It’s been a while since our last Success Series…but that doesn’t mean Internet success stories are few and far between. In fact, it’s getting harder and harder to get a hold of successful web site executives, so we suppose that’s a pretty good sign!
The object of our latest success story is SparkLIST, an email list hosting service (upfront disclosure: SparkLIST is the list hosting service WebAdvantage.net uses to distribute this weekly newsletter). We’ve interviewed SparkLIST founder and CEO, Christopher Knight, to bring you the story of how an ISP shifted to become a successful, profitable email list host.
FYI: SparkLIST was acquired by Lyris Technologies on August 1, 2002. Christopher Knight is no longer with the company.
In 1995, Christopher Knight wanted to market his ISP service. He turned to online discussion lists for help but was quickly criticized by his peers as being “too profiteering.” Stirred by this rejection into action, he decided to build his own list called The ISP List, which became so successful, it eventually grew into a whole community. Apparently there WERE other ISPs with similar needs and questions. The community grew to over 80 topic-related lists and 100,000 members, and soon Knight was earning more revenue through ads in his list emails than he was with his ISP business!
Knight became enamored with email list hosting. In 1998, Knight sold The ISP List to Internet.com, and in 1999, after partnering with email software company, Lyris, to offer a more robust list hosting solution, SparkLIST was born.
|Hollis:||So what’s the skinny on SparkLIST?|
|Knight:||Well, we now have over 55 million list members for 1,000 business clients with 3,900 lists. In total, we’re delivering over 500 million opt-in emails for our clients a month.|
|Hollis:||How have you gone about marketing SparkLIST?|
|Knight:|| In those half a billion emails each month, every email’s header includes, “X-Hosted By http://sparkLIST.com. Can’t get much better advertising than that! We also have time to our advantage — we’ve been at email list hosting for nearly five years now, which really helps.
We get a lot of word-of-mouth referrals. Our largest clients are secured because 80% of the decision-makers all know each other and they all talk. When someone leaves one firm to join another, they usually bring SparkLIST in, too. We’ve also done some advertising from time to time in email newsletters and targeted online forums.
|Hollis:||What’s your strategy?|
|Knight:||We’ve recently revised it. We used to focus solely on growth at all costs. Now we’re focused on *profitable* growth.|
|Hollis:||And how do you plan to do that?|
|Knight:||First of all, we’re running a leaner and meaner operation without sacrificing quality service for our clients. We strive for operational excellence, which means investing in our network (we have over 80 servers and every 18 months our entire system is rebuilt with the latest and fastest technology), redundancy (to prevent loss or downtime), a high ratio of customer service reps to clients, and state of the art security. All of these factors add to our clients’ confidence and customer retention — our attrition rate is less than 5%!
This client confidence gives us the ability to sell more services to those same clients, therefore increasing profits while reducing acquisition cost.
|Hollis:||Just what kinds of services are you selling them?|
|Knight:||Our clients are now encouraging us to think less like list publishers and more like list marketers. This means providing them with all sorts of greater capabilities and functionality like databasing, list segmentation, tracking, demographic appending and ultimately email marketing campaign management. The new version of SparkLIST we’ll be coming out with in mid-2002 will have these kinds of capabilities and more.|
|Hollis:||So your joining the fray with some other established companies. How will you position yourself against them?|
|Knight:||Number one, because of our operational excellence, we protect our clients’ reputations. We also like to say that with us, you can outsource your email list(s) and forget about it.|
|Hollis:||What do you see as your biggest challenge in the year to come?|
|Knight:||I have lots. As we transition from list publisher to list marketer service provider, will the market accept us? Will our clients trust our expertise? Will they pay for it? How do we capture what we see as our bread and butter: the middle market (not super big but not very small clients either)? And how do we sustain employee morale, many of whom have stock options, at a time when the market is not receptive to the sale of a company like ours?|
|Hollis:||How about your biggest technical challenge?|
|Knight:||Believe it or not, speed is not it anymore. We’ve evolved to be faster than the average POP account can handle. We are able to deliver emails so quickly now (at a rate of 2 million per hour) that we can be perceived by mail servers as spammers. So our technical challenge is retaining our status as a “white hat” and keep from having our emails blocked by the mail servers we deliver to.
To that extent, we also need to be sure our clients are NOT abusing SparkLIST and spamming people. We do not tolerate that here, so we’re constantly working to educate and inform our clients.
|Hollis:||What are your goals in 2002?|
|Knight:||I’d like to grow the company to $7-$10 million in sales within 18 months. That’s not completely unrealistic considering last year we had 64% growth despite the dot com bust, the economy, and September 11th. We plan to do this by:
|Hollis:||Can you describe your planned advertising mix?|
|Knight:||75% email newsletters, 25% targeted web sites. Also, we’re doing some keyword buys on Overture.|
|Hollis:||Can you conclude by telling us your top achievement?|
|Knight:||Being debt-free with a positive cash flow…and still being a dot com.|
Links to other WebAdvantage.net Success Series articles:
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