Onshoring as an Evergreen® Strategy
Dear Readers: This article was originally published in March, 2023. We are sharing it again today because its insights on onshoring strategies are particularly relevant amid the current tariff environment.
As businesses evolve and market conditions change, we as leaders adapt our strategies, experiment with new initiatives, build and rebuild our structures to maximize opportunities. In recent years, the shifts in the market have been dramatic and have caused us here at DEMA Engineering Company, like so many of you, to adapt and even roll back some initiatives that had seemed so right just a few years earlier. Some of these reversals have caused us to learn powerful lessons about what is right for an Evergreen® company in the long term, regardless of market conditions. Our journey to and from offshoring is a great example of this.
For us, the move toward offshoring started all the way back in the 1980s, when we started exploring some partnerships with companies who made injection molding parts in Taiwan. The reasons were clear; the cost of steel to make the tools and the cost of labor–and therefore the parts themselves–were far less than in the US. It was quickly becoming the case that making the tools necessary for running the injection molding parts, even more than making the parts themselves, was so expensive in the US that very few companies were doing it anymore. We found we had no choice, so we made the smart and obvious move.
This shift was happening on a huge scale, in manufacturing as well as a great many other industries. We chose to work with partners in Taiwan, with brokers who managed our relationships, instead of in China because we found that we were able to establish better relationships and communicate more easily, even though costs were higher there then in mainland China.
All of this became easier, even in China, in the 1990s. With the rise of email, communication became easier and more barriers to doing business in Asia fell. We were able to start doing direct sourcing, in Taiwan especially, and bypass the brokers, thereby reducing our costs even further. I don’t mean to minimize the role of China in all of this; we did and still do buy parts from China. It’s difficult to avoid. But it was not our primary market. For the last 20-25 years, our partnerships with suppliers in Taiwan became the core of our business for bringing in injection molded parts.
For obvious reasons, everything shifted suddenly and almost entirely in 2020. The biggest problem for us, as for so many, was the cost of freight, which had skyrocketed overnight. We went from a 40-foot shipping container costing $3,500 to costing over $28,000. You can imagine how much was dropping straight from the bottom line. Between the freight cost that had skyrocketed and the strikes in the ports, labor shortages, unreliable delivery timeframes, and all the mess we saw around covid, it was no longer workable and was imposing extremely challenging and unpredictable circumstances on our business. Add the price increases worldwide, geo-political challenges, tariffs– the uncertainty became too much. This is what pushed us to start to imagine a change.
As we started to imagine ways to mitigate this series of issues, we faced several challenges. One of the most significant grew out of the fact that, over the last 30 years, because of the situation I have described, production of certain products and processes, especially in injection molding, vacated the US almost entirely. For the molded parts, which were also hard to find, we made the decision to start molding them in the US ourselves, even though the cost was higher. We have done this in several ways.
We are able to source some of the parts right here in Missouri. We have a number of small partners here that we work with locally and we are growing that network. It’s not cheap, but we are saving on freight, and we have regained reliability when it comes to delivery times, which is huge for us. We also acquired a subsidiary company in Pennsylvania in 2006 that does injection molding, and since 2020, we have invested in that too, to help increase production. We are basically buying those parts from ourselves, so that helps mitigate the higher cost there, as we are supporting our own business. When we used to start a new project, we would go to Taiwan to get it going. Now, we are starting our new projects at home. We are carrying less inventory and we are being more strategic about the parts we do still ship from Taiwan, being conscious of the size and nest-ability, so we are shipping containers with less empty space.
All of this has helped us reduce our lead times, reduce the amount of money tied up in inventory, and regain consistency of both pricing and delivery of our products. Eliminating the wild uncertainty we were experiencing has been extremely important. But it’s a process; it will take time to truly complete this shift.
Today, we have brought back about 20% of the product we had been sourcing overseas. This number is going to continue to grow. Especially for new projects, we are bringing the tools themselves that make the parts back onshore, and then we can start making the parts here, in Missouri or in Pennsylvania. For the last three big projects we’ve done, we’ve been able to onshore most of the parts.
We regularly share this onshoring strategy with our largest customers and they are very supportive of these efforts. They also understand the benefits of reducing lead times and gaining predictability. Our business will never be entirely domestically sourced, but more and more is moving back home, and we feel very good about our decision.
I keep the Evergreen 7Ps® principles right here by my desk and I have been thinking about Paced Growth and Private in particular a lot recently. We wouldn’t be able to do this if we weren’t Private; it will take time for the investments we are making, especially in our Pennsylvania company, to yield results and return us to strong profitability. If we had a short-term mentality, we would have to follow the lower prices, like many of our competitors are doing. But we are diversifying and integrating at the same time, which will, in the end, make us a stronger company, better prepared to weather whatever the next 100 years have in store for us.
1,000 Years of Stewardship
The story of the modern Western United States is a story of pioneers. My great-grandfather, Thomas Young, was one of these pioneers. He was drawn to these wide-open spaces by his faith and a belief that he could build a better life here. Leaving his native England at age 15, Tom and his family crossed an ocean and a continent, arriving in Ogden, Utah in 1910. Early on, he showed a talent for fine art. At age 20, the young entrepreneur founded Thomas Young Sign Company, specializing in hand lettering window signs. Neon was invented in France in 1910, and in 1928, Young purchased the license to manufacture neon signs in the Southwestern U.S.. The company name became Young Electric Sign Company (YESCO). Tom’s travels selling signs in Utah and California often found him passing through a sleepy rest stop in Southern Nevada called Las Vegas. In 1931, gambling was legalized in Nevada and the construction of the Hoover Dam began, with 5,000 workers pouring into the Las Vegas area. The first Las Vegas casinos opened, and by 1934, he had a make-shift office in the Apache Hotel designing neon signs by night and selling his designs by day.
Today, YESCO is a 105-year-old family-owned business with four primary sign manufacturing facilities and 36 sales and service offices in the Western US. We also operate a network of over 127 franchised sign and lighting maintenance offices east of the Rocky Mountains and in Canada. In 2021, I became the fourth CEO of the company, taking the place of my uncle who led the organization for 33 years.
At Tugboat Institute®, we talk about building companies that will last for 100 years or more. Outside of Tugboat, to non-Evergreen® leaders, this can sound ambitious and even unrealistic. So imagine the reaction I get when I tell people that we have just transferred ownership of our fourth-generation family business to a 1000-year trust! Yes, one thousand years. Here is the story.
