This one's a winner (TMN)

The Sunday Times - Business

March 14, 2004

Progress Report: Themutual.net
THE shopping portal Themutual.net, which was on the verge of collapse three years ago, is now making a healthy profit, writes Philip Smith. In December 2000 the online firm was losing £100,000 a month. Today it makes more than £50,000 a month.

The concept is simple: members use the portal to link to the 500 associated sites. These are all big online retailers such as Argos, Amazon and Expedia. Themutual.net earns commission for generating custom and, as an incentive to use the site, shoppers receive shares in the AIM-quoted company.

The challenges

When the Enterprise Network visited last year, the managing director, Ben Heaton, was starting to look at establishing the brand after a turbulent first few years. The company began as a knowledge-sharing site where members could get expert advice on a range of health and lifestyle matters. But income failed to meet expectations and the company began to lose money.

Drastic action was required. The company bought a database and turned into an e-mail marketing business.

The challenges facing Heaton were to establish the brand and increase the number of registered users.

What the experts said

“Online marketing is about more than e-mailings and click-throughs,” said Duncan Fitter from UK Online for Business. “It’s about finding ways to engage with your customers to harness loyalty, closeness and trust.”

Debra Davies from American Express suggested that Heaton profile each member to find the most profitable and market accordingly.

BT’s Tim Evans said the company should not rely on word of mouth and must invest in marketing to attract new members.

Action taken

Heaton said: “With 500 associated merchants, it is hard to navigate around our website so next month we will be launching our own search engine. It will include information about how our members are shopping and what they are buying. This will tell us which are the better services and we can make that information available to all our members.”

The company has also bought a competitor — Mypoints.co.uk — from GUS. “It followed a similar business model to us and had 450,000 subscribers who were receiving e-mail marketing,” said Heaton. “That has really enhanced our profitability.” The company came with a small e-mail marketing salesforce. Themutual.net has also raised the amount it spends on marketing to £40,000 a month.

Conclusion

Themutual.net now has 950,000 members, all willing recipients for e-mail marketing and keen to use the portal for online shopping, as they receive shares for both as an incentive.

The concept appears to be working. The 40,000 new registrations a month more than offset the one-in-eight who eventually stop using the site. Turnover is now £2m a year, producing a £650,000 profit. “Our profitability is directly related to how many members we have,” said Heaton. The target is 100,000 new members a month.