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There's a reason people call it junk mail--as much as 99 percent of direct-mail ads are ignored, or cursed at, before being tossed into the trash.
But Shawn Burst saw potential amid the unredeemed coupons and "This week only!" offers: What if it was possible to combine a direct-mail campaign with social media and other web technology? What if he could make junk mail extremely valuable--not just to the people who get it but also to the marketing groups and businesses that send it out?
Two years ago, Burst founded Dukky , a company dedicated to exactly that idea. After 15 years in the direct-mail and printing industries in New Orleans, Burst knew that the most effective campaigns have a good offer and a good mailing list. But he also knew that even the best lacked strong customer engagement and truly measurable results.
"We've been on this mission to build a tool that would give every business, big or small, an intelligent lead-generation tool that closes all the holes," Burst says.
What Burst and his Dukky partners developed is, simply, a souped-up lead-generation device. It makes print advertising trackable, and it lets marketers watch the progress of their campaigns in real time. It builds a deep database--the all-important mailing list--as it goes along. And by adding social media--giving respondents a chance to share the promotion on Facebook, Twitter or some other outlet--it can make the despised coupon-in-the-mailbox a full-on, viral-marketing phenomenon.
In January, Dukky launched the first version of its software platform. Within months, it had more than 100 clients, including Chik-fil-A restaurants and Stein Mart department stores. It monitored their campaigns in real time and collected detailed information about their customers (including e-mail address, birthday and gender). It orchestrated one campaign so effectively, the response rate was an unheard-of 280 percent--with no additional investment.
"This is going to be a game-changing technology," says Richard Birt, senior vice president of customer analytics and insights at KSL Media, an agency in New York and Encino, Calif., that buys advertising for clients. "In 30 years' time, I consider it one of the top three groundbreaking technologies in database management."
Burst is counting on it.
Burst, a lifelong resident of the New Orleans area, attended Tulane University and then went to work with his brothers at their direct-mail and print facility, where he was responsible for product innovation. Dukky spun out of that business and, when it started to gain traction and attract funding, it became Burst's sole focus (his title is executive vice president of sales and marketing).
Anatomy of Going Viral
Or, how Dukky turned a chicken biscuit into a marketing bonanza
1. Chik-fil-A of Covington, La., sends 5,000 pieces of direct mail offering a free chicken sandwich or chicken biscuit with online registration. Each piece features a PURL, a personal URL, unique to each recipient.
2. To get their free chicken biscuit, customers must click onto their PURL and supply their name, e-mail address, birthday and gender.
3. Customers then are offered the opportunity to share the biscuit giveaway via social media, text message or e-mail. Added incentive: They and the people they share the offer with can win free Chik-fil-A sandwiches for a year.
4. Using the Dukky dashboard, marketers track respondents through every step of the process, measuring how many people activated the free sandwich card, how many shared the offer, etc. Through sharing, the Chik-fil-A offer is extended to 14,000 people.
5. More than 1,300 customers redeem the original offer--a 26 percent conversion rate--and the Chik-fil-A store captures 3,400 names and e-mail addresses for future marketing efforts.
A note about that name: It's pronounced ducky, as in rubber ducky. Early on, Burst, a busy father of four, was doing some strategic thinking in the shower.
"One of my only places of refuge," he says. "I looked down and there was a yellow rubber duck. I thought about how ducks fly in formation and how that related to our co-op mail approach." Because ducky.com wasn't available and because two-consonant domain names were popular, the company name was hatched.
According to the Direct Marketing Association, more than 54 percent of all advertising spending in the United States goes into direct-marketing channels. Spending in 2009 was more than $149 billion; direct mail and catalogs alone made up $44.4 billion of that.
Despite the big numbers, marketers know the frustration of not being able to quantify their results, and anyone selling advertising is acutely aware of the demand for metrics. In a tight economy, marketers want sales leads more than they want anything else.
Meanwhile, social media has altered how consumers make buying decisions. Sure, people still look at ads in magazines, and if they don't TiVo, they may even watch a commercial once in a while. But chances are, they are paying more attention to their connections on Facebook and Twitter.
