The real need for fencing is around the perimeter of the
    alpaca pasture-barn area to protect them from predators.

    PROJECT DESCRIPTION

    GOALS
    In this project, we planned to develop a process and resources for identifying the best route to a national market for non-perishable sustainable farm products, devise a marketing plan to reach that market, collect data on the results, and then share the process and marketing materials widely. We planned to take a two-pronged approach: First, we planned to tap marketing experts to identify the most efficient route to a national market and develop a marketing plan for pursuing this route. Second, we planned to engage a database expert to integrate inventory, sales, and marketing data to inform business growth and efficiently reach appropriate markets.

    PROCESS
    First, we put together a team of national and local marketing experts. Ken Weiss and Ken
    Mannheim were involved in the successful national lifestyle marketing efforts of Alpaca Owners & Breeders Association, Inc. or AOBA (now AOA, Alpaca Owners Association, Inc.). They agreed to provide “big picture” guidance for our marketing strategies and message. Igniting Business, a local firm specializing in small businesses and nonprofits, agreed to develop the overall message and strategies into concrete products.

    Trade Shows
    Perhaps our most successful “trade show” efforts were within the alpaca industry itself. In
    spring 2014, we placed flyers in the show bags for four alpaca shows to invite breeders to have us make insoles from their fiber. This yielded 13 new wholesale customers and accounted for most of our growth in 2014. So in spring 2015–we chose spring shows because they fall just before shearing–we placed flyers in the show bags for eight alpaca shows. To date, our wholesale customers include about 40 alpaca farms. The lesson for us is that, if we can figure out where our customers might congregate or events that they are likely to attend, we have a better chance of getting the word out to them about our products.

    We knew there were trade shows that retailers attend to find products for their stores, and we spent a ridiculous amount of time attempting to find those shows on the web. At last we learned that the secret search word seems to be “market.” We took a big chance with our own money to attend the enormous Outdoor Retailer show in Salt Lake City in 2014. To say that we were lost in the crowd would put it mildly. We gained only one account from that show. Thinking we needed a smaller venue, we tried a regional show in St. Louis. That one turned out to have a primary focus on Asian-made holiday decorations.

    As part of our USDA project, we did a lot more research on the national “markets.” Our search for shows that might be appropriate to Heartfelt’s admittedly broad product line produced about 35 shows around the country. (Readers can access all the details of this research via a folder of files on Dropbox here.) Then we screened the list for several priorities:

    1. We needed a Goldilocks show that was “not too big” and “not too small.”
    2. Given the warmth of alpaca, we looked for shows that would draw retailers from the
      northern half of the country.
    3. We looked for locations that would be within about a day’s drive from mid-Missouri to
      avoid the expenses of air fares and shipping all of our booth materials to and from the show.

    This cut the list to 8 or 10 prospects. From there, we emailed and called to ask questions:

    • Who are the typical vendors? (We can’t compete with third-world child labor.)
    • How many vendors typically attend?
    • How many vendors of hand-made US products participate?
    • How many buyers typically attend?
    • What types of businesses do typical participants/buyers represent?
    • What buying cycle are the participants shopping for? (We wanted to sell for fall and
    • winter retail sales.)
    • Is the show primarily for order taking or cash and carry sales?

    And we studied the lists of vendors for recent shows to see how well our products seemed to fit. We finally settled on two shows, one in Chicago and another in Minneapolis. The latter seemed to offer the best exposure for the money, so it was off to Minneapolis in August.

    With our lessons from the Salt Lake show, we invested in placing a product in the show’s giveaway bag for the first 200 buyers, and we created an ad for the show’s directory. We paid to be listed in the directory under all of the categories that applied to our products. We developed a slide show to help draw people into our stall.

    We got no orders. None. In a FIVE DAY show. I did, however, get a lot done on the shawl I was knitting.

    Many farmers are probably not familiar with what a wholesale market is. Retailers “go to market” where there are permanent show rooms set up and they can see products and decide what to carry in their stores. What we learned in Minneapolis is that the distributors who have these show rooms carry multiple “lines” of products and have sales personnel who call on the stores – they don’t just sit in the market and wait for people to show up.

    We also learned that these distributors typically get a 15% commission for their role, and that to be worthwhile, they will likely want to see at least about $50,000 in annual sales. So you have to think about how hard you want to work before you tap this kind of resources.

    The best thing that came from the Minneapolis show is that because we attended, we could
    purchase the mailing list of all of the retailers who attended. That list has already yielded several new accounts, and we’re hopeful that more will come of it based on the number of “opens” that our email to the list generated.

    The Web
    Many small sustainable agriculture operations have websites, and a portion may even support ecommerce. Many also have Facebook pages. Most of these efforts are designed, however, without the needs of a national audience in mind. Our marketing professionals encouraged us to emphasize the made-in-the-US, eco-friendly, Heartland location, and women-owned aspects of Heartfelt, and the color palette, new logo, and graphic images were selected to reinforce that vibe.

