By Richard L. Routh, Ph.D.
Director, The Institute for CIO Excellence
President, The GINESYS Corporation
Faculty, USC Upstate
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A profitable dot.com business
Sold for a profit prior to the dot.com bust of
2001
Was once the largest paintball retailer in
U.S.A. (maybe in the world)
Never had a store front (always existed only
on a server—a true pure dot.com e-commerce
business)
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By 1995, had evolved to rapidly create
sophisticated full-featured Web-based
business solutions
GINESYS used KnowledgeWave to create
and operate sophisticated e-commerce
business solutions for a variety of business
sectors
By 1997, we were asking, “Why don’t we do
this for ourselves?”
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We weren’t particular about which market we
chose to demonstrate our ability to create a
successful dot.com business
We were looking for the right relationship with
a wholesaler who would drop-ship product for
us and allow to focus on the sales and
marketing end of the business.
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Largest paintball wholesaler in the country
Served about 2000 paintball retailers across
North America
Maintained a large inventory of paintball guns
and supplies
Operating their own shipping and receiving
department
Was willing to drop-ship for us
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We (GINESYS) would own and operate a Webbased paintball retail store on the Web
We would own the business, the customer
lists, the trademark (PaintballCommand), the
domain name, etc.
We would sell product to consumers
NPS would drop-ship our orders and pay us
7.5% of gross sales (and we would not need to
keep any inventory!)
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We started building the Web-site/store in
September 1997
We were taking orders on a reduced inventory
by October 1997 (with KnowledgeWave, it
took longer to build the database of products
than it did to build the Web-site)
By June 1998 (8 months after start-up) we
were the largest single store retailer of
paintball stuff on the country.
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Within 15 months, we hit a $2 million/year runrate (based on fourth quarter 1998 sales)
We then began looking for someone to buy the
Paintball Command business (we were not
paintball fans, we just did to to prove we could
do it)
1.
2.
3.
You must have a compelling value proposition (i.e.:
You must be the BEST in Price or Service or
Quality)
Use technology that allows you to rapidly develop
and customize all the services you will require: retail
store, customer accessible databases, integration
with third party databases, email robots, and
customizable detailed reporting that is updated
daily or more frequently.
Realize that you are not in the inventory
management business. Arrange a contract with
someone else who is to do your drop shipping and
return service.
4. Maximize the use of Web-based and Internet services
such as search engines, pop-up ads, email, etc. to do
your advertising for you. Also, realize that it is much
more difficult in today’s cyberspace marketplace to
get instant top search engine position. This doesn’t
obviate the principle espoused here, it just makes it
a little trickier and maybe a little more expensive to
implement.
5. Develop detailed daily reports that measure all
significant facets of your sales. Ensure that these
reports are in the form to be quickly digested by
senior management. Also, ensure that you use a
reporting tool that can quickly and easily modify
these executive reports. A good data mining system
is not a bad technology to consider.
6. Keep focused on constantly and rapidly
measuring the effectiveness of your
marketing campaigns. Make it your goal to
shrink the entire implementation and
evaluation cycle for a marketing campaign to
something on the order of a day or less.
7. Rely on quality Web-based automated
customer support technologies and not on
humans for customer support.
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With the exception of one monthly paintball trade magazine ad
(created, placed and paid for by NPS), all of our advertising
was done for free by third–party commercial search
engines (such as AltaVista, Yahoo!, HotBot, Lycos, Excite,
etc.—Google didn’t exist back then). We learned how to be very
good at placing Paintball Command listings on the first page of
the major search engines. This took a significant amount of
study, experimenting, time, and monitoring. But this was our
primary marketing mechanism (along with some very
significant word-of-mouth referrals later on), so a lot of time and
attention to this was appropriate. Almost all of our new
business (which was about 90% of our business in the first year
or so) came from the search engines. It was a key tenant of our
business strategy to gain and hold dominant first page position
in the major search engines. Once we got good at doing this, the
cost of our entire marketing effort was only time—no dollars
were spent.
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We developed detailed daily reports that measured
all significant facets of our sales (and a lot of
insignificant ones). These reports, combined with our
ability to quickly (within minutes) register new or
changed search engine entries high on the first page of
some major search engines, gave us an incredible
competitive advantage. For example, we got so good at
this that we could decide on a new marketing campaign in
the morning, build the supporting Web-pages for it on our
Web-site by 1:00 p.m., get it advertised on the first page of
AltaVista (then the most popular search engine) by 2:00
p.m. that afternoon, and begin monitoring the impact of
the new marketing campaign prior to going home that
evening. By the next morning, a full report was
automatically generated that showed the differentials in
sales due to the new marketing campaign.
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In this way, we could quickly create, implement
and measure new sales strategies and marketing
campaigns—and then modify them and go
through the entire cycle multiple times per week.
This allowed to quickly modify and hone our
marketing campaigns to optimal
effectiveness over the course of a few days.
