This is a story about understandings and ideas.  Sometimes, when they collide great things can happen.

Recently, I had a little idea, and once it was set into motion a big drama began to unfold. Over the next three days, amazing things were going to happen.

• My company, Axosoft, sold 2,633 units ($1.3 Million retail value) of its flagship product, OnTime;
• Axosoft’s name was making headlines in the blogosphere and web sites all around the world;
• Energy and motivation almost visibly swirled through our halls;
• And, Axosoft owed the American Red Cross a check for over $14,000.

Background

I started Axosoft with equal parts understanding about myself and an idea for a product. I understood that I love the game of business and my favorite position on the field of play is entrepreneur. My idea was to express my lifelong passion for the software development process on two levels by designing a software product called OnTime. It is 1) an application undergoing the software development process itself and 2) an instrument to help other developers and teams successfully build software. Axosoft is what happened when understanding and idea collided.

I’m a junkie for the constant challenges, stimulation, and infinite possibilities. My role at Axosoft has evolved over the past 3 years, and today I spend the majority of my time collaborating with very smart people who work with me under the Axosoft umbrella. No matter what I’m doing, though, I always feel an undercurrent of desire to tell the world about our great products. On February 21, 2006, another understanding collided with another idea; if it worked the way I hoped it would, a lot more people would know about Axosoft.

Web 2.0

Before diving directly into the idea, I have to talk a bit about Web 2.0, how I came to view it, and how experiencing it from differing angles lead me to this point. When I first approached Web 2.0 as a developer and entrepreneur, it looked a lot like an old picture with a new frame. Over time, though, I had begun to use and enjoy Web 2.0 sites like Digg and del.icio.us.  I was also being enriched by Web 2.0 technologies like blogging and RSS.  My hand-to-forehead moment came when my understanding of Web 2.0 emerged from being an actual user, instead of an entrepreneur or programmer. 

At its best, Web 2.0 is about user interaction acting as an essential ingredient of web pages and sites -- nothing more than a little code and the cumulative input of all of the site’s visitors.  It's so much more than AJAX, big fonts, and six shades of green.

Axosoft periodically explores and experiments with new technology. As a result of our latest exploration, we threw our hat into the Web 2.0 ring by developing a free RSS to Email service, called Squeet.  Squeet.com provides the best of RSS and Email (automatic delivery, unsubscribe at will, no sharing email addresses with content providers, advanced filtering, etc.), while scrubbing out the worst parts of both (no spam, no separate application to learn and run, no wasting bandwidth by constantly checking for new feeds, etc.). 

So now I’ve experienced Web 2.0 as a user, developer and entrepreneur, and with it came a deeper understanding and appreciation of this new way of looking at the web.  I started to wonder if Axosoft could harness Web 2.0's word-of-mouth PR potential.  Is it worth exploring?  Is it worth marketing capital and time expenditures?  Is it really all it's cracked up to be?

That's when I got the idea.  Collision!

A $5 Idea

To find out, I decided the best proof of concept would be to see how many copies of Axosoft’s OnTime Small Team Edition I could give away free by seeding a promotion exclusively in the blogosphere.  Who best to seed the story?  Microsoft’s Robert Scoble, who is one of the “edge cases” of the Web 2.0 movement, was my first (and honestly, only) choice to put things into motion.

I ran into an immediate challenge with the Axosoft Online Store.  We had never created a method for zero-dollar transactions.  Instead of diverting development time, coding and testing the necessary modifications, I decided to offer OnTime STE for $5 (it normally sells for $495) and to donate all the proceeds to the American Red Cross.

If Axosoft could learn a bit about how memes spread across the Internet, expand its user base a bit, and donate a few hundred dollars to a worthy cause, the experiment would be worthwhile.  What happened next blew my mind...but it wasn’t immediately apparent that this test was going to work at all.

Succeeding in Seeding

By 2pm on February 21st, we had created a Web page on Axosoft’s site describing the offer and details of the experiment.  No internal links whatsoever pointed to this page, so there was essentially no way to view it, or become aware of the limited time offer, unless one had a direct link. 

