Stand and deliver

Stand and deliver

Peter Slee has enjoyed a range of careers, from banking to cable TV. But it’s customer contact and order fulfilment that brings him most satisfaction, writes Brian Nicholls.

Now, few of us seriously believe Father Christmas meets his annual delivery commitment with an army of little helpers at the North Pole. Some work at Follingsby Park, skirting Gateshead and Washington, and aren’t so little.

They’re employees of Spark Response, one of the nation’s six major customer contact and order fulfilment services, distributing millions of orders to retailers’ online customers from October to December each year.

Their primary attention is now back to non-seasonal buys and requests, such as Red magazine for its subscribers and Fitflop footwear for online buyers and directly into Harvey Nichols, Fenwick and John Lewis.

The reader in Brighton responding to a North East tourism invitation in her newspaper may assume she will hear back from a tourism chief.

In fact, it will be the versatile staff of Spark Response, ensconced in Follingsby’s avenue of warehouses big enough to berth battleships, who will respond on behalf of regional development agency One North East and the Passionate people, Passionate places campaign.

Christmas re-confirmed managing director Peter Slee’s belief that the public is more confident than ever in the reliability of internet shopping.

“They were even buying successfully through us as late as December 21 and 22 this year,” he says.

“It helps that the carrier network is now much more reliable and robust, and that orders can be tracked on their journeys. We put out masses of orders daily, but Christmas brings it into focus with a different sort of pressure.

“Many buyers do order early, but many are also trusting and push it till the end. We’re still putting out thousands of orders on December 21. November is our annual peak, and this time was 50% up on the previous year in despatch terms. We’ve done that in pretty accomplished fashion.” Clad in luminous safety jackets rather than elves’ pointy green hats, staff worked a 24-hour shift system among presents stacked 36ft high, many switching to warehouse work from other duties. Despite forklift truck and radio scanners, staff still made round trips of up to a mile at a time, up and down aisles, servicing customers from the likes of Toys R Us, Red Direct, Kids Playstore, and Totally Funky.

Even Christmas Eve e-appeals get Spark attention. “Carriers aren’t collecting then, but we respond as flexibly as we can, and sympathetically. Where there’s been a problem, perhaps a delay in distribution – it does happen – you try to come up with something. Customers know they’ll get a refund, but we may also try to direct them to a store selling the item near their home.” The items handled range from a tiny piece of jewellery or a hand-held computer game to an outdoor gym – items of over 100kg, even. They draw down from stacks of 7,000 product lines at peak and could cope with maybe 10,000. Yes, Slee agrees, you hear horror tales of people disappointed by late deliveries for a special occasion.

“But our advantage towards getting out on schedule is a long-serving staff. Even many taken on temporarily have worked for us previously. They know the routines. They’re the first option in seasonal recruitment.

“In 2005, we sent human resources staff to Cracow to recruit Polish workers because we found it difficult to get UK staff who could deliver on the campaigns. But for the last couple of years, we’ve been able to recruit locally - Washington, South Tyneside and Gateshead. They’re doing well for us.” Slee - a father of two children and two stepchildren, all grown up – is Sunderland born and bred (educated at St Aidan’s) and he and his wife live there now. He may be spotted on Saturdays at the Stadium of Light.

Staff grows from nearly 200 to 300-plus at peak, when around 70,000 items are being despatched daily. Like many high street stores, Spark makes about 35% of annual turnover then. Summer campaigns are being sought to level the year’s workload.

“The more we build up other months with a permanent staff handling the volumes, the better,” he says. The attraction of working full-time there will get a boost this year, when chairman Barry Stiefel’s long-held ambition to develop a level of employee ownership is realised.

Now that the company no longer makes £1m loss on £8m turnover, but instead £400,000 pre-tax profit on £10.5m turnover – with a switch from red to black in three years – there is confidence the profits will be regular.

The board comprises Stiefel, Slee (with 15% of the equity), and operations director Noel Lambert - “a great guy” with more than 20 years in the industry, who joined in 2007 from Two Ten Communications in Wetherby.

