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Dot-com Grows by Applying Basic Business Principles
(Marketing Memo, December, 2001)

Bulbs.com, a two-year old Worcester, MA, company that sells traditional and compact fluorescent bulbs to businesses over the Internet, has grown its business by 300%-400% per quarter by applying basic marketing, sales, and finance principles, says Mike Connors, Vice President of Marketing.

At first Bulbs.com had no track record and little data. Soon, the company realized that 25% of its customers made multiple purchases during the year, but the remaining 75% were one-time purchasers. Puzzled, the company surveyed customers at 60 small to medium size companies.

Although some single orders included all the bulbs the company needed for the year, in other cases, the customer had switched to another provider. Bulbs.com collected data on why these customers had switched and made changes based on this feedback. As 5%-10% of four- and eight-foot long fluorescent tubes were arriving broken, Bulbs.com invested in better packing materials rather than risk losing customers. This investment allowed staff to focus on developing new business rather than on placating customers. Breakage fell to 1%, and they regained most of the defectors. The company is now trying to reduce shipping costs without increasing breakage.

Ultimately, 75% of the one-time purchasers (>50% of the total customer base) said they would place their next orders with Bulbs.com. In fact, some placed orders during the survey! To improve retention, Bulbs.com began calling customers and/or sending them post cards reminding them to reorder. Both of these low tech/low cost approaches have been effective.

The company continues to collect and analyze data. Connors notes that every two to four weeks they ask, "How did we do?" "Who are our top 20 customers?" "What are our top 20 products?" "How many customers place repeat orders after two months? Four months? One year?" Keeping good records allows Bulbs.com to continue to fine-tune its strategy. Every two months they overhaul their product lines and update their Web catalog. They then print paper catalogs from their Web site, rather than importing paper catalogues into their Web site.

Lessons learned:

  • Target your audience
  • If this audience doesn't work out, target another audience
  • Measure your results and look for significant trends
  • Fine tool your strategy
  • Accentuate the areas where you are strong
  • Use the Web to acquire customers and compete against old guard distributors
  • Keep your eyes on why you are in business -- profitability.

This fall we saw how quickly market conditions can change. Like Bulbs.com, you should regularly survey your customers to verify that you are targeting the right audience and providing the right products and services. But, if you do solicit customer feedback, you should listen, investigate, and change what you can.

Winett Associates offers a new technology/product tracking service. Email for details.

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