I shot off the critical email to Robert Scoble, asking him if he would be interested in seeding this story.  I subscribe to his Scobleizer blog (Squeet It!). As I said, I felt from moment one, that his blog would be the perfect garden in which to plant the seed: the right blogger and the right audience.  I was pretty sure this experiment would hit a curiosity nerve with Scoble, too.  Then, I crossed my fingers and the waiting game began. 

While hoping for a response from Scoble, I couldn’t help submitting the promotion page to Digg.com.  It was now 3pm. Shortly after the Digg submission, we received 2 orders at $5 each, but the Digg-related traffic soon began to fizzle.  No more Digg-related orders were coming in and it didn't look like Digg was going to advance our story to more visible space.  We were essentially sitting on a marketing message with no medium for spreading the meme.  I was beginning to feel some disappointment as I prepared to head home.

The Scoble Effect

By six o’clock on the 21st when I headed home, there were still only 2 sales and it looked like that was going to be it.  We had raised $10 for the American Red Cross, and we hadn't learned anything we didn't already know.

As it turned out, I wouldn’t get back online to track progress until later in the evening, about 9 o’clock, when I opened up my notebook.

Something had happened.

I received email notification of about 20 new orders! I had to figure out what was going on. First, I scanned down my list of email folders until I got to Squeet...then to its Scoble subfolder...there were a few unread Scoble articles.  A quick click revealed the subject of the first new article:  Project Management Software Maker Tries Memetracker Approach.  Scoble ran with the story!  The traffic to our web site was going up rapidly and the orders were rolling in.

What about Digg?  Next, I checked out how the story was fairing over there, and there were a few more diggs, but still no real movement in the story. Our web site logs showed little traffic attributed to the Digg submission.  I had to conclude the new sales activity was attributable to the Scoble Effect.

Now I was glued to my computer.  It seemed that every few minutes we were getting another order.  I’d get up to get a glass of water and when I returned, I would find more orders.  I went to bed at about midnight, and by then we already had over 55 orders.  Scoble published the story at 7:30pm.  This was amazing! 

It was obvious the ball was in motion and I drifted to sleep wondering how far it would go.

The Morning After

I think I managed to get over to my laptop for my first glimpse of the stats before fully awaking that morning.  I probably “thought” about it all night as I slept. Between midnight and 7 a.m. we had received another 25 promotional orders.  I was truly amazed; that brought the grand total to about 80, and traffic was still heading sharply upward with orders coming in faster and faster.

By 10 AM orders were up to 150 with traffic spiking even sharper upward.  The realization that we had almost doubled the number of orders over the last 3 hours hit me, and I knew this experiment was going to succeed beyond my most optimistic estimates.  By now, a good 25% of my time was being spent just filling orders.  A process that normally takes minutes per day!  What started as a trickle quickly became a raging river of orders for OnTime.

A little analysis showed visitors were arriving via several sites now.  DownloadSquad (Squeet It!) had mentioned us, there were several forums including SlickDeals.net where this experiment was mentioned, and several other blogs were picking up the story, too.  To my delight, some bloggers including Steve Richards (Squeet It!) were even reviewing OnTime!

I was able to track some of the blogs’ comment threads.  Not only was our experiment spreading quickly, I was getting real time feedback from members of the community.  Perfect! It was overwhelmingly positive and ranged from people who just liked the idea of experimenting with the social marketing idea to people who were already in the market for a bug tracking and project management application.  Most were happy to take advantage of the great deal, but to my amazement, some people were so skeptical of the deal that they were posting messages about the legitimacy of the offer, the donation, and/or the company.  Fortunately, there were many people responding to the skeptics in our defense.  That was great to see.
 
Armed with the instant feedback, I also set out to address some people’s concerns by posting replies.  The insight gained from reader comments also equipped us to refine the offer’s web page.  I added two counters: one for the number of units sold and one for total dollars raised so far for the Red Cross.  I also tweaked the content to more strongly express the legitimacy of the offer.

Record Traffic

A portion of the blogosphere had Axosoft centered in its crosshairs, and we were feeling it. By noon, orders reached 300 – doubling over the previous 2 hours.  By 5 o’clock over 700 units of OnTime STE had zoomed out our bandwidth pipes. The entire office was buzzing with talk about units sold and site traffic.  Emails were flying back and forth, linking to newly discovered blog stories. 