Spark Response’s origins go back to the mid-1980s when Eddie Shotton started a family-owned direct mail and wish fulfilment business called Mailcom at Crowther in Washington.

It used coupon and phone call; today e-business provides more than 90% of Spark Response’s activity. Shotton, subsequently a Direct Marketer of the Year, also set up Virtutel. He and his family have a transformed Mailcom today at Milton Keynes and Boldon, which shares a telemarketing client with Spark – E.ON.

The business was acquired and split out in the 1990s as part of a parcel of six UK purchases by a South African media group, Primemedia. But by 2002, all had been re-sold. Stiefel, a London associate of Primedia shareholders, acquired Spark. Slee joined the following year as a director, becoming managing director in 2006.

A five-year partnership with B&Q from 2001 enabled B&Q to establish and Spark Response to handle 13,000 different product lines for every B&Q warehouse.

“From a packet of screws to a bathroom suite, our dedicated call centre staff of 160 coped. That forged our reputation as a partner who could do pretty well everything you could throw at us,” Slee says. Spark’s average link with outsourced staff is now five years.

“That’s quite unique in our business. It engenders pride in the business, a sense of being part of the family. It also delivers efficiency and productivity.”

Slee attributes Spark’s financial transformation to the performance of its employees and to the firm’s majority shareholders who, although London-based and with worldwide interests ranging from an Australian airport to a US multi-billion dollar cash and carry, showed patience while a plan was being created to deliver profit. What had to be done? “Various issues,” Slee says.

“Some contracts weren’t delivering profit. Another challenge was matching the physical side of the business to its revenues.

“Come to a business park like this and you’re getting into, typically, 15-year minimum leases. However, when you start a business with a new client, you’re typically starting a one, two, three-year contract. It’s a fact of life.

“What hadn’t been so well matched in the past was fixed overhead to likely revenue. We took major steps to consolidate space, converted some office space into warehousing and moved our contact centres to a brighter, more modern environment.

“We released £600,000 of fixed overhead annually. We’ve got two warehouses giving 200,000sq ft now, which is still massive, but matched to throughputs and volume for our clients. Two other units earlier were probably surplus to need then.

In a business like this, you must understand your space needs and get flexibility. That’s tough amid a commitment to such long leases.” Now a strategic partnership with Port of Tyne less than six miles away provides 25% more space, giving 250,000sq ft in all.

“We use that overflow for campaigns with slow moving stock, or some buffer stock and perhaps bring that in on a just-in-time basis.

That works well.” Carriers, meanwhile, are selected by tender built around client preference, with a broad range of about six on the books. Some carriers do ‘ugly’ - the large, heavy product - others work on speed.

“More and more orders are being delivered to our customers next day, or certainly the following working day,” Slee reports. At the end of the day, he is answerable, the first point of contact. The last two years have shown that being certain of anything beyond two years is tough.

But revenues have been growing 30% a year. “We’re not recession-proof, but the internet side of business will still grow and, while a lot of retail campaigns have seen setbacks, we continue to see organic growth.

“For us now, client retention is crucial. We have to show every day that our clients do right to give us their business.” A daily conference for departmental heads keeps everyone abreast of developments, and every effort is made to deliver to customers in accordance with clients’ aims. Besides retaining blue chips, Spark looks increasingly for clients among entrepreneurial retailers.

“They may have reached tipping point,” he explains. “They could be thinking about investing in contact centres and delivery points, whereas their focus and skill is in marketing and developing product range.

“We see ourselves as a key here, helping such firms to achieve yearly double-digit growth.” Spark also wants to serve more charity e-businesses, having already won Cancer Research UK’s Shop to Beat Cancer.

“Charities are growing retailers,” Slee points out. ”Cancer Research is the 16th most recognised brand, and we had a very strong pre- Christmas with them.” And, encouraged by that One North East account for tourism, Spark also aims to partner one more big North East client every year.

One thing Slee is certain about in otherwise uncertain times: “We will grow.”