Although electric lighting was the "Internet of the 19th century" according to Topbulb CEO and President Phil Bonello, "100 years later it's just not exciting anymore."
Light bulbs, in fact, are now as about as exciting to consumers as facial tissues. You really miss them when you need one, but otherwise they take up about 0% of your daily consciousness. Or as Bonello explains it, "Bulbs are low involvement products."
The Gray Supply Company specialized in esoteric light bulbs, mostly sold through printed catalogs for the business-to-business and medical markets, for about 70 years before the Board recruited Bonello in 1998. They simply wanted him to raise sales. He saw a ripe opportunity to broaden the Company's marketplace as an online B2C retailer: Topbulb.com. CAMPAIGN
As Bonello explains, "One of my beliefs is that every commercial buyer is a consumer after dark, and they all have light bulb product needs too." Although in the past consumers could pick up a fresh four-pack of 60 watt bulbs at the supermarket for very little, these days consumer light bulb needs are becoming more and more esoteric as folks need to replace "Fiber optic lighting, holiday lighting, display lighting, track lighting, aquarium bulbs, task lights for reading or the basement, that bulb that burned out in my Corvette, or my amplifier…"
Bonello believed that the Company could test heretofore-unknown consumer waters by using search engine marketing. Sending a printed catalog through the postal mail (if you could find a rental list of people looking for light bulbs) would not be even remotely cost effective. But positioning the Company's products, so they appeared in related search engine queries might make sense.
First Topbulb's team came up with a list of every possible term a consumer might search for bulbs by, including attributes (mimics daylight), categories (black light), as well as the codes manufacturers place on each bulb. Then they built productivity models to track the efficacy of each individual term, including the cost for paid listings, number of views, cost per click, gross margin, conversion rate, product purchased, repeat purchases, and when the account becomes profitable.
Bonello says, "We're direct marketers, we understand basic DM models. Most don't speak to profitability in the first marketing effort. There's normally a large customer acquisition cost, and then you recover the money as you build the relationship with the customer."
In order to maximize sales conversions from the first click through, Topbulb's hotlinks vary depending on the search term used. Search engine users are taken directly to the relevant product or category page in Topbulb's site. The only time search engine listings link to Topbulb's home page are when the search term used is so general that that's the only place it makes sense to send them. Bonello explains, "Every product purchase has some element of impulsivity. The more steps you can eliminate between the thought to buy and the actual behavior, the more likely you are to sell something."
Topbulb's site constantly pushes visitors to contact customer service with any questions. The toll-free phone number is listed clearly throughout the site. There is a photograph of the team in the "About Us" section so you can see there are real humans looking forward to helping you. Plus, if you decide to leave the site without purchasing, a pop-up box appears reading:We think that you were looking for light bulbs and we are sorry to see you go. We are always trying to improve our visitor satisfaction and would appreciate your feedback. What were you looking for that we did not have? Or what didn’t you like about our site?
Visitors can type their comments into a field in the pop-up and submit them for an answer. Then there is also an incentive to give Topbulb your name and address:Thank you for your comments. Please accept a FREE Night Light as our gift to you, by filling in your name and address below. This gift is completely free and optional so, if you do not wish to receive one, simply leave the name and address fields blank. Please click “submit” when you are finished.
Last but not least, the pop-up reminds you that if you asked a question requiring an answer, you will need to give Topbulb a way to get in touch with you if you have not already.
The customer service team are true light bulb specialists. "You can fax or email over a picture of a fragment of a bulb," says Bonello, "our folks can match it." He hopes that level of expert service will ensure a high level of repeat customers who will stick with Topbulb for years to come. Extending lifetime value is where true profits are to be made.
Naturally Topbulb also collects opt-in permission from as many buyers as possible. Bonello's team have tested a wide variety of special offers to this list, including "Thank you for your order -- get 10% off your next order" and "Free Hagen Daz ice cream with orders over $20." Bonello says, "We've experimented with dollars off, percentages off, discounts on shipping, free shipping…"
Starting from almost zero four years ago, B2C sales now comprise about 30% of the Company's overall sales. While TopBulb's B-to-B customer base has also grown steadily, the Company's B2C clients are growing "very rapidly." Bonello says, "It's very gratifying."
International sales are also becoming a larger slice of the pie. Bonello says, "We're getting a lot more enquiries from offshore by virtue of the Web." He imitates a typical international customer, "Their projector bulb has just burned out and they're in deep trouble. How fast can you get that bulb to France? I don't care what the shipping costs! We want it pronto!"
Bonello notes all of this B2C business would have been practically impossible without the search engine marketing on the Internet. There are no mailing lists of consumers whose light bulbs need replacing at a particular moment, and a general branding campaign to make Topbulb a household name would be cost prohibitive.
Bonello says, "On the Web it doesn’t cost us much to do a campaign. You can put up graphics on your site, and for relatively little money go out and test words to see what you pull in. You're pulling in new customers you could never afford to prospect for in a push marketing world, but you can sell them very effectively in a pull world."
- Broad marketing campaigns did not convert enough sales to be worth the investment. Bonello says, "Early on to attract as much traffic as possible, we offered a free radio to sign up on our email list. A lot of people signed up, we saw an enormous spike in traffic … and an enormous drop in conversion rates. The traffic didn't drive a lot of buyers."
- Conversion rates are "much higher" for specialized search terms. "If we put in something extremely obscure, the end user thinks 'Wow, these guys are really smart! They have exactly what I'm looking for.' Versus the person typing in 'lighting.' I don't know what they're looking for."
- Customers like to order through multiple channels. Sometimes online, sometimes on the phone, sometimes via email. In fact, Topbulb's most loyal (and profitable) customers are most likely to communicate and order through a variety of mediums.
- Email to the house list "works pretty well." The 10% off your next order thank-you email was a big hit. The free ice cream offer did ok, but it wasn't the home run Bonello had hoped for. An email promoting bulbs as last-minute stocking stuffers didn't work.
- Percent discounts tend to work better than dollars off. Interestingly Bonello says he's seen no difference in the success rates between 10% and 15% discount offers.
- Site traffic gains are steady but to some extent unpredictable. Bonello says, "We find something akin to a step-function. The volume kicks up to a certain point - a kind of plateau -- and then for some reason we don't understand, all of the sudden it moves up significantly again, and plateaus again for a few weeks or a couple of months. It's very hard to budget."
He adds, "We attribute it to fairly clever marketing, acting on customer feedback, and constant vigilance, constant marginal improvements. It just never stops!"