My great-grandfather built his business for over 50 years, and while Evergreen did not exist at the time, his actions embodied the Evergreen 7Ps® principles. Recognizing the illiquidity of the company as he neared the end of his tenure, my great-grandfather realized he had a challenge to overcome. He had six children and liquidating the business could destroy everything he had built and endanger the jobs of his valued co-workers. So, he made a pivotal decision: he gave virtually all voting stock to one son, my grandfather, while non-voting shares were distributed amongst the other siblings. They each received some economic value from this arrangement, but my grandfather became the primary owner of YESCO. This ‘gift’ came with a very clear directive. My great-grandfather told his son that he had built the business alongside many great people, and that it was critical to him that those individuals be rewarded for their hard work. He told him that in handing him the reins of the business, he was charging him with carrying the torch forward, and to continuing to build something that would benefit all who participated in the effort. While Tom did not use the word stewardship, we have come to know that this is exactly what he was asking of my grandfather.
This arrangement did succeed in balancing control and economic value, though it also created tension and challenges within the family. YESCO did not, and still never has, made distributions to owners. Rather, it reinvests 100% of profits back into the business. This tension culminated in a major dispute that threatened the existence of the company. The dispute was ultimately resolved with a great outcome for the company and a modest share repurchase program. But the relationships between my grandfather and two of his siblings were permanently damaged.
Fast forward to the early 1990s, it came time for my grandfather to think about his own retirement. He was faced with similar estate concerns as his father. With five children, three of whom worked in the business, he sought his own solution that would preserve the company, and above all, the family relationships. His decision was transformative; he decided to make a move that would ultimately transform our family from a family of owners to a family of stewards. Rather than realize an economic windfall from his shares, he chose to gift them to the 100-year YESCO Stewardship Trust and passed leadership to my uncles and father, who would become trustees and stewards of YESCO.
A published article by family business experts Craig Aronoff and John Ward called The Critical Value of Stewardship was foundational for the development of our family’s creed and purpose. Here are a few of the core beliefs that came from this article and this period of transition:
• Stewardship is our duty to enhance the family’s resources for the benefit of employees and the community, as well as future generations of the family.
• Motivation inspired merely by increasing personal power and wealth fails to sustain families through the generations.
• The results of responsible stewardship provide the moral basis of private enterprise and justify the privilege of inheritance of private property.
• Having received the resources to continue creating value, subsequent generations must also accept responsibility and transmit talents and values.
• Personal well-being does not come from having money, but is achieved by building talents and character, experiencing accomplishment, learning from mistakes, and living with integrity.
So, how do you ensure that your children build character and that when they take over the company you built, they share your values and vision for the company and its future? Families have solved this problem in many ways, but my grandfather zeroed in on replacing the ownership mentality with a stewardship mentality. Both Thomas Young Sr. and Jr. hoped that YESCO could be a vehicle for future generations to be pioneers in their own right and experience the kind of happiness and accomplishment they had known. Their vision and hope were that YESCO would continue to bless the lives of not only their families, but also thousands of employees and the communities where they live.
In 2021, the third generation of the family began formally transitioning the stewardship of YESCO to the fourth generation. I became the CEO that year, with two cousins working in key leadership roles. Each of us began working with YESCO in our teens and experienced success in our chosen career paths within the company. My cousins and I are the first YESCO leaders who have never owned company shares. The YESCO Stewardship Trust allowed us to make this transition smoothly by passing the trusteeship between generations without conflict from shareholders, and without triggering any tax or liquidity challenges.
We realized, however, that there were still potential threats to our desire for YESCO to be Evergreen. First of all, almost 30 years had passed since the trust began, and it became clear that during our children’s lifetime, they would confront the termination of the trust. This would force the family to confront the issues of control and ownership. Secondly, our roster of non-voting shareholders had grown to nearly fifty, and with no distributions and little opportunity to sell shares, they were functionally bound as shareholders with their inherited shares.
In 2022, we became aware of a change in Utah’s trust laws which extended the permissible lifespan of a trust. We decided to take a bold step—transition from a 100-year trust to a 1,000-year trust. The transition was no small feat and took over two years to organize. It required revisiting and refining the trust’s language and intent to ensure alignment with the family’s vision. The process reaffirmed our commitment to stewardship and company values, as well as remaining an Evergreen company. We have also begun an enhanced share repurchase program to better balance shareholder needs for liquidity with company reinvestment. While this process could take decades to complete, our vision for the future is to maintain a roster of shareholders who remain by choice and are committed to our vision and goals, while at the same time creating an off-ramp for those who choose to leave. One of the unintended benefits of this process has been the mending of family relationships as we have reconnected with cousins who were once estranged.
Whether you are a pioneering founder or, like me, following in the footsteps of pioneers, I hope our story might have some lessons that can be applied to other companies who aspire to endure the next 1,000 years. The whole idea of a business existing, and leaders serving as stewards for the benefit of others is at the core of the Evergreen movement. As I look to the future, along with my leadership team, we are clear that we aim to make YESCO an incredible place to work and grow responsibly, so when it’s time to hand over the reins, we can say we’ve honored the trust.
Paving a Path to the Trades for High School Graduates
The last decade has seen significant social and economic ups and downs, but from a business owner’s perspective, one thing seems likely to remain constant: workforce shortages in skilled trades will only continue to grow. This has affected us at Lozier Corporation, a leading manufacturer of products used by retailers and warehouses: store shelves, backroom storage, sortation solutions and checkout and self-checkout systems.
More than a decade ago, we realized that our skilled trades workforce was retiring faster than we could fill those roles. The knowledge gap was only likely to grow, so we decided to work toward diffusing it. Our most successful effort so far has been an initiative designed to engage high school students and introduce them to the opportunities that trade school can provide. Through this work, we have not only helped solve a critical labor shortage, but we’ve also provided young adults with an education at no cost to them, as well as a viable, stable career path.
Lozier is headquartered in Omaha, Nebraska, with facilities across the US. In Omaha, and now in Scottsboro, Alabama, we have created a program that is building us a robust pipeline for developing skilled tradespeople, thereby addressing our workforce needs.
When we first perceived this issue, the average age of our skilled trades employees was between 55 and 58 years old. It was clear that this created a looming retirement cliff. With fewer workers entering the skilled trades field, and demographic data that suggested this would only get worse, we saw that we were on the verge of a critical shortage of trained employees in essential areas like electrical, mechanical maintenance, and tool and die. We had to get out in front of it.
Our options were limited. The first option was to enter an expensive bidding war for existing talent, but this brought with it obvious disadvantages far beyond financial, as that talent was harder and harder to find. We decided we could do better and partnered with the local community college to help develop our own talent, proactively.
