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Organic collaboration


  • By Mark Gordon
  • | 6:05 a.m. January 24, 2014
  • | 2 Free Articles Remaining!
  • Strategies
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Gulf Coast technology executive Dan Clarke, an engineer and the youngest of 10 kids who grew up on a northeast Ohio farm, is used to being a tad different.

Like the time in the early 1980s when he was part of a team at Intel that worked on something called a laptop computer. Intel's old guard looked down at the young laptop team, recalls Clarke. They called them “crazy kids.”

Clarke worked at Intel for seven years. He ultimately ran two departments, including the video components group, a $75 million unit. And the biggest business lesson he learned from the $53 billion semiconductor chip manufacturer, a guiding principle he still uses today, is laptop-like contrarian.

The lesson: It's imperative to form business partnerships with competitors, large and small, in addition to peers.

Intel, says Clarke, called it ecology. It's when the firm created a mission or objective, figured out which entities outside the firm to work with and simultaneously presented an opportunity to all potential partners, even and especially competitors. It's a system where partners are aligned for a specific mutually beneficial project, but might not be in agreement on other business issues.

The partnerships, Clarke says, can be anything where both sides contribute some expertise on an issue or project that goes past a revenue-generated relationship. “I like to align myself with giants,” Clarke says. “I feel the more competitors you can be friendly with, the better.”

Adds Clarke: “It's been the key to my success as a CEO. It gives me the credibility to get an audience with a high-level executive at almost any company.”

Clarke recently brought his partnership theory to the Gulf Coast, where it has been a major boost for Lakewood Ranch-based Living Naturally, a software and marketing firm for independent retailers. The company is on a growth spurt, in employees and sales.

Living Naturally provides mobile marketing, website management and software services. It also provides data-based loyalty and product ordering programs for natural product stores, specialty groceries and independent pharmacies. Working out of a third-floor office suite in the HomeBanc building on University Parkway, just east of Interstate 75, the firm uses the software as service business model. Many functions are cloud-based.

Executives say Living Naturally purposely tries to keep a low profile to prop up clients. “We are always behind the curtain,” Clarke says. “It's all about their brand.”

Clarke was named CEO at Living Naturally in April 2012. The payroll has since doubled, from 40 to 80 employees, and the total value of products the firm processes through its software has jumped 257%, from $1.4 billion to $5 billion. The company has satellite offices in Phoenix and Chicago, but about 70 of the employees are based in the headquarters.

Clarke projects the firm, with 10 current job openings, will hire at least 40 people in 2014 to both support the growth and go after more business, including larger retail clients. New hires range from software developers to customer service reps, and the expansion will put the firm near capacity in its 12,000-square-foot office.
Living Naturally doesn't disclose revenues, but Clarke says it had positive earnings before interest, taxes, depreciation and amortization for the first time in the fourth quarter.

“We are very excited about the growth in front of us,” says Jim Sheehan, a co-founder and business-to-business product manager at Living Naturally. “We are more focused and organized.”

Prove it
That discipline, say company officials, comes courtesy of Clarke. His partnership approach has brought the company multiple new relationships, and in some cases contracts. Living Naturally, for instance, now partners with some of the leading wholesalers and distributors in the natural and organic food industry, including Nature's Best, United Natural Foods Inc., and KeHE Distributors. Those partnerships are wrapped around data-marketing projects.

And Living Naturally won a major business victory late last year when it signed up Phoenix-based Sprouts Farmers Market Inc. The $1.8 billion specialty grocery store chain has more than 160 locations, mostly in the Southwest. Sprouts uses Living Naturally's ordering, procurement and supplier programs, which are bundled under the software firm's trademarked GeniusCentral platform.

Sprouts, says Clarke, is already one of Living Naturally's largest clients. The business, he adds, only came after Sprouts tested Living Naturally on a few small projects. Clarke also had a relationship with Sprouts executives through partnerships from other businesses. Says Clarke: “We had to gradually prove ourselves over time.”

Living Naturally was founded in 1999. Sheehan and some business partners, who worked at The Granary in Sarasota, wanted to open their own natural foods store. But during the startup process they realized there were few, if any, businesses devoted to helping the technology and marketing side, from website design to inventory management. So the founders shifted directions.

David Knaggs, an Australian-born investor and technology entrepreneur, joined Sheehan at Living Naturally early in that shift because he saw the same void. Knaggs helped run the business for several years in the early 2000s, and remains a minority owner and consultant. He helped recruit Clarke in 2012.

“I'm a startup entrepreneur, the type who can take you from zero to $10 million in revenues, but Dan's the kind who can take you from $10 million to $100 million,” Knaggs says. “He's a dynamic guy and a great strategic thinker in the IT space.”

Genius shelf
The current version of Living Naturally is far from Sheehan's original vision.

The vision now is centered on its GeniusCentral software suite of services. The system uses tailored promotions and coupons, through mobile apps and email marketing, to drive customers into stores. Other Living Naturally products, like BuyingGenius, ScanGenius and SupplierGenius, are geared to specific client needs in ordering and inventory.

The company's growth comes at the right time. Industry-wide sales in organic, natural and specialty grocery stores have been on the rise for several years. Total sales on the organic side alone, for example, have surpassed $30 billion, up from $1 billion in 1990, according to the Organic Trade Association. Big industry grocers, from Walmart to Publix, have also expanded specialty and organic inventories in recent years, another sign of the industry's' growth.

Clarke seeks to match the industry surge with new products to win more business. That requires hiring more people, including software developers. Finding top employees, especially in technology, has been Clarke's No. 1 challenge — just like it is for many other Gulf Coast executives. Says Clarke: “We are only constrained by our ability to hire the right people.”

An executive-for-hire who has been a CEO or board member of more than 10 technology-related businesses since his Intel days, Clarke says he could stick around at Living Naturally longer than other stints. He signed a three-year contract, but “there's so much upside here,” he says, he might stay at least seven years.
“Our success will be based on our ability to execute,” says Clarke. “And I love that. I like being able to control my own destiny.”

Loyalty lives
Loyalty and frequent buyer programs have shifted from the domain of giant companies to include small businesses over the last few years.

Lakewood Ranch-based Living Naturally Chief Operating Officer David Williams captures that transformation in a new book, “Loyalty Marketing Works! (But Don't Expect Loyal Customers.)” Living Naturally, a software and marketing firm with 80 employees, builds data-based loyalty programs for clients, which include specialty groceries and independent natural food stores.

Williams, foremost, cautions against over-hyped expectations. “The fact is,” Williams says in a press release that promotes the book, available on Amazon, “there is no such thing as a truly loyal customer, but if you can use the system in the right way, customers tend to fall into patterns that help businesses be more profitable.”

Williams has worked on marketing projects for a slew of retailers, mostly in the pharmacy industry. The list includes CVS, Eckerd, Walgreens and Duane Reade. Here are some tips Williams provides for a business that seeks to launch a loyalty program:
-Don't call it loyal or frequent buyer. Those phrases, writes Williams, aren't “particularly exciting.” He suggests names like rewards club or card; community club; VIP club; or Best Guest. Those names make the program about the customer, writes Williams, not the business.
-Use a point reward system, not dollars. A point reward plan, Williams says, is the least complicated and most effective system. Points, for example, can easily be given away to correct customer service mistakes or other errors, real or perceived.
-Design credit card-sized cards, but offer key tags because some customers want to avoid wallet clutter.
-Make sure the program meshes with a mobile app, where customers can scan their phones to track rewards.

 

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