    Igniting Business upgraded our website not only to reinforce this image but also to bring its
    ecommerce features to 2015 standards and accommodate both wholesale and retail customers. We’re hoping this is a perk that helps us hold onto our current customers and also helps us pick up a few new customers.

    We learned that for search engines to find our site, we needed at least a couple of paragraphs of text on the home page because search engines can’t read pictures. We also learned, to our dismay, that we needed to maintain a blog with entries at least once or twice a month. Any readers who have done this or who have produced newsletters know about the black deadline cloud that just never seems to go away with this kind of ongoing publication. There is some irony in all the whining we did about this: one of us has a master’s in journalism, and another has a degree in English and spent the last 20 years writing for a living.

    We brainstormed a list of topics, split them up among the four of us, and wrote the entries up for a whole year so that it would be behind us. This is not to say that we don’t post timely information as it comes up during the year, but the worst of the deadline pressure has been
    relieved by taking care of the bulk of the content at the beginning of the year.

    We can’t say whether or not the blog is causing the site to get more attention, but we can say that the new website is attracting what we would call a steady trickle of requests for user accounts.

    To help get the new site noticed, we set up Google ads that ran for the first several months to help direct buyers to the new site. For comparison purposes, we set up an Etsy store with some promoted listings to see what those generated. Here are the results:

    Google Ad Words /Etsy Promoted Listings

    • $0.56 per click /$0.70 per click
    • $0.0014 per impression /$0.26 per impression
    • 364,503 impressions /15,250 impressions

    Facebook set off another bout of whining. The average age of the Heartfelt owners is 62. We do not find Facebook “intuitive.” Nevertheless, we had promised in our grant proposal to follow the consultants’ advice, so we set about learning how to shift the alpaca farm “friends” that we had each accumulated over the years to the Heartfelt page, what it means to “share” items on Facebook, and why we should bother with all this. And we have to admit that the consultants were right. Facebook isn’t going to sell products, but it has been effective at creating buzz about our company, our image, and the products we make. Our Heartfelt page has grown this year from a handful of friends and likes to well over 300 likes.

    Email
    I have used Constant Contact in another role. Heartfelt for several years had an iContact account, which is almost identical to Constant Contact but a little cheaper. Our marketing professionals suggested MailChimp, which is free if you have mailing lists of less than 2000 people. Our marketing professionals also developed a template for our mailings, which is
    included with the Dropbox files.

    We had struggled to develop mailing lists. We had one of alpaca farms that we secured from having sponsored a show several years ago. And we had all of our current customers on a list. So we were very happy to realize that we could acquire the list of 1,500 buyers from the Minneapolis show. And we’ve already gained new accounts as a result of our first mailings to this list.

    The reporting on MailChimp is really impressive. We can see the email address of those who have opened each email, of those who clicked a link in a given email, which links people clicked in a given email.,… So this has allowed us to pare that list of buyers from the Minneapolis show down to just the individuals who are actually opening our emails. MailChimp allows us to pay as we go, so we paid $30 for a month until we got the big list pared down. It’s a very affordable vehicle if you have very targeted addresses. If not, it’s just an aggravation and spam for the recipients and extra work for you.

    Print Ads
    Our initial grant proposal didn’t anticipate that we would have enough funding to place print ads, but we had some cost savings in other areas that allowed us to see how effective this avenue would be. The advantages of national magazines are that they go to the reader, they are more “permanent” than a web ad or a show booth, and they have established and known
    demographics.

    The big disadvantage is cost. We’d LOVE to have a big ad in Mother Earth News, but those run upwards of $12,000 a pop. We were, however, able to identify several options that we think will get us to the retailers we are after:

    • Smart Retailer was a give-away at the Minneapolis show and appears to have the retailer
      demographics for stores that would likely carry our products, so we ran two quarter-page ads
      there this fall. We’ve already had requests for wholesale user accounts from individuals who
      saw those ads.
    • Display ads in Mother Earth Living are way out of our price range, but they do have a sort of
      “classified” section, so we are trying that.
    • And Alpaca Culture produces an annual directory, and we placed a quarter-page ad in that,
      hoping that people will look at it more often than they would a single regular issue.

    Record-Keeping
    If all this sounds like it took a lot of time, it did. Part of our grant project’s goal was to figure
    out how to make our bookkeeping and inventory management more efficient in order to save
    time. Prior to submitting our USDA proposal, we communicated with six to eight experts about the records and reports we needed and the software applications that might help us. All the experts pointed to QuickBooks, though they disagreed about which version we should use. After more consultations following the receipt of our award, we settled on QuickBooks Premier.

    Despite the best efforts of a QuickBooks-certified accountant, QuickBooks Premier would not maintain our inventory, track the owners’ individual fiber contributions, or track the individual owners’ contributions of time. Here’s why: We have more than the allowable number of descriptor fields for our products. We want to know not just how many rugs sold; we need to know which colors, patterns and sizes sell best. We calculate the percentage of the total fiber pool that came from each owner. When a product sells, we look at the weight of the fiber in that product and assign a percentage of that weight to each owner to match the percentage of the fiber contributed by that individual. We do the same thing for the labor that goes into each product.