Inspired by some others in our industry in the U.S. and especially in Europe, our Chief People Officer and a dedicated community outreach specialist led the charge to develop a training and apprenticeship program aimed at cultivating a new generation of tradespeople from the ground up. A significant advantage was that, by creating our own program, we could tailor it to meet Lozier’s specific needs. The groundwork required to get it started included an enormous amount of community outreach and forging of relationships with local schools and organizations, but in the end, that work, and those relationships, have become the reason it has worked so well. It also confirmed one of the competitive advantages of being an Evergreen® company: people and relationships contribute value that compounds over time.
Lozier’s program, now well-established in Omaha and in Scottsboro, operates on a multi-faceted approach, each aspect of which is designed to benefit both the company and the individual who engages in the process.
A critical piece of the program is the early outreach and recruitment. In an effort to connect with high school students while they are far enough along on their journey to have started to think about life after school, but not so far that they have committed to a specific option, we engage directly with local schools. We visit students at school, we invite students and their families to visit our sites, and we work with Career & Technical Education teachers to identify promising students with an interest in skilled trades. Our focus is to educate the students, the educators, and the parents about the great career opportunities in manufacturing at Lozier. While high school seniors are the primary focus, the outreach efforts often begin earlier, sometimes in even middle school.
Students selected into the Sponsorship for the Trades program receive myriad benefits. Upon graduating high school, selected students work for Lozier and then enroll in the local community college to pursue an associate degree, at no cost to them (books and tools included), while continuing to receive paid, on-the-job experience at the manufacturing company. Upon completion of their education, the student is guaranteed a full-time job with benefits at Lozier.
One of the most innovative and fun aspects of our program are our Signing Day Ceremonies. Each Spring, we host a formal event equating signing to a career in the trades to signing to a college to play sports. These days are designed to celebrate the students and their bright futures, and we involve families, teachers, current and former Sponsorship students, the community and invite the local press. This public recognition helps to elevate the trades as a respectable and desirable career choice.
In order to make the associate degree piece of the program possible, we collaborate closely with local community colleges to provide formalized training at the same time as students are gaining hands-on experience in our plants. The opportunity to earn a degree, all while getting paid, and then start a full-time career without any college debt at all appeals to a great many young people and can be an excellent opportunity to launch into their professional lives and feel quite far ahead of the game.
The impact of this initiative has been significant. Approximately one third of our current skilled trades employees have come through this program, effectively closing the gap of the talent crisis we perceived a decade ago. What began as an effort to merely survive a labor shortage has evolved into a thriving, self-sustaining talent development pipeline and transformed individuals’ lives.
In the time since we have started this program and through its growth, it’s been interesting to watch national trends around post-secondary education. In the U.S., parents and educators used to prioritize four-year college paths over the trades. This contributed in large part to the shortages we saw coming down the line that inspired us to begin this work in the first place. But as college costs continue to soar, the national perception of skilled trades has shifted dramatically. An increasing number of students do not want to start their professional lives saddled with debt, and they are starting to see that they don’t have to; there is another path. Our program, while initially slow to attract applicants, now receives more applications than available spots, making participation increasingly competitive.
Beyond direct workforce development, this initiative has created a ripple effect within the communities we serve. Several former Lozier tradespeople have transitioned into teaching positions at local community colleges and high schools, bringing real-world experience into the classroom, reinforcing the value of trade careers, and further strengthening the relationships that we have forged with the local schools and community colleges.
With our Omaha and Scottsboro programs running successfully, we now have our sights set on expanding the initiative in other locations. However, it’s a big undertaking; such programs require long-term commitment and resources to be effective. For example, Lozier attended and participated in 96 school events in the 2023-24 calendar, along with 34 community events. To support these events and activities, 38 employees volunteered their time. We have learned that in order to be effective and take root in the community, we have to be ready to commit for real and for the long term. We have to take the time to build relationships, set a foundation, serve a small number of people initially, and build a meaningful presence in the community. With time, trust is earned, and success begins to compound.
While the skilled trades labor shortage remains a nationwide challenge, the model we have developed provides us with strategic investment and community engagement. We have been able to both secure our own future workforce and also provide young people with stable, lucrative career opportunities. We are an Evergreen® company whose Purpose is our people. We want our people to become better versions of themselves and to have the opportunity to improve their lives, take care of their families, and give back to their community. This initiative has allowed us to serve our people, and to improve and strengthen our business at the same time.
In closing, I’ll share a few words from one of our newer hires, Sam, who is in Tool & Die. Sam summed it up succinctly, but in some ways, he said it all; "Don't second guess the trades, because we need trades more than ever."
Innovating Through Values-Aligned Partnerships
My father founded the Larkin Company in 2001, after selling the first company he co-founded that administered self-insured disability benefits. The Larkin Company also manages employee benefits, including disability and leave of absence services, and focuses on providing customized, People First solutions for each company’s specific needs. People typically go on leave for reasons that are associated with a huge life event, which means they can be emotional and often difficult situations. We are in this industry because we believe we can help make people’s experiences easier and more positive, by connecting people with the right people and building solutions that matter. This is, we believe, what differentiates our Evergreen® company from most of our competitors.
At the same time as we are driven by a desire to be People First, we are a business, and we must continue to grow and evolve to stay relevant, successful, and Evergreen. For this reason, we are always looking for ways to be innovative and take advantage of opportunities that present themselves, in as smart and creative a way as possible.
The initiative I am going to share with you today grows out of these dual perspectives of the Larkin Company: to take good care of people, and to continue to grow and evolve in our changing market.
As is often the case with the best ideas, this one came to me not because I went looking for it, but because life brought it to my door, in the form of a deeply personal experience. My wife’s father started to decline, and she faced the daunting challenge of navigating healthcare, benefits, and resources for him, a task that proved to be overwhelming and time-consuming. As I watched and helped her navigate this difficult journey, I was struck by how nearly impossible it was to manage these responsibilities while maintaining a full-time job.
From this realization came a broader recognition: many employees, especially those in the “sandwich generation,” are stretched thin, balancing care for both their children and aging parents, not to mention their responsibilities at work. These are often unplanned emergencies, such as a parent’s sudden fall, requiring immediate action and extensive navigation of healthcare and benefits systems. It is rarely possible to manage this and stay productive and focused at work, but there is often no alternative but to do as best as one can. Often, the only choice is to take a leave of absence from work which is when they call The Larkin Company. Seeing the gap in support available to employees, I wondered, could we help make this journey easier? Are there services we could provide, better than what an employer may find through an EAP, that might help the employee and either alleviate the need for a leave of absence entirely or at least reduce the amount of time needed away from work.
