Web Builder Thrives on ‘Reverse Auction’
Dan Gutierrez was a computer science student at UCLA when some of his professors were involved in the early-stage development of the Internet. When he graduated, he took the technology of the day and started a company that developed general database software for corporations. With the growth of the World Wide Web in the mid-’90s, the firm shifted most of its energy to building Web site databases and equipping them with e-commerce. Long on the cutting edge of technology, Gutierrez jumped on the bandwagon again last year, when he began bidding for jobs posted on business-to-business Web sites. The practice has revved up his company and simplified the process of finding qualified leads, Gutierrez says. He was interviewed by freelance writer Karen E. Klein.
We’ve always used the traditional methods for finding clients: Cold calling, word-of-mouth, marketing our service to business lists on the Web, positioning our firm in the search engines. Still, all that was pretty spotty, not consistent.
Less than a year ago, we got involved in a beta-test of a business-to-business Web site called BizBuyer.com. It’s what is called a “service exchange,” or “reverse-auction” site. Instead of presenting something for sale, a consumer presents something on the site that he wants to buy, and various companies bid on the job.
When BizBuyer was officially launched, they did a lot of PR and advertising and it really took off fast. We were successful in finding jobs on that site, so we started looking for other sites like it. Now, we use four of them and we’re always looking for others.
Each of the sites we use has a different slant. Some of them, like BizBuyer and OnVia.com, include all kinds of business categories, like office supplies, legal services, insurance, accounting and recruiting. Others, like EConstructors.com and ITsquare.com, are limited to Web design or software services. They have different ways of making money, also. Most have free registration, but some charge a flat fee every time we post a response to a request for proposals. Others let you post responses for free, but they want a 5% commission if you get the job, like a finder’s fee.
The way it works is that a buyer goes onto the site and submits an RFP [request for proposal], say for an e-commerce Web site. Because we’re registered as Web site designers, we get an e-mail notification that there’s a new RFP waiting to be bid on, with a link to the information that the buyer has submitted. We go in, read all the specs, post bids on the ones we choose, and then our information is sent off to the buyer. Most of the sites let you store a couple of different types of response templates, which you can modify based on the job, so it’s easy to reply. If the buyer likes what we have to say, they contact us.
With our name out on four Web sites, it gets to be quite busy during the day. My assistant and I monitor the e-mail for RFP notifications, but it can be challenging to keep up with them. We get about 20 or 30 notices per day, and they are all qualified leads--people ready to buy. We used to be lucky to get two or three of those a week, so it’s an incredible increase.
Of course, we cannot bid on every single job that comes up. I look for proximity and budget. If they’re here in Los Angeles and they have a reasonable budget, I’ll generally respond. We’ve probably bid on 120 to 150 jobs in the past year, whereas before this we maybe bid on 25 or 30 jobs over a year’s time. It’s difficult to know what to bid, because the requests are not that detailed, but I give a price range depending on the specifications and I try to stay within that.
If a company chooses you, you get notification within a couple of days. We get called back on about 25% of the bids we send out, then we go through a more formal process of talking directly to the potential buyer. Probably about 5% of the total bids we send out actually turn into projects that we’re contracted to do. Given that these jobs are landing in our lap with almost no effort on our part, and responding initially is pretty easy, that’s a good percentage for us.
We have gotten both local and national jobs through this process. We did a Web site for a clothing firm based in New York City and a Web site for a hotel in San Francisco that allowed them to take reservations online. For the San Francisco job, I never actually met the client in person. We just worked with him by telephone, fax and e-mail.
One of the downsides of the process is that you can put only a limited amount of information in a bid. I cannot imagine a company being able to make a decision on a contract just based on the proposals they get. Another difficulty is that some of the services will accept only a certain number of bids per RFP, so it’s a race to submit your bid. Sometimes I get an e-mail, and by the time I can actually go and review the RFP and make a bid, all 10 slots are filled up because there are more than 200 Web-design vendors registered on a site. Other sites let the buyer specify how many bids he or she wants to receive.
Still, this process is more efficient than hiring a salesperson, and much cheaper than finding qualified leads through the old methods. It puts us directly in a place where buyers are ready to buy what we are selling. It has helped our business tremendously. I think this practice is setting the stage for this year to be a real boom year for my company.
If your business can provide a lesson to other entrepreneurs, contact Karen E. Klein at the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016 or at kklein6349@aol.com. Include your name, address and telephone number.
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AT A GLANCE
* Company: Amulet Development Corp.
* Owner: Dan Gutierrez
* Nature of business: Web database and e-commerce development
* Location: 6083 Bristol Parkway, Suite 210, Culver City 90230
* Year founded: 1984
* Web site: https://www.amuletc.com
* E-mail: info@amuletc.com
* Employees: 10
* Annual revenue: $650,000
