One-to-one marketing, a popular industry buzz phrase, recently caught the attention of the investment community with profitable results.
Last month, MicroMass Communications, a provider of healthcare-focused relationship marketing solutions, generated $7 million in investment capital during its latest round of financing presentations.
The Cary, N.C., marketing company uses customized software technology to develop personalized communications through various forms of media, from printed materials to Web sites.
Its latest marketing coup with SmithKline Beecham's Nicorette gum and NicoDerm CQ nicotine patch, called "Committed Quitters," demonstrated to investors the long-term potential of one-to-one marketing, according to Bryan Ferren, MicroMass' chief financial officer.
The Pitch
MicroMass made IR presentations starting in April to at least 15 potential investors looking for a healthcare or technology focus. Although most of the firms invest in companies with a strong marketing focus they had to be educated on how one-to-one marketing works and its application in healthcare.
One of the key investor concerns was the scalability of MicroMass' marketing solutions to 10 to 15 programs a year, up from two to three.
"We had to get them through an incredulous stage - they thought [one-to-one marketing] was impossible to implement on a large scale. That's when our technology staff had to walk them through the guts of what we do," says Dave Bulger, MicroMass' chief technology officer and chairman.
MicroMass used these IR tactics to seal the deal with investors:
- Educating them about the healthcare market's growing emphasis on patient compliance and adherence to drug therapy programs; and
- Providing one-to-one marketing models that highlight financial returns and projections of existing programs. (MicroMass projects that its programs are profitable within two to five years of launching.)
Its most successful marketing case study, the Committed Quitters program, went a long way toward showing investors how the science behind the technology produces strong marketing results.
The program, which won an In-Awe Award for marketing from the Medical Marketing Association, helped smokers using Nicorette gum or the NicoDerm CQ patch kick the habit with a personalized smoking cessation education and support program. Participants are 50 percent more likely to quit smoking than non-participants, according to research conducted at the University of Pittsburgh.
The 12-week smoking cessation program, developed by MicroMass in 1995, identified individual barriers smokers confront when trying to quit. For example, participants who responded to the toll-free hotline in Nicorette gum and NicoDerm packaging were given profiles based on factors like how long they've smoked, how often and if their partner or family members smoke.
Based on this data, the program generated multiple, individually tailored direct mail pieces and customized coupons. The campaign reached more than 350,000 participants.
MicoMass' one-to-one software marketing packages range in cost from $250,000 to $1 million and the Committed Quitters program was on the higher end of this range, says Ferren.
The IR pitching process with each potential investor resulted in investments from Jefferson Capital Partners I, LP of Richmond, Va., a software investment firm; Johnson & Johnson Development Corp. and SR One, Limited, the venture capital arm of SmithKline Beecham and two regional investors - Tristate Investment Group II, LLC in Chapel Hill, N.C., and Gray Ventures in Atlanta.
Jefferson Capital, led the financing, investing about half of the $7 million, according to R. Timothy O'Donnell, Jefferson's managing director and capital partner. Other investors did not reveal details.
Market Potential
MicroMass has eight healthcare clients, including SmithKline Beecham, Glaxo Wellcome, Bristol-Myers Squibb [BRON] and the American Heart Association.
Additionally, its customized marketing programs have vast applications for helping physicians develop disease management and patient adherence efforts.
For managed care organization, there are tremendous untapped opportunities in providing member management solutions and helping hospitals meet NCQA (National Committee for Quality Assurance) standards, says Bulger. (MicroMass Communications, Bryan Ferren, Dave Bulger, 919/851-3182; Jefferson Capital Partners, R. Timothy O'Donnell, 804/643-0100)
MicroMass Communications
- Headquarters: Cary, N.C.
- Founded: 1994
- Revenues: Since 1994, revenue has grown at an annualized rate of 150% (company doesn't disclose actual revenues).
- Employees: 50
- Healthcare clients: SmithKline Beecham, Glaxo Wellcome, and American Heart Association.