It takes months or years for this to be done with
traditional marketing methods and tools, and is
usually not done to completeness because it is so
time consuming and expensive with traditional
means. This was a competitive advantage that I
believe we uniquely held for a long time and it
was obviously a key factor in our competitive
success.
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We kept our customer service expense to a minimum
through the use of email robots, an on-line order
status database, and F.A.Q. pages. This was not
something we did right from the start. We grew into this
one. Initially, when sales were fairly small, customer service
could be (and was) handled by telephone and human
response to customer emails. To man our customer-support
telephone-service, we hired a high-school kid who knew more
about paintball than we did. (We really weren’t paintball
fans even though we ran the largest paintball store in the
country! I personally have never played an organized game
of paintball!) As our sales grew, the customer service
overhead grew proportionately. The telephone and email
customer service grew from a couple hours per day, to a
couple people full-time and they still couldn’t keep up. This
precipitated a minor crisis in an ever-expanding overhead
burden.
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The GINESYS corporate vice president began
to try to persuade me that we needed to scale
back our human customer support in favor of
automated customer service in the form of:
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Email robots
On-line order status database
F.A.Q.
A way to talk to humans if you’re desperate
o
These are email messages that are
automatically generated in response to certain
key words in the subject or body of the
customer’s email. For example, if an email
contained the word “warranty” or the word
“broken,” the robot would assume this was in
reference to a product that might need
warranty repair. An email would be
automatically generated explaining our policy
and procedure for returning an item for
warranty repair and instruct them in how to
ship it to NPS for this service.
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A large percentage of our telephone calls and emails were
asking questions like, “When will my order get here?” and
“Has my order shipped yet?” We implemented an on-line
Web-based and customer accessible database that
contained the current status of all orders. This was
partially automated to include the UPS tracking numbers
of all orders as they shipped from the NPS warehouse. So
when a customer placed his or her order, an order number
was provided with instructions as to how to access our
order status database. Then the customer could view the
database which marked an order as either “received,”
“processing through shipping,” “on back-order,” or
“shipped” with the corresponding UPS number. If the
customer provided us with an email at the time of order,
we also automatically sent an email when the product
shipped with the UPS tracking number and a link to the
UPS tracking Web site. This ended up being a great
success and very popular with our customers.
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A Frequently Asked Questions section (F.A.Q.)
that was kept up to date with the latest
customer concerns and Paintball Command
policies.
o
o
At the end of each email sent by our email robot
system, we included instructions for how to get
through to a human. It was a simple procedure.
We instructed the customer that if our automated
customer support features did not satisfy the need,
then they could send an email with a special key
word in the message subject. All emails with that
key word in the message subject were routed to the
human customer service rep for personal response.
We also continued to maintain a minimal telephone
support staff, but it was reduced to one person for
three hours per day (and was almost always busy,
so it was not really very accessible).
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This plan to reduce human customer support in favor of
the automated system described above was not
something I initially favored. I thought it would
significantly reduce customer satisfaction and we were
finally getting to the point where word-of-mouth
referrals were becoming significant for us. The
argument was stated forcefully as, “If we are going to be
a Web-based business, then we are going to have to
figure out how to operate as a Web-based business and
that must include all customer-facing aspects of the
business. We cannot afford to do otherwise in terms of
either economics or conceptual business model.” So I
agreed to implement the plan as outlined above, and I
held my breath (so to speak). In the end, although we
got an occasional irate email swearing to never do
business with us again, we measured no significant
decrease in sales growth.
1.
2.
3.
You must have a compelling value proposition (i.e.:
You must be the BEST in Price or Service or
Quality)
Use technology that allows you to rapidly develop
and customize all the services you will require: retail
store, customer accessible databases, integration
with third party databases, email robots, and
customizable detailed reporting that is updated
daily or more frequently.
Realize that you are not in the inventory
management business. Arrange a contract with
someone else who is to do your drop shipping and
return service.
4. Maximize the use of Web-based and Internet
services such as search engines, pop-up ads,
email, etc. to do your advertising for you. Also,
realize that it is much more difficult in today’s
cyberspace marketplace to get instant top search
engine position. This doesn’t obviate the
principle espoused here, it just makes it a little
trickier and maybe a little more expensive to
implement.
5. Develop detailed daily reports that measure all
significant facets of your sales. Ensure that
these reports are in the form to be quickly
digested by senior management. Also, ensure
that you use a reporting tool that can quickly and
easily modify these executive reports. A good
data mining system is not a bad technology to
consider.
6. Keep focused on constantly and rapidly
measuring the effectiveness of your
marketing campaigns. Make it your goal to
shrink the entire implementation and
evaluation cycle for a marketing campaign to
something on the order of a day or less.
7. Rely on quality Web-based automated
customer support technologies and not on
humans for customer support.
Paintball Command was sold in 1999. Under
new management, it failed to thrive and grow
and, when last I checked, was no longer in
operation.