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Omaha Steaks: Carving Out a 21st Century Sales Model

Stocks in this article: COST WMT GRPN

OMAHA, Neb. ( TheStreet) -- When J.J. Simon and B.A. Simon established a local butcher shop in Omaha in 1917, there were no Groupon deals or Facebook retail stores to work into their marketing strategy. How to keep the meat fresh was the technological challenge of that age. Yet in a way, Omaha Steaks has always been a technology pioneer when it comes to keeping fresh the direct sales business.

Omaha Steaks first adopted a process for ordering by mail and then was one of the first companies to have a toll-free number in the 1960s for customers to phone in their orders.

In fact, the secret to the family-run business's success, according to the great-great grandson of J.J. and great-grandson of B.A., is the company's quick-adaption to technological innovations that have occurred over many decades. It's a sales model that Todd Simon, the fifth-generation owner and the company's senior vice president, calls "being where the customers are." As a direct sales and marketing business, Omaha Steaks has to provide as many avenues to purchase its premium meats and seafood as the customer seeks.

As technology improved, the company added telemarketing, fax ordering and e-commerce capabilities. Today the company allows purchases to be made online, through social media, at a retail store -- Omaha Steaks has 80 locations in 28 states -- or by still sending in mail orders. (Todd's father, Fred, was inducted into the Direct Marketing Association's Hall of Fame in 2003.)

It's a secret that has seen the local butcher evolve into a direct sales company that ended 2011 with more than $450 million in annual revenue and 2,000 employees.

The story of Omaha Steaks mirrors that of the meat industry, Simon says. Back in the 19th and 20th centuries, meat suppliers didn't have the luxury of being able to transport goods a great distance. Omaha Steaks began as a supplier to local restaurants and grocery stores, and was served in dining cars on Union Pacific's luxury passenger trains in the 1940s.

"Over time, changes in technology made it so that beef and meat production could become more centralized and then distributed out regionally. But you always had, and still do have, grocery departments that have their own meat department where they cut their own steaks," he says.

Bringing steak into the 21st century

The most recent excitement for the company has been the use of social media.

The company has already administered several Groupon (GRPN) deals and earlier this year the company launched its mobile app. Omaha Steaks has more than 8,500 Twitter followers. Just this May, Omaha Steaks launched a Facebook retail store where fans can purchase products. Omaha Steaks plans to use the platform to promote exclusive offers to Facebook users as well as test new products, it says.

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