Jeff Taxdahl has sewn up a national clientele and more than $1 million in sales at Thread Logic, his embroidery company that makes logo apparel for other companies.
Taxdahl attributes the company's growth to extensive online marketing efforts.
Pay-per-click ads and other online marketing tools have put Thread Logic in the top 10 percent of embroidery companies nationwide in terms of sales, while bringing the digital age to a largely local, mom-and-pop industry that saw sales fall by more than 20 percent last year. In contrast, Thread Logic posted a 25 percent jump in revenue last year to $1.1 million, building on consistent double-digit increases since Taxdahl founded the company in 2002.
Taxdahl's story resonates even more with these recessionary, job-shedding times because he founded Thread Logic after getting laid off from a marketing management position in 2001.
Taxdahl had thought about starting his own company when he was in college, getting an undergraduate degree in marketing from the University of Wisconsin-La Crosse and a master's in marketing education from the University of Minnesota. The idea had less appeal as he advanced in his career, got married and started a family.
'In control of your destiny'
Getting laid off, while a shock, made him reconsider taking that entrepreneurial risk.
"It was definitely making lemonade out of lemons," Taxdahl, 46, said. "I said, 'Here's my chance, here's an opportunity to take control of what I'm doing.' Being an entrepreneur, being a small-business owner, you're in control of your destiny. The company succeeds or fails largely on what I do. I wasn't afraid of failing."
Taxdahl did marketing consulting, helping small business contacts with their marketing programs. He eventually decided he should turn his marketing work into a company. He chose embroidered logo apparel as the vehicle for his marketing efforts because he had often bought such items in his past jobs.
"I started doing research, talking to people in the industry," Taxdahl said. "One of the messages I heard was anybody can learn to embroider. The hard part is sales and marketing and running the business. And that was my background."
First, though, he did learn to embroider, figuring out largely by trial and error how to run a two-head machine and cranking out the logos himself. His start-up financing came from a loan he took out against cash value in an insurance policy.
Today he has eight employees and four machines with 15 heads, stitching logos on polo shirt, hats, jackets, T-shirts, sweatshirts and accessories for use as corporate apparel and uniforms. Within a few weeks, the company will move to a larger space, also near Jordan, and likely will add another employee.
Besides embroidery, Taxdahl also had to learn some new approaches to marketing -- using pay-per-click ads, keyword searches and testing pages where users land when they visit his site. In his previous work, he had done most of his marketing through direct mail and networking. Taxdahl wasn't sure online marketing would fit his plan to provide a high level of customer service and build relationships with customers over time to win repeat business from them.
"My perception of the e-commerce model was that it was all transactional and price-driven," he said. But in 2005, he decided to give the Internet a try and now credits online marketing with much of his company's growth. More than 90 percent of his orders are from outside Minnesota, and sales have grown 25 percent a year in each of the past three years.
"It's really a marketing problem," Taxdahl said. "We're just trying to attract the target market and communicate to that target market our value proposition."
As the economy soured, Taxdahl ramped up his online marketing, spending even more on pay-per-click ads in hopes of gaining market share as others retreated. He's planning on continuing that approach this year, looking to fine-tune his efforts to lower the cost of acquiring new customers.
On the service side, Taxdahl said, customers respond to several marketing strategies. One is flat pricing, with no minimum order. Contrary to the industry standard of setting prices by stitch count, Taxdahl said, Thread Logic has what amounts to a free embroidery policy, meaning the price of the shirt or other item includes the stitching used to create the logo. And the lack of a minimum order makes it easier for small- and medium-sized business customers to test his products and service on small orders.
Thread Logic also provides free logo consultation. Not all logos translate well to embroidery, so potential customers can upload their logo for a free evaluation. Thirty percent of the uploads become orders, Taxdahl said. Molly Johnson, marketing communications specialist at St. Francis Regional Medical Center in Shakopee, has been ordering lab coats, physicians' coats and employee gifts from Taxdahl since 2002.
"He does quality work quickly," Johnson said. "I like vendors who make my job easy, and he's always been that guy. He makes recommendations on items that would be best received and which would be best to put our logo on. If he says it will work, it does."
Joel Theisen, founder and president of AgeWell Home Care in Edina, said he appreciated the fast turnaround and personalized service Taxdahl provides. AgeWell has ordered logo shirts and bags for nursing and home health aide staff and higher-end shirts and sweaters for sales people.
"He's practical, he's personable and he knows the value of a lifetime customer," Theisen said. "One of the things we've respected is, he's not always trying to sell you the highest-priced items but the right item."
The expert says: Lorman Lundsten, professor and chair of the marketing department at the University of St. Thomas Opus College of Business, said Thread Logic appears to be well-positioned, in part because business-to-business companies have found more success in Web marketing than business-to-consumer ones and because the Web likely is the first place potential clients will look for embroidered logo apparel.
Taxdahl's focus on developing long-term relationships with customers also works well for business-to-business companies that use online marketing, Lundsten said.
"His pricing scheme is optimized for small, first-time buys," Lundsten said. "It's very likely he can turn people into longtime buyers." Repeat customers also help protect Taxdahl from competitors who might try to copy his business model, Lundsten said.