How Barragan family sleeps well at night … as world’s largest mattress retailer
Dial-A-Mattress founder and CEO Napoleon Barragan attributes the success of his company to the effectiveness of television, radio and telecommunications as marketing mediums. The once-proprietor of a lowly furniture shop is now the owner of a successful marketing utility and service bureau for other retailers with franchises located all over the country.
Barragan believes that the convenience offered by the company's two-hour delivery service at any given time has been the main selling point, aside from the prices they offer, which are 60% less than those of department stores'. The company expects to gross $40 million in 1993 sales, an increase from 1992 sales of $28 million. The firm handles 25,000 calls during a 24-hour working period and sells 500 mattresses within that time frame.
Television and telephone grow another marketing utility. To see the way other company apply this channel into business.
Napoleon Barragan is a retailer, an unusual one at that. He no longer sells a line of low-end furniture from a 2,000 square foot store on Jamaica Avenue, in Jamaica, New York. Now, he retails only mattresses, including full size futon mattresses, but in the modern idiom as a "category killer." He sells mattresses on TV and invites interested prospects to phone him at 1-800-MATTRES ("leave off the last S for Savings"). He's no longer limited by a single location. The world is his oyster. AT&T and CNN are helping him as they did Jim McCann at 1-800-FLOWERS (see Direct Marketing, April 1993).
Mr. Barragan's become a marketing utility (SIC 7311-04), a service bureau to other retailers. His 30-second spots are run on any station which reaches young, upwardly mobile, busy people. While Napoleon advertises that his merchandise can be bought for 60 percent less than at department store prices, he says, isn't the most important selling point. It's convenience, delivery in two hassle-free hours-within the video footprint.
While the company Dial-A-Mattress started out in the New York metropolitan area, the firm now does business all over the country (with franchisees or established retail stores in Boston, Philadelphia, Chicago, San Francisco, San Jose, Los Angeles, Miami and Washington, D.C.). Each location must have a sufficient number of trucks to make two-hour deliveries day or evening, weekends and holidays ... whenever the direct response TV commercial is run.
As the commercial airs, interested buyers pick up the phone and dial 1-800-MATTRES. They reach one of 50 telemarketers manning one of the booths in the utility's warehouse and headquarters at 31-10 48th Avenue, Long Island City, New York. The rep asks for the bedding and futon mattress products wanted (twin, regular, queen, king or full futon mattress), tells them the price and determines when delivery can be made within a two-hour time frame ... If the caller wants delivery immediately, the order is phoned to a roving driver in New York. If delivery is requested for a later, specific, two-hour time slot, orders are accumulated and given to the appropriate driver attending the area of delivery during the two-hour slot requested.
Orders for other cities are faxed in minutes, with delivery time specified. In cities where there is no retail arrangement, the full size futon mattress, now get this, is Federal Expressed for next day delivery at 10:30 a.m. It's difficult for the mind to accept that Federal Express will handle this "package," flying it from New York to Memphis for a reload, then onto the destination city. The Barragan group earns a 20 percent commission on each sale they forward.
In 1976, Napoleon was grossing about $400,000 per year from his Jamaica Avenue location. He does that much a day now as the marketing utility for selected retailers around the country. Dial-A-Mattress will gross $40 million in 1993, up from $28 million in 1992. Approximately 60 percent of sales are made with a credit card processed by the truck driver; 40 percent are cash transactions. The firm answers some 25,000 calls a day around the clock and sells some 500 units in that period. Also, 30 percent of new orders come from referrals of satisfied customers.
One big problem with inbound calls is the number of bogus or prank calls from teenagers or adults who should know better. Of some 3,600 calls a day only one-third are valid. Two-thirds are worthless. AT&T has advised Dial-A-Mattress how to recognize this troublesome problem via caller ID. Some numbers which prove bogus repeatedly can be blocked from coming through to TSRs. Hard-to-detect troublemakers are quickly screened through the phone answering routine, through questions that detect a phony inquiry. Nevertheless, the good one-third provides enough sales to make it all worthwhile.
With each delivery, the driver leaves an oversized card which includes a business reply questionnaire to be sent to Dial-A-Mattress. This is done after the new delivery has been tested, pounced upon, accepted. The non-card part is instructional, advising on when to turn the mattress, how to do it without damage to the new Simmons, Sealy or Serta. The card is accompanied by eight coupons worth $20 a piece.