Through our personal experience, we had met two women who had just launched an eldercare startup called Ways & Wane. They had done several years of research and had worked hard to lay the foundation for their business. We thought, why not benefit from this hard work, and at the same time, help them get their new business off the ground? We invested in their company, becoming part owners, and set out to bring an eldercare service to life, in partnership with Ways & Wane.
Founded by two sisters, this small company already had a road map for eldercare services navigation, and our investment allowed them to scale and integrate the service into our broader offerings. Rather than building from scratch, the partnership fast-tracked the solution, capitalizing on the startup’s groundwork and building from our shared vision for high-impact, employee-first care. This partnership appealed to us in great part because the founders of Ways & Wane shared our People First orientation. We were a great match.
Like the rest of our services, the eldercare navigation service we developed together places empathy at the core of the solution. Our high-touch model ensures employees have a supportive guide who walks them through every step, from understanding Medicare options to exploring VA benefits for veterans. The service even includes personalized research, like identifying suitable care facilities and ensuring they meet the necessary standards. This matches the level of care we provide for other leave and disability benefits, so it fits right in with our larger profile of offerings.
Feedback from clients has been overwhelmingly positive. In fact, for some of our larger corporate clients, eldercare support has become the top-rated employee benefit within its first year, with participants praising the relief and clarity it provides. Sometimes, employees access eldercare and are able to successfully navigate their situation without taking any leave at all. Many employees have shared that the guidance they received made their process so much easier and more efficient that it prevented them from needing to take extended time off work, which of course benefits both the employees and their employer.
Could we have opted to start our own elder care division, from the ground up? Given that we operate in an adjacent industry, of course we could have. But it would have taken time. The decision to partner with Ways & Wane saved us so much time and money that it was an easy decision to make, particularly given that we are so values-aligned with the co-founders. At this point, Ways & Wane has expanded to cover children as well. So, the solution is evolving into a full family care package. We have a similar collaboration with Navvisa, a startup specializing in cancer care navigation, which grew out of the same strategy: identify critical employee needs and invest in solutions that bring immediate value. Mental health is another area we see opportunities in the near future.
Despite the advantages of the partnership and the relative speed with which we were able to put this initiative into action, it has not been perfect. Our eldercare service has seen slower-than-anticipated adoption—partly due to market conditions and company cost-saving measures. However, the feedback has been so consistently positive that we are optimistic. Given the demographic realities of the country, this is a need that is not likely to abate any time soon, and as it becomes adopted by more companies and normalized, we expect it will continue to grow. Recall that not much more than a decade ago, parental benefits were not mainstream. I was involved in that work at the time, and it took a while for that to get going and for people to see the value of it. But today it’s more or less standard; I think the eldercare piece is following the same trajectory.
From the employer side, it’s a classic win-win. By reducing or even eliminating the need for leave altogether, this service saves companies money on backfilling positions and maintaining productivity. Employees feel supported, and employers see the financial benefits. I can’t imagine that this is going to do anything but continue to grow, especially as people are living longer and longer lives.
To me, this initiative is all about balancing empathy with strategic investment. By listening to the real, often emotional needs of employees and finding agile ways to address them, we are finding more ways we can create meaningful support systems that benefit everyone involved. Taking good care of people isn’t just good ethics—it’s good business.
Discovering Evergreen
As most of you are aware, Dave Whorton and I have written a book about Evergreen® businesses—or rather, more precisely, about Dave’s discovery of the Evergreen way of building and running a company. Until then, the Evergreen companies had been completely unrecognized as a business phenomenon, not to mention a critical component of the American economy.
I had been introduced to Dave by his erstwhile partner Chis Alden, who had approached me about attending the second Tugboat Institute® Summit in 2014. I was the co-founder of the Small Giants Community, based on my book titled Small Giants: Companies That Choose to Be Great Instead of Big. Alden thought some members of the community might be interested in attending the conference. I couldn’t make it, but I was fascinated by the concept, especially given its unlikely origin in Silicon Valley, the last place you’d expect to find any interest in private companies that eschewed venture capital and never intended to be sold. I resolved to find out more and possibly write about it for Inc. magazine, where I was editor-at-large at the time.
Toward that end, I introduced myself to Dave and met him at his office in Palo Alto in mid-December 2014. We chatted about the Evergreen companies in his institute. They sounded a lot like some of those I had met through Inc., including one in particular, SRC Holdings—formerly Springfield Remanufacturing Corp.—of Springfield, Missouri, with whose co-founder and CEO, Jack Stack, I had written two books. During the meeting, I suggested that Dave read the first of those books, The Great Game of Business. A couple of weeks later I was surprised to learn that not only had he read the book right after our interview but he’d arranged to visit Stack in Springfield.
I continued to do research for an article. Among other things, I attended the next Tugboat Institute Summit in Sun Valley, Idaho. I had recently published another book, this one titled Finish Big: How Great Entrepreneurs Exit Their Companies on Top and, at Dave’s invitation, had agreed to give a brief talk about it. The experience at Summit gave me a better sense of the organization he was building and the business leaders he was attracting. I was most struck by their determination to build companies that would last much longer than they themselves would be around to participate. I decided to make the companies’ longevity the focus of my article for Inc.
My editors loved the idea, and I thought they would make it the cover story, but—as the publication date approached—I was told that the magazine had a big “scoop” that it would have to give priority on the cover instead.
The “scoop” turned out to be what my editor described as an “exclusive” interview with Elizabeth Holmes, the founder and CEO of Theranos, manufacturer of a supposedly revolutionary new blood testing system. Sure enough, the October 2015 issue appeared with Elizabeth Holmes on the cover portrayed as “The Next Steve Jobs.” Also mentioned was my story about building companies that would last 100 years or more. Two weeks later, the Wall Street Journal published the first of John Carreyrou’s exposés about Elizabeth Holmes and the Theranos fraud, for which she was ultimately convicted and sent to prison. My article about Tugboat held up considerably better.
Thereafter I continued to follow Dave Whorton and Tugboat Institute, attending Tugboat Institute Summit every year. I was very impressed by the company leaders whom I met there—the lengths that they went to support their people, the role that they played in their communities, their attention to the quality of the products and services they offered their customers. I included several of their companies in the monthly column I was then writing for Forbes.
