Acquire and Keep Your Customers

I started pulling this stuff out of the trash can and putting it into kits that we put up for sale for $10 or $12 each. People just bought it up like crazy. One month we sold $30,000 worth of scrap paper. It was a perfect fit.” Now, the scrapbooking craze has slowed considerably. Having acquired a database of more than 20,000 customers through eBay, McCullough is trying to do the same thing for them that he did for recycled scrap paper: find new uses for that database of names in order to continue growing his business.

Using Your eBay Store to Acquire Customers: Creative Paper
When times are hard and you can’t sell your original product line as well as you did, you need to find new products and new ways to sell them. Business on eBay was great for Creative Paper for several years, especially in its eBay Store. Things have changed for reasons that other eBay sellers know all too well. As one seller put it to me, “eBay has lots of sellers, but it needs to find more buyers.”

Business was great for quite a while. “We started in 2001, really going crazy in 2002 and 2003, tapering off in 2003. Now scrapbooking is maybe 10 percent of our total business. eBay has now been flooded with a lot of other sellers doing the same thing we do—selling scrapbooking kits and scrap paper. That is compounded with the fact that the market just is not as good as it used to be. If you combine the two, it’s tough.”

But when you look at the big picture, things are much rosier: Less than six years before this was written, Creative Paper didn’t exist at all. And he was throwing his scrap paper in the recycle bin. Jeff ran Suburban Paper and primarily serviced customers in his local area. He didn’t know anything about mailing lists, databases of customers, packaging, or selling products directly to the public. Current monthly sales from scrapbooking materials are $10,000. It was all made possible and continues to be possible thanks to eBay.

“The Whole Purpose of eBay Is to Get Customers”
It should be obvious: People sell on eBay in order to find customers for their merchandise. What’s changed in recent years is the role eBay plays in the relationships businesses develop with those customers. In the early years, many companies saw no need to go beyond having an eBay Store. But now, with rising eBay fees and increased competition cutting their profit margins, an increasing number of businesses see eBay primarily as a “front end” tool. eBay gives them a way to make initial contact with customers, but their ultimate goal is to sell directly to those customers without eBay’s involvement. Creative Paper is one of those businesses. “We don’t do much better than break even with eBay sales because we are selling such small items,” says McCullough. “When we started doing this, eBay was charging a dime per sale. Now they charge 30 cents to list an item, and more for Gallery photos and other extras. The whole deal costs 60 to 70 cents per listing now. In the beginning, four out of five auctions were selling. Now, if I list ten auctions, I am lucky if three of them sell. Now, we encourage customers to go to our web site to make purchases. The whole point of eBay is to get customers we can sell to later on.” The Creative Paper web site (http://shop.store.yahoo.com/creativepapers/index.html), which is hosted by Yahoo!,

“We Do a Blast E-Mail to 20,000 Customers”
When you are just starting out, customers come and go. You barely notice their names and addresses as you write them on the package you’re about to take to the post office. But smart businesspeople know those names and addresses are like gold. They or their employees record the information in databases for later use. What kinds of things can you do with this business “treasure”? Some suggestions are presented in the following sections.

Send E-Mail Announcements
One thing Jeff McCullough does is send out regular e-mail communications to tell people about new promotions, seasonal specials, closeouts, and the like. Such messages enable Jeff to keep his company’s name in their minds so that, when they are ready to place an order for more paper, they’ll know exactly where to turn. It’s also a way to develop a kind of “one to one relationship” that marketing professionals talk about in regard to e-commerce.
McCullough’s mass e-mail “blast” is essential to his online business. “Right now my web site sales are about $5,000 a month, and half of that business comes from the blast e-mail I send out once a month offering free shipping, two-for-one deals, whatever. Business always spikes after I do the blast e-mail.”

Include a Gift
Like many successful eBay sellers, Jeff includes something extra in each package he sends to a buyer. Along with the item they ordered, they get some additional paper on a ring

“We throw a swatch ring in with all of our orders; it includes samples of our paper, hundreds of different patterns and shapes, and encourages customers to go to our web site to find out more.”

