REVIEW: The ABC of Electronic Fundraising

Our Rating

10 PRODUCT/SERVICE

10 VALUE PROPOSITION

10 MARKET SIZE

10 REVENUE MODEL

8 MANAGEMENT TEAM

5 COMPETITIVE ADVANTAGE

10 PROOF OF CONCEPT

10 CUSTOMERS/USERS

10 STRATEGIC PARTNERS

5 FUNDING

ABC has a client retention rate of 99% and is on target to generate $3.5MM in sales for 2013.

Founded in 2011, AuctionsByCellular (ABC) combines technology with exceptional customer service to revolutionize charitable auctions and maximize the fundraising efforts of nonprofit organizations. ABC’s user-friendly proprietary software automates auctions by allowing donors to use their cell phones and place bids from anywhere in the world. ABC works with charities, nonprofits, schools, churches, political organizations, corporations, etc. to organize silent and live auctions, and direct donation campaigns. [Video courtesy of Auctions by Cellular]

PRODUCT/SERVICE: After signing a contract, the client sends a list of auction items and ABC catalogs them on a website created just for the event. When guests ‘arrive,’ either in-person or online, they register with their phone number and credit card and receive a text message which directs them to their own personal bidding page. There is no app to download. They also receive a link with pictures and descriptions of the auction items as well as updates on the current bid delivered as a text message. When outbid, donors instantly receive a text alert and can respond with a higher bid. As guests text their donations, names and a message appear on a screen at the event which creates excitement and competition and more bidding. Guests without a cell phone can bid via ABC’s iPad-equipped “Personal Shoppers.” Donors have the option of pre-registering online and bidding on the same items before the event. In addition, a professionally-trained team of ABC experts provides comprehensive client service from beginning to end including planning, registration, and check-out. They organize and run the event, suggest strategies to enhance the fundraising process, sell tickets, handle cataloging, market the event, and “go the extra mile” to ensure customer satisfaction. After the event, clients receive a detailed financial analysis and donor database in less than 48 hours. The analysis provides a list of donors with contact information, the most active bidders, the most popular items, who paid and who did not, etc.

VALUE PROPOSITION: AuctionsByCellular offers the following value propositions: 1. Donors can pre-register online and bid on items before the event. 2. Donors can bid from anywhere in the world via their own cell phone. 3. Real-time alerts boost bidding. 4. Bidding is anonymous which increases the number of bids. 5. Online bidding keeps silent auctions open longer. 6. ABC’s mobile bidding platform dramatically increases the number of bids, frequently by as much as ten-fold. 7. Clients who switch from paper auctions to ABC’s technology typically increase revenue from 30% to 50% and sometimes by as much as 300% to 600%. 8. Electronic bidding significantly improves the overall guest experience by providing a simple, fun, and engaging way to give. Guests can bid on their cell phones and mingle during the gala as opposed to standing in front of a paper bid sheet the entire evening and keeping a watchful eye on the auction. Guests can begin the silent-auction process a couple weeks before the gala by registering online. Guests do not have to stand in check-out lines. 9. ABC’s software automates the entire auction process and reduces labor expenses by up to 50%. 10. Event organizers do not have to chase guests to tell them they’ve won. 11. Check-outs are quick, typically in 15 minutes or less. 12. ABC’s team of hands-on experts provides comprehensive service before, during, and after an event to ensure customer satisfaction. In short, ABC increases revenue, decreases expenses, enhances the donor’s experience, reduces the workload for the event organizer, and touches more people.

MARKET SIZE: There are over 800,000 revenue-generating nonprofit organizations on file with the IRS.

REVENUE MODEL: AuctionsByCellular charges a flat fee which varies based on attendance, the number of auction items, and the complexity of the event. ABC does not receive a percentage of the auction proceeds and there are no hidden fees. Salespeople work on commission only.

MANAGEMENT TEAM: Jim Alvarez, founder/CEO, is a serial entrepreneur. He invented the HammY golf putter, grew two Sprint stores to seven and successfully sold them in 2010, founded the haunted house Amhurst Asylum, and launched a tanning business which led him to become a partner in L.A. Tan, one of the largest privately-held tanning salon chains in the U.S. with 180 locations. Philip Crutchfield, COO, is a 15-year professional sales veteran, his last 6 with The Marvel Group. Rich Aquino, CTO, is a 17-year software development veteran, his last 15 at Flexera Software, makers of Installshield. Jason Grutzius, VP of Business Development is a 17-year professional sales veteran, his last 10 in various executive sales and marketing roles with T-Mobile USA.

COMPETITIVE ADVANTAGE: 1. ABC automates auctions with the ubiquitous cell phone which allows donors to bid from anywhere in the world. 2. With ABC’s technology, the auction is “always on” and allows for donors to bid before and during the event. 3. ABC charges a flat fee and never takes a percentage of auction proceeds. 4. ABC’s primary competitor is BidPal Mobile Auctions in Indianapolis which launched in 2008. BidPal Mobile Auctions  requires clients to use its own device and takes a percentage of the proceeds. 5. ABC’s team of experts supports its customers before, during, and after a fundraising event. ABC brings a full staff to every event and helps donors without cell phones bid via an iPad, registers guests who have not pre-registered, and helps to answer questions.

PROOF OF CONCEPT: AuctionsByCellular is generating significant revenue, attracting new clients, and growing rapidly. They won the 2013 James Tyree Emerging Business Leadership Award including a $25K cash prize given annually by the Chicagoland Chamber of Commerce to Chicago’s highest-growth small business.

CUSTOMERS/USERS: ABC launched in May 2011 at Rush Medical Center and doubled the amount of money expected from its very first auction. For the remainder of the year, ABC managed 56 charitable events using its proprietary mobile bidding technology. In 2012, they expanded quickly and organized 295 fundraising events. In 2013, ABC expects to host 800 events in 17 cities including its hometown of Chicago. Currently, the company’s second largest market is in Denver. In 2014, they plan to expand to over 2000 events and 25 new cities. To date, they have helped hundreds of nonprofits in 14 U.S. markets raise more than $54 million from silent and live auctions and donation campaigns; clients include the American Lung Association, American Red Cross, American Heart Association, Boys & Girls Clubs, Costco, schools (Seton Montessori, St.Patrick, St. Viator), hospitals (Children’s Memorial Hospital, Rush Medical, Wheaton Franciscan) Make a Wish, National Kidney Foundation, Ronald McDonald House, Rush Medical Center, 7 Eleven, and universities (DePaul, Notre Dame, Purdue). ABC is on target to generate $3.5MM in revenue for 2013. Sales have increased 100% or more during each of the last 3 years. The company has a 99% customer retention rate. Currently, they have 60 full-time employees and 300 part-time staffers. ABC is debt-free and profitable.

STRATEGIC PARTNERS: AuctionsByCellular has strategic partnerships with Ability Graphics, Auction Packages, Ballast Group, Connecttivity, Renee Jones, National Fundraising Solutions, Saint Andrews Products, and Weybridge Strategies.

FUNDING: ABC is growing internally and not actively seeking capital. They’re focusing on recruiting and building their teams.

SUMMARY: ABC is growing by leaps and bounds. The combination of efficient technology and a well-trained professional staff have produced a stunning client retention rate of 99%. ABC’s challenge is to scale quickly, be first to market, and establish key relationships which will make it difficult for new competition to wrestle away their business. ❒

[Photo: Auctioneer Vinnie Zaffarano, and ABC Pro, Tim Mooney (in red shirt), manage a fundraising auction for Lifesprings Ministries at Pipers Banquets in Aurora, Ilinois. Courtesy of Auctions By Cellular.]

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