Software Maker Sells Its DM Services to Other Firms
The Fairfield, NJ, company has used mass mailings with toll-free numbers and response envelopes to promote Harvard Graphics and other products for years, but now it has begun outsourcing its internal direct marketing operation and designing programs for other software makers, generating fliers and bringing calls through its telemarketing centers in Nashua, NH, and Nottingham, England.
The company's nascent efforts, which began four months ago, work on a revenue-sharing basis. Though SPCH charges no per-call fees or flat rates to set up the programs, it typically takes half of the revenue generated through the calls. Bob Gordon, vice president of direct marketing and sales for SPCH, sees the offering as an essentially risk-free way for software companies to get their products into distribution.
"If you take a trip through the Internet, you find all kinds of software being given away free," he said. "The reason it's being given away free is because there are a lot of guys out there who can develop very good software, but don't have the wherewithal, either the financial or infrastructure, to know how to distribute it. We are looking to facilitate that process and let it be a win-win proposition for the company."
SPCH signed its first agreement with IXLA Inc., a maker of photography and scanning software, in April. Package inserts and automated registration protocols in IXLA's bundled software directed new IXLA customers to the call centers -- and as the users registered their software, SPCH took customer information to use in direct marketing and telemarketing ventures. IXLA also distributed software through SPCH's online store.
A number of factors in the software industry have conspired to make SPCH's service an attractive option, especially for companies that might be cash-strapped and searching for a way to come to market. And as capital infusions from initial public offerings become more rare for these companies, Gordon sees a bright upside for SPCH.
"We perceive that this is going to be an area that continues to grow, particularly in an environment like this where IPOs are more and more difficult to get underwritten. Those people who are developing products but don't have any avenue to get them to distribution, this is an ideal situation for them," he said.
To get out the word, SPCH has been in contact with the Consumer Products Council, a group of software publishers that operates like a trade association, trying to solve the problems those companies have with distribution.
In addition to IXLA, SPCH has landed two other clients so far, including International Business Saveware Inc., a Canadian firm specializing in software that helps businesses reduce their insurance premiums for workers compensation. SPCH took aim at accounting firms with its campaign. Another client, Megasoft Inc., a Freehold, NJ, maker of CD-ROMs and a supplier for SPCH, received outbound calling services. Megasoft and SPCH bartered for products in return for the sales leads.
Because it uses internal labor, SPCH's own risk from the agreements is slight as well. And while its call center has customers for IXLA or another software company on the phone, SPCH representatives try to up-sell them, offering products from SPCH's repertoire. Revenue from those sales are shared with the client software company as well.
Meanwhile, the company continues to promote its own products through the same telesales and fulfillment facilities. SPCH just kicked off a U.S.-based direct marketing campaign of Serif 3DPlus, an extension of its Serif desktop publishing and graphical software line. The mailing's 90,000 pieces will be aimed at the best segments of SPCH's Serif file, while another 30,000 will test other segments of the customer file.
Separate 3DPlus mailings are planned that will be targeted at buyers of utility programs from other lists.
SPCH's customer list, which is 400,000 names strong, includes sales- and marketing-oriented business people in the United States and United Kingdom who rely on graphics and presentations. Worldata Inc., Boca Raton, FL, manages the list.