When a customer places an order on the Creative Paper web site or when he or she is viewing a short explanation about how to order he or she is given the option to sign up for the company’s free newsletter. What can a newsletter do to help you keep customers? Here’s what:

• Builds credibility A newsletter lets people know you’re on the ball and actively managing your business.
• Reminds them about you Web shoppers are fickle and will go anywhere they can find the best price unless you develop a sense of loyalty.
• Gives them new reasons to visit your site Your newsletter can include descriptions of products your customers didn’t buy and didn’t know about originally. You introduce them to your entire product line; since they already know and trust you, they’re more likely to purchase one of those new items than someone who’s visiting you for the first time.

A newsletter like Creative Paper’s requires a commitment on your part. You or one of your employees (or a freelance writer like me) will have to be assigned to provide copy for it. Like many other parts of your business, a newsletter requires work up front but brings benefits in the long run. But then, a newsletter is a twentieth-century communications tool. If you want to really be on the cutting edge, you can create a blog for your area of business. A blog is an online diary that you or staff need to update on a regular basis. The eBay business profiled later in this chapter, Dallas Golf, operates such a blog through the blog hosting service TypePad.

“We Do Give People the Option to Opt Out”
Jeff McCullough is very conscious of what separates legitimate business communications from the dreaded “Unsolicited Commercial E-Mail,” otherwise known as “spam.” Whenever he sends an e-mail “blast” or a newsletter, he includes a note giving recipients the chance to “opt out” and not receive such messages in the future. The bottom line: Don’t approach your valued customers unless they have chosen to receive such e-mails from you, or unless you have specifically asked them if they want to receive such notification from you in future.

“When someone buys a product from us, they do so through Andale, which provides us with a checkout system. The checkout system gives people the option to opt out of any future communications from us after the purchase is made. Some people do opt out, but most don’t. It’s surprising, considering all the spam that’s out there on the Internet, but in a typical month we add 400 names to the list of 20,000, and we usually get 100 who opt out. Once they opt out, they don’t get messages about our products anymore.”.

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Upselling and Cross-Promoting: Dallas Golf

Dallas Golf started out small. In 1983, it was a single club repair shop located in Dallas, Texas. The company grew along with the recent popularity of the sport to which it is devoted. It became a consignment shop, a retail store, two retail stores, and finally, four retail stores. It was 1996, and the World Wide Web was the latest novelty. “Somebody said, ‘We’d better have a web site,’ so we jumped into the dot-com boom era,” recalls company E-Commerce Manager Chris Smith, along with some of his inventory. “Everybody was speculating and nobody was selling; we did that, too.”

By 1999, Dallas Golf’s retail stores were booming, even though its web site was not. Customers eagerly bought up new products. “We had lots of used inventory piling up in our retail stores, and those stores were small, so we said, ‘We need to do something with this.’ My boss read an article about eBay. He store the article out of the newspaper and said, ‘Here, try this.’ We put 10 things up for sale, then 100, then 250. Pretty soon, we had 20 employees assigned just to eBay, and that part of our business really took off.”

“Golf Is Almost the Perfect eBay Product”
Today, Dallas Golf is a Titanium PowerSeller and one of eBay’s biggest success stories. The store has only two retail locations now; it has actually closed some of its brick-and-mortar stores in order to concentrate its energy on Internet sales. “eBay has become a major part of our business,” says Smith. People who sell golf balls and golf equipment have always done well on the Internet and on eBay in particular. The qualities about the merchandise that make it such a success are ones that every budding eBay seller should look for:

Much of the equipment is small and easily transportable. True, golf bags and golf clubs are heavy. But most items like tees, balls, gloves, shoes, hats, and other accessories are small and easy to pack and ship.

There are many different product lines, each with its own models. Golf enthusiasts have a plethora of options when it comes to making purchases online. They can buy a complete set, an individual club, or they can mix and match. “Almost everything we sell is unique in some way, especially if it is used,” says Smith.

Used equipment is still valuable. Even though certain styles of golf clubs go out of style, according to Smith, they often come back in style a few years later. Golfers who are looking for quality equipment at bargain prices are eager to buy used equipment.

At certain times, it sells very quickly. The warm weather months find golfers shopping and buying on eBay in droves. Smith often conducts relatively short three-day auctions because the turnover comes so fast. “If there was a twelve-hour auction format, I might use it in summer,” he jokes.

