For the 12-employee Harvard Business Service Inc. (HBS), Internet newsgroups have become an invaluable marketing tool. HBS, a $2-million registered agent in Delaware that provides companies with incorporation services and helps them find venture capital, promotes itself by posting catchy one-page advertisements all over the mazelike Internet. But the company isn't random about where it puts its pitches. HBS selects business and entrepreneurial newsgroups, which are accessible to entrepreneurs worldwide. Newsgroups that accept ads include alt.business.misc and biz.misc. HBS also puts notices in forums hosted by Prodigy and other on-line service providers.
Vice-president of marketing Rick Fletcher and his systems-operations manager also look for prospects by trolling around newsgroups reading posted inquiries. They seek opportunities to "educate" people who could use their services in the future. Fletcher may find and personally answer a question about whether it's better to incorporate a business in Delaware or Nevada. For HBS, finding the right newsgroups in which to post messages has been a matter of trial and error.
HBS's set-up costs for labor, phone lines, new modems, and Pentium-driven Windows systems came to about $60,000, says Fletcher. Fees to Prodigy, CompuServe, America Online, and NetCom run about $300 a month.
Is it worth it? "Yes," says Fletcher. "Our volume has doubled in a year. The Internet is a way to reach millions of people, and it's very cost-effective. I don't know how we ever did things before."
Information about HBS is available by E-mail at hbs@reply.net.
* * *
Direct Marketing
For many companies, mailing out marketing literature to customers and prospects is the most effective way to increase sales. But the high cost of printing and postage often limits the appeal of the direct-marketing approach.
Electronic marketing literature offers the same opportunities, but on-line charges are minuscule compared with printing and postal fees. And the information can be delivered instantaneously around the world, which greatly appeals to Mountain Travel-Sobek (MTS), an adventure-travel company with 40 employees. Its "Hot News," a weekly on-line publication, reports on, say, the latest Ebola conditions in Zaire or describes how the political climate in Katmandu may affect travel itineraries.
"We have offices and guides all over the world. They send us information, and we put it in 'Hot News' along with descriptions of trips that are going out and available discounts," explains Richard Bangs, founding partner of the $15-million El Cerrito, Calif., company. "Can you imagine if we tried to mail these every week? I just push one button, and 'Hot News' goes to everybody."
"Hot News" is seen by about 77,000 people every month, though only 1,500 people subscribe. Subscribers get the free three- to four-page publication in their E-mail boxes each week. Everyone else reads it on MTS's Web home page. According to Bangs, "Hot News" is an effective advertising tool. "Our business is up 37% this year. We think a significant portion of that has to do with our media experiments."
MTS will not disclose the cost of building its on-line presence, but that cost probably was more than $10,000, perhaps as much as $100,000. With Internet access in place, the cost of putting together "Hot News" came to a mere $200. If MTS had put out just the newsletter, its only costs would have been for a computer, a modem, and Internet software, which retail for less than $2,000.
MTS's home page and newsletter are available at http://www.mtsobek.com.
* * *
Warehouse
Just as conventional wholesalers or brokers provide a link between end customers and manufacturers, there's a growing opportunity on the Internet for companies to serve as intermediaries between on-line consumers and various electronic services. In effect, those companies act as electronic warehouses or gatekeepers.
Alain Pinel Realtors, in Saratoga, Calif., took that tack, recognizing that real estate agencies are essentially links among home buyers, home sellers, and banks. The company decided it could make the process of buying and financing property all the more efficient by providing the same links on-line.
Pinel uses a combination of the Internet and a wide area network to connect agents, lenders, title companies, and clients. For example, Pinel agents can electronically find out the status of escrows or update loan proceedings. They can then E-mail the information to their clients.
Even though Pinel's several offices are located in California's high-tech Silicon Valley, its executives realize they can't go entirely digital. Agents can exchange E-mail with only the 20% of their clients who want to do business that way. The majority still prefer face-to-face consultations, and in-person meetings are still required for signatures. In addition, not all lenders and title companies have E-mail capability. Neither do most smaller real estate service agencies, such as termite inspectors, photographers, and publishers. "We're definitely in a transition period," concedes Kevin Vance, Pinel's executive director. "The learning curve of the general populace needs to catch up."
Still, the gatekeeper concept has been a success, despite a sluggish local economy. Pinel ended 1992 with $259 million in gross sales, 1993 with $451 million, and 1994 with $690 million.
"The Internet has allowed our company to be more productive and therefore more profitable overall," Vance says. The $2 million that Pinel has sunk into computers and its Internet presence is recouped by a streamlined sales process, increased productivity, and better customer service, he explains.
Alain Pinel Realtors is located at http: //www.apr .com.
* * *
Rusty Weston (weston@well.com) is the managing editor of Open Computing magazine.
