Give And Take Why it pays to partner up on your marketing efforts

To really make it in e-tailing, you've got to keepcustomer-acquisition costs down. You have to find creative ways tomove merchandise and increase sales. And you must add value to yourcustomers' shopping experiences.

The secret to achieving all of the above-and more-may lie in areliable strategy employed by the most innovative dotcoms. Known asreciprocal marketing, the tactic basically allows you to offer yourpaying customers discounts at your online partners' sites aswell as provide discounts to your partners' customers on yoursite. To illustrate: If your customers spend $40 on your Web site,they then receive a gift certificate or discount coupon to use at apartner Web site. "Reciprocal marketing programs are awin-win-win for customers and any participating merchants,"says Shel Horowitz, a low-cost marketing consultant and author ofGrassroots Marketing: Getting Noticed in a NoisyWorld (Chelsea Green Publishing Co.). "You add morevalue to the customer's purchase and, at the same time, allowthe partners in the deal to tap into each other's customerbases."

One company that's found fantastic success with onlinereciprocal marketing programs is Proflowers. com, a San DiegoInternet flower company. In 2000, for example, in an effort toincrease sales-as well as motivate customers to purchase theirproducts before the Christmas rush-the 102-person business launcheda reciprocal marketing program with The Bombay Company, Gap.com,Omahasteaks.com and Wine.com.

Here's how it worked: Customers who ordered a product fromProflowers by December 13 received an order confirmation e-mailcontaining a special URL to access gift offers. Those offersincluded $20 off a purchase of $75 or more at Wine.com and freeshipping for customers who spent $75 or more at Gap.com. Customers who clicked on thelinks could enter the partner sites and redeem their holiday giftoffers. Proflowers, in turn, has marketing arrangements with eachpartner. In some cases, it has links on its partners' pagesallowing those customers access to special deals and discounts.

The company had also found success launching an earlierreciprocal marketing program prior to the holiday season. Lastspring, Proflowers implemented a strategy for Mother's Day, thelargest flower-buying occasion of the year. Here, when customersordered from Proflowers in time for a delivery no later than theThursday before Mother's Day, they received $10 off anypurchase at Gap.com. At the same time, customers of Gap.com whospent $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 manyproducts early as a result of the offers, and we also increasedsales. We met both of our objectives."

In addition, the programs were relatively inexpensive toimplement. "This is probably one of the lowest-cost marketingdeals that we do," says Bill Strauss, 42-year-old co-founderand CEO of Proflowers. "In many cases, there is virtually nocost associated with them. We only offered a discount to ourpartners' customers, which frankly is an acquisition tool forus."

But despite the clear benefits and cost savings, Bellach saysreciprocal marketing is just starting to catch on in the onlineworld. "These kinds of deals are the way the Internet will beworking, going forward. The beauty of it is that no cash changeshands between merchants, and you get people when their wallets arestill 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 mcampanelli@earthlink.net.

Making It Work

A key factor in launching a successful reciprocal marketingprogram, however, is choosing the right partner or partners.Experts say you shouldn't pick a company similar to your own,but instead select one that naturally com-plements your philosophyand product line. Essentially, Proflowers took this tack. "Wedeveloped an extensive grid with a lot of criteria around thingslike the number of visitors a particular Web site gets regularly,what category they are in, what their brand image is, andobviously, they had to be noncompetitive sites," explainsBellach. "Then, the 10 or 15 criteria we chose were weighted,and we ranked potential partners."

While you don't have to be as recognizable as Proflowers tolaunch a successful reciprocal marketing program, it helps to haveits level of marketing know-how. "When we first started out,nobody knew us," says Bellach. "But we understood how toput together successful reciprocal marketing programs. For example,we made an effort to really understand our partners' needs andbe creative in helping them accomplish their objectives while atthe same time accomplishing ours."

A good way to find partners is the tried-and-true method ofnetworking. "Attend conferences," says Strauss."Talk to people. And, most important, know what you can offerand understand what might be of value to potentialpartners."

Proflowers insists that because of all the successful reciprocalmarketing deals it has set up, the site actually gets a lot ofinquiries now from other Web sites wanting to establish deals."The best way to get potential partners interested in doingreciprocal marketing with you and your site is simply to be outthere, actively proposing win-win arrangements," saysHorowitz.

However, for your reciprocal marketing program to succeed, makesure you're not cluttering your site with discounts for a dozenother retailers. It's a risky move, because customers mightbegin to confuse your site with an online mall. "I am not abeliever in filling up the home page with reciprocal marketing oraffiliate marketing or affiliate marketing programs," saysHorowitz. "When you take the trouble and time and money tobring someone to your Web site, you want to keep the visitor thereas long as possible. Off-site links interfere with this."Proflowers prevents this confusion by including on its home page a"Specials and Promotions" link to the programs takingplace.

Another tip: Horowitz says netpreneurs shouldn't base theirrevenue models solely on their reciprocal marketing programs."Think of it as a little extra gravy and not the primarymoneymaker," he suggests. However, that doesn't change thefact that reciprocal marketing remains a great way for netpreneursto grow-especially in today's risky dotcom environment. "Ibelieve it is in the best interest of all businesses to expend theenergy developing reciprocal and affiliate marketing programs withcompanies that can synergistically help each other'sefforts," says Chris Anne Wheeler, vice president ofinformation services for online market research company ActivMediaResearch LLC. "By failing to do so, companies will loserevenues."

Contact Sources

• ActivMedia Research, (800) 639-9481, ext. 125, research@activmediaresearch.com
• Shel Horowitz, www.frugalfun.com