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Getting a Line on Customers

A quick look at how two companies turned to technology to take a nontraditional approach to marketing.
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Marketing
Problem
The lag time between mailings and sales

Solution
Attracting on-line customers with nontraditional marketing

Payoff
Skyrocketing sales, devoted customers

For Big Emma's, a Boston-based company that sells secondhand movie laser discs, traditional mailings meant not just high costs ($4,000 per mailing) but also huge lag times between marketing and sales. Despite fevered demand for used laser discs (they're as good as new and cost half the price), discs would often sit in a warehouse for six weeks before they were sold. With a staff of just two, inventory lists would take about a month to get out. Worse yet, by the time customers ordered, titles were often out of stock. Ten months out of the gate, Big Emma's was barely breaking even. The solution seemed obvious: ditch traditional mailings and go on-line. But that raised another problem: how to attract on-line customers.

Cofounders/co-owners Christian Strain and Liam Sullivan took a leap of faith. They set up a Web site on a virtual server run by a local Internet service provider (ISP), Channel 1 Communications, a division of Cybergate. Then, to get the word out, Strain turned to a news group (alt.video.laserdisc) dedicated solely to laser discs. He spent two weeks following the group and then posted a message announcing Big Emma's new E-mail club.

Club members receive the list of Big Emma's titles before anyone else. Membership is free, and there's no obligation to buy anything.

Today Big Emma's has more than 3,000 members in its E-mail club--an organization that costs virtually nothing to run. (The basic ISP fee is just $75 a month.) Nonmembers can see the list at the company's Web site, and everyone can order directly from the Web. Customers no longer have to worry about out-of-stock items, either. Big Emma's switched to a real-time inventory system that automatically crosses an item off the list once someone has purchased it. (Channel 1 set up the system for a mere $1,000.) Finally, Big Emma's has become a star in its own right: its revenues shot up 400% in the past year.


Communications
Problem
Unreliable customer feedback

Solution
On-line focus groups

Payoff
More accurate results, lower costs

Janice Gjertsen, director of marketing and business development for WP-Studio, an on-line entertainment company in Manhattan, wanted to conduct traditional focus groups to gauge reaction to her company's Web site, Total New York, an events guide to the metropolis. But Gjertsen knew that people in focus groups tend to be vague about their feelings. She had tried to get objective results when she was at other companies by using a professional moderator, but the nature of group dynamics worked against her. The writing was on the two-way mirror: she needed a more reliable source of marketing information.

Rather than do away with the focus-group idea altogether, Gjertsen decided to add a twist to the roundtables of old. She took the groups on-line. A coworker suggested that she contact Cyber Dialogue, in New York City (212-804-1170), a company that specializes in on-line market research. The results surprised her. "People were a heck of a lot more honest on-line than they were in our traditional groups," she says.

Cyber Dialogue has a database of more than 10,000 people that it draws on for focus groups. The market researcher provided the moderator, and the focus group was held in a chat room that was superimposed on the Total New York Web site. Gjertsen looked on from her office computer. One of the most helpful things, she says, was software that let her interrupt the moderator at any time with flash E-mails, without any of the respondents knowing.

Though on-line focus groups have draw-backs--no access to body or voice cues, for example--Gjertsen says she would never go back to the in-the-flesh variety. Not only are on-line sessions cheaper (the standard price for a Cyber Dialogue on-line focus group is $3,000, one-third the cost of a traditional group) and more accurate, she says, but the results are quick. Gjertsen received a full report in a day, compared with the four weeks she used to wait for results. She has already rethought her strategy for attracting new members, based on the outcome of her on-line rap session. "This method is so immediate, so accurate. In this world I need that," she says.

Last updated: Dec 15, 1996




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