What happens when one of the biggest e-newsletter publishers goes shopping for a new e-mail vendor?
What’s the single biggest decision you’ll make outsourcing your email operations? Without a doubt, finding the right vendor. Will it have the capabilities you’re looking for? Will it tailor its system to fit your needs or try to fit you into a predefined mold? Can you trust it to handle vital communications between you and your customers?
A Crazy Train
Having just completed the process of seeking out and signing up a new email vendor for internet.com and EarthWeb, I can promise you the decision won’t be easy. This young industry still has a bit of the Wild West in it. Shopping for an email services vendor today is a bit like shopping for a Web design firm was in the late ’90s: rapidly changing technology, customers just learning how to understand their needs, and vendors who often lack experience.
We publish hundreds of daily, weekly, and monthly newsletters. Fulfilling close to 5 million newsletter subscriptions each month, we consider ourselves to be a pretty big player in the email newsletter world. Though we’d been happy with our previous vendor, we wanted to evolve from simply sending newsletters to accommodating more personalization and customization, such as advanced database-/segmentation-based campaigns.
Of course, we went to our existing vendor to see if it could provide these features. At the same time, we decided to broaden our search just to make sure we weren’t missing anything or anyone. And since we were looking anyway, if we could convince someone to charge less than our current contractor, so much the better.
Insane in the Membrane
Early in the search, we decided to reach out to providers we already knew. I spoke with the CEO of one well-known email services company. We’ve had a good rapport over the past year or two, so it seemed a natural place to start. Initially, this CEO was very responsive. Unfortunately, the salesperson I was handed off to wasn’t. The rep was in the process of being promoted to vice president, so maybe closing a deal for 30 million emails a month wasn’t a front-and-center priority.
After a couple conversations, the rep handed me off to a low-level production person to answer some of our technical questions. The techie wasn’t empowered to actually close the deal. But ostensibly, he was supposed to answer my questions and make me happy, with a goal of getting me to sign.
I became decidedly unhappy when I requested some sort of demo. Instead of suggesting a WebEx conference call or offering us a demo account to play with, the company suggested setting me up with a live account -- for a small fee to cover its time. I have to pay to see a product I might spend a boatload of money on? Total insanity.
We argued. The company acquiesced. I got a comp account. I felt so loved.
At this point, we decided to expand and formalize the search, both because we weren’t terribly impressed with the first company and, despite the warm and fuzzy of working with acquaintances, we were, after all, talking about a lot of email and a lot of money. Better to do a proper proposal and look at a broad number of candidates.
We distributed a request for proposal (RFP) to several companies (more on that below). The first company got a copy of the RFP and did submit a decent proposal. We ultimately decided not to go with it, primarily because we were turned off by its lack of interest during the sales phase and it didn’t have all the features we were looking for. It also didn’t seem all that interested in customizing its system for us.
We figured, "Hey, maybe business is that good out there. Maybe this doesn’t need the extra revenue. Maybe it doesn’t need us as a customer." A big customer. Insane.
Exit, Stage Left
We distributed our RFP to several large email hosting companies. We stayed away from full-service agencies, pursuing companies known for self-service database email marketing. I sent the RFP to a salesperson I knew at a good-sized company. He responded immediately and bumped me up the chain to a more senior exec -- nice!
That company offered to do a conference call and demo for us. The product was just beautiful. It did just about everything we wanted. Any extra features we wanted seemed easy to add. Folks at that company pursued us aggressively, calling with questions about the RFP. We got the feeling they were as excited about the prospect as we were.
During the process we ball-parked the CPM for them, just to make sure we were all on the same page. It was lower than what they were used to, but with our volume it didn’t seem impossible.
However, a couple of weeks later when proposals were due, they bowed out. They didn’t even submit an RFP response. They told us they were looking to build service relationships at higher CPMs, the low-CPM self-service model was not the direction they wanted to go.
Again, unbelievable. I mean, business must be really good out there for email services providers if they can turn away big bucks. I would think a self-service client is preferable, especially for a company looking to move toward a full-service model. Go ahead, pursue full-service contracts. In the meantime, set up some servers and let us run our own show. You won’t have to pay high-salaried service agents to hold our hands every day. Oh well.
Eye of the Tiger
We also sent our RFP to a smaller, up-and-coming email hosting company. We heard the magic words: "What do we have to do to get your business?"
After the demo, we saw the company’s product had 90 percent of the features we wanted. Customizing the additional 10 percent seemed achievable. These folks responded to our RFP with a detailed, professional proposal that arrived on time. What’s not to like?
An important factor was this is a relatively new company. Depending on your perspective, this could be either an asset or a liability. On the plus side, it didn’t have any major flubs or goofs to look back on. On the downside, it didn’t have an extensive, long-standing record of success. It is known in the community and has some sizable customers (though none as large as us). We did some sniffing around the edges, checked references, and had our tech people talk to theirs. We detected no scent of the fly-by-night about it.
The company wanted our business and had a product that could handle it. With that mantra ("What do we have to do to get your business? What do we have to do to get your business?") dancing in our heads, we had a feeling we could make some progress on price.
Babe, I’m Leaving
Having identified a competitive candidate, it was time for the big question: Were we really ready to leave our current host? We’d been with it a long time. We were definitely comfortable working with it. It was (and is) a great company. We wanted to do new things. To expand our services. Was it ready to do so with us?
The company had been developing new database marketing tools very comparable to some of the other systems we looked at. As with others, whatever features were lacking we could add through customizations.
The problem: It sought additional revenue for new features and wanted level funding for maintaining our current service level. We were looking for more features at lower costs. Who wouldn’t want more for less -- especially in these tough times?
There’s the rub. Times must not be so tough in email hosting. We couldn’t get the new features we wanted and pay less at the same time. Does this company have all the business it needs as well?
We went with the "hungry" new kids on the block. They have all the features we want, and we got a deal we can live with.
The lesson? For me, it’s I should’ve started an email marketing company. For you? When shopping for an email host, don’t expect companies to fight for your business, especially if you want a self-service vendor. We were waving big bucks, and it didn’t generate a ton of interest. Is business so good? Or is this industry just very young? I don’t know -- but you’d hardly think anyone would have to work this hard to spend so much money.
On a side note: The first reader who can identify all the musical references above (and I mean all of them: bands, albums, songs) will be sent a ClickZ backpack. Or, if you’re attending ClickZ E-Mail Strategies in New York (May 19-20), I’ll sit down with you for lunch and divulge the identifies of all the companies above (just kidding -- I don’t kiss and tell).
Got a question? Think I’m full of it? Let me know -- send me email!
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