    In other words, we only pay ourselves when a product sells.

    We’d sort of led ourselves to believe QuickBooks would be a panacea, only to discover that our humble Excel spreadsheet was doing all these things that QuickBooks Premier couldn’t replicate. We were stunned.

    It took a little while to regroup. Eventually, it dawned on us that our credit card processing service provided reports. We looked more carefully at what the various flat-rate services offered (a table of this research is included with the DropBox files). Square allowed us to upload and download inventory files and also allowed us to use a barcode scanner. However, when we saw the extent to which we could categorize our products in the Square software, we realized we didn’t need the barcode scanner.

    The reporting in Square is just what we wanted. We can see sales by category (e.g., how many rugs or hot pads or insoles we’ve sold), by item (how many small insoles or wholesale insoles we’ve sold), and by date (how much we sold at a particular event). We can record cash sales as well as credit card sales in Square.

    Our original goal was to be able to cut and paste from the Square download into the Excel spreadsheet so that we didn’t have to key sales into the Excel spreadsheet by hand. We identified an Excel programmer online with Excel4Business, and he was able to reduce the process of uploading our whole inventory from Excel into Square down to about a 20-second process.

    Ditto for downloading all of our sales (including cash and checks, not just credit card sales) from Square into the Excel file. With these “macros” in hand, we asked him to automate our invoice production, so the Excel file now has a worksheet with buttons for choosing the customer and sale items, for saving the invoice as a pdf to our invoice folder, and for updating our Income worksheet with the information on the invoice. I can’t begin to capture my excitement at all the time this part of the project has saved us. To say that we’re pleased is definitely an understatement.

    PEOPLE
    • Ken Manheim and Ken Weiss of KLM Creative provided the overall vision and strategies for our marketing plan.
    • Ben Seidel, Jennifer Matthews, Andrew Dominick and others of Igniting Business helped us implement the marketing plan. They created the new website, templates for our email marketing, the trade show slide presentation, two sales flyers, and the print ads that we placed.
    • A local accountant with Accounting Plus installed and set up QuickBooks, LinkLabeller, and Wasp Labeler + 2D on our laptop. She did additional research to confirm her realization that the software we had purchased would not replicate the tasks we had been accomplishing with our Excel spreadsheet.
    • Ian Holden of Excel4Business created macros for our Excel spreadsheet to automate uploading our inventory to Square.com, downloading our sales from Square.com, and invoicing customers.
    • Lanette Freitag of FeltLoom, Inc. allowed us to present our grant project at the annual
    conference of FeltLoom owners.
    • Joan Benjamin advised us several times during the course of the project as we made revisions and adjusted our course.

    RESULTS
    The first result we can cite is that over the last two years we have been successful in migrating our business almost entirely to wholesale customers, adding to date about 70 wholesale accounts. In terms of the various strategies we tried, those that appear to have been most successful and cost-effective would be the email marketing, the alpaca show flyers, and the print ads in Smart Retailer. Because the QuickBooks glitch caused a major delay in the project work as we figured that out, we won’t really have a more solid handle on the results of the project until after the project period ends.

    In comparing where our time was spent in 2013 to 2015, we can see several differences that we attribute to the results of our SARE project:

    • Record keeping time is down by 30% despite having more sales.
    • Advertising time is up for 2015 by about 30%, largely due to time spent finetuning the new website.
    • Selling time is down by about 30%, thanks to not doing so many craft shows.
    • As we compare our projections for 2015 as to the total time we will have spent on Heartfelt activities and the total income to those totals for 2013, we expect that our income for 2015 will be about 160% of what it was in 2015, while the total hours we devoted to the business will be about 145% of the 2013 total. This net gain of about 15% in our efficiency appears to have been drawn in large part from time spent with record keeping and selling activities, exactly where we had hoped that the SARE project would make us more efficient.
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    Materials

    DISCUSSION
    As we come to the end of our USDA project, we can say several things. First, grants are very much a “be careful what you ask for” endeavor. We accomplished a great deal in our project, but we earned every bit of it with our time and effort. Second, the “research and education”
    moniker for the SARE program was completely appropriate to our project. We did substantial research at every step, and we hope that the information we compiled, particularly about software options and trade shows, along with the new-and-improved version of our Excel file, will be useful to other farms. We definitely learned. Our research obviously taught us a lot, and we also learned from the marketing consultants who coached us and developed materials for us and from the results of the project’s marketing efforts.

    Project objectives:

    Spring 2014 – Notice of award: establish agreement with marketing consultant and database consultants;

    August 2014 – Completion of templates and schedules for marketing Heartfelt products; identify and purchase computing hardware and software.

    October 2014 -Project personnel learn to use the integrated database application and place it in use; implement marketing plan, including activation of templates and schedules for marketing tasks.

    November 2014 through December 2015 – Complete implementation of marketing plan; track results of marketing efforts; assess usefulness of integrated database; prepare progress report.

    January to March 2016 – Engage in outreach and evaluation activities.

    March 2016 – Submit final progress report.

     

    Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.