For Quill, a mail order office supply retailer based in the Chicago suburb of Lincolnshire, eCommerce in the late 1990s was a lucrative and untapped marketing channel. Its first Web site, launched in 1996, was rudimentary. “We figured that everybody has one, so we better get one up, too. We did not pay a lot of attention to it. It was not a focused effort,” says Lisa Iannuzzelli, senior Internet marketing manager. Email marketing, which Quill decided to do itself, included converting its printed newsletters to email.
In 1999, Quill realized its Web site needed retooling. “Our current website was not sufficient to serve our customers. We needed to bring our digital efforts up to what we were doing in print,” says Iannuzzelli. “We basically started from scratch and built the new site to include all the current services and features that other players in our industry had.”
In October 2000, Quill relaunched its Web site to add more functionality. The company, which focuses on national middle market businesses with under 100 employees, now understood the Internet is one of many choices its customers have when shopping for office supplies. “We have an aggressive effort to migrate our customers over to the Web site since it is much more cost efficient to take the orders on-line,” says Iannuzzelli.
The company felt email was the best way to encourage that migration.
Since Quill did not have a formal email program, it looked for an expert “who could guide us in creating a program that could grow and flourish,” reports Iannuzzelli.
Digital Impact of San Mateo, California became Quill’s outsourcing solution in January 2000. Founded in 1997, Digital Impact has implemented more than 10,000 permission-based online direct marketing campaigns with Web-based applications, hosted technology infrastructure and professional services.
“There was an initial rush to get into email marketing. It was so inexpensive compared to direct mail since you could blast out to everyone,” explains Dave Kleinberg, senior vice president of marketing for Digital Impact. Companies realized they had a problem when customer email came back with “unsubscribe” in the subject line. Kleinberg says companies learned email could become an expensive vehicle if they angered their hard won customers. “If you lose your customers, you lose them forever,” he explains.
Outsourcing brought knowledge and experience to Quill’s email campaigns. The supplier has been “very proactive” in its recommendations and made Quill aware of best practices in the industry. “Digital Impact has really guided us in making sure that we collect our email addresses in a fashion that prevents customers from viewing us as spammers. Its staff provided solutions to minimize our costs while maximizing our sales with increased flexibility in our emails. We have gotten very positive feedback from customers with few complaints for spam. Our opt out rates are well below the industry standard,” the Quill executive notes.
Iannuzzelli says Quill “rarely” has technical issues with customer emails, but when there is a problem, even with one customer’s email, Digital Impact has always responded quickly. Its representatives “will even call our customers” if they have a technical problem, she reports.
Email marketers like Digital Impact are concerned with getting the message out to people who care about it. They spend the time and resources needed to get a highly developed message to each individual. Its staff is concerned about the results. “We teach the client to see its customer database in different segments based upon buying habits, preferences, and behavior,” says Kleinberg.
With an easy to use and comprehensive Web site in place, Quill has formulated a marketing plan. The company still mails out catalogues. But now Quill is using an email strategy to encourage its customers to try shopping on the Web. Emailing is a much more cost effective way to communicate, points out Iannuzzelli. She says an email costs between three to five cents while a catalog costs 25 to 30 cents.
There is also an operating cost benefit. Increasing Web site orders reduced the head count of the telemarketing staff. Emails are also more timely; the typical cycle time for a catalog is four months but only one month for an email. “Email is by far the most effective way to get a message out quickly,” reports Iannuzzelli.
Amit Patel, Digital Impact account service manager for Quill, says the Quill email marketing program is focused on three segments:
- Retention of online customers
- Reactivation of past on-line customers
- Migration of offline customers to buying online
Patel says, “Getting started is very quick. Finding out what needs to be sent out takes a little more time.” The supplier needs two weeks to prepare the infrastructure with a database. Then it has to migrate the data and create on-line pages to collect new data. These pages segment customers who buy; its software then follows up with related offers to them. “This encourages users to update their profiles,” Patel explains. The information Digital Impact collects is then reintegrated into the database.
Iannuzzelli happily reports Quill has seen “tremendous growth” in its email program in the past year, thanks to the efforts of its supplier. “At the end of 2000, eCommerce was less than 10 percent of our business. We project it to be 20 percent by the end of this year,” she says.
From February 2001 to August 2001, Quill saw an approximately 500 percent increase in sales from email marketing. Iannuzzelli believes these numbers reflect Digital Image’s “commitment to solid customer service and the latest technologies with cutting edge solutions.”
Kleinberg adds that the cost of Quill’s campaigns as a percentage of sales generated now stands at about one percent. Quill views Digital Impact as a partner, according to Iannuzzelli.
Lessons from the Outsourcing Primer:
- Outsourcing vendors have proprietary applications that the buyer would never develop.
- Companies trying to compete in the new economy can outsource that piece to an experienced supplier offering a solution with proven technology.
- Outsourcing cuts time to market; this is important when your competitors arrived there before you did.
About the Author: Ben Trowbridge is an accomplished Outsourcing Consultant with extensive experience in outsourcing and managed services. As a former EY Partner and CEO of Alsbridge, he built successful practices in Transformational Outsourcing, Managed services provider, strategic sourcing, BPO, Cybersecurity Managed Services, and IT Outsourcing. Throughout his career, Ben has advised a broad range of clients on outsourcing and global business services strategy and transactions. As the current CEO of the Outsourcing Center, he provides invaluable insights and guidance to buyers and managed services executives. Contact him at [email protected].