Strategy and Implementation Summary
The success of MyHaystack.com depends on the company’s ability to build a user base by converting visitors into registered members that use the organizational system. MyHaystack.com acquires customers through strategic business-to-business partnerships with product manufacturers and service providers. Customers access the organizational service through a branded Internet website. Marketing activities and partnerships with third party incentive programs serve to increase brand awareness and attract additional users to the website.
Early strategic partnerships target product manufacturers that will post user manuals and similar product information in the MyHaystack.com database. These partners may also reach consumers through the Dynamic Posting service. Online bill paying, online disk storage, and other value-added services are provided through co-branding agreements with third party Internet companies. These partnerships not only provide a more comprehensive organizational structure for the initial deployment of the MyHaystack.com service, but also serve to accelerate customer acquisition.
5.1 Competitive Edge
Product manufacturers that sell through multi-tiered distribution rely on a retail channel to manage the customer experience. However, as retailers move online, they reduce their interaction with consumers and place an additional burden on the manufacturer. Product rebates, warranty registration forms, and similar promotions are an effort to partially eliminate the information gap between the manufacturer and customer. With a response rate that is usually less than 5%, these methods have limited effectiveness in helping the manufacturer better serve the consumer.
Consumer-oriented service providers face a different challenge. While most have direct access to their customers, they often need to deliver personalized documentation. The high volume of individual mailings creates an information challenge for both the service provider, and the customer.
MyHaystack.com serves manufacturers by providing a channel for direct communication to the consumer. The user benefits from an increased level of post-purchase consumer care while the manufacturer learns how to better meet their customers’ needs. MyHaystack.com supports consumer service providers by allowing personalized documentation to be filed electronically in a customer’s filing cabinet.
All MyHaystack.com business clients benefit through increased customer knowledge. A product manufacturer can not only determine who is buying their product, but can also determine what other products that consumer owns, or is likely to purchase. Service providers can better determine the service requirements of their customers through a deeper understanding of overall service usage. They can further improve consumer satisfaction and reduce customer inquiries by insuring that all documentation is readily available through an online service. Using this service, business clients can target new customer segments, participate in direct marketing to a highly qualified consumer base, or partner with other manufacturers to offer a comprehensive product solution.
5.2 Sales Strategy
MyHaystack.com is currently negotiating co-branding agreements in the following key categories that will serve to increase traffic and user registrations on the MyHaystack.com site:
- Financial services- MyHaystack.com will partner with a third party provider to allow MyHaystack.com users to pay bills online. The co-branding agreement is structured such that the provider’s logo will appear within the MyHaystack.com organizational system. Users who subscribe to the service will have to pay a fee directly to the provider, but will access the site through MyHaystack.com. Financial documentation is then archived within the MyHaystack.com organizational system. Users of the partner’s site will have the option to join MyHaystack.com when they open a new account. Once they join, they will become shared users between MyHaystack.com and the financial services provider.
- E-commerce- MyHaystack.com has established initial partnerships with key e-commerce providers and is in the process of negotiating additional relationships. E-commerce partnerships allow MyHaystack.com customers to directly purchase products that are offered through other sites. Similar functionality may allow MyHaystack.com users to join a purchasing group for specific e-commerce transactions. Consumers who purchase at partner e-commerce sites will have the option to open a MyHaystack.com account at the time of purchase. Initial product information, including an electronic receipt, will then be automatically filed into the MyHaystack.com account.
- Warranty Services- MyHaystack.com is discussing a partnership to offer extended warranties on registered products. The partnership will consist of a co-branding agreement whereby MyHaystack.com users will purchase an extended warranty through a third party partner. Users who originally visit the partner site will have the opportunity to open a MyHaystack.com account when they purchase an extended warranty. Warranty documentation will automatically be filed in the account.
- Product Manufacturers- MyHaystack.com is actively seeking strategic partnerships and co-branding agreements with product manufacturers. The agreements will give those strategic partners additional access to market intelligence in return for joint marketing.
Later stage strategic partnerships target companies that require economical document delivery and information management systems for their customers. Insurance companies, investment and financial services companies, and health management organizations are targets for later stage partnerships. Online and traditional retail businesses may also serve as key strategic partners and drive future e-commerce opportunities.
5.2.1 Sales Forecast
As services are added and users increase the volume of information managed through MyHaystack.com, the frequency of repeat visits will increase. More importantly, the value of information stored in the MyHaystack.com database increases as registered members expand their activities on the website.
Market Intelligence Sales
For the purposes of financial forecasts, market intelligence sales are divided into online market research clients and research subscriptions. It is likely that a single client will use both the online service and the reporting service.
The number of MyHaystack.com online research clients is based on recent client acquisition numbers of comparable companies. Jupiter Research acquired 921 clients, over three years, for their market research practice. They were able to accelerate acquisition by converting the attendees of their conferences into clients. Greenfield Online has acquired over 350 clients since 1995. This analysis assumes the acquisition of 350 clients by the end of year 3. MyHaystack.com will accelerate acquisition by ensuring that strategic partners are also online research clients.
