More and more small companies are mining the Internet for business intelligence. What they're gathering in the way of data and customer feedback often sets them ahead of the pack

For years one of the most popular diversions on the Internet has been the on-line scavenger hunt. Usually played by members of E-mail newsgroups, it's a digital variation on the traditional party game, with contestants vying to see who can sleuth out the most data on a given topic across the vast reaches of cyberspace. In one such competition a couple of years ago, participants were simply given the name of a volunteer subject and challenged to track down as much personal information as they could find, using only Internet sources. The eventual winners turned up nearly 150 pieces of data on their quarry, including his upcoming wedding date and the fact that he worked for the CIA.

Now, consider for a moment the business applications of this kind of game. You're trying to get a young company off the ground, and you want to promote closer relations with your target customers. You're thinking about introducing a new product, and you want to get a feel for the market. You're looking to break into a hot industry, and you want to get the lowdown on the dominant players. Wouldn't it be an advantage to be able to gather intelligence as those crackerjack scavenger hunters did?

The answer for more and more companies is yes. Which is precisely why the Internet's fun and games are becoming the stuff of serious business. The cutting edge, if you will, is turning into a competitive edge, as up-and-coming small businesses increasingly use on-line resources to get a leg up on market research and customer relations. While many larger companies continue to think of the Internet as a sprawling playground for the young and the wired, enterprising smaller companies are quietly proving that it's also the new frontier for gathering business intelligence. For those companies that take the time to explore the expanding on-line universe of newsgroups, mailing lists, and Web sites, the Internet can open up untold worlds of information and opportunity.

Before you can find what's out there, of course, you have to learn how to get around. Give up surfing, in other words, and take up navigating. With more than 15,000 newsgroups now up and running on Usenet (the umbrella term for an entire spectrum of Internet "addresses" where users post messages via E-mail) and new sites on the Web being launched every day, that may seem like a tall order. Fortunately you don't have to be a hacker anymore to travel the Net with confidence. Armed with the latest generation of search software and shareware, and drawing on a few standard browsing techniques, anyone willing to put in the hours can be prospecting for information on-line that will make an impact on the bottom line. Here's a look at how several companies are seeing their on-line time pay off handsomely in three critical arenas of business intelligence.

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Customer Relations

It was just another day on the job for Invitrogen Corp. research scientist David Higgins. With a bit of time on his hands, the biologist had finished reading about the sex life of yeast in the bionet.molebio.yeast newsgroup when he happened on a message in a newsgroup on reagents. A user was trashing one of Invitrogen's products, a DNA cloning vector (a circular bit of DNA used in research). Higgins quickly fired off a response, identifying himself as an Invitrogen employee and offering tips on how to better use the product.

Higgins's message was a gut reaction, one techie offering to help another. He didn't know he was taking a natural first step for companies that want to establish an on-line presence: interacting with customers on-line. Out of the Internet's thousands of newsgroups and proliferating mailing lists, a good many are devoted to discussions of specific industries, products, or services. With customers, suppliers, and competitors mixing it up on-line, there are plenty of opportunities for controlling damage, providing service and support, and collecting feedback.

Now Invitrogen cruises the Internet as a regular part of its customer-service routine. The $12-million, San Diego-based manufacturer of gene expression kits and reagents has assigned technical-services representative Christopher Hoover to scan relevant Usenet groups for messages about the company and its products. Every day Hoover reads at least a dozen newsgroups that focus on molecular-biology research. The rest of the time he answers technical-help questions from baffled customers, many of them from overseas, who contact Invitrogen by E-mail. "We're addressing customers one to one, in real time," says Higgins.

Higgins says the Internet's unbounded flow of ideas and opinions has intensified Invitrogen's commitment to customer service. Anyone who doesn't use the Internet, he says, "will be left in the dust." He notes that word travels fast in cyberspace, making it all the more important for companies to get their own words out there. "Before we didn't care if someone in North Dakota had a problem," says Higgins. "Who were they going to tell? The Internet has changed that."

Streamlined customer service is one clear-cut benefit of on-line access; expanded customer service is another. At Balentine & Co., a midsize investment firm based in Atlanta, the ability to comb the Internet for hard data and quick feedback allows consultants like Gary Martin to bolster their investment advice with up-to-the-moment detail. These days you'll find Balentine's consultants routinely trolling Web sites, mailing lists, and newsgroups to help customers who are contemplating investments in particular markets or floating ideas for specific product innovations. "Now we're an agent of information for our clients," Martin declares.