A note from Joe Vicens, vice president, marketing/sales, asks the new buyer to write the sales invoice number on each coupon; then give a coupon to a friend or neighbor. The coupon offers a $20 discount to anyone who calls 1-800-MATTRES and turns over the coupon to the driver on delivery. The coupon donor also gets $20 for every sale. Thus the buyer can get back $160 if all coupons are redeemed. Does it work? One-third of all new sales come from this coupon source.
How Did It All Start?
The Ecuador-born entrepreneur got his big idea in 1976 when he saw an ad in the New York Post headlined "Dial-A-Steak." With business being just so-so, he needed a new approach. An idea flashed: Dial-A-Furniture? "No, that wouldn't work." But what about mattresses, items which sold in his stores for $29 to $49 dollars (for a full size futon mattress)? (Not exactly the top of the line.) That might work, said Napoleon during our interview. Despite the advice of well-meaning friends to forget the crazy idea, he ran an ad in the New York Daily News headlined "Dial-A-Mattress," suggesting a telephone call to his regular business number. Three people called, and he was hooked, on his way.
Napoleon became a regular print advertiser until he became curious about television. He got someone to inexpensively produce a commercial, which ran in late-night slots. This, too, was encouraging. Volume picked up. Then in 1988, he was introduced to the 800 people. He claims to be the very first retailer to try this avenue. Sales soared, as he moved the commercial around to different time slots on cable stations which delivered his customer's demographics. Sales continued to climb as he offered name brands like Sealy, Simmons and Serta, two-hour delivery, free placement in the home and removal of the old mattress, guaranteed satisfaction on delivery or no obligation and prices well below those of department stores.
Interestingly, radio has also proved a good medium. Careful testing is ongoing to learn which stations pull and which don't. The system proved to be magic, forcing a move to a large warehouse and executive offices where, today, some 300 employees guide the enterprise, including Napoleon's two "kids," Lewis and Kay, who function as directors of operations and quality control, respectively.
They're all excited about moving beyond U.S. boundaries and into Mexico, starting out in Mexico City. The family envisions being a service bureau to retailers in all of South America. Thus, Napoleon wholeheartedly supports the controversial NAFTA agreement. He thinks it will be good for the United States and all of the South American countries, including Ecuador, where he was born in 1941. It will be good for both in jobs and GNP. Dial-A-Mattress is already in Canada and has made a connection in Mexico.
The family’s taste is the commissioned marketing utility for retailers all over Europe and on the Pacific Rim. The enterprise is restricted only as satellite TV transmission is limited. Lewis visualizes running commercials in Spanish or any other language. AT&T tells him technology will translate language on-the-fly so that TRSs (Bedding Consultants, if you please) can take the order in simultaneously translated English.
What about product lines beyond mattresses? Kay lights up with the potential for related home furnishings, pillows and covers, drapes etc. There's already a modest catalog which is dropped off with the mattress on deliveries now. What about going the full circle and including furniture? That's not being overlooked.
Many ideas come from reply cards dropped off at delivery time. Questions on the card relate to: 1) Most important reason for buying: 2) What part of the service did you like? 3) Didn't like? 4) What other products would you be interested in purchasing by telephone? The tips are invaluable in improving performance and, equally important, in deciding what to do next. Some of the best testimonials are recycled into commercials. Their in-house TV producer will go out with camera in hand and put the raves on tape. Then edit them for a commercial which may include two other raves.
The pressure to keep moving is immense. Copy-cats abound. Macy's is advertising 1-800-MACY-BEDS. There are 13 others applying the 800 route in New York alone. The mattress idea has clicked among retailers in other cities not associated with Dial-A-Mattress. You see their trucks when driving through cities across the country.
Napoleon Barragan's success has brought many questions from merchants of all stripes. So now he's consulting ... for pay. With most, he signs an annual contract which stipulates a monthly fee of $300. Clients get the course: telemarketing, video commercials, markets, new product categories which ought to be tested, money handling, fulfillment, and the works. Not bad for an immigrant who started modestly in a storefront on Jamaica Avenue nearly 20 years ago.