Dialogue Insights

June 2007

Internet Marketing - "You've Got Mail"
by Robert M. Donnelly

There are moments in our lives where we realize that another significant change milestone has occurred. It’s like a bigger blink than Malcolm Gladwell refers to in his best selling book.

I had the same feeling awhile ago when I heard about the “Walkman” and more recently again when the iPod appeared.

However, Walkman and iPod are dwarfed by the introduction to the internet that was heralded by “you’ve got mail” from America OnLine way back in 1989.

That auspicious and now familiar announcement on our PC’s and now laptops began the rapid transition from what was left of mass marketing as we knew it to one-to-one marketing that is changing our lives and the way we shop.

Except for when we had the dot.com melt down because too many entrepreneurs convinced too many VC’s that the market was ready for virtual stores when in reality it wasn’t, primarily because there weren’t enough tech-savvy customers yet; internet marketing has gradually matured since then into the most effective marketing vehicle ever because it allows for direct one-to-one contact with the customer.

Historically, manufacturers dealt with wholesalers who dealt with retailers who sold their product to the customer. Advertisers got into the act on behalf of the manufacturers, some of the larger wholesalers and a lot of the retailers. In this era the manufacturer made what they thought would sell and the channel intermediaries did their best to get it to the marketplace and into the hands of the customer.

Most of this was done on the domestic or local level. Some of the larger manufacturers were able to market globally and did so quite well, but for the majority of small to medium size manufacturers this was impossible.

Many manufacturers were at the mercy of all the channel intermediaries to get the message right and to be able to “sell” the product effectively to the customer. Since they were so far removed from the customer in most cases it was almost impossible to get much first hand feedback from the customer. So then we had a lot of market research firms interpreting customers reactions for the manufacturers, but often by the time the results were available the market had changed again.

The internet has altered those dynamics dramatically. Now we have manufacturers communicating directly with the customer in a one-to-one virtual exchange and getting instantaneous feedback. And, rather than relying on someone else to interpret reactions we have immediate market research results from the ultimate source – the customer.

Beyond this we now have the opportunity not only to get instant input, but to be able to customize products to individual customer requirements thus engaging the customer in the product development process saving time, eliminating costs and delighting the customer.

Some virtual firms make nothing, have no offices, few employees and thrive solely on their networks of suppliers being able to get their products to the firm’s customers with the whole process taking place in space.

In reality, the customer has become the portal for the virtual marketing organization to satisfy as many of their requirements as they can, or want to. Today Amazon has some enormous number of SKU’s for all the products their customers have come to them to get for them.

More importantly the internet has created a global marketplace where anyone from anywhere can sell a product to a customer somewhere else on earth. For example, my book is available thru Amazon and Barnes & Noble OnLine globally. I have seen it promoted in Japanese and Chinese on the internet.

I am on the faculty of a virtual university and I now have students from parts of the world where I have never been and probably will never go in my lifetime. All of our interactions are carried out in space and their assignments and projects are delivered as an attachment to their e mail. We can even communicate for free on Skype and see each other if need be on a webcam attached to our laptops or PC’s.

The real value of internet marketing is that anyone or any company for that matter can now sell their products or services to anyone else on earth. You are no longer held captive by the geographic parameters of your local market. The flip side of course is that competition is also greater and the old concept of faster, better, cheaper is epitomized over the internet.

eBay has become the global clearing house for whatever you have to sell. Google facilitates the location of information on anything you can imagine. You can broadcast your latest innovation to any number of prospects or customers with the tap of a key. You can demonstrate your product with a flash video. You can have them design a product that only they want - their own customized sneaker or breakfast cereal or BMW Mini.

One-to-one marketing has become the most sensible approach to a changing world market. Virtual storefronts are the only way to shop for some. Some housewives have even abandoned the supermarket and prefer to shop for their groceries on Peapod.com and have them delivered to their doorstep. For others there is still a fluctuating balance between the traditional store and the virtual store in order to satisfy everyone. Some who started with virtual stores like Dell are now opening traditional stores.

Let’s take a small growing local firm that I know well – Assured Automation, a distributor of industrial process control equipment. Historically the company sold industrial valves, valve automation accessories, and process control systems to major firms with manufacturing operations in the New York, New Jersey and Eastern Pennsylvania area. Sales were generated through the traditional process of salesmen calling on engineers and purchasing managers and getting opportunities to quote on their existing requirements. Business was good, steady and reasonably profitable.

Then with the advent of many manufacturing activities either being outsourced, moving south or offshore, competition for the remaining business became intense and more difficult to get with fewer engineers with the time to spend with salesmen. More MRO business was becoming standardized and the requirement for engineered solutions of the past started to decline.

Concurrently, the internet was fast becoming a more efficient way for process control engineers to find information, specifications and even process orders electronically. Realizing this, the CEO and founder of Assured Automation acted quickly and launched the first industrial valve automation site in his industry:www.assuredautomation.com – that gave engineers the opportunity to electronically search for and buy standard automated valves off the internet.

It has been an overwhelming success and has expanded the reach of this local industrial valve distributorship nationally, as well as internationally. Since its launch the site has been expanded and embellished to allow for electronic sizing of automated valve packages to specific process control requirements, and new products have been added based upon one-to-one electronic interactions with engineers across the country.

While still generating business from the traditional personal selling technique, Assured Automation’s e business has tripled and continues to grow day-by-day. More importantly, profitability has increased with the lower overheads of running a virtual business versus the store front style traditional distributorship.

One of the most efficient and entrepreneurial examples of internet marketing I have seen recently is a doctor who specializes in surgery for only one life disrupting illness. He does not diagnose patients nor does he see or talk to patients before their surgery. Everything any patient needs to know is available on his website as well as the scheduling of the surgery, the hotel stay before the outpatient procedure, and payment/insurance arrangements.

Patients from around the world find this doctor by Googling their illness or from referrals to his site by their primary care physician. He also has a flash video of a live surgery on his site.

The only time the patient actually sees the doctor is immediately prior to the surgery. He is recognized by the patient from his picture on the site. Every patient that has ever had surgery with this doctor has glowing praise for what he did for them as well as posting their testimonials on the site.

While this may smack of the epitome of impersonality it also speaks for the power of internet marketing. I believe this doctor does 7 or 8 of these operations a day.

Where are you with internet marketing for your growing firm? Are you reaching as many customers as you could in as efficient a manner and with as good an explanation of your products as the entrepreneurial doctor described above?

If you have any questions about internet marketing email me so that we can start a dialogue about your business.

My next column will be about the next advance in marketing – Mobile Marketing.

E mail me with questions or comments so that we might begin a dialogue to help you get your business to where you want it to be. I can be reached at rmdonnelly@chiefexecutive.net

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An entrepreneur himself, Bob has spent most of his career involved with starting, growing and selling businesses. Having held managerial positions with IBM, Pfizer and Exxon, he draws upon extensive organizational experience with large and small companies in advising CEOs of growing firms. He is available online to answer questions from Chief Executive readers, as well as offer workshops, tips, books to read and a monthly online column about common issues facing CEOs of growing firms. Bob has been featured in USA TODAY for his work with Inc 500 firms and is associated with NYU's Stern Graduate School of business in their Center for Entrepreneurial Studies where he is a Venture Mentor, Marketing Strategist and Business Plan Reviewer.

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