Nine coupon cutters from Sheboygan, Wis. Those are the kinds of people that a Cambridge (Mass.) company is hoping to convince to shop online. But the company isn't sending direct-mail solicitations to Sheboygan homes or decorating the coupon clippers' computer screens with banner ads. Instead, eight-month-old QuantumClicks is expanding on the technique that direct-selling businesses such as Avon (AVP ), Amway, Tupperware (TUP ), and Mary Kay have perfected since the 1950s: encouraging groups of people -- in person, at home -- to buy products. But the difference is QuantumClicks unleashes its "Web guides" to encourage shopping on the Net, at partner Web sites.
Since May, 2000, QuantumClicks has held 1,000 pilot "workshops" in Massachusetts, Rhode Island, and the Midwest to demonstrate shopping at the Web sites it works with. "People don't understand all of the features that Web sites have," says Robert Rizika, co-founder and CEO of QuantumClicks. For instance, he says, Barnes & Noble.com (BNBN ) holds free online classes on everything from financial planning to the Civil War, in addition to selling books. When people breeze through a site without help, he adds, they're apt to overlook special features that could make them repeat customers.
Rizika's selling point is that the people QuantumClicks bring to the Net buy more and return to shop more often. Some 40% of workshop attendees buy something. That's compared to the 0.27% of active home Internet users who clicked on the top-10 banner advertisements in the U.S. at the beginning of January, according to Nielsen/NetRatings. QuantumClicks also claims that 60% of its customers return to featured Web sites to shop, with an average first-time sale of $40.
"We are looking for different [marketing] opportunities," says Alison Berglund, vice-president fOR marketing at HomeRunner.com, a Boston outfit that delivers groceries to homes and a pilot client of QuantumClicks. Adds Betsy Hawkanson, senior director of marketing for drugstore.com, another pilot client: "We face a challenge of educating consumers about the benefits of an online pharmacy." If QuantumClicks works, she says, it will help convince shoppers that buying medicine and beauty supplies online "isn't a complicated or time-consuming process."
For QuantumClicks, organizing the groups can be lucrative: For each sale it produces, it can make as much as $200 from the participating Web site, depending on the nature of the site's services. Other pilot clients include Earthlink and Barnes&Noble.com.
The company is relying on word of mouth to market its workshops. Many of the guides already have a network of clients from past direct-selling jobs, which gives them an edge in spreading the message. The company recruits its guides through information sessions it holds in certain cities and through referrals from current guides, workshop participants, and former colleagues.
DIRECT SALES ARE UP.
The timing is right. Joseph Mariano, executive vice-president for the Washington (D.C.)-based Direct Sellers Assn. (DSA), which has 150 member companies, says direct-selling businesses do better when the economy slouches. "[Direct sales] is a [job] option for people who are downsized or need supplemental income," he explains. Mary Kay has more than 750,000 independent "beauty consultants" worldwide, up from 500,000 a year ago. Tupperware, with more than 1 million sales consultants holding parties for 100 million people worldwide, saw its U.S. sales increase 16%, to $125.2 million, in the three quarters that ended in September, 2000. Overall, DSA expects U.S. direct sales to rise to as much as 5% this year, nearly double the projected growth for the U.S. economy.
QuantumClicks' Web guides work similarly to other direct sellers. Someone hosts a workshop for four to six friends. The host chooses three of QuantumClicks' client Web sites, and the guide devotes 20 minutes to explaining each. Each participant uses the host's computer or one brought by the guide to practice surfing the sites and -- hopefully -- to purchase something with a 20%-off coupon. "Some people come thinking that they know everything [about the Net]," says Kimberly Walters, a 32-year-old guide in West Bend, Wis. "Those are the kinds of people that are impressed by what I've taught them." The former Mary Kay consultant has taught 22 workshops since September of last year and aims to do 50 in 2001. She gets at least $10 when a client buys online for the first time.
Marketing experts say the untested strategy could build loyalty to sites that many haven't experienced yet. Claes Fornell, a marketing professor specializing in customer service at the University of Michigan Business School, says loyalty seems to come only through direct experience. "If QuantumClicks provides good information [to consumers] and leads to a good purchase, it should [produce] more loyalty." He adds, however, that the more steps required to make a purchase, the more room for error. And if QuantumClicks' guides aren't a hit, the business "stops there."
Eventually, QuantumClicks hopes to ring as many bells as Avon. In February, the company, which now has about 300 Web guides, plans to start expanding nationally by recruiting as many as 4,000 new guides and adding to its client list of companies that want their Web sites promoted. In June, Rizika intends to add similar services aimed at small businesses. In that case, the guides will focus on promoting office-supply, printing and copying, and shipping sites. "If [company employees] understood the way that FedEx works, they would send more packages that way," Rizika says. By the fourth quarter of 2001, Rizika expects QuantumClicks to be profitable and to have performed as many as 600,000 presentations to consumers and businesses.
Of course, the coffee-klatch approach doesn't work for everyone. Willard Peters, 67, a retired engineer in West Bend, Wis., went to a workshop with his wife and daughters last fall. "I was kind of watching -- it was helpful," he says of his tour through Barnes&Noble.com. But he says he hasn't made a purchase online since.
If QuantumClicks markets the sites the right way, however, such failures will be relatively rare. In the pilot run in Sheboygan, the nine coupon clippers who participated "thought everything at drugstore.com was well-priced, except for toilet paper," which was on sale at the Piggly Wiggly that week, Walters says. But for QuantumClicks, that just spells another opportunity. If it could land Piggly Wiggly's Web site, shopthepig.com, as a client, if would be covered on every front.
By Mica Schneider in New York
Edited by Thane Peterson