|
A Patently Successful Form
FORM Magazine, May 1994
An Oregon Distributor Is on the Road to Success with this Patented Form for Car Dealers
BY KATHERINE L. HOUSE
Succeeding in the automotive forms market is tough. Reynolds and Reynolds tends to dominate it and government regulations can complicate it. But distributor Dick Ipsen has found a unique way of competing against the industry's major players and helping his clients comply with the law.
In February, Ipsen, president of DiversiForm Inc. in Portland, Ore., received a patent on a federally mandated form he designed, which he calls Seal 4. But this is more than a story about the maze of patent law. It is also a marketing success story with lessons for every small business owner.
Ipsen's trip to the patent office began in the mid 1980s when the Federal Trade Commission mandated a "buyers guide" be placed in the window of every used car sold. The FTC also said that customers must receive a copy of the form, which contains warranty information. Violations cost dealers up to $10,000. Manufacturers producing the product used adhesive strips across the form's top and bottom to adhere it to car windows. But when the car window was rolled up and down, the buyers guide often crumpled or fell off.
Ipsen, who has sold to dealerships since 1976, wrestled with this problem for years. It wasn't until an exhibitor's presentation during a trade show in 1991 that he thought of a solution. He wanted to print the form on a label liner and die cut around the form to reveal adhesive on all four sides. This would ensure the form would remain stuck to the window at all times. More importantly, he wanted to die cut around the form on the reverse side to ease removal of the buyers guide and provide the car buyer with a copy of the form.
Returning to his office after the trade show, Ipsen developed a prototype from blank label stock. Using an X-acto knife and ruler, he painstakingly made the necessary perforations, then tried the product on his own car window. Once it worked, Ipsen thought he had a viable new form design that could be patented.
A short time later, in July 1991, Ipsen consulted a patent attorney, the same one he used to file for a trademark on a static cling label he sells to the automotive market. His attorney said he did not appear to violate any existing patents, and more significantly, that he may have invented a patentable construction. Ipsen then worked with a manufacturer to select an adhesive that could withstand temperature extremes a car would undergo on a dealer's lot. That fall, Ipsen had the manufacturer conduct a test run, whose cost included $1,300 for two dies. By December, he had a prototype. Dealers could retain part 1 of the 2-part carbon interleaved form for their records. Part 2 employs Ipsen's unique construction.
The Marketing Blitz
Since inventors have one year from the time a product is first sold to file for a patent, Ipsen opted to sell his buyers guide label before filing. He had already come up with the name Seal 4 to describe the product and hired a graphic artist to develop a logo. Before the test run, he had hired another artist to develop sketches providing instructions for the dealer and the car buyer. "I wanted this to be a complete product, not just forms in a box," says Ipsen. "It's the little things like that which make it a more marketable product. I don't have to go out and sell it and explain it to buyers."In fact, most sales of the product have been done by direct mail and through an advertisement in an industry trade magazine. In the beginning, though, Ipsen knew it was important to find buyers for the product who could then provide testimonials. The first buyer of Seal 4 was a long-time customer, a Portland area dealership. Ipsen knew the company was having problems with its existing buyers guides because he supplied them. The dealership agreed to try out the form, which Ipsen guaranteed, and has reordered it since.
Next Ipsen began working on a 4-color marketing piece to explain the benefits of Seal 4. DiversiForm already sold other products to the automotive industry via direct mail, and Ipsen knew that a snazzy promotional piece would ensure success for the new product. He hired an ad agency to develop the 5-panel 11 x 191/2-inch piece. When the piece arrives at a dealership, the buyer sees a photograph of a crumpled buyers guide. The flyer opens to display a photo of a perfectly flat Seal 4 buyers guide, sketches about how to apply it and text about the benefits of Seal 4. The bottom two panels are perfed and fold over into a postage paid return envelope.
"I thought it was very important to design a 4-color flyer with true photos to promote the idea that our company is professional and that there is no risk to order from us even if the dealership has never heard of us," says Ipsen. The flyer includes a table showing the price per product and total price for various quantities as well as the discounted pre-pay price. Ipsen offers a 10 percent pre-pay discount, and a whopping 60 percent of first-time buyers take him up on it.
Buyers can mail the order form back with a check, fax it to DiversiForm or call the firm's toll-free phone number. DiversiForm offers a 30-day money-back guarantee. Ipsen ships a copy of the FTC's guidelines on proper use of the buyers guide to all form buyers and offers them free to all recipients of the mailing. The reverse side of the promotion displays a photo of Seal 4 viewed from inside a car, testimonials from buyers and information about the FTC's Used Car Rule.
It took from December 1991 to April 1992 to design and print the flyer. In the interim, Ipsen used a 2-color 81/2 x 11-inch flyer developed in-house. Ad agency fees alone for the 4-color piece cost nearly $12,000. He initially printed 20,000 flyers, enough for most of the franchised new car dealers in the U.S. Despite more than twice as many used car dealers, franchised new car dealers account for sales of more than half the used cars sold in the U.S., according to Ipsen. He says new car dealers are less of a credit risk than used car dealers, and he is now developing a flyer for used car dealers to buy Seal 4 C.O.D.
The Patent Process
Ipsen and his attorney filed for the patent in October 1992, listing 17 claims describing Seal 4's construction. The patent application also included detailed drawings referred to in the text explaining how the form was constructed and how it is used. A "background of the invention" section detailed the need for the form and compared it to existing products. Nearly one year later, the examiners at the patent office asked for more information and said that certain claims related to the manufacturing process would have to be filed separately. Ipsen's attorney prepared a response, and on Feb. 8, 1994, the patent office allowed most of the 19 claims ultimately made by Ipsen, including the crucial ones about construction. Thus, he received a patent for his product.Ipsen says the patent hinged on claim number one, which explains how die cutting on all four sides of the face of the 2-sided form allows the buyers guide to adhere to any surface. Die cutting on the reverse side gives the buyer the option of removing the form, thus retaining his copy, and leaving the attachment strip or border adhesive stuck on the window. Ipsen says the car buyer can remove the border with soapy water or window cleaner.
The Payoff
Ipsen licensed the marketing rights for Seal 4 to DiversiForm, which also sells Seal 4 through other distributors. At the National Automobile Dealers Association convention earlier this year, a handful of exhibitors displayed Ipsen's product. DiversiForm continues to sell Seal 4 by direct mail and with a black and white ad in Automotive News. In addition to the traditional Seal 4, DiversiForm sells a version for the standard power train warranty and one to indicate that the manufacturer's warranty still applies to the vehicle. These versions are sold to existing customers only.A high reorder rate helps bolster sales. Six months after a dealership places its initial order for Seal 4, DiversiForm sends a post card reminder notice telling buyers to check their supplies. Two months later, the distributorship sends another post card, and a third is sent a few months later. If the buyer still has not reordered, DiversiForm calls the dealership. Of 160 dealers called recently, only eight did not want to reorder. If the client has an order history with DiversiForm, it will receive warning post cards three months before the dealership is scheduled to run out. The distributorship also encloses reorder cards in each box of buyers guides.
Seal 4 has helped Ipsen's firm grow significantly in the last two years. Company sales have jumped 75 percent from 1991 to more than $1.4 million at year-end 1993, and Ipsen says Seal 4 was a major factor. He estimates Seal 4 has a 10 percent market share nationwide, even though it costs about twice what traditional buyers guides do, which he still sells. "People are willing to pay more because it works," he says.
Katherine L. House is managing editor of FORM magazine.