Article

Feature cover story from: Worcester Business Journal, December 21, 1998

"Handing it Off"

by Micky Baca

All Star Incentive Marketing, Sturbridge

Edward Galonek Sr. has been known to lapse into fatherly lectures during corporate meetings for his cutting-edge incentive marketing company, All Star Incentive Marketing in Sturbridge. After all, he muses, he helped his three sons through homework and hockey, basketball and scraped knees before they grew up and joined him and his wife at the helm of the 31-year-old family business.

But most of the time, the incentive-marketing pioneer says, he lets his sons —Gary and Brian Galonek and Edward Galonek Jr. — "fly" when it comes to pursuing ideas in the company of which they are an integral part. Father and sons seem to share an enthusiasm for the freedom, diversity and excitement that running their own multi-million-dollar marketing company provides.

Edward Sr.'s wife, Ann Galonek, is the treasurer, handling the less-glitzy internal financial systems of the business. Whatever family rivalries might arise, they say, only add to the creative process that has distinguished All Star as an innovator in the $30 billion per year incentive marketing industry.

"We have a lot of fun. It's exciting," Edward Sr. says. "No two days are alike." As the company's president and founder, he looks forward to the "brainstorming" sessions in which he and his sons share ideas on major accounts. "The banter gets to be fairly stiff, sometimes aggressive," he says, "but it's a lot of fun."

Now that All Star has a new headquarters facility — and Edward Sr. says he is contemplating handing the company off to his sons — the firm is setting its sights on broadening its marketing area. Only 26 percent of companies today are using incentive marketing, he notes. He figures he and his family can capture a big chunk of it, if they can continue to work hard and play hard at the same time.

A marketing pioneer

All Star Incentive Marketing develops and implements incentive programs for clients seeking to motivate their sales force, inspire employees or reward consumers. For example, when AT&T wanted to reward customers for staying with its long-distance service, All Star set up a system through which customers could get merchandise based on points for the volume of long distance calls they made.

Dunkin' Donuts uses All Star's services for an array of programs, from providing employees with hats and t-shirts for special campaigns like its "Bagelfest" to offering consumers a travel mug with discounted coffee refills. Other major clients include Duracell, Allied Signal, Foxwoods Casinos, Smirnoff and the New England Dairy Promotional Board.

Besides coming up with the ideas, supplying printed materials, implementing the programs and tracking the results, All Star also acquires the merchandise — from t-shirts to TVs — that clients use as rewards. It serves as a manufacturer's representative for more than 40 major companies and boasts access to "virtually every product imaginable." Its gaping warehouse is piled high with everything from TVs and stereos to karaoke machines and tricycles. All Star has enjoyed an annual growth rate of 20 percent to 25 percent in the last several years, and expects 1998 revenues to approach $18 million.

Edward Sr., a former plastics engineer, started the company in the basement of his Southbridge home in 1967, because he wanted the challenging and lucrative lifestyle marketing could provide. Back then, he recalls, incentive marketing — or the premium business, as it was known in its infancy — primarily consisted of manufacturers representatives who would sell their company's product to companies which wanted to use it as a motivational reward.

The reps would pretty much deliver the TV sets or toasters as agreed and leave it at that. But Edward Sr. took the incentive business one step further, and began developing incentive concepts for companies based on what they wanted to accomplish as well as supplying the merchandise. Now, he prides himself on having one of the first full-service incentive marketing companies. All Star will handle a reward program from start to finish, he notes, and provide analysis to show how it worked when it is done.

For Dennis McEnaney, director of advertising and promotion for Muro Pharmaceuticals in Tewksbury, All Star is the company to use for incentive programs. He has not only used All Star to set up rewards for Muro's sales reps over the past four years, but has also done business with the company for his previous two employers dating back to 1977.

Edward Sr., he says, revolutionized the incentive industry by serving customers' individual needs. When every other premium company was just drop-shipping merchandise with no other services, he points out, Edward Sr. was putting together custom turn-key programs for his clients. "He had the attitude that, if you came to him with a challenge and you needed a program, he could put it together," McEnaney says.
Today, he says, All Star still offers a broader scope of incentive-marketing services than any company he's aware of. While he says he still likes to deal with Edward Sr., he finds his sons hard-working and competent. "They're really terrific kids. They've brought a lot to the business," he says. "Each of those kids really broke their backs. He never handed anything to them."

Extended family dynamics

Edward Sr.'s wife worked beside him from the start, taking the two-person company from its early days in a former four-room trolley station on Main Street in Sturbridge, to a 12,000-square-foot former farmhouse across the street, then, six months ago, to its new home in a $1.4 million building on Route 20.

Middle son Brian was the first to join the company, in 1988, after doing a college internship with National Cash Register while attending the University of Massachusetts in Amherst for business management. A few years later, eldest son Gary came on board after working in corporate sales for five years. He was followed by Edward Jr., who joined the company straight from college six years ago.

Each son handles his own set of accounts as well as participating in joint efforts on some of All Star's larger accounts. The Galoneks also share the boardroom table with a sixth "adopted" family member: Marketing Vice President Michael Balcom, who joined All Star in 1984, adding imprinted merchandise to the list of services provided to clients. Edward Sr. says he considers Balcom a fourth son, on equal footing with the other Galoneks in the company.

For Brian, "freedom is Reasons 1 through 10" why he chose to work in the family business. His college internship at NCR, he says, "told me all I needed to know about Fortune 500 companies. I took a good look at what the best salesmen there were doing. It didn't take long to realize that working for yourself was better. It's dynamic. You don't go out and sell the same product." In fact, All Star sells everything from 5-cent temporary tattoos to motorcycles and boats in the context of its incentive programs.

