Michael Soenen is FTD’s green thumb. He runs the 94-year-old flower delivery company with the care of a weekend gardener doting over prize azaleas before a county fair, and he’s helped turn the once-wilting flower into a rejuvenated, blossoming enterprise.
Despite its place in business history, with one of the most recognized brands in the world — the gold, wing-footed Mercury — FTD represents different things to different generations.
“It was a brand my grandma loved, my mom liked but my sister hated,” says Soenen, who became president and CEO in May. “The company had been mismanaged and hadn’t really been leveraged to the extent possible. Its brand had become a bit outdated. We kind of joke around here that it was really a bunch of carnations stuffed in a coffee cup.”
Despite the company’s well-known name, its brand had become stale. Originally known as Florists Telegraph Delivery and later Florists Transworld Delivery — reflecting its reach of approximately 150 countries — FTD began as a nonprofit co-operative owned by the florists it serviced. The company was purchased from the florists in 1994, then taken public. The IPO gave FTD’s management team the opportunity to make several changes.
“We were able to embark on a revolution of the brand, a significant updating to target a new generation of customer that previously wasn’t part of FTD,” Soenen says. “We spent a lot of marketing dollars on (an extensive) marketing campaign. We took the brand and updated it.
“We attracted a younger customer crowd, an Internet crowd, and were also able to take up purchasing frequency as a result of the Internet. We were able to push an average order value from $45 to almost $62.”
Throughout its history, FTD has existed to serve its 20,000 U.S.-based and 53,000 worldwide partner florists, and in 1999, it launched FTD.com to provide services directly to consumers. The results of that expansion are visible in the company’s bottom line — double-digit revenue increases in the consumer portion of the business since 2000 and in the florist business the past two quarters, reversing a trend that had dragged down the main part of the business over recent years.
Following an acquisition by Green Equity Investors IV LP, an affiliate of Leonard Green & Partners LP, FTD was taken private and FTD.com was rolled up back into the parent company. Soenen, who joined FTD in 1997 and later served as CEO of FTD.com, left the business in February 2004 after two years as president and COO, following the October 2002 reintegration of the Internet-based division into the main entity.
“They had two CEOs,” Soenen says. “When Green Equity did the transaction, the opportunity for me to remain president and COO wasn’t that interesting because I was going to be a No. 2 for the next five years. I really wanted the opportunity to be a No. 1, so I left the company.”
Soenen’s self-imposed sabbatical, which he spent traveling to places including Africa, where he climbed Mt. Kilamanjaro, didn’t last long.
As FTD continued to struggle with changing marketplaces, the aftermath of the dot-com crash and an increasingly fickle customer base, chairman and CEO Robert L. Norton decided to call it quits and announced his retirement.
Soon after, Soenen’s phone rang.
“They said, ‘Would you be interested in coming back if the position was available?'” he says. “I said yes. It took about an hour to work it out, and I was back at work.”
Blossoming into leadership
Prior to his arrival at FTD in 1997, Soenen held a comfortable position with Perry Corp., a private equity investment operation, which at the time had a large investment in FTD. Not one to sit back and let others run an enterprise, Soenen left his job to join the struggling flower company in the marketing department as vice president of marketing and sales promotion.
“I’ve been very fortunate,” he says. “I’ve never really had a fear of failing, a fear of taking on a really hard assignment. If you think back to 1994, FTD really wasn’t considered a blue chip place to work.
“Most of my friends were going to work at McKinsey and other blue chip-type places, where they wanted to launch their careers. I actually left Wall Street, where I was doing well, to go work in a situation that nobody wanted to work in.”
And as any entrepreneur knows, you can’t succeed without taking some risk.
“The real opportunity was, if you could fix it, you could end up running it some day,” he says. “That was what we did. I’ve always been more interested in the more difficult challenges in life, and this was certainly more difficult than what I’d been doing.”
Soenen’s opportunity to put his leadership skills into practice came in May 1999, when he was offered the top job at FTD.com.
“At the time, the prevailing thinking in the market was to spin off your Internet companies into separate entities, take them public and let them raise the funds that they were going to need to help them grow their own business,” he says. “That’s what we did. As we grew and grew and grew, we got big enough to stand on our own. And, at $200 million, we were getting big enough that it was becoming clear that we really had one brand, not two.”
