Introduction
At first glance, VistaPrint's business model seems absurd. They give away most of their products. Free. Seriously. It does sound scary, but there is a lot that small online businesses can learn from VistaPrint – which was a small online business itself, once. The challenge is to apply the principles on which VistaPrint relies to affect viral marketing and drive customer loyalty. VistaPrint has embedded itself in popular culture using a simple formula. Quite simply, VistaPrint gives away the basics and charges for the extras.
VistaPrint Is Everywhere
A customer of mine had business cards made – by VistaPrint – for nothing more than the cost of shipping. Her needs were simple; she did not even have her own logo to add to the cards. She simply used one of VistaPrint's default designs. It met an immediate need, and the price was right. Over the weeks that followed, she saw her business card design – on a number of other people's business cards!
VistaPrint was everywhere . . .
Not only did she see business cards from VistaPrint, she saw personal cards as well. Energetic professionals have eschewed the phone-number-on-the-napkin approach to social interaction, favoring a pre-printed alternative. This solution actually is quite clever. To exchange contact information in social situations, you traditionally have had two choices. You could scramble for a napkin, matchbook, or scrap of paper, ultimately risking the readability of your contact information. Alternatively, you could use a business card – which can be disconcerting; giving out professional information in a social setting can be uncomfortable.
With social and professional uses, VistaPrint enters your life. Free "business" cards make VistaPrint an attractive solution, and their popularity, consequently, is not surprising. But, how do they generate income?
The Extras Will Cost You
While the business cards are free, the alternatives are limited. You can choose from a number of fonts, pre-defined logos, and layouts, but the choices are not sophisticated. Eventually, VistaPrint expects that you will want more. They tend to be correct; tastes evolve. Small businesses develop identities as they grow – identities that include logos and branding. Individuals crave distinction; they want to be unique. These are the routes VistaPrint takes to profitability. The fees are modest, but they accumulate quickly with a large, loyal customer base.
Business cards represent only one of VistaPrint's many offenses. VistaPrint provides a plethora of business identity products, including ink stamps, stationery, and magnets. Of course, VistaPrint charges a modest fee for these products, though the company occasionally offers them free to entice their customers.
The keys to VistaPrint's success are the size and loyalty of its customer base. Through its free offers, VistaPrint generates goodwill and accumulates a mountain of customer data. As a result, VistaPrint avoids competing in the commodity business card market while achieving a competitive advantage in stationery and business identity products. Why compete in a commodity space where price is the primary driver?
VistaPrint has exhibited innovative differentiation.
Lessons for Small Businesses
VistaPrint's innovative approach to the market holds some important lessons for small businesses of all types. Now quite large, VistaPrint grew rapidly through a two-pronged strategy entailing a commitment to customer loyalty and a gutsy decision to give away the commodity. By generating a formidable bond with is customers through free product offerings, VistaPrint accumulated extensive customer data – and goodwill – for use in future sales.
Selling a commodity product has never been easy; it is extremely difficult to differentiate what you offer from the masses. A commitment to "quality" is no longer sufficient. So, if you cannot differentiate your product, you can differentiate your company – as VistaPrint did. By changing how you interact with your customers – through targeted online promotions – you change how your company is perceived. Giving your product away is not the only option. Other high-gain opportunities include a unique website design, efficient purchasing process, and loyalty programs.
Of course, your interaction with customers requires that you have customers . . .
For small online businesses, it is essential to win fanatically devoted customers early. They are your best marketing channel. You need your "early adopters" to become devoted to your product and your company as a whole. VistaPrint affected this through targeted promotions and product giveaways, but you do not need to limit yourself. Even basic customer interaction can help. Make phone calls; ask how your customers like the product. Send a newsletter. Stay at the front of their minds!
Customer loyalty is the gift that keeps on giving. Differentiate yourself and win customers for life.
Copyright 2006 Daniel Scheff
Dan Scheff owns and operates a custom web design firm in Massachusetts.
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