As the consultant remembers it, Balentine's discovery that the Internet can be a dynamic business resource was something of a shot in the dark. It was Martin who first hit pay dirt, following a lunchtime chat with a client who was thinking of developing a design for a plastic wheelchair but wasn't sure how to gauge market interest. Martin offered to browse the Net for the client, to see if he could turn up any leads.

And turn them up he did. Using a few keywords, Martin quickly found a newsgroup for people with handicaps and posted a message asking users for feedback on the idea. Within a few weeks, Martin had heard back from enough users to be able to pass along encouraging news to his client: most of the respondents had three wheelchairs in different locations and found the prospect of having one lightweight portable chair very appealing. Today, Balentine has added intelligence gathering on the Net to its basic menu of customer services.

Market Research

The prospect of pinning down accurate international data is what spurred Eric Anderson, CEO of Art Anderson Associates, to take the Internet seriously. A significant portion of his $4-million engineering and architecture business involves designing ferry vessels and port facilities for overseas locations, and it's vital for the firm to obtain reliable geographic surveys. "Lots of coastlines are inaccessible," Anderson points out. "To make them func-tional, there has to be a ferry service. The Net helps us find information about those sites."

Anderson began investigating the Internet in earnest after attending a seminar led by a consultant who specialized in gathering competitive intelligence. Intrigued, but unwilling to pony up the high fee the researcher was charging for his services, Anderson decided to give it a whirl himself. He signed up with a local access provider, installed Internet In A Box -- software by Spry, CompuServe's Internet division -- on his PC, and began tapping away.

Anderson is now counting on the Web and newsgroups run by overseas tourism boards to help his own company "leapfrog into new markets." To get the latest news on development and tourism in Singapore, say, he pulls up the Singapore Web page and checks out which industries are "hot" and who the major players are. "If I see that there's an intensive push to develop industry or tourism in a certain area," he says, "I try to find out who's leading that push." And then he contacts them about building a ferry.

Anderson says that using the Internet is doubly appealing because it cuts his expense budgets. "It allows us to do more preliminary research without the travel expenses we had before." That cost-saving feature is one of the Internet's big attractions. Most companies can justify a $99 software package for getting around on the Net (starter kits usually contain E-mail programming, a browser, and a few other on-line networking tools) and about $20 a month for an Internet dial-up account for one computer. Compared to what a market research analyst charges for a single report, the Internet looks downright cheap, provided you have the time to hunt down what you're looking for.

Competitive Intelligence

Craig Stouffer, CEO of Mobius Computer Corp. (an Inc. 500 company in 1995), used to work the phones feverishly when it came to scouting potential business. The $7.5-million manufacturer of computer systems sells to Fortune 1,000 corporations. Keeping close tabs on those companies' 10K reports, now available on-line, helps him get an early line on which of them might be in the market for new or upgraded systems.

Stouffer also gathers product information and lists of references from competitors and potential customers by working the Internet. "You can post a question on the newsgroups about products or systems, and 4,500 people respond with their experiences." A slight exaggeration, yes, but there's no question that the number of people you can reach on the Internet is mind-boggling. When Stouffer first logged on, about a year and a half ago, there were some 8,500 newsgroups. Now there are nearly twice that many. Painstakingly reading through all the subject descriptions, he whittled down that list to just over 200 newsgroups on topics pertinent to his business. These days he only has time to read the postings in five or six groups each day, but having gone through the huge list once, he can now cut to the chase with the utmost efficiency.

Many of the resources that businesspeople like Stouffer are mining on-line -- for instance, the inside scoop on competitors from real customers -- weren't accessible to them previously in any form. "There's information available now on the Internet that's never been available anywhere," says director of operations Trey Seitz at Competitive Intelligence International in Chicago, a consulting firm that specializes in digging up industry dirt. "The newsgroups are a good place to get information anonymously from experts, and on mailing lists you can find competitors and their customers." Seitz says that exploring the Internet should be a first step for any start-up. "You can pretty much find out what any company in any field is doing. It's a great first step for an entrepreneur -- you can evaluate market needs just by posting a message."

Admittedly, getting the goods on the Internet is not always that simple. But investing a few hours each week in finding useful information is the only way to test the possibilities. The CEOs who have come to rely on the Internet for diverse business information agree on one thing: at some point they had to stop talking about it and just jump in.

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Phaedra Hise (phaedra_hise@incmag.com) is the technology editor for Inc. magazine.


