Hello Direct Eyes Owning Phone, Headset Market Online

Hello Direct Inc., San Jose, CA, recently announced two alliances as part of a multi-pronged Internet strategy aimed at offering complete self-service online and prospecting through related content placed wherever new telephone or headset buyers might be.

The cataloger partnered with R.R. Donnelley & Sons, Chicago, to promote its services through Donnelley's online initiative Select Source. Select Source's promotional services include an affiliate network of more than 200 sites, including Yahoo, Lycos, iVillage and Home Arts, and is reportedly on track to reach 500 sites by the holiday season. Hello Direct also struck a deal to link with Internet-only telephone merchant PhoneZone.com Inc.'s site at www.phonezone.com. Terms of both deals were not disclosed.

“We're going to build as many alliances as we can with people who have sites with related environments,” said Dennis Waldera, vice president of direct marketing at Hello Direct, adding that Hello Direct's and PhoneZone.com's product lines and sales approaches are complementary.

“Where our focus is on user-installable products, they're focused more on systems that you might need some installation help with,” Waldera said. “They've got a very different target-audience focus, but the mechanics of how they're asking questions [and offering expertise] to direct people to their best options are very similar to what we're trying to do.”

The alliances are part of a strategy to meet aggressive year 2000 Internet-sales projections, Waldera said, but he declined to say what those projections are.

“Like most business mailers right now, the Internet is not contributing a real significant percentage of our total revenue,” he said. “I think very few people have reached double digits yet.” By 1999, however, he expects the Internet to drive 8 percent to 10 percent of Hello Direct's sales.

Key to reaching the projections is becoming an all-in-one resource center for customers and prospects. As a result, Hello Direct plans to add customer service features to its site that will allow access to virtually all the information available that might be available from a Hello Direct telephone representative, including order status, installation help and trouble shooting.

Some industry watchers think that becoming a resource center is a way to capture small business sales on the Internet.

“One of the great untapped potential marketplaces [on the Internet] is [the small-office/home-office market],” said Barry Silverstein, president of direct marketing agency Directech, Lexington, MA, and author of the book “Business-to-Business Internet Marketing. “My feeling is that small businesses will tend to rely on the Internet a great deal to do their product evaluations, primarily because of time.”

As a result, Hello Direct is creating electronic surveys that will develop product presentations dynamically as site visitors answer questions.

“Sometime in the future, we believe we'll be able to make as persuasive a presentation to you on the Internet as one of our operators would if they took a half an hour with you on the telephone,” Waldera said. “Only you'll get to do it when you want to do it.”

Currently, Hello Direct's Web site at www.hello-direct.com is drawing 8,000 visits a day and driving 5 percent of the company's revenue, Waldera said. It recently began testing opt-in outbound e-mail marketing. The company has a house file of 170,000 accounts that have purchased from Hello Direct (not necessarily online) within the past year. From that file, the company has created a database of e-mail addresses in the tens of thousands and divided it into an undisclosed number of segments to test how it will respond to progressively more frequent e-mails.

“We did one little round to make sure the world wasn't going to blow up,” Waldera said. “Now we're in the second round.”

Like most catalogers, Hello Direct isn't particularly interested in blazing trails online. One reason catalogers have been so slow in adopting the Internet is because they are wrestling with sales-cannibalization issues, Waldera said.

“Also, companies like ours have to stay on the curve, not ahead of it or behind it,” he said. “There's a tremendous potential to spend an awful lot of money in experimentation and technology development without finding the right answer.”

Hello Direct will mail 28 million print catalogs this year, Waldera said. The company's average order size for the first quarter of 1998 was $259, up from $244 the same period a year ago.

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