CHALLENGE

Like many high tech firms, Seattle Lab used to be run by engineers. Which meant that the Lab's marketing was pretty much non-existent. Still they did all right because they developed quality software products, and had a solid in-house sales team of five hard-working reps. But you can only grow so far without solid marketing behind you.

Two years ago, the Company was purchased by BVRP, a French software company with a marketing-centric corporate culture. So, the pressure was on for Seattle Lab to become marketing-centric as well. Last summer they hired an expensive VP Marketing and spent a bunch of money on everything from banners to print ads. But after six months of marketing spending, sales didn't seem to be growing as much as they should be.

Heather Fairchild, a direct marketing specialist, joined the Company in December 2000. Her job was to turn things around.

CAMPAIGN

Fairchild says, "When I began, money was being spent on banners, newsletters, print, and whatever the Company could throw money at. No tracking, no quantifying, no ROI analysis."

Almost immediately she stopped the marketing cash flow drain. She says, "There was a lot of pressure from the management team to continue marketing, but I didn't want to spend money to just spend it. I cut every single marketing activity and didn't do any at all for all of February 2001."

That month was filled with frantic preparation. With the support of sales support specialist Sandreen, Fairchild accomplished the following five steps:

1. Measurement of all past campaign results:
Fairchild says, "We found out, after quantifying, that we didn't have one single marketing activity that worked. Our banners only got a .01-.05% click through rate and only 1-2% of those turned out to be good leads. Sales conversion rates were horrible."

2. Market potential:
Were these lousy marketing numbers the product's fault? Fairchild examined both the total potential marketplace and the percent of product downloads from the Company's site that turned into sales. Both were high enough that she was sure her products were worth investing marketing dollars in.

3. An action plan:
So many things had to happen -- media buying, offer creation, site development, database management, copywriting, reseller management, email newsletter creation, etc. -- that Fairchild knew it would be easy to lose focus and end up not finishing any task successfully. So she set down a month-by-month set of steps and goals based on the Company's sales targets and product launch schedule. Hence forward, every step was dictated by the plan.

4. Customer and prospect database management:
Fairchild knew her best potential market were IT pros who had purchased Seattle Lab products in the past. However getting the data into one, usable format wasn't easy. Fairchild says, "We had customer records over the last ten years spread across three databases -- Excel sheets, Quickbooks and Act."

With advice from Carney Direct, a list brokerage and database consultancy, she collected, cleaned and deduped all the data into a single database and then negotiated with a vendor to house it for her.

5. Email privacy policy:
Fairchild knew that email marketing would become an important part of her marketing mix, so she set down Company rules about how email could be used, and how opt-in permission would be gathered.

Seattle Lab now only uses opt-in names and never opt-out names. In addition, unless personally requested, the only email customers receive is critical user-information (updates, patches to fix bugs, etc.) for products they have already purchased.

Next in March, Fairchild ran two outreach programs. The first was to the customer database. Although the Company had collected customer emails together with permission to use them, they had never done any broadcast email communication to those names. Fairchild emailed a single, initial, text-only note to them to introduce them to the idea that the Company was finally about to begin communicating with them via email.

She explains, "The introductory email said, 'We haven't spoken to you in a while. We would like to communicate with you about updates and upgrades on the products you own.'"

Fairchild's second outreach program was to test the most targeted opt-in email lists available on the rental market. Again working with Carney Direct, she tested groups of three-to-five lists at a time. She says, "I did mini-buys of 5000 names." Each campaign included test cells to split out various title selections from the same lists, as well as two different subject lines with the same message body creative. She also tracked the results of text-only versus HTML messages.

By the end of March she'd learned which lists, title selections, and subject lines were worth investing in. So she was able to roll out much bigger campaigns without risking ROI. Initial campaigns were focused on making up the sales lost while the February-March prep work had been going on, so campaigns focused on promoting particular products, and often featured a time limited offer.

However, Fairchild had a greater vision beyond simply using email to generate direct sales. She wanted to use email to begin a long-term relationship with each IT professional that could result in much more profitable sales as they began to trust the Seattle Lab brand. Plus, while renting opt-in email lists is a lot less expensive than doing a direct mail campaign, it's still pricier than doing campaigns to your own in-house list.

