Winning Customers the EPod Way

To say Geoff Clendenning is entrepreneurial by nature -- as his corporate biography does -- really is an understatement. With three start-up companies already under his belt, the youthful co-founder and CEO of EPod Corp. is garnering clients and venture capital as he rapidly builds up his on-line marketing business.

EPod is the culmination of Clendenning's eight-plus working years of applying technology to marketing and customer relationship management. Improving on the ubiquitous-but-often-ineffective banner ad concept, the so-called ePod showcase technology uses Macromedia Flash to provide merchants or manufacturers with an interactive marketing tool. Visitors to a Web site hosting an ePod showcase -- in effect a Web site within a Web site -- can interact with the marketer and purchase products without leaving the page they are currently viewing.

The result is contextual merchandising, an effective means of creating customer "stickiness" for both the host Web site and the company marketing products through the ePod showcase.

"With traditional banners ads and buttons, you're hijacking that customer away from the site on which they're already engaged and putting them into an environment which may not be familiar or may not be appropriate for them," Clendenning says.

He cites the example of Bolt.com, a leading teen site in the United States and an ePod customer. A cosmetic company who advertises on Bolt.com was finding previously it was getting good click-through rates on its banner ads, but very little of the traffic was being converted into actual sales. "The teenagers would see something targeted at them on Bolt that was interesting, so they would click on it," Clendenning says. "But all of a sudden they were on a site that was designed for, well, probably their mothers, and they couldn't relate to any of the products that were being sold."

Using an ePod, the cosmetics company can now package together a storefront customized for the Bolt audience, displaying only the products targeted at that group of potential customers. Teen buyers who click on the ePod link to view or ultimately purchase the available cosmetics products never have to leave the Bolt.com site. ePod is the brainchild of company co-founders Clendenning and Jeff Ungar, a technical whiz who graduated from the University of Waterloo with a computer science degree at age 19 and now serves as ePod's chief technology officer.

For his part, Clendenning began developing his marketing expertise in the early 1990s. Shortly after graduating from university, he started up an Ottawa-based company called AureCom Systems Inc., which provided fax-back and interactive voice technology to companies looking for leading-edge ways to better communicate with their customers and promote their products.

By 1995, having served as AureCom's president for about two years, Clendenning recognized that fax- and phone-based marketing tools would soon be superseded by the Internet, and so he shifted his focus toward the Web. He created iNautics Inc., a consulting organization that specialized in Web marketing. It was during his time as a senior consultant at iNautics that Clendenning first began developing strategies to address how to get customers to come to an e-commerce site, how to use the distributed nature of the Web, and how to track on-line customers and maintain a dialogue with them.

In early 1997, after relocating to Toronto and hooking up with Ungar, who had been working as a consultant at Andersen Consulting for four years, Clendenning started his third company, JCard Software. This company marketed virtual business card technology that enabled users to easily distribute and update contact information via their Web sites. It was here that the ePod idea was born.

By May 1997, JCard Software had been renamed Reflexive Networks Inc. "We renamed the company Reflexive Networks for no particular reason except that we thought it was a more marketable name," Clendenning explains.

And it appears that it was. In spring 1999, Reflexive Networks secured its first round of venture financing from XDL Capital, a Toronto-based venture capital firm founded by Dennis Bennie, former chairman and CEO of Delrina Corp., the creator of WinFax software.

Reflexive Networks moved its headquarters to Manhattan in August 1999, and went through another name change in December when it began operating as ePod Corp.

Clendenning explains the move State-side was designed to give ePod greater exposure to its chosen market, which consists predominantly of advertising and marketing companies.

"The majority of our employees are still in Toronto, and probably always will be," he says, adding that the technical operation is still in Canada.

"But it just made a lot of sense for us to set up our sales and marketing in New York where we can get access to the skill sets that people have down there," he says.

Clendenning admits venture capital has also been more available in the United States than Canada. In June, ePod raised US$18 million in its second round of financing, led by Brand Equity Ventures of Greenwich, Conn. Other investors include U.S. Trust, I-Hatch Ventures and Macromedia.

At the same time, ePod has been signing up clients both in Canada and the United States. In addition to Bolt.com, customers include Clearnet Communications Inc., CDNOW, NBCi, eMarketer, eNutrition and Reciprocal Inc.

"The main challenge in selling products on the Web is getting customers to pay attention to the offering," Clendenning says. "What we offer the merchant or manufacturer is the ability to package up a storefront which is targeted toward a well-defined customer. We make it very easy to bring the store to the customer, rather than try to bring the customer to the store."

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