It occurred to me that many more people would like to hear the story of Tugboat Institute and how a former venture capitalist wound up starting it. I had been writing about business for almost 40 years, and I had never heard or seen any article or business school course about companies that followed the Evergreen 7Ps® principles (Purpose, Perseverance, People First, Private, Profit, Paced Growth, and Pragmatic Innovation) that Dave had identified as the defining characteristics of Evergreen companies. I could see they constituted an important part of the economy that had heretofore completely escaped the notice of the wider business world. When Dave happened to mention that people had suggested he write about the subject, I jumped at the chance to volunteer my services. And that’s how this book came to be written.
We did it with long interviews that I arranged to have transcribed. Then I worked with the transcriptions to produce a draft that Dave would change as he saw fit. What interested me most in working on the book was the opportunity it offered to examine two totally different concepts of business—or actually three, if you consider that Kleiner Perkins exposed him to two ways of building companies with venture capital. All of them can produce significant companies. The approach people prefer depends in large part on their values and goals. Dave Whorton thought that the best businesses would do what Bill Hewlett and David Packard had done with their company, Hewlett Packard—that is, build a community that not only makes great products for customers but fosters better lives for the people who do the work required. Dave Whorton’s experience gave me new insights into how it is done and specifically how the Evergreen companies go about it, which is the subject of the book.
My hope is that readers will appreciate the role of those companies play not only in shaping our economy but in enriching our world. I also hope that readers who start their own businesses will see the Evergreen model as one worth pursuing themselves.
Transforming Compensation Practices as a Foundation for Growth
My wife and I founded Home Science Tools in 1994 when we discovered, through personal experience, how difficult it was for parents homeschooling their children to find good resources for teaching science. We launched Home Science Tools, and it grew steadily; there was indeed a demand for this service! By about 2015, we had grown to a $6 million business with 30 employees, and we were starting to face growth-related challenges. We had ideas about how to grow further, but our structure and team at the time did not seem poised to take it to the next level. We knew something had to change.
There were many reasons we struggled with growth at this stage, but we soon realized that, at the heart of it, was our approach to taking care of our team, and specifically compensation management. We had tried versions of benchmarking salaries, worked toward ensuring fairness, and strived to create clarity for employees about their growth and earnings potential. But ultimately, we realized nothing could change until we embarked on a thoughtful overhaul of our pay structure that could solve internal administrative headaches and also strengthen employee trust and satisfaction. It had to start with a scalable, transparent compensation system.
Like many small businesses, the first thing we realized we had to address was Human Resources. Especially on small teams, HR functions often fall to multiple team members, who juggle many responsibilities. At Home Science Tools, at this stage, we lacked dedicated HR resources, and this was the start of some of our recurring problems. Chief among them was how to benchmark compensation effectively.
Up until this point, in an attempt to attend to this issue, we had participated in benchmarking surveys, but the data often didn’t fit our positions. Further, on some of the surveys, the midpoint for a role would jump or drop significantly from one year to the next. The issue was compounded by the small sample size of local surveys. Data inconsistencies—likely due to the variety of industries represented in our region—created more questions than answers. All of this combined to make us question how accurate, reliable, and applicable the data was.
For employees, this uncertainty sometimes resulted in their feeling undervalued. For managers, whose primary role was not HR to begin with, it was a time-consuming and frustrating process of sifting through conflicting reports.
While the trouble started with benchmarking, it spilled over into adjacent areas as well; we struggled with defining pay ranges for our growing list of roles and determining how to position employees within those ranges. Without a formal compensation philosophy beyond paying slightly above market, decision-making became inconsistent. We had no structure, it was haphazard, and everyone felt it.
Once we had identified this core issue, we had to figure out how to solve it. In 2018 or 2019, I came across Payscale (now called PayFactors), a compensation management tool that has proven to be transformative for us. The platform offers access to a vast database of salary information and uses algorithms to tailor data to specific geographic areas and company sizes. Through Payscale, we were introduced to the concept of salary ranges set at the company level. We could slot positions into these ranges and adjust them annually based on market trends. And thanks to their rich database and sophisticated algorithms, we were able to make compensation decisions with great confidence, as opposed to under our previous method.
Through this work, we created an ascending salary scale with defined grades. At the same time, we developed a comprehensive compensation program document, outlining the philosophy, purpose, and policies guiding our new approach.
Once we had addressed compensation, we were able to tackle many more issues effectively. Recognizing the importance of career growth, especially as an Evergreen®, People First company, we created high-level career paths. While we didn’t draft job descriptions for every hypothetical role, we outlined clear paths for advancement within the company. This provided employees with a clear understanding of their next steps and gave them specific goals toward which they could work.
The result? A system that was easier to administer, more transparent for employees, and adaptable to the company’s growth. Our work succeeded in improving both internal processes and the employee experience. We gained a great deal of confidence in our pay structure, which has allowed us to attract and keep better people. Conversations about performance and raises are now grounded in a structured system, which fosters trust and alignment between leadership and staff. Importantly, our compensation program document is accessible to all employees, further reinforcing transparency.
Since implementing the new system, Home Science Tools has seen significant growth. Revenue doubled from $6 million in 2019 to almost $12 million in 2025. While employee headcount has increased more modestly—to 42 employees—the streamlined processes have allowed the company to scale effectively.
When I look back on this process, and specifically on how our work around compensation has affected our overall success, I see it as one piece of a larger puzzle. While compensation was never the loudest or the most obvious problem, I now realize the extent to which clearly showing employees how much we value them and their growth can, in turn, affect overall performance and company growth. Making room for openness about pay and career opportunities has brought about a key cultural shift. By aligning employee aspirations with company goals, the system supports both retention and engagement.
Looking forward, I know our work is not done. (It never is!) We are approaching 50 employees, and I anticipate that additional HR complexities lie ahead. While we have been able to rely on tools like Payscale for compensation management, eventually, a full-time HR professional will become necessary. For now, the structured compensation program continues to serve as a scalable solution, enabling growth without overburdening the team.
I’d say the overall lesson here is that small businesses looking to grow need to adopt the perspective of seeking and implementing scalable systems early. Our compensation challenges were probably typical of a small but growing company, but through a wider lens, they represent a great example of a system that was not scalable, and then became scalable. If you wait until your growth objectives demand it, you have to wait until the problem is solved to move forward and you can lose time. If you get out in front of it, you will miss fewer opportunities as you grow.
It's also a great example of how you can solve a problem in the period after a certain expertise becomes necessary, but before you have the ability to bring it in house. Whatever challenge you are facing, there is a good chance that a tool like Payscale exists to help you solve it.
Finally, it’s a reminder of the power of valuing your employees and truly putting People First. As we have heard many times, take care of your people, and they will take care of the company. Together, you will be poised to succeed.
