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INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads | | MAY 7, 2001 PERSPECTIVE By Ellen Neuborne How Commercial Communities Can Click PharmQuest, Ace Hardware, SlimFast, and others are finding that, done right, online meeting places can be good marketing tools
Take the experience of PharmQuest, a maker of software for the pharmaceutical industry and a true believer in this emerging form of virtual commercial community. Last year, it invested about $500,000 to build a meeting place for its scientist customers online. Message boards, news and feature sections, and chat areas all were designed to let this relatively small band of about 100,000 pharmaceutical professionals socialize among themselves. But it also gave PharmQuest a place to communicate directly with its customers. The site has no ads per se -- no banners or boxes or streaming video. But PharmQuest routinely participates in the community it has created, interacting on message boards, soliciting feedback from the group on potential new products, gathering their ideas for new projects. THE ACE PLACE. The return, says CEO Shankar Hemmady, has been substantial. He estimates that this year, $10 million in new revenues and cost savings are the direct results of online relationships, ideas, and feedback. "The community features are part of our inbound and outbound marketing strategy," he says. "This strategy has worked out remarkably well." He's not alone in his experience. Ace Hardware hosts an online community exclusively for its 300 dealers nationwide. It offers them a place to trade business tips and, Ace officials hope, respond to promotions suggesting they stock more Ace inventory in their hardware stores. Ace execs say the program has helped boost sales and keeps headquarters in touch with distributors to head off potential problems. Community works, says Tina Lopotko, manager of Ace's industrial division. What's new about these communities is that they exist not just for their own sake but for their role as marketing tools. They're not traditional advertising programs and certainly not the high-profile marketing platforms companies hoped the Internet could provide. But they effectively harness the medium to make a pitch. That's more than most can say for their banner ads and e-mail programs. DIET BUDDIES. Traditional companies may be wary of the idea -- after all, community portals like TheGlobe.com were some of the Net's most spectacular disappointments. But in this more narrow construct, the Internet can be a potent marketing force. Clearly, other companies are willing to give it a try. Diet company SlimFast launched its own community site -- which includes a personalized virtual buddy system -- in the hopes that social ties will keep customers on their diets -- and buying SlimFast products. Johnson & Johnson just spent $10 million to buy Babycenter.com, a popular community site for new parents. The maker of Huggies and Johnson's Baby Powder hopes the online community will, among other things, give it better and more regular access to its target customers. The tactic isn't without risk. For one thing, maintaining a decent, entertaining community is expensive. It requires constant monitoring, updating, and significant connection to the company's broader marketing efforts. Otherwise, it's pretty useless. What's more, marketers are still feeling their way for fear of angering Net purists. Many worry that consumers will revolt when they find their community sites invaded by marketing interests. Certainly, in the early days of the Net, coming off as too corporate was considered a faux pas. But just as I don't mistake B&N for the public library, I'm not confused when I find that a site I like has a financial backer with a sales plan to meet. If the community suits my needs, I'll hang around for a while. Maybe I'll even buy something.  Neuborne covers e-commerce for BusinessWeek e.biz  | | |
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