Pricing for online research depends on the industry and level of functionality required. Annual rates for Active Research Inc., an industry leader in online research, start at $10,000 and run as high as $50,000. Jupiter Research increased their average contract value from $28,000 to $41,000 in the last year by bundling additional services. These services include online research, periodic reports, and access to conference calls. MyHaystack.com will initially offer a basic online research tool free to our early strategic partners. Following a full launch, pricing will start at $6,000 per year and increase to an average of $12,000 by year 3. Although online subscriptions may be bundled with research reports, this model accounts for them separately, keeping the combined cost within the industry range for total contract value.
The projected number of market research subscriptions assumes that some clients of the online research tool will subscribe to market research reports. Research reports will also be sold individually and may exceed the number of online market research clients.
Initially, MyHaystack.com will sell monthly and quarterly reports at between $250 and $5,000 per report, depending on the industry and the number of reports bundled into an annual package. The first reports will not be marketed until after the production launch of the MyHaystack.com site at the end of year 1.
The number of individual filings is based on the number of users in the MyHaystack.com database. As more services are added, the percentage of users accepting direct filings and the number of direct filings per user will increase. Prices for filing will vary from $0.50 to $5.75 per document, depending on the number of filings delivered, the size of each filing, and the type of each filing. This can be compared with regular postage, which can vary from $0.53 to $5.72 to mail.
MyHaystack.com’s ability to target users with relevant information will drive up both the price per message and the number of users willing to accept direct marketing. Forrester Research estimates that by 2004, the average household will receive 9 pieces of email marketing a day. The model estimates two messages per week, for users that choose to accept them, by the end of year 3 of operations.
The cost to deliver a direct marketing message will be between $.01 and $.25 per message. MyHaystack.com will be able to charge substantially more than the market average for targeted marketing once extensive user profiles have been established. By year three, the average cost is conservatively estimated at $.15 per message.
|Year 1||Year 2||Year 3|
|Direct Cost of Sales||Year 1||Year 2||Year 3|
|Subtotal Direct Cost of Sales||$13,166||$688,349||$3,437,650|
5.3 Value Proposition
My Haystack.com offers different values to its various target markets.
Key advantages of MyHaystack.com over other online and traditional market research firms are:
- MyHaystack.com builds long-term consumer value by maintaining the relationship with our users. The result is time-series market data that models the life cycle purchasing behavior of the consumer population.
- MyHaystack.com effectively bridges the gap between online and brick-and-mortar consumer research companies. The unique value offered to the consumer encourages participation from offline participants.
- MyHaystack.com is a completely online service, eliminating the expense associated with physical survey methodologies. The result is a shorter time for data collection at a lower cost.
Key advantages of MyHaystack.com over similar online direct marketing companies are:
- While traditional email marketing is completely one-sided, MyHaystack.com maintains a two-way dialog with the users. This not only insures that every message is delivered to a user willing to accept it, but also assures that each user profile is current.
- MyHaystack.com messages can be received in the MyHaystack.com organizational system or via targeted email. This allows the user to separate MyHaystack.com messaging from the clutter of other online email marketers.
- Opt-in and Opt-out functions allow a user to adjust the level of information received immediately, without fear of “subscribing” to a mailing list that will be sold, or otherwise distributed.
MyHaystack.com has several key advantages over traditional organizational tools:
- MyHaystack.com is a highly automated system that limits the amount of consumer effort necessary to build and maintain an organizational system.
- MyHaystack.com is an online solution that can be accessed from anywhere. This reduces the possibility that critical data is unavailable when it is needed.
- MyHaystack.com is a comprehensive solution with a built in organizational structure. This allows a user to easily start using the system and add components as their needs change.
MyHaystack.com selected to participate in the Bay Tech Incubator Program. Bay Tech has established a consortium of sponsors and partners to provide services to 25 selected start-up, e-business companies. The program provides a development incubation environment for a period of 6 months and allows MyHaystack.com to dramatically reduce the necessary development time. MyHaystack.com is now a member of the Bay Area Incubator Program.
Sara Jones joins Board of Advisors – Sara Jones, Principal at Arthur Coopers Management Consulting Services, has over fifteen years of consulting experience focusing on e-business, strategic planning and organizational design. Ms. Jones has agreed to serve on the Board of Advisors for MyHaystack.com Inc.
BuildIt Inc. contracts for site development – BuildIt Inc., a leading technology development firm, and MyHaystack.com Inc. have established an agreement to complete the development of the MyHaystack.com Internet service within 16 weeks.
Samuel Dewy added to Board of Directors – Mr. Dewy, a partner in the law firm Watson, Sonoma, Goodson & Rodgers has agreed to serve as a member of the Board of Directors of MyHaystack.com. In addition to serving as general counsel to the company, Mr. Dewy’s experience in building new technology ventures will insure the success of MyHaystack.com.
Partnership with Stuff.com – MyHaystack.com has established a strategic partnership with Stuff.com, an online group purchasing service for consumer electronics and related products. The partnership addresses issues of information sharing, market research, and e-commerce.
Arthur Coopers joins Board of Advisors – Arthur Coopers L.L.P. has agreed to serve as advisors to MyHaystack.com. Steven Cross, a partner at Arthur Coopers L.L.P., and a specialist in emerging companies will serve on the Board of Advisors of MyHaystack.com.