That created another problem — two companies with the same brand meant two CEOs running two separate entities. By late 2002, it was clear to Soenen, as well as to others, that the two-headed approach was hindering FTD’s ability to best leverage its assets for growth.
“We had one group kind of going in one direction and one group that was doing something else,” Soenen says. “By putting the two companies back together, we were able to take that Internet thinking — the young and fresh attitude that we were bringing into the company — and spread it through the entire organization. That’s really allowed us to integrate the brand, really tie us together, start to launch into new channels, really push into places we hadn’t before to go after customers we hadn’t before.”
The results of the integration are measured in the number of new customers, the average age of those customers (now under 40) and the income average for those customers, which exceeds $70,000 a year. The florist side of the business has grown as well, moving from 13,000 to nearly 20,000 traditional florists. But Soenen’s not ready to settle.
“We’re also in over 2,500 grocery stores,” he says. “And we’re testing in several big box locations as we speak, several new channel expansion opportunities. Now that we have a (unified) brand, that is much more relevant.”
Soenen’s work at the company led one commentator to compare him to New York Yankees superstar shortstop Derek Jeter saying, “He never complains, he never talks back, he just goes out and does his job perfectly.”
Soenen demurs.
“I am far from perfect,” he says. “But much like Derek Jeter, I’ve got a lot of great players on the field, and even if I’m having a bad day, they can make me look good. From my standpoint, if you look at it over the long term, I have a long track record of achieving goals.
“If you look at our financials, we’ve grown and have continued to grow the company double-digit, both top line and bottom line, over the last five years. And it’s really a function of the people I’ve been fortunate enough to work with.”
Not surprisingly, Soenen credits his team with the smooth reintegration of the two companies.
“The team that we had at FTD.com was probably the best e-commerce team in the space,” he says. “We had $200 million in revenue generating over $20 million of profit, which is pretty rare. It was a combination of Internet thinking with a profitability mindset.
“Bringing that into FTD, many of those managers simply took over many of the key management responsibilities in the new company. We kind of did it all in one day. Everybody knew it was a good idea. It was really welcome; people wanted it. It was just a matter of executing it.”
Cultivating the company
Today, the combined FTD is a $400 million operation. Soenen’s goal is to surpass $1 billion.
“We
b
egan to focus on our customers in a big way when we put the two entities together,” he says. “You’re starting to see the double-digit growth now for our florist business. The other opportunity is expanding into new channels.”
That means finding new places and new ways to service florists and consumers, such as opening storefronts in places like Home Depot.
“Flowers for everyday are often a convenience purchase,” he says. “The opportunity to allow our florists to expand their store fronts by servicing third-party locations is another opportunity for our florists to profit. We’re also launching a variety of new products, which we’re doing all the time — new bouquets that we’re bringing on; whether it’s going after the lower-end market with the value-priced programs, the gifts, which are now over 25 percent of our sales. We were never a gift company before at all.
“We’ve really freshened up and taken a new look at the company. Integrating the two and spreading that throughout, I think we’ve been able to get into new channels and get new customers, in a way, people who wouldn’t have (considered) us before.”
Soenen isn’t content with simply increasing the number of outlets through which florists can provide flowers. He also wants to increase the offerings they provide.
“We have an inherent demand that isn’t dependent on the economy,” he says. “By giving florists new products and services — whether it’s gifts, whether it’s the Internet capability — they’re able to grow their business on top of that inherent demand.”
Those gifts don’t cost the florists that offer them any cash outlay — packages are drop-shipped from the myriad partners the company works with.
“They don’t actually inventory any of these items,” he says. “For them, that’s a great business. As I think longer term, five years down the road, wouldn’t it be great if they did inventory some products — FTD with the same-day delivery of flowers and specialty gifts. You can inventory those products that are nonperishable and allow same-day delivery.
“At Christmas, you can get gift basket delivered same day. That’s an area that we’re currently testing. Longer term, that will allow our florists to continue to generate more profits for themselves.”
And if things continue to grow, both the company’s florists and its owners may be sending Soenen a bouquet.
How to reach: FTD www.FTD.com or (800) 788-9000
