Steering the Big Customer

ike Sands is holding down two jobs these days, and it's not because he's having trouble making ends meet. Sands is in the middle of transitioning from a post at a company with an industrial-age image, GM Corp.'s Oldsmobile, to the decidedly modern title of vice president of media and partnerships

at Giant Step, a Chicago-based Internet solution provider.

Client companies hiring away consultants used to be a way of life in the IT industry. Now, thanks to the Web, that goes both ways, and it is just one more area where the nature of relationships between solution providers and their customers has evolved.

"What gets me excited are ideas and creativity," Sands says. "I can work with a range of customers [here] rather than staying focused on one company. I love the change of pace, but at the same time, I don't have to walk completely away from Oldsmobile."

Sands' move is indicative of how Internet solution providers' customers are changing. While many smaller companies are still depending on their service providers for the heavy lifting of systems and branding, larger and more experienced companies are building their own knowledge bases and becoming partners with integrators, contributing creativity, technology and, in Sands' case, even manpower in return.

Sands has occupied a ringside seat for this evolution. He served as director of corporate marketing communication and brand strategy at Ameritech Corp. before starting a seven-year stint at Leo Burnett Co., an advertising agency. After helping to design and launch United Airlines' Web presence in 1996, Sands jumped to Oldsmobile as director of advertising and sales promotion.

In doing so, Sands joined a company that was paradoxically both a leader in Web e-business and a loser in terms of its public image. Despite years of asserting that their cars were "not your father's Oldsmobile," studies showed that Oldsmobile was still seen as the ride of dads and granddads. Oldsmobile owners were thought to be older, less educated and less interested in saving money.

The Internet Awakening

Even as the image of its customer base continued to gray, Oldsmobile had taken steps to appeal to a younger, more free-spending audience. In 1994, the company opened an online showroom, and in 1995 it became America Online Inc.'s first advertiser.

In launching those ventures, "Oldsmobile realized that the people using the Internet were ideal customers. We knew that when people took a test drive, we could close about 60 percent with sales. The problem is that no one wants to go into the dealership," Sands recalls.

With that in mind, Sands led an all-out charge facilitated by Giant Step to reinvent Oldsmobile over the Internet. The company initiated partnerships with eTrade, Buy.com and CDNow, which offered $50 credits at their Web sites for taking a test drive; other incentives were available at dealerships if potential customers provided information for online surveys at Oldsmobile's site.

"The incentives we created with our partners provided opportunities for hundreds of thousands of people to experience the cars," Sands says. "At the same time, we got a lot of positive brand rub-off from eTrade and the other partners because the associative value is very significant."

As a result, the average age of Oldsmobile buyers fell by 10 years in 18 months, the level of education went from last to first, and the company's site took away top honors for number of hits from competitor Saturn.

The Oldsmobile experience helped Giant Step get a better feeling for the value of partnerships and the ability to execute quickly on marketing plans.

"We also learned that these partnerships have to lead to a bigger and better solution in a hurry," Sands says. "A lot of customers want to establish long-term relationships with other marketing partners, then get dragged down when their goals don't line up. It has taken awhile to learn that the 60- or 90-day deal is better."

Another benefit of Internet advertising is that you can see in real time how effective it is. A cycle that formerly took years to analyze is now available overnight. Giant Step and Oldsmobile had to work with that data on a daily basis. That might involve throwing out a piece of advertising based on poor results and asking an artist at GM to turn around a new ad overnight, Sands says.

"That brings up cultural issues that companies like Giant Step may not have had to face in the past," he adds.

Business Redefined

While Oldsmobile came to Giant Step with the knowledge that the Internet would be the key to its future, Hub Group Inc. came to its solution provider, Cysive Inc., Reston, Va., unaware of specifically how it would be influenced by the Web.

Hub Group, Lombard, Ill., which moves cargo in trailers over railroads and behind trucks, had built in a degree of redundancy in its operations to cope with inconsistencies in the railroads. "Every time there'd be a merger between rail lines, we'd have a brief disruption," explains David Yeager, vice chairman and CEO of Hub Group. "We had to have the resources to deal with these situations."

But when it came time to introduce a Web-based system for managing the trucking side of Hub Group's business, the process of organizing the data revealed the company had been so focused on heading off customer outages that efficiency had slipped. "I hate to admit it, but this process showed we had a lot more redundancy than we had envisioned," Yeager recalls. "Just going through the preliminary steps of Webifying our trucking operations helped us function much more economically."

The phenomenon of unexpected returns isn't unique to the Hub Group, says Cysive CEO Nelson Carbonell. "It doesn't matter how smooth you are," he says. "You're always going to learn something new when you roll out a solution."

One B2B project required one of Cysive's customers to organize its system, which turned out to be the most powerful part of the Web implementation. "A few weeks after it went live, the customer came back to us and asked if they still needed to keep using the Web," says Carbonell. "In this case, the Web served as a stepping stone; without having to build the infrastructure to put up the site, the relationships could not have been improved. The Web had a useful life of about six weeks, but it helped solve the problem."

Customer Changes Lead To Partnerships
Sometimes, the unexpected return from the integrator-customer relationship proves to be an opportunity for both companies. In the case of San Jose-based PumaTech Inc., a developer of data synchronization software for the wireless industry, the end result of one partnership is the ability to recommend its service provider, New York-based Agency.com, to its customers. The two companies worked together to improve PumaTech's internal operations.

"When we did our installation, we used our own products and technology," says Steve Meyer, former president and COO of PumaTech. (Meyer was interviewed prior to leaving PumaTech.) "We can pull data from our applications using our own technology. It's a great proof point for customers...we've been able to turn around and give our partners a high recommendation. We end up being both a provider of products and a portal to our partners."