EchoMail: Quiet, Steady and Profitable

Kate Claus
Associate Analyst

In the application service provider (ASP) race, some early vendors resembled the rabbit from the famous fable of the tortoise and the hare. These ASPs focused on marketing and customer-reference lists, loudly rushing to market. They were quick to proclaim victory before establishing sound fiscal, business and marketing strategies. In today's shaky economy, many of them have hit the skids, struggling to find sure footing in a newly sober marketplace.

Other ASPs, however, followed the tortoise's lead, taking a slow, measured path to market. They focused on developing robust, useful products and services to target customer pain points, and invested in service-management functionality to enable them to scale and fine-tune their businesses to market requirements. One such ASP is EchoMail, a Cambridge, Massachusetts, company that provides solutions to help customers cope with their overflowing e-mail inboxes. Like the tortoise, EchoMail has steadily and quietly built its business, capturing a prestigious list of Fortune 500 clients. In fact, despite the current economic downturn, EchoMail is profitable.

EchoMail remedies a major ill of large enterprises by automating management of the mountains of e-mails these companies receive daily. It delivers an alternative to manually sorting and responding to e-mail from customers or other constituents. Its e-mail relationship-management operating system (also called EchoMail) can automatically classify, route, track and respond to e-mails to reduce the time and cost of handling them. EchoMail can distinguish among e-mails containing sales leads, requests for information or complaints. It can even detect the sender's sentiment or the tone of the e-mail, to identify whether a customer is satisfied or disgruntled. Taking the process one step further, EchoMail can generate an automated response that takes into account the subject matter, context and sentiment expressed by the sender.

EchoMail is the brainchild of its CEO, V.A. Shiva—a.k.a. Dr. E-Mail—who traces the roots of his solution back to a White House competition in 1993. The White House had found itself suddenly overloaded with e-mail, and had interns manually categorizing the more than 500 messages it received daily. Once the interns categorized the messages into more than 140 categories, they would then manually respond to the senders via regular U.S. mail. Seeking to automate this process, the White House ran a competition that Shiva, then a graduate student at the Massachusetts Institute of Technology (MIT), entered and won. His solution achieved a better than 70 percent accuracy rate in categorizing e-mails, without human intervention. In 1994, he garnered the rights to the MIT technology and began Millennium Cybernetics, the precursor to EchoMail.

The technology on which today's EchoMail rests is called XIVA, and it is derived from Shiva's 20 years of research in pattern recognition and classification. EchoMail solutions are Web-based and can be accessed from any Web browser. The solution can run on multiple hardware, operating systems and e-mail packages, and is OBDC compliant. Products in the EchoMail suite include:

• EchoMail/CC, which automatically receives, manages, routes, responds and tracks e-mail. Customer-service departments and call centers can use EchoMail/CC to increase quality of service and response time to customers;

• EchoMail/DM, which allows customers to create mailing lists and outbound e-mail campaigns;

• EchoMail/BI, which analyzes all mail and categorizes it by attitude/sentiment, issues, request, sender type and product/service. EchoMail/BI can be integrated with other EchoMail products to create responses, link e-mail to existing customer data, route leads and perform targeted outbound campaigns;

• EchoMail/TP, which integrates e-mail and telephone communications;

• EchoMail/DW, which warehouses e-mail data along with a company's customer database, and creates reports from e-mail and other customer data;

• EchoMail/RM, which manages responses from direct-mail promotions;

• EchoMail/LM, which provides real-time lead capture and management. Built for trade shows and events, it can receive data via magnetic card scanners, business-card readers, and manual input; and

• EchoMail/EN, which notifies customers about time-based events, such as renewals and electronic billing.

EchoMail became an ASP in a roundabout way: One of its first commercial customers was AT&T, which, by 1995, had spent millions of dollars on its Website—an almost unheard-of expenditure at that time. The company wanted to use outbound e-mail campaigns to leverage the volume of e-mail correspondence the site was generating, and selected EchoMail's platform to do this. Since EchoMail was new and relatively unknown, AT&T was hesitant to deploy its solutions in-house. Instead, EchoMail offered to host the solution for AT&T, and thus began its ASP delivery model.

Today, EchoMail lists more than 100 customers, including AllState Insurance, American Express, Calvin Klein Cosmetics, Compaq Computer, Citicorp, GEICO, Gateway, Hasbro Interactive, IBM, J.C. Penney, John Hancock, Merrill Lynch, Nike, Sprint PCS, the United States Senate, and Unilever. EchoMail hosts its solutions for about 80 percent of its customers, but some, such as the U.S. Senate, deploy them in-house. In these cases, EchoMail helps customers set up an "internal ASP" for their users (such as the 100 individual Senate offices, which use a variety of e-mail systems). The company will also set up pilot programs to help companies maximize sales leads from incoming e-mail. In 1996, for example, EchoMail ran a 30-day pilot for AllState, generating the biggest increase in closed sales from e-mail inquiries that AllState had ever had. AllState is now one of EchoMail's largest customers.

Notably, EchoMail has paid attention to service-management issues from the get-go, incorporating security, service-level agreements (SLAs) and quality-of-service functionality into its offering. The vendor provides 24/7 support, and can guarantee up to 99.999 percent availability. In addition, the company has built its own metering and monitoring capabilities, which allow it to charge customers based on three parameters: number of users, volume of e-mails and the SLA for availability. EchoMail charges customers a base monthly fee, which ranges from about $5,000 to $10,000 per month at the low end to between $100,000 and $200,000 per month at the high end. Its billing system is very granular, and can monitor and charge customers when EchoMail generates accurate responses to incoming e-mails. For instance, when customer-care representatives can quickly open, check and send an EchoMail-generated e-mail response, EchoMail receives a bonus on top of the monthly fee.

Some of EchoMail's customers have also decided to partner with the company. IBM, for example, resells EchoMail's solutions. Advertising agencies that want to use it as an outbound marketing tool for their clients, such as Wieden Kennedy, have purchased EchoMail as a hosted service and private-label it to resell to their clients. EchoMail is also targeting service providers (xSPs) that sell mail and messaging solutions as another channel to reach end-user customers. These xSPs can choose either to host it themselves on their own infrastructure, or EchoMail can provide it to them as a utility service that they resell. Either way, the ASP can private-label it, and use it to upgrade its e-mail customers to additional services.

Slowly but surely, EchoMail has built a solid ASP foundation based on innovative technology and quality customer service. The company can measure its success not only by its list of high-profile customers, but also by its profitability. In addition to providing the industry with a much needed success story, EchoMail merits other xSPs' evaluation as a potential partner.

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Contact:
Kate Claus
Associate Analyst
kclaus@summitstrat.com