EJ+ Launched Last Week at Tugboat Institute Gathering of Teams
Last week, our members and their leadership teams gathered in Nashville, Tennessee for our sixth annual Tugboat Institute® Gathering of Teams. Many aspects of our week echoed the first five Tugboat Institute Gatherings of Teams in structure and format, but there were some exciting innovations as well. This is appropriate, since this is a big year at Tugboat Institute.
In our eleventh year, we are unlocking the second part of our original vision. While continuing our foundational, important work of sharing inspiration, best practices, and wisdom between our members, we are now creating new ways to spread the inspiration and know-how of Evergreen® companies far and wide. An important announcement that we shared at our gathering marked this step forward, about which you will read below.
To kick off the week and set the tone, we welcomed Charles Duhigg, author of the bestselling Supercommunicators and The Power of Habit. Charles introduced us to the why and the how of making deeper interpersonal connections through thoughtful and intentional communication. With the tone of authenticity, vulnerability, and curiosity set, we dove in.
As always, the centerpiece of our experience was our impressive slate of speakers. We were treated to five Tugboat Talks and one panel discussion, all of which offered rich learnings and insights.
Marianne Lewis is Dean and professor at the Carl H. Lindner College of Business at the University of Cincinnati. She is also the co-author of Both/And Thinking, which explores the power of creative tensions. She shared wisdom around how to shift our perspectives on priorities that appear to conflict with one another, such as Profit and Purpose, or Purpose and Pragmatic Innovation, for example.
Tugboat Institute member Ford Mennel gave us insight into the fascinating history of his family’s 140-year-old company, Mennel Milling. He then shared some of the creative ways he has found to grow and innovate in one of the world’s oldest industries – flour milling.
Michael Horn, co-founder of the Christensen Institute and longtime friend of mine and of Tugboat Institute’s, shared a talk grounded in his recent book, Job Moves, in which he explores how and why so many employees are experiencing job dissatisfaction which leads them to make company changes that they later regret. Although the book is aimed at job seekers, his talk offered a perspective into the minds of potential employees and insights into ways companies can attract, hire, develop, and retain talent.
We heard from another Tugboat Institute member and leader of a multi-generational family business, Jayne Millard. Jayne is the fourth-generation leader of her family’s company, Turtle & Hughes, which is a leading electrical and industrial distribution, logistics, and supply chain solutions provider. In addition to sharing the rich history of her family’s company and four generations of leadership, Jayne shared her past experience in the arts and how she was able to meld that passion and experience into her leadership of her firm.
Modern philosopher, Ryan Holiday, author of The Obstacle is the Way and The Daily Stoic, brought forth the wisdom of the ancients, and specifically the Stoics, in his talk. His encouragement to view obstacles not as something to avoid, but as an opportunity to understand and address challenges with creativity and perseverance, resonated with our audience.
Lastly, we enjoyed a panel discussion with Bo Burlingham and me, moderated by Tugboat Institute member Mel Gravely. The topic of the discussion was the book co-authored by us, Another Way: Building Companies That Last…and Last…and Last. This book, which publishes on May 6, 2025, represents perhaps the most important step forward in our push to raise awareness of, and appreciation for, Evergreen companies broadly.
Most of these talks will be available to readers through our Evergreen Journal® in the coming months in both video and audio formats so please keep an eye out for their release. And this bring us to our exciting new initiative, which was launched this past week in Nashville: Evergreen Journal Plus (EJ+).
EJ+ is an upgrade to our Evergreen Journal free subscription and contains our entire library of eleven years of content, which includes over 200 Tugboat talks and 300 Evergreen Journal articles and is growing every week, in a new and vastly improved format. Our library contains a treasure trove of Evergreen wisdom; collected over more than a decade, it includes inspiration, stories, best practices, challenges, and wisdom from Evergreen leaders and thought leaders to help current and future Evergreen company leaders, founders, and owners be more successful. It’s a rich store for anyone interested in learning more about capitalism at its best. Your paid subscription to the EJ+ also includes periodic live events with Evergreen leaders and thought leaders, a curated list of recommended books from me, and much more. As a current EJ subscriber, we invite you to upgrade now to the EJ+ at a discounted price of $99 for the coming year HERE.
By extending the Tugboat Institute experience and know-how to our broader Evergreen community through Another Way and the EJ+, we hope to both elevate Evergreen companies and provide ideas for Evergreen leaders to further improve their companies.
We are grateful and humbled to serve such an incredible community of leaders that make such an important contribution to our communities and society.
Don’t Just Do the Thing Right, Do the Right Thing
Today, at Tech Systems, Inc., we are proud to affirm that when we have a choice to make or a job to do, we do the right thing. Always. No matter what. However, we were not always driven by this commitment. To understand how this has evolved and how we have become the Evergreen® company we are today, we have to go back to 1995.
We are security integrators. In 1995, we were fairly small and, like all security integrators in town, we were continually chasing projects. The low dollar always got the job; we won some and we lost some, just like all of our competitors. When it came to service contracts, after a purchase, we provided a service contract that basically listed all the exceptions to what we agreed to provide. “You pay us X dollars and here are the things this contract does NOT cover. We can do that, but you have to pay us more.” That was standard protocol in our industry at the time. We thought of ourselves as pretty customer service driven in those days, but then something happened that changed us, and set us on a course to become who we are today.
We had been in business for about eight years, and I had become the sole owner of the company. Our largest client called on the Saturday of Labor Day weekend and said, "Hey, all my cameras are out in our parking deck." The service person on call said, "We'll be there the next business day, which is Tuesday, because that's what our contract says." Our client didn’t protest and that was the end of that. I happened to talk to this service person shortly after the call, and he shared the conversation he’d just had with our client. My initial thought was, "Well, that's the way it's structured, that’s the way it's supposed to work."
I was only about a mile from the facility when I spoke to him, so I decided to swing by and see if there was anything I could do. It was still within an hour since the initial call had been placed. I walked in and greeted the guy at the security console, and he said, "Hey, don't worry about it. We got all the cameras up and running." It turned out they had just blown a simple little fuse, and they had been able to diagnose and fix the problem themselves. I thought, what a great resolution.
A couple of weeks later, my contact at the same client called and asked for a meeting. I figured they wanted to talk about a new service or some other new business opportunity. To my complete shock, once we sat down, she announced that they were going to end their relationship with us. They fired us. I was stupefied. We talked it through, and she brought us back to Labor Day weekend. She said, " I know what the contract said, and I know you guys did the thing right, but you didn't do the right thing.”