RESEARCH TOOL PRIMER

There's no research librarian to hold your hand on the Internet, so learning a few key terms and tools is the first step to productive exploration.

Browser: A software package that allows you access to Web sites. There are both graphic and text-based browsers.

FAQ (Frequently Asked Questions): A list of the questions commonly asked (and their answers) in a newsgroup or at a Web site. Skimming the FAQs is a good way to find information on a topic.

FTP (file transfer protocol): A method of transferring files among computers on the Net. For example, an FTP allows you to download a file from the Library of Congress, say, or some other Internet storage site.

Gopher: A system of menus, much like the directory of files in your computer, that allows you to search the Net for information. Most ISPs have their own Gopher lists.

Mailing lists: Discussion groups that are open only to those who "subscribe" to the main address; when one subscriber posts a message, it's routed to the entire group via E-mail. Also known as LISTSERVs.

Newsgroup: Any collection of posted messages on a specific topic found in Usenet. Also known as on-line discussion groups.

Search engine: On-line software that helps the user locate information, usually on the World Wide Web. Popular packages include Yahoo!, Lycos, and InfoSeek. Archie and Veronica are shareware programs that locate information on the rest of the Internet; but because they search the entire Net, they can be slow.

Spam: A message (usually a commercial message) that's been posted to a series of newsgroups. Often the message is not related to the topic of those newsgroups.
Telnet:
A program that lets you visit another Internet site -- say, that of the Stanford University libraries -- from a remote computer and download files while you're there.

Usenet: The collection of newsgroups on the Internet.

URL (Uniform Resource Locator): The address for a Web site. Using a Web browser, you can enter a URL and go directly to that site.

World Wide Web: Often confused with the Internet, the Web is only one section of the on-line universe. Heavy with graphics on various "home pages," or "sites," the Web is the one place on-line where commerce is openly accepted.


SAMPLE SEARCH

So you're thinking you could make a killing selling left-handed cooking gadgets. Why not? Cocooning is a national trend, as more and more baby boomers entertain at home and develop their gourmet skills. And if the rule of thumb holds true, 13% of them are southpaws. Well, as your on-staff on-line guru, let me check out the information the Internet has on this niche market:

Monday, 4:40 p.m.: On-line newsgroups. I have to search through the Usenet listings by keyword. I try cooking, gourmet, and left. There are only two discussion groups with cooking in the title, and none with gourmet. While I'm searching, however, I notice several that list food in the title. I search under that and find 72 different groups, ranging from "alt.food.grits" to "rec.food.sourdough," and several regional food groups in between. I post a quick message to a busy discussion group called "rec.food.cooking," asking people what left-handed tools they'd like to see, what they use, and where they buy them. Under left, I find several political groups listed, along with "alt.lefthanders." I post the same message in that group. It will take a while for the message to post (anywhere from 15 minutes in the best case to two or three days at the outer limits of the Internet galaxy) and for others to read and respond, so it's time to move on.

Monday, 4:53 p.m.: Yahoo!'s search engine. I stop here and type in the keyword left to see what's available. That gives me 64 matches, most with political connotations. So I narrow down my search and type in the keyword left-handed. That turns up 5 matches, including a left-handed golf-equipment retailer, two left-wing political Web sites, and an informational site on left-handedness. The big score is Southpaw Pineapple, a left-handed gift shop. I decide to check out the potential competition and click on the link that sends me to its Web site.

Although the store does list kitchen aids in its on-line catalog, the site is probably still under construction: there's no link to product listings. I browse around, clicking on links, but can't find those kitchen gadgets listed anywhere. Finally, I file the URL on my Internet browser's "hot list" (a standard feature of browser software), so that I can come back to it easily later on, and keep checking to see if those products show up.

Tuesday, 9:30 a.m.: Back to the newsgroups. Checking in, I find three responses to my message in "rec.food.cooking." (When you post a message with a newsgroup, it always comes up the next time you log on, with any responses appended to it.) One woman tells me she used to own a left-handed specialty shop, and she lists those products that sold well and those she still has boxes of. She also lists the names of several lefty shops across the country for me to check out. Another person pleads for a left-handed can opener. The third asks for left-handed oven mitts and lists a few more lefty specialty stores. There aren't any responses yet in "alt.lefthanders."

Time spent: 48 minutes

Total cost: About $2 per hour for Internet service

Info found: Product suggestions from potential customers, the names and locations of competitors, and one Web site that appears to be selling the exact product line I'd want to sell. n