1-800-Flowers CEO Jim McCann on His Company’s Second Blooming

 You’re facing one of the biggest hurdles of leadership—fixing a business that isn’t broken. You’re the founding CEO of the world’s largest florist, 1-800-Flowers, which has thrived for more than 35 years under your nurturing touch. You grew a business that people said couldn’t be scaled from a single New York flower shop into a retail chain and telemarketing powerhouse whose operations took root across the country. Next, you became an early pioneer in Internet sales and took your company public. But while revenues are now over $1 billion and your floral and gift company has operations in 70 countries, you know that you can’t rest on your laurels if the business is to continue to grow.

Jim McCann was working as a social worker and part-time bartender when a barstool regular mentioned plans to sell his floral shop. Having just started a family, McCann was looking for a business with growth opportunity. He put in a few Saturdays at the store, found that he enjoyed it and took the plunge, picking up the operation for $10,000. “I wanted to build a business, not just a flower shop,” he recounts. “So six months later, I opened up my second shop and we averaged one shop every six months or so.”

Then came McCann’s lightning-in-a-bottle moment: changing the company’s name to 1-800-Flowers. In hindsight, the brilliance of the moniker may seem obvious, but at the time the market was dubious. “Everyone told us it would never work,” says McCann. “People don’t need to be able to order flowers 24 hours a day, they don’t need a seven-day guarantee.”

In all fairness, the naysayers were not entirely wrong. The company’s first telemarketing station averaged less than 40 calls a day—calls, not orders. But while the concept wasn’t an instant hit, McCann’s company soon reaped the rewards of the publicity generated, in part, by its very critics. “It was so novel that we got a lot of free ink, both people saying it was crazy and people saying it was revolutionary,” says McCann. “It wasn’t an instant hit but the press we got helped us become a brand.”

Given its maverick culture, it was only fitting that 1-800-Flowers also become one of the early adopters of Internet sales, staking its claim on the virtual marketplace early on by working with AOL and CompuServe. “It was probably 1996 when we realized that our business couldn’t continue to grow in a telephonic environment—we needed to put all our bets on the Internet,” says McCann. Similarly, when the social and mobile sales channel began to gain traction, the company took a proactive approach, becoming one of the first companies to enable transactions on Facebook.

Just as a rising tide lifts all boats, a drought can ground them. 1-800-Flowers did not emerge unscathed from the tumble the gift industry took during the economic downturn. Unable to stem losses with cost-cutting measures, the company had to resort to laying off some of its workforce. “In 2008, we clearly couldn’t continue to fund the dozen and a half projects we had under way,” says McCann, acknowledging that allocating resources becomes tougher during a difficult economy. “So we made a bet on social and mobile commerce, because we felt it was clear that it was going to take over the world.”

“We made a bet on social and mobile commerce, because we felt it was going to take over the world.”

Still, investors grumbled about the cost of continuing to invest in the rosy future of mobile sales. “It was painful to be pouring money into something that wasn’t going to produce anything for some time,” recalls McCann. “It’s tough to sit around with a board of directors saying, ‘You just had a layoff for the first time in your company’s history and you’re still pouring money into social and mobile?’”

McCann persevered and today 1-800-Flowers is back on a growth track, one strengthened by its efforts to reach for customers through social media and the mobile market. “Bricks and mortar was the first wave, the 800-number was the second and the Internet was the third,” says McCann. “But I think that the fourth wave will be the biggest. There are five billion mobile phone contracts in existence in the world and only six billion people. There are 450 million people who use Facebook monthly. The wave is just unquestionable.”

To catch the wave, 1-800-Flowers has charged its dedicated social marketing team with finding ways to build relationships with consumers that go beyond sales transactions. The company’s 2013 #JustBecause campaign was one outgrowth of that effort. Launched on the AMC Reality Show “The Pitch,” #JustBecause let users share their stories and memories about gifting, which then spread across the social technology universe via Facebook, Twitter, Instagram, YouTube, Google+ and other destinations.

Back in September of 2013, when the team told McCann that the company would hit 1 million likes on Facebook by February of 2015, he challenged them to do it by Valentine’s Day instead. “While they didn’t quite make it, this spring we hit 967,000 likes,” says McCann. “When someone likes you on Facebook they’re giving you permission to access a lot more information about who they are and what they like to do, as well as the opportunity to reach out and engage them.”

Changing your business model to adapt to the capabilities of new technology while staying true to the philosophy and relationships on which the company was built can be tricky. For McCann, efforts to morph his company to leverage all the different customer touch points technology provides are all an extension of the same value proposition his first floral shop provided its local customers. “All I’m trying to do is mimic the relationship I had with people back on 1st Avenue 35 years ago,” he says. “They’d ask for restaurant recommendations or say, ‘Gee, I’m having a party and I could use some ideas on decorating and food.’ Those are the dialogues we had with our two or three dozen regular customers, and now those are the dialogues we can now have through social technology.”

Jennifer Pellet: As editor-at-large at Chief Executive magazine, Jennifer Pellet writes feature stories and CEO roundtable coverage and also edits various sections of the publication.