Growth Market for Mike Gorun
East Bay Business Times – March 3, 2006 – When he launched his latest business, Mike Gorun didn't know much about what he was getting into, and his early employees didn't know much about it, either.
Gorun, founder and managing partner of Performance Loyalty Group of San Ramon, says, "When the principal isn't experienced in the market and the guys writing the code aren't experienced in the market, it's kind of scary."
No worries. Four years later, the only thing that's scary is Performance Loyalty Group's growth. Eight months after the former school teacher launched Performance Loyalty Group, it be-came profitable.
The company has 20 employees and expects to add 15 by the summer. It has 300 clients, including car dealerships and some of the nation's largest home builders.
"We just have a lot of growth going on right now," he said.
Performance Loyalty Group had sales of $10 million in 2005. Gorun expects sales of $15 million to $18 million this year.
In the tradition of fast-growing tech companies, much of Performance Loyalty Group's heavy costs were upfront development expenses to make products.
"There isn't a lot of overhead once the client comes on because it's all automated," he said. "So it's a great model from that standpoint."
Performance Loyalty Group helps businesses - such as home builders and auto dealerships - gauge response to advertising and boost sales through loyalty card programs. Its original product, Media Manager, gives advertisers toll-free phone numbers linked to its software that capture data about callers and routes that information to the client. Its newest product, LoyaltyTrac, manages rewards card programs, gathering and analyzing customer information to help clients, such as auto dealer service departments, increase sales.
Gorun spent 18 years in the auto industry, working for Ford, Nissan and General Motors.
In the summer of 1994 he started an Internet company that grew out of a database of car components and prices that he had created. As he compiled the database, car companies took note.
"They didn't know what the competition was doing," he said.
So, their marketing departments started buying the information he was gathering to find out about their competitors' products and costs. The demand was so strong that he decided to put the information on the Internet and provide access to consumers. And CarSmart.com was born.
The company provided pricing data on vehicles and parts and became the first to show invoice pricing to consumers on the Internet, Gorun said.
He hoped to take the company public, but instead it was acquired in 1999 by Autobytel of Irvine for $3 million in cash and 1.8 million shares of stock. After the deal closed, Gorun continued to work as president of Carsmart. But he didn't want to relocate when Autobytel moved the operations to Southern California.
After he left Autobytel, he looked for a new venture. He looked into janitorial services, franchises and graphic design businesses.
"They were all overpriced. It was right after the dot-com boom and everybody thought their businesses were worth a lot more than they really were," he said.
At a trade show, he saw a system for tracking the effectiveness of advertising. Gorun thought the system, by Who's Calling Inc., of Kirkland, Wash., had flaws and that he could come up with something better. He set out to develop a system that combined 800 numbers, third-party consumer information databases and customer tracking software to allow home builders and car dealerships to assess the effectiveness of advertisements and gather data on respondents.
The first problem? Finding software developers familiar with telecommunications to link phone data with a software product that would gather customer data. He thought it would take 12 months, but it took 16 months to complete the product and launch the company.
"It was difficult from the technology side," he said. "I had to find people who knew telephony products and knew how to code, knew how to code software in a way you don't see a lot of."
Despite the challenges, he says Performance Loyalty Group has been more fun than CarSmart.com.
"We don't have the competitiveness that the Internet had in the mid to late 1990s. It's a lot easier, a lot less stressful," he says. "Out of my entire professional career this has been the most fun. It makes it fun, too, because you're making money."
– Jim Cole, Business Times contributor
Headquartered in San Ramon, California, Performance Loyalty Group is a leading marketing technology company providing customized loyalty rewards, customer retention, prepaid maintenance and media tracking programs for the automotive industry.
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Performance Loyalty Group