To really make it in e-tailing, you've got to keep customer-acquisition costs down. You have to find creative ways to move merchandise and increase sales. And you must add value to your customers' shopping experiences.
The secret to achieving all of the above-and more-may lie in a reliable strategy employed by the most innovative dotcoms. Known as reciprocal marketing, the tactic basically allows you to offer your paying customers discounts at your online partners' sites as well as provide discounts to your partners' customers on your site. To illustrate: If your customers spend $40 on your Web site, they then receive a gift certificate or discount coupon to use at a partner Web site. "Reciprocal marketing programs are a win-win-win for customers and any participating merchants," says Shel Horowitz, a low-cost marketing consultant and author of Grassroots Marketing: Getting Noticed in a Noisy World (Chelsea Green Publishing Co.). "You add more value to the customer's purchase and, at the same time, allow the partners in the deal to tap into each other's customer bases."
One company that's found fantastic success with online reciprocal marketing programs is Proflowers. com, a San Diego Internet flower company. In 2000, for example, in an effort to increase sales-as well as motivate customers to purchase their products before the Christmas rush-the 102-person business launched a reciprocal marketing program with The Bombay Company, Gap.com, Omahasteaks.com and Wine.com.
Here's how it worked: Customers who ordered a product from Proflowers by December 13 received an order confirmation e-mail containing a special URL to access gift offers. Those offers included $20 off a purchase of $75 or more at Wine.com and free shipping for customers who spent $75 or more at Gap.com. Customers who clicked on the links could enter the partner sites and redeem their holiday gift offers. Proflowers, in turn, has marketing arrangements with each partner. In some cases, it has links on its partners' pages allowing those customers access to special deals and discounts.
The company had also found success launching an earlier reciprocal marketing program prior to the holiday season. Last spring, Proflowers implemented a strategy for Mother's Day, the largest flower-buying occasion of the year. Here, when customers ordered from Proflowers in time for a delivery no later than the Thursday before Mother's Day, they received $10 off any purchase at Gap.com. At the same time, customers of Gap.com who spent $40 or more received a discount of $10 to use at Proflowers. "The programs were very successful," says Steven Bellach, Proflowers' chief marketing officer. "We shipped many products early as a result of the offers, and we also increased sales. We met both of our objectives."
In addition, the programs were relatively inexpensive to implement. "This is probably one of the lowest-cost marketing deals that we do," says Bill Strauss, 42-year-old co-founder and CEO of Proflowers. "In many cases, there is virtually no cost associated with them. We only offered a discount to our partners' customers, which frankly is an acquisition tool for us."
But despite the clear benefits and cost savings, Bellach says reciprocal marketing is just starting to catch on in the online world. "These kinds of deals are the way the Internet will be working, going forward. The beauty of it is that no cash changes hands between merchants, and you get people when their wallets are still open."
Melissa Campanelli is a technology writer in Brooklyn, New York, who has covered technology for Mobile Computing & Communications and Sales & Marketing Management magazines. You can reach her at email@example.com.