Gary took a bit longer to join the family venture. He worked at NCR for five years after getting his business degree at UMass, an independent success he says he needed before joining All Star. "Eventually, I felt I would work in the family business, but I wanted to bring something to the table," he says. "I had no desire coming out of school to come back to Sturbridge and work for my dad. You know, you get all these visions of corporate America."

Gary waited until he landed a major account that he had been working on for NCR and then immediately left to work for All Star. "I hit the home run and quit," he says. "It was just too stale for me. When I looked at the 20-year and 30-year guys, they were kind of like robots."

For Gary, the family business is a creative environment in which to ply his sales skills as well as providing the flexibility to dabble in acting — a long-time interest of his. He and his brothers and parents work well together, he says, though they can clash now and again. "We're all pretty competitive and pretty outspoken people," he says. "We can get vocal with each other."

Youngest brother Edward Jr. agrees the brothers work well together. But, he says, he is still trying to shake his standing as "low man on the totem pole." Working day in and day out with family members — they're generally there before 8 a.m. and stay well past 5 p.m. — can take the thrill out of family gatherings, Edward Sr. says half-kiddingly. "You're with them all day long and then, when you get home, your wife says they never invite us to dinner," he remarks. "I really don't want to sit with them for dinner." And dinners do often evolve into business meetings, they all admit.

But the Galonek family also appears to make time to share another passion besides their business: sports. They leave business behind when they take to the golf course or the basketball court, Brian says. The three brothers even compete in an annual sport competition ritual they call the "Galympics," a month-long contest that might involve everything from baseball and basketball to archery. Brian says his father has "hung up his cleats," and doesn't take part these days.

Harmony despite changes

Generational differences between father and sons do exist. But the Galoneks say they don't pose a major conflict. Edward Sr. admits he isn't that comfortable with computers and the Internet, but says he's smart enough to know the value of those tools and appreciates his sons' high-tech skills. He's let his sons do everything in the business they wanted to do over the years, adding he was sometimes tempered by his own sense of timing and restraint.

For example, Brian says, he and his brother have been talking about constructing a new building for almost a decade. Their father didn't nix the idea, he says, but did carefully pursue it. All Star bought the land and had a design drawn up three years ago, then waited until this year to actually construct it. "The timing was perfect," Brian now admits. "If we had tried to build this three years ago, we could have been in trouble."

Gary says his father sometimes faces "culture shock" because ways of doing business have changed a lot in 25 years. "His generation was much more hands-on," he says. "You were much more in the face of your client. Three-martini lunches were still prevalent." These days, he says, a lot of clients don't have time for personal meetings but just want the details e-mailed to them.

Edward Sr. says one change for the better in doing business these days is that his company can pitch its ideas directly to upper management rather than going through channels. "A good idea is a good idea today," he says. "Thirty years ago, you had to convince management it was their idea."

The biggest challenge he sees facing family businesses like his is "the slowness of payments from big corporations." Companies, he says, used to pay their bills on time. These days they seem to delay payments as a matter of policy, leaving businesses like his constantly struggling to get paid. To deal with this, Edward Sr. says, his staff is constantly on the phone with late-paying customers. But, he adds, "There isn't a hell of a lot you can do."

Passing on the reins

Perhaps the biggest challenge facing the family structure of All Star will be when Edward Sr. quits the marketing game. It's a day he says is coming soon. He will pass the reins of the company to his sons and Balcom in the next several years when he plans to retire. But, he says, he isn't sure how the company should be structured once he leaves. Should he have it run by a committee of all four sons? Should he name a president? He says he'll probably let his sons decide the structure for themselves.

Brian says he's sure the brothers and Balcom will work out a harmonious arrangement. "We're not dumb enough to let something like that come between us," he says. The fact that his father is indecisive about how the business should be structured when he retires, he says, doesn't bother him and his brothers. "We're quite confident that when he does step down," he explains, "the decision on how to run things will be decided between everybody."

For his part, Balcom says he has indeed been treated like one of the family and views the Galonek sons as his younger brothers. That said, he adds he has "no illusions" that although Edward Sr. may feel Balcom could be company president, "I certainly feel it should be one of the boys."

Working on a bigger market

Up until now, Brian says, All Star has kept more of a regional focus. Over the last year, he says, the company has launched a campaign to do more business nationwide. It is currently upgrading its Web site (www.incentiveusa.com) as well.

There is, Edward Sr. notes, a lot of room for expansion in his industry. As it expands, he seems to clearly envision keeping All Star's family approach intact. "When you're an account of ours," he says, "you're like family."

 

All Star Incentive Marketing at a glance

Address: 208 Charlton Rd., Rte. 20, Sturbridge 01566

Phone: (508) 347-7672

Year founded: 1967

Founding family members: Edward Galonek Sr. and Ann Galonek

Share of business originally owned by founders: 100 percent, Edward Sr.

Current family members involved with business: Edward Sr. and Ann; Brian Galonek, Gary Galonek and Edward Galonek Jr., sons

Shares of business now owned by family members: Edward Sr. and Ann, 51 percent; withthe remaining 49 percent divided mostly between the three sons (Marketing Vice President Michael Balcom owns a small percentage)

Revenues, 1998: $14 million to $18 million
Profitable, 1998: Yes
Working capital: Twice earnings
Borrowing capacity: $3 million to $4 million
Current financing sources: Self
Full-time-equivalent employees: 20
Customers: 150 to 300
Square feet: 28,000
Service cost: 15 to 30 percent less than most competitors
Written business plan: In progress
Contains marketing component: Yes
Strategic plan: Yes
Leadership plan: In progress
Succession plan: In progress
Estate plan: Yes

-M.B.