Therefore, in June Fairchild began testing soft-offer campaigns that would help her grow her in-house prospect opt-in database, while starting long-term relationships with potential customers. She says, "The first time we talked to somebody, we wanted to add a lot of value to their experience. We didn't just want to hit them with a promotion. I wanted to start a dialog with them, let them know who we are."

She commissioned a white paper on content security from a third-party professional writer. Then she rolled out an email campaign to her best performing lists. She tested two different subject lines -- "Free White Paper on Content Security" and "Free White Paper on How to Stop CyberCrime." Click throughs landed on a special Web page that requested a small amount of information (name, state and email.) In keeping with her privacy policy, Fairchild added a check box asking each visitor for permission to email them again. It read, "Do you wish to receive more information on products and services relating to security?"

Although the white paper briefly mentioned Seattle Lab's products, it was not marketing focused. Fairchild explains the sales cycle from that point, "We give them time to read the white paper and then put opt-ins on a once a month schedule to receive further information. It's a longer qualifying cycle. We'll make them an offer probably six weeks later for our product." By which time presumably they are thoroughly impressed with Seattle Lab and are more likely respond positively.

After getting her own marketing house in order, Fairchild turned to Seattle Lab's resellers. She knew resellers already had a loyal client base they routinely sold to. The key to efficiency was to leverage that relationship on behalf of Seattle Lab. She says, "It's more efficient to build up your reseller program to sell products through them. Direct marketing is really expensive CPA-wise."

Generally software resellers in Seattle Lab's marketplace don't do any direct response marketing. They focus on direct sales and telesales, with perhaps a single marketing staffer creating marketing collateral for support. In July 2000, Fairchild started to share everything she'd learned about direct response marketing with her resellers. She explains, "Now we kind of act as a consultant or marketing agency for them."

Much of this help is very hands-on. Fairchild has created special microsites branded with each reseller's logo that they can use as landing pages for email campaigns. She also introduces them to key direct response and database vendors; and shares her test results from marketing campaigns so they know what copy and offers work best for Seattle Lab products.

She explains, "We commit to them that we are going to help them market these products. We know what messages work, what's compelling to prospects. We show them that customer data is an asset and how to use it. It's a long term investment in relationships with our resellers."



RESULTS

Seattle Lab's sales figures for the month of July 2001 were 44% higher than its sales figures for the month of March 2001 when Fairchild's initial marketing tests began. The Company's new product launch sales for 2001 are currently 20% higher than expected.

Here are more results:

- Email list test results
Fairchild says, "Generally if I try five lists typically three will be around 1% response rate, one will always be around 2% and one will be around 3%. I go back and do a larger buy on the 3% list.

"With the 2% list, it could be the list or the message, so I run another message to test offers and subject lines. If it does lackluster the second time, it doesn't matter how many times I change the offer or subject line, the list isn't right."

She also notes that HTML almost always gets double the response rate that plain text does.

- White paper test campaign
The results between the subject lines ("Free White Paper on Content Security" and "Free White Paper on How to Stop CyberCrime") tested were so close -- 2.9% CTR vs. 2.7% CTR -- that Fairchild called it a tie.

However, 52% of the clicks from the "Security" subject line actually downloaded the white paper, while a full 60% of the clicks from the "CyberCrime" subject line did. In both cases, about half of the visitors who downloaded the white papers also checked the box on the firm to opt-in to receive further information via email from Seattle Lab. Fairchild says, "We're very pleased with the results."

- Reseller results -- Although it's too early to see an ROI on the reseller marketing assistance program, the response has been overwhelmingly positive. One reseller even hired a full-time direct response marketer to handle campaigns. Others have created new marketing databases, many with more than 100,000 names. Fairchild says, "It's been an unbelievable reaction. I mean unbelievable! These guys are not marketing focused -- they are direct phone calling to sell products. But their common reaction is 'Let's get this rolling as soon as possible.' They get so excited."