She explained that they had a bunch of employees, mostly women, working in a call center. They had 34 cameras out in the parking deck, which created a false sense of security. If they went to their cars and somebody was attacked or something, that would be a huge liability for their company. As much as I didn’t like it, I had to admit that she was absolutely right.
Coming out of losing our biggest client, and of realizing what kind of situation we’d put them in, we committed to making a change. We had to do better, and we had to do the right thing, first and always.
It took eight or nine months and more than one iteration. We started by making a list of commitments we were ready to make to all our clients. There were only about 20 of us in the company at the time, so we sat in a room and we brainstormed: we're going to guarantee our response time; we're going to get there within four clock hours around the clock; if we don't do that, we're going to give the client a $250 credit memo, because we're not going to profit on failure. It was an all-inclusive agreement; they pay one price per year, no exceptions. There were lots of other details in there, all aimed at always doing the right thing by our clients.
When we laid this all out and adopted it, we knew it was a financial risk. We were small and not at all sure we could afford this, but we took a leap of faith. Of course, we stubbed our toe several times getting started, but in a very short period of time, it started to become contagious throughout the organization. The team became fanatical about hitting these performance metrics, because frankly, at that time, we couldn't afford to give up $500 of credit. It was all hands on deck
On the other side of this work, we finalized and implemented what we now call F.O.C.U.S – “For Our Client’s Ultimate Satisfaction.” It has made us into an entirely new company. When we implemented F.O.C.U.S, we thought for sure our competitors would copy us and we’d have a new fight for business on our hands. But they haven’t, at all. In fact, ours is an industry where many of our competitors are public, and beholden to their shareholders, and the ones who aren’t are now being rolled up by Private Equity. Neither of those structures have room for an agreement like F.O.C.U.S. We have remained unique in our commitment to complete, consistent, and excellent service.
As a result, we have been able to grow the company an incredible amount, from about 20 employees in 1995 to 515 today. We have clients throughout the US, Canada, and Puerto Rico and 90% of that growth has been purely organic, based on client referrals. Our clients see us as the guys who do a fantastic job understanding who they are and meeting their service needs. It makes all the difference in the world and has become our greatest competitive advantage by a huge margin.
To bring this story full circle, I have one more story to share. About eight years after we were terminated by our client, we had deployed F.O.C.U.S. and it had begun to gain momentum. We hosted a lunch-and-learn presentation in Atlanta where we invited many local security professionals to show them our new products and new technology, but also to talk about F.O.C.U.S. We did a presentation on F.O.C.U.S. and the lady who had terminated us in 1995 was in the audience. After the meeting, she said, "That's incredible. I wish you guys had had that then. We wouldn't have fired you." I replied, "If you hadn't fired me, we wouldn't have it today." They hired us back.
Now at Tech Systems, the spirit of doing the right thing is so deeply ingrained in who we are that it has become the lens through which we make all our decisions, including engaging new clients. If we have a current or prospective client who solely values the lowest price over a long-term service relationship, we will decline their business or even terminate their contract. It’s not common, but it’s an easy decision when it happens. Do the right thing, first and always.
When I look back to 1995, I see clearly that the worst thing that ever happened to us became the best thing that ever happened to us; it allowed us to become the industry-leader we are today. Even though it takes time and can cost more along the way, it pays to not just do the thing right, but to do the right thing.
Eliminate Silos and Improve on All Fronts
Nussbaum Transportation Services is an employee-owned trucking company based in Hudson, Illinois. Founded in 1945 with deep roots in faith and integrity, Nussbaum operated as a family business for many years. In 2018, we transitioned to an Employee Stock Ownership Plan (ESOP), giving each employee a personal financial stake in the company’s success. We’ve grown steadily throughout our nearly 80-year history, but the past 15 years especially have seen significant growth. In 2010, we shifted our focus from short-haul transportation to long-haul, and it was the right decision—but not without growing pains.
For a long time, the entire company worked in one building. Getting to know colleagues or sharing ideas was easy—they were all right there! But as the business grew, we outgrew our building. So, we moved to our new campus in 2012 and added additional office space in 2020. The team is now spread across three buildings—relatively close, and all sharing a common breakroom space—but far from the small, intimate office we knew previously.
As an Evergreen® company, our culture is very important to us. As we entered this new chapter, we still wanted our employees to feel that close-knit connection when they came to work. So, the question became: How do we foster a culture of engagement and communication with a larger group in this new setting? And how do we prevent the building of walls between departments?
These walls (or “silos” as they are commonly referred to) are a serious problem for any business. Less communication can lead to less cooperation, which can stifle innovation, efficiency, and ultimately, the bottom line. One example at Nussbaum was a disconnect between Sales and Billing that resulted in incorrect bills, issuing refunds, and general tension between the two teams. Aiming to address the conflict, we set up weekly touchpoints between the frontline team members to talk through recurring issues and identify solutions. Sales and billing managers also met monthly to share concerns on behalf of their teams, and in the end, the two departments renewed their sense of connection. Ultimately, it reinforced our belief that culture and communication are worthwhile investments.
Many of the solutions we implemented centered around relationships—an essential aspect of culture and beating silos. One classic example is Food Day—a longstanding Nussbaum tradition where employees bring a lunch dish to share and enjoy a meal together. In the “old days,” it happened organically. But in our new office, we established that individual departments would “host” a food day and provide lunch for the entire company. This way, everyone would have the chance to build new relationships, and the host team would get to know one another as they planned and executed the event.
It's been a smashing success—though we realized partway in that department members already spend their days together, so one extra team assignment doesn't really accomplish what we intended. So, we made the simple but effective decision to reorganize. Now, Food Days are hosted by a cross-departmental team with no more than one representative per work group. Everyone still enjoys a community gathering for lunch while the host team forms new connections with coworkers they may not otherwise know.
A second initiative to foster relationships is “The Network Lunch,” hearkening back to the intimate setting of the first Nussbaum office. One of our executives hosts a catered lunch for a small group of employee-owners; anyone may sign up, but no more than two from a department may attend the same lunch. Employee-owners can build relationships with each other and with our leadership team in a more relaxed environment than hosting a Food Day.
That’s great—but what about the “department” that doesn’t work onsite? We’re referring, of course, to the drivers. How do you include them in the broader company? And give them opportunities to build relationships?
One answer is Nussbaum’s Certified RED—a voluntary continuing education and certification program for professional drivers. It helps drivers connect with office staff via hands-on training sessions, mentoring calls, and in-person job shadows. Upon graduation, drivers are publicly recognized at a companywide ceremony, allowing them to see their entire support group! Likewise, the office staff gets to hear the drivers’ stories and learn more about their backgrounds. It’s a win-win! Furthermore, Certified RED training positions the driver to mentor and develop future drivers and create more meaningful connections.