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It’s Like Tapping Them on the Shoulder and Saying, Would You Like to Buy Something Else?

When you create an eBay Store, you have to pay an additional monthly fee to eBay, and this is on top of the insertion fees and Final Value Fees you already have to pay. But you get some additional advantages that other sellers don’t enjoy:

• You pay only pennies for small Gallery photos, instead of the 35-cent fee charged to auction sellers.
• You get a place to promote your business and develop an identity through a name and logo.
• You get your fixed-price store sales included in keyword searches on Google and other search engines.
• You get the chance to do cross-promoting.

Cross-promoting is the practice of presenting shoppers with additional purchasing options even as they are browsing or preparing to make a purchase from you. In an eBay Store, this takes the form of the “See More Great Items From This Seller” box that is familiar to many eBay members “We have an eBay Anchored Store, so we can include the See More Great Items feature on an unlimited number of listings,” says Smith. “We do this sort of cross-promotion in our item listings and on our web site at checkout as well. It’s like tapping a customer on the shoulder and saying, ‘Would you like to buy something else?’

“Cross-promotions and other tools for encouraging repeat business are essential,” he adds. “At least 25 percent of our transactions include multiple item purchases; 25 percent of our business is repeat business. On eBay, you’re always into the new customer that’s what eBay does, just the way the marketplace works. Everyone is new, basically. We get a lot of repeat business within the same transaction. Sometimes people will buy up to 20 different items. We get wholesale buyers who buy in large quantity from us, and they will sell in their retail store or at the local flea market.”

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We’re Sourcing Through Our Competitors

Chris Smith’s big priority is moving inventory. He wants to put as much stock on eBay as rapidly as he can, rather than letting it sit around the showroom or warehouse. Dallas Golf has its wholesale suppliers, like any other eBay business. But even their own wholesalers can’t keep up with demand, especially in the busy spring and summer months. Smith scratched his head, wondering where he could come up with new (or used) golf equipment to sell. Two sources came to him:

• Dallas Golf’s competitors
• Customers who want to replace used equipment with new equipment

Sourcing through your competitors? It sounds improbable, but Dallas Golf manages to do it.

“We go to our competition and say: ‘You sell new products, we have a database of the values of trade-in merchandise. Here are those values; call us once a week with your used inventory and sell it to us for the price we have in the database.’ Once we have the used merchandise, we can mark it up for a profit and sell it directly to customers on eBay.” Smith says he understands the problem with eBay’s rising fees, but golf is insulated from the fee increases to an extent because of the high turnover. “They eat out of your profit, but it’s better than having merchandise in your warehouse waiting for someone to come to your web site,” he comments.

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If We Can Get Customers to Trade in Their Old Clubs on eBay, We Can Sell Them on eBay

What about that other, highly unusual source for merchandise that was mentioned in the preceding section? Can you get people to trade in their used equipment on eBay, so you can turn around and resell it on eBay?

Dallas Golf is one of the first merchants to do so through a pilot program being conducted with eBay’s approval. In each of the Dallas Golf listings, which invites customers to calculate the value of their old golf clubs. Once they find out how much Dallas Golf will pay for those old clubs, they’ll be more likely to purchase brand-new clubs from Dallas Golf, or so the theory goes. “We are trying out ways to get more merchandise to sell. If we can get these people to trade in their old merchandise, we can sell it faster; we can sell it on eBay for more than they can list it for themselves. Since a good deal of our merchandise comes from our competitors’ buyers, we are giving those buyers the same technology, only in modular form.”

Dallas Golf was, in fact, the first company to be allowed to use the trade-in feature on eBay; any other listings prior to December of 2004 that asked buyers for trade-ins were ended. “We came up with a technology that met eBay’s requirements to allow someone to solicit,” Smith says. “We advertise in the listing, we use a flash calculator to tell the bidder that, if they win, their golf club is worth X amount. If you win, you can use your club as this much credit toward your purchase. That way, buyers can tell their significant other they didn’t spend so much on their new equipment because they got money for their old equipment.” In the six months it used the trade-in feature, Dallas Golf saw a 30 percent increase in bids, page views, and selling price, he adds.

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