Axosoft web stats for Month of February, showing regular traffic dwarfed by the 3-day Social Marketing Experiment

I envisioned Axosoft’s font size enlarging in tag clouds around the globe.  But, we couldn’t stay wrapped up in the excitement for long: the phones started ringing at a faster-than-usual clip...sales and support were noticeably getting bogged down.

When Sima, who typically spends a few minutes a day on accounting (the rest is spent managing International Sales), burned through a ream of paper printing orders, it quickly became another office factoid.  When she ran out of ink, we all got a good laugh.  When the printer broke down, reality began to set in.  Clearly, these were problems I was happy to have.

Sima sitting at her desk with a stack of 2600+ printed orders.

The Aftermath

As it turned out, Sima would break in her new printer by cycling it through almost five more reams of invoice sheets. Unless we figure out something more efficient, the promotion will require over 140 hours of data entry into our secondary accounting system (AKA QuickBooks).  We also encountered about a 1% “problem” rate with challenges that took about 20 minutes each to handle.  These included customers placing their order without the promotion code and immediately requesting a refund of the $495 sale.  We even had several refund requests on $5 orders (even though the $5 was being donated to the Red Cross).  Some common reasons were “I ordered 3, but only needed 2” or “I didn’t know what I was ordering, but I now realize I don’t need this software.”  Ironically, the $5 refunds cost us at least 5 times that much to process.  Of course, we processed every one of them, usually within an hour of the request.

All of these challenges provided us with a learning opportunity and gave us some fun conversation material, but the overall success of the campaign is the real take-away.  Our final count was 2,642 units of OnTime STE.  It still blows my mind.  Axosoft kicked in an additional $1,000 to the $13,210 raised for a total of a $14,210 donation to the American Red Cross.  We’re also going to cover the costs of Credit Card transaction fees (which are a whopping $1100 or so because of the high volume of small transactions - about $0.30 per transaction + 2.75%).

On paper, we moved over $1 million in product...and we lost money on the deal.  But it doesn’t take much imagination to realize Axosoft will earn a return on the investment many times over.  I don’t know how to place a dollar value on the publicity, the expanded user base, the knowledge gained, or the possible improvement in search engine placement that is yet to come.  I do know we got it for a bargain.

The Digg Disappointment

Because we were promoting the Digg story, it eventually received over 120 diggs, but it never really moved to desireable real estate on Digg’s site.  I’m left with more questions than answers about how Digg ranks its stories.  At several points in, we had more Diggs than the (then-) most recent 3 front-page stories combined, yet we still never made it to Digg’s front page.

The Scoble Effect was easy to see, however.  Exponential growth in traffic, sales, and blog spreading began almost immediately after he pointed to the experiment. 

I want to thank Robert Scoble for seeding the story, his curious nature, and for his blogging activity in general.  He has a great blog. I also want to thank everyone in the blogosphere who contributed to spreading the word, thus taking part in our experiment. To those of you who purchased OnTime STE: Thank you and Congratulations!  This experiment was ultimately about learning how to reach you, and we did!

Referring sites during the 3 Days. Much of the "Direct" traffic was probably from Desktop RSS Readers.

Social Marketing Experiment Concludes

The power of the blogoshpere and social marketing is for real.  There is no doubt in my mind that this is one of the most effective ways to market anything.  The challenge of course, is creating a sustainable, repeatable marketing strategy that utilizes this power and effectiveness without giving away your product. 

It’s not easy for a small company to generate buzz.  In this case, we were able to do so because the buzz wasn’t really about Axosoft, it was about a social marketing experiment that happened to include Axosoft and our great prouct, OnTime.  Just as Web 2.0 has given individuals an audible voice that has taken a chunk out of Big Media’s monopoly on ideas and reporting, perhaps small business will be empowered as well.

This is an experience that I know will help guide Axosoft (and me) in the future.  I hope sharing this experience with the reader will provide some new insight and understanding.  Hopefully, it will spark some new ideas.  I’m looking forward to seeing what happens when those understandings and ideas collide.

Technorati Tags: axosoft, blog, blogging, marketing, social marketing, experiment, scoble, scobleizer, entrepreneur, ideas, web 2.0, ontime, bug, bug tracking, project management, Hamid Shojaee, RSS, Squeet, Digg