Another small but helpful innovation to improve office-driver connection is Connect Accelerator, a proprietary Nussbaum app. When a driver calls in, the app opens to display their picture on our computer screens. This helps the office staff put names with faces, especially for drivers who rarely come through the terminal.
Our executive team believes that investing in culture is the right choice for our people and the business. We want employees to be on the same team, driven by a shared purpose, and naturally collaborating. Of course, this starts from the top, so our leadership team works hard to model these qualities and make themselves visible to all employees. Our technicians and IT group are two teams in particular that tend to get isolated, so certain executives have intentionally spent time in their spaces, getting to know them and keeping the door of communication open. It makes a difference. Being in front of your people is the first line of defense against silos.
Nothing we’ve done is especially earth-shattering—most of it is simple. The key is a regular, intentional investment. Time, thought, and upkeep are essential. But the dividends—happy, productive employees who drive industry-leading results—is well worth it. As an Evergreen company dedicated to living out our faith, our people will always be the number one priority.
As our founder used to say, “If you take care of your people, the rest will take care of itself.”
Can Affiliates and Influencers Help Drive Sales? They Have for Tacony
Pragmatic Innovation is one of the Evergreen 7Ps® principles, but it’s not new or specific to Evergreen® companies to continually seek innovative ways to expand their reach and drive sales. What is new, especially in the age of digital marketing, is that the pace has picked up quite a bit. While we may be a 78-year-old company in a traditional industry – we are a manufacturing and distribution company that provides the world with better solutions for sewing, cleaning, and home – we’ve embraced the power of social media and online platforms to expand our reach and drive sales.
About two and a half years ago, led by our Director of Marketing, Tracey Wiltshire, Tacony Corporation began to explore collaborations with influencers and affiliates. For ages, our primary channel for selling our products was through independent retail and brick-and-mortar stores. It had become clear that, in order to stay competitive and drive sales, it was time to try something new. So, we leaned into leveraging the power of social media and online platforms.
Our first step was to understand exactly what influencers and affiliates were, how they worked, and how they might help us move our products.
Influencers are individuals with a significant social media following who can help promote the brand's products, often through sponsored content. They excel at creating brand awareness and engaging with a broader audience, though they may not always generate immediate sales. To make this process more efficient, we’ve partnered with platforms like LTK, which allows us to reach a wide network of influencers on one centralized platform. By using LTK, we’ve streamlined our influencer efforts, enabling us to manage multiple influencers at once in a cost-effective way.
Affiliates, on the other hand, are participants in programs like ShareASale or Awin, who promote products through unique links, earning commissions for sales generated through their referrals. This method is considered low-risk and was a great place for us to start; businesses only pay affiliates after a sale is made, making it a cost-effective strategy. This is where we have focused our efforts for now.
Working with affiliates can get complicated, as there are many different types. As we set out on this new journey, we explored partnering with various types of affiliates, such as coupon and deal sites, content creators, and loyalty and reward programs. These affiliates help drive traffic, often through special offers or cashback deals, to our improved e-commerce sites. In advance of this initiative, we did a lot of work on our sites, making sure we were prepared for the increase in traffic and that they were set up to maximize conversion rates when people landed there.
Another way to understand how all this works and why it is effective is to look through the lens of the customer. Understanding the customer journey within affiliate marketing is key. While consumers may be unaware of the complex mechanisms behind the scenes, they often encounter loyalty programs or special promotions while browsing online. For example, a consumer might find a Tacony promotion on Rakuten, which leads them back to the brand’s site. This cross-platform exposure drives traffic and builds brand awareness.
Publisher sites represent another critical aspect of a successful digital marketing strategy. These are platforms where companies can feature their products, through lists like "Best Stick Vacuums,” for example, or other similar rankings. While getting featured on these sites often requires additional budget allocations, the exposure can be invaluable. For example, at Tacony, our commercial floor brand, Powr-Flite, recently saw a single, significant $13,000 sale from an article featuring their product as a top pick for tennis court cleaning. Sometimes the investment is minimized when these publisher sites, driven by good content and well-maintained accounts, seek out products to feature. This can result in organic traffic and sales without any investment at all.
We are still refining our approach, but we are gradually expanding our affiliate programs, exploring new platforms, and adapting to the dynamics of digital marketing. The initiative is still in its early stages, but the results so far have shown promise, especially in reaching new customers and driving online sales in a cost-effective manner.
As much as we have seen success with these initiatives, this strategy is not without challenges. Getting listed on these sites requires not only financial investment but also a deep understanding of how the affiliate marketing ecosystem works. As I think I have made clear, it’s complicated! It's about striking the right balance between visibility and cost-effectiveness, a delicate dance that my team is doing a great job mastering.
If you have not stepped into this world yet and are considering it, the first critical step is to make sure your online platform is ready for the traffic that you hope will be coming your way. No number of affiliates or influencers will help you if your site is not ready to convert your visitors into sales. The next strongest recommendation I have is that you make sure you have someone on your team like Tracey, who is willing and able to dive in and become fluent in this new language. She has been instrumental in this work, and it’s complex. If you are looking to start an affiliate program, I can’t emphasize enough the importance of researching competitors to understand the market standards for commissions and offers. Fit can vary widely. For instance, in the sewing industry, we’ve found that 10% is the standard commission, with some outliers like Joann’s Fabrics offering as low as 2% due to their volume. Understanding these intricate dynamics allows our team to set competitive and sustainable commission rates from the outset.
Once you have taken the leap, managing your relationships with affiliate programs requires constant attention. Regular communication with affiliates is critical to ensure they have the necessary tools, such as landing pages and promo codes, to effectively promote products. This proactive management is crucial for maintaining a healthy conversion rate, which has been the most meaningful metric we track.
In terms of how this is affecting our bottom line, like I said, the early results are promising. We set a goal to grow e-commerce sales to 20% of our entire portfolio. When we undertook this initiative, we were basically at zero and today, a year and a half later, we are at about 14%. Some product lines are selling at higher volumes online than others, but 14% is the average across the board.
Embracing affiliate marketing has been far from simple. We’ve learned that it requires a blend of strategy, constant oversight, and adaptability to the digital landscape, which evolves at a dizzying pace. Yet, as Tracey and the team have demonstrated, with the right approach, it can be a powerful tool to expand a brand’s reach, increase online sales, and build lasting consumer relationships.