Dukky's tool for bridging the online and offline worlds is something called a PURL: a personalized URL, or web address, that is pre-populated with a target customer's data. That individualized PURL--say, gift.com/johndoe--is printed on a piece of direct mail sent to John Doe. And the offer on the mailer requires a trip to the Internet to redeem it.
It sounds like a hassle, but Dukky and the marketers who use direct mail are confident consumers will take that extra step. "People's online and offline lives are pretty intermingled now," Burst says.
The end result: A deep connection with customers before they even set foot in the store. A rich database for future marketing. And--incredibly--a good chance that the customer himself will become a viral marketing agent.
The First Wave
Dukky takes the most effective form of direct marketing--an offer that requires the customer to interact with the company--to the next level, "by combining that interactivity with social media," says Richard Joutras, CEO of the Segerdahl Group, a direct-mail printer in Wheeling, Ill., that uses the Dukky platform. "It's direct marketing on steroids."
In the case of Stein Mart--which had never done an interactive direct-mail campaign before Dukky--it exceeded its expectation of 2.5 percent offer redemption by 16 times and got a list of 5,500 potential customers.
"Not only are we exponentially raising the numbers, but now Stein Mart has a list of people they didn't have before," says Jimmy Treuting, CEO of Dukky.
Chik-fil-A had even greater success. Rick Gonzalez, the owner of the franchise's store in Covington, La., used Dukky's platform on a direct mailing of 5,000 free sandwich offers. He received an incredible 14,000 responses, thanks to the offer going viral, and, more important, he built a strong database for future promotions.
"I had tried for eight months to build an e-mail database and had 150 names," Gonzalez says. "After the four weeks of this campaign, I had 3,400 names."
It's almost as though Dukky is removing the perceived influence of the marketers by making the consumers themselves the advocates for a product or service. "It's the difference between kicking the door in and throwing something at you, and ringing the doorbell and showing you what we want to sell you," Joutras says. "If it's the right offer, people will want to use it."
That's an important point about what the Dukky platform doesn't do: Create the actual campaign. "Our tool is not a silver bullet," Burst says. "If you have a crappy list and a crappy offer, our tool might only make it a bit less crappy."
Dukky lets marketers figure out how good the campaign is as it is in progress. As customers are accessing PURLs and sharing offers on Facebook, marketers can see the regions where it's working best, how long customers spend in different phases of the process, who their best advocates are, and so on. That allows marketers to rank customers based on how much they help attract new customers. Or as Adam Boalt, Dukky's interactive director, puts it: "Our clients love watching their campaigns come alive."
Next: Small Businesses
Boalt, who founded an interactive marketing agency in Washington, D.C., and West Palm Beach, Fla., helped Burst develop the software platform. The third Dukky principal, Jimmy Treuting, was one of the original investors in the company and a veteran of online startup ventures, and in January he joined the company as CEO.
Since the software was launched in January, Dukky's efforts have landed more than 100 customers, Burst says. For Dukky's enterprise clients--the direct-mail printers and ad agencies--the software license fee is $999 per month. Those outfits can use and brand the tool however they choose and use it with any of their own clients. They upload their lists into the system and pay anywhere from 2 cents to 6 cents per PURL, based on the volume of their campaigns. Burst projects sales this year to be $5 million.
Dukky is beta testing a version for smaller businesses--including those that don't have the budget for a marketing agency. The most basic subscription level for small businesses is $99 per month, which allows for three campaigns and 350 leads into the database. Bigger packages are available for larger businesses that need more campaigns and more database entries.
Ultimately, that tool could be distributed via any number of outlets that have access into small businesses, from IT systems integrators to companies that provide services such as web hosting and online directories to small businesses. Even big guns like Google are being discussed; Burst sees the potential to integrate the Dukky tool into Google AdWords.
The licensing strategy has led to $3 million in private equity raised to date, including an undisclosed amount from LongueVue Capital in New Orleans.
"What attracted us was the opportunity to bring offline companies online and the software-as-a-service model," says Rick Rees, general partner and co-founder at LongueVue. "The scalability of that business model is tremendous."
Dukky is also exploring applications for print media advertising and mobile tagging technology and how to take those consumers directly to advertisers' PURLs.
Actually, say Burst and company, they are exploring every avenue they can think of.
"In the end," Burst says, "we just want to be known as the best and easiest-to-use lead-gen system for any size business."