Dean Kershaw calls his employer, Sanford, Fla.-based Coastline Distribution, "a 19th century company standing on the edge of the 21st."

The distributor of heating, ventilation and air-conditioning equipment still does nearly all its business on paper. So it's not surprising that Mr. Kershaw, VP-operations, became aware of ProcureNet through a good old-fashioned trade journal.

ProcureNet sets up Web sites--essentially, intranets--for businesses that allow purchasing departments to buy items remotely. Mr. Kershaw visited its Web site and saw a couple of white papers that interested him. In order to grab the papers, he had to give his name, title and e-mail address--the standard information exchange.

Within a few days, Mr. Kershaw received an e-mail from ProcureNet. He expected junk, but, he said, that's not what he got.

"What really impressed me was the quality of the e-mails they put out," Mr. Kershaw said. "It was in HTML format, so it came in with a graphic at the top that tied in with their Web site. It didn't look sophomoric; it was very professional, it caught my attention, it prompted me to go back to their Web site."

Follow-up marketing

Fairfield, N.J.-based ProcureNet uses a sophisticated e-mail follow-up marketing system to boost its core product, OneSource, a Web-based purchasing catalog for businesses. The product is intended to eliminate a common problem for any employer with far-flung locations: maverick spending.

"The problem a lot of our customers face in buying goods is that they negotiate with a large number of suppliers, and people out in the field often have a hard time finding the right thing or have problems with the purchasing department," said Charlene Smith, director of corporate communications at ProcureNet. "We offer an electronic catalog from preferred suppliers at pre-negotiated prices."

ProcureNet will negotiate withsuppliers, if a customer wishes, or will allow the customer's purchasing department to do the negotiating.

Ms. Smith said that shortly after ProcureNet formed last April, it chose e2 Software, Plano, Texas, to design and host its e-mail system.

For about $500 a month, she said, e2 automatically sends one of several e-mails to every visitor to the ProcureNet site who leaves behind an e-mail address. The e-mails are targeted by titles and other visitor disclosures.

Initially, e-mail sales leads stacked up. Now, "within 24 hours of download, we put you on a track and you start getting information. ... The objective is to build a dialogue with prospects" Ms. Smith said.

After a first visit, three e-mails go out over about three weeks.

"People can opt out after the very first e-mail, but if they're downloading information from our site--if we're adding value--I think it's only fair that we have the opportunity to send them at least one e-mail," she said.

The e-mails direct would-be customers to research that indicates cost savings from Web-based procurement systems. There's also a survey, with a completion reward of a $25 gift certificate from Amazon.com.

Replies that indicate prospective customers are "in a buying mode" are turned over to account reps, she said.

Keeping current

The biggest risk of such an automated system is keeping it current, Ms. Smith said.

"We got caught with our pants down once and it was corrected within 24 hours, but it's still embarrassing--we invited customers to a speech of ours at a conference after the event," she said.

ProcureNet is such a new company, she said, that return on investment for the e2 system is hard to measure. "It's really minimal" in terms of ProcureNet's overall costs, she said of the expense.

But, she said, it's clear that e-mail has a strong following these days.

"We just did a 3,500-piece direct mail campaign in three parts, with a scrubbed-clean list, and we were told we could get a 7% to 10% response--we got like a half a percent," she said. "So then we decided on an e-mail campaign to 700 recent site visitors. We got a 20% response. That showed us it certainly makes sense to capture all you can from people who visit your Web site."

ProcureNet has about 200 customer accounts and 250 employees, she said. The company's revenue comes from licensing fees to set up procurement sites, as well as markups on items bought.