Headsets.com Happy with Its Growth Spurt

Since mailing its first catalog in fall 2001, San Francisco-based Headsets.com has seen sales soar from $3 million that year to $11 million last year; the telecommunications equipment marketer is projecting sales of $18 million this year.

Founder Mike Faith launched Headsets.com six years ago “on the belief that the price of headsets was too high and the quality often wasn’t that good,” he says. The company started out as a postcard mailer and dot-com merchant, selling just one model of headset, the Executive Elite. To find more high-quality headsets, “we went to several manufacturers,” Faith says, “and wound up with one in South Korea that gave us the best quality and consistency.”

Having started the company with $40,000 of his own money, Faith scored another $625,000 from angel investors in 2000, which enabled him to mail his first catalog in August 2001. The 48-page digest-size book carried more than 45 products, including audio conference phones, which now represent 5% of Headsets.com’s sales, and audio headphones, which represent 3%.

The company made a point of acquiring the Headphones.com URL in addition to that of Headsets.com. “Our research showed that about 8%-9% of people confused the terms ‘headsets’ [for telephones] and ‘headphones’ [for music and other nonphone use]. So we bought the domain for $125,000 just to get the type-in traffic,” Faith says, “but we also put headphones products on the site and now get about $20,000 a month in headphones sales.” The company’s average order value is $310.

Faith bumped up catalog circulation from 400,000 in 2001 to 8.2 million in 2003; the company plans to mail 12 million catalogs this year. The size of the company’s house file has jumped from 50,000 in 2001 to nearly 80,000.

At first the company targeted both businesses and consumers, but it soon learned that only business lists worked. Faith has built up Headsets.com’s database using list rentals and business-to-business co-op database names. “We’re constantly testing a lot of different lists,” he says. “We’ve tried compiled, direct response, and co-op databases. We’ve also done tests on which positions within companies and whether males or females respond best.”

The doctor is in

In a rather unorthodox management approach, most of Headsets.com’s sales and management staff engages in weekly phone consultations with a business psychologist.

“It really irons out the problems and keeps us on track,” Faith says. The psychologist “makes sure we have an organization that’s doing the job and keeping on the main mission, rather than typical political stuff that goes on in companies as they grow.” In addition, the psychologist talks with the company’s staff of 18 about various issues “to make sure we’re all focused in the same direction,” Faith says.

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