2. Integrate your website with your organization?s back-end (existing) support systems. Stated in a different way, do not ignore the tools you already have at hand. If you have existing databases and support systems, do not leave them as stand-alone systems. Instead, connect your website to these systems and use the available data. (Seybold & Marshak, 1998, p. 39)
3. As noted above under the design of customer-facing business processes, use and integrate other technologies such as Touch-Tone telephones, hand-held devices, kiosks, etc. (Seybold & Marshak, 1998, p. 39) Many business owners maintain a narrow view, and they do not look for resources beyond their website. To reap the full potential of E-commerce opportunities, consider all of the E-commerce options available, and integrate all of the technologies that can contribute to your profits.
4. Build bridges to consolidate customer information across all product lines and functional departments. (Seybold & Marshak, 1998, p. 40) Many businesses are organized into different functional departments or along different product lines, and these individual entities often maintain separate customer and product databases. While it is not an intended side effect, this often leads to fragmented or duplicate information on customers, rather than a cohesive, centralized customer database. This could result in a product line department being aware of a customer?s preferences on marketing vehicles, but the marketing department having no idea about the customer?s preferences. Remembering that the customer should be our focus, it makes sense to build bridges among stove piped systems. The logical follow-on to this is to integrate information across all software applications. Taking both steps will effectively build a data warehouse that would facilitate an increased capability to address customers? needs and wants. 5. When either migrating from an old data system or building a new one, ensure that you include the essential architectural building blocks in the system. At a minimum, the system must include the following elements: (a) customer profiles, (b) the organization?s explicit and implicit rules for conducting business, (c) the organization?s significant business events and (d) the appropriate business objects (e.g., customer, account, product, order, purchase, etc.) for programmers to design the system. (Seybold & Marshak, 1998, p. 41-51)
6. In addition to adopting a philosophy of future thinking, noted above, be sure to stay abreast of the developing technologies that appear to be here for the long haul. They may become industry standards, and they should be evaluated for inclusion in your strategy. Some examples of hot technologies that appear to have continued future potential are smart cards, digital certificates, extensible mark-up language (XML), and JAVA programming language. (Seybold & Marshak, 1998, p. 44-46)
In order to promote customer loyalty, it is important to assess the current situation and then make a plan for the future. This entails measuring customer loyalty, identifying the customers who provide the most profitability, targeting the customers who provide the most profitability, and ensuring our business model is customer-focused. (Seybold & Marshak, 1998, p. 52-62)
There are five basic elements required to make a current assessment of customer loyalty: (a) the cost of acquiring new customers, (b) the cost of retaining customers, (c) the revenue generated by customers, (d) customer profitability and (e) the most prevalent reasons for customer defections. (Seybold & Marshak, 1998, p. 52-62) Of course, this requires some existing ability to produce the customer date necessary to compute these elements. The accuracy and value of the assessment diminish commensurate with data limitations in this area. Companies using conventional, standard financial accounting systems may not be able to extract much customer data because these systems are designed for external reporting, not management use. (Seybold & Marshak, 1998, p. 57) Companies with limited capability in this area should seriously consider migrating to activity-based costing systems that can give them customer and activity data.
The objectives of making the measurements identified above are to isolate the costs associated with acquiring and retaining customers, the revenues generated by customers, the customers who generate the most profit, the types of customers who don?t come back, and their reasons for not coming back. This would provide a baseline from which to measure future changes in each area. Ideally, we would be able to break customers into revenue and profitability quartiles and identify the characteristics common to members of each quartile. Armed with this information, we would use the characteristics of members in the highest profitability quartile to target marketing, and product and service efforts on the types of customers who will generate the most profit. If done properly, we would optimize profitability by placing emphasis on the customers who generate profit and by reducing emphasis on those who generate little profit. In essence, this would foster greater loyalty from existing, loyal customers and from new customers with typical loyalty characteristics. (Seybold & Marshak, 1998, p. 56-60)
The final point regarding customer loyalty leads back to key rule of E-commerce. That is, all efforts should be focused on the customer. This concept of focusing on the customer is not new; Total Quality Management (TQM) business philosophy has espoused customer focus for years. Still, many companies are product-centered. In a product-centered model, ?the customer is the anonymous target of marketing campaigns, and the financial systems are designed to evaluate product market share, product costs, and product contribution to profits.? (Seybold & Marshak, 1998, p. 60) Unfortunately, product-centered models lack validity in E-commerce because ?revenue and profits come from customers, not products.? (Seybold & Marshak, 1998, p. 61) In order to optimize profits in an E-commerce setting, a shift must be made to a customer-centered model. A customer-centered model focuses on the customer and provides an ability to identify individual customers, to catalogue their characteristics, preferences, and needs, and to develop or modify products and services to meet the customers? expectations. In E-commerce, having the ability to meet customer?s expectations is essential. The conventional brick and mortar store scenario may allow a business to stick with a product-centered model; the effort a customer may have to exert to leave and shop elsewhere might compel her to make a transaction not completely to her liking. E-commerce, however, requires little effort. With a couple of mouse clicks, the customer can easily shop someplace else on the globe!
Typical stages of E-commerce development.
Most organizations venturing into E-commerce for the first time cannot begin conducting e-business with a fully developed website. They normally start out with a limited capability and then grow into a model with greater capabilities. Seybold and Marshak (1998, p. 46-50) noted a general pattern where many company?s progress through five stages of E-commerce development:
1. Supplying company and product information. Most sites initially start out by simply providing marketing information, contact information, and company background information. This information is often referred to a ?brochureware.? While this type of site does little to bring customers back, it establishes a presence on the Internet and provides the business with expanded visibility.
2. Providing customer support and enabling interactions. In order to entice customers to return to its site, a business must provide more than information to its customers. Therefore, the site must quickly expand to acquire a customer support capability. This is the most beneficial capability a business can acquire because it provides customers with the something they truly want. That is the ability to help themselves!
3. Supporting electronic transactions. The next logical growth step is to enable customers to purchase goods and services over the Internet in a secure environment. If the website is properly designed, progressing to this capability should begin providing a significant return on investment.
4. Personalizing interaction with customers. Once the site has a transactional capability is acquired, the wise organization will begin collecting customer information (customer preference profiles, purchase profiles, etc.) This information is then used by the business to personalize its interaction with the customer. The ability to personalize interaction becomes the ?glue that binds? a customer to the business, and prompts the customer to return because of the personal attention he or she receives. In Internet parlance, this is when the site becomes ?sticky.?
5. Fostering community. Once the business establishes a level of trust and a one-on-one relationship with the customer, the business can use the site to foster community among its customers. Through the website, the business encourages customers to interact with each other through technologies such as chat rooms, customer on-line help forums, etc. Customers can offer each other tips and help, swap stories, etc. This form of interaction is the ultimate level of ?sticky? because the customers will return to the site to both conduct transactions and to interact with each other.
Steps for establishing a small business website.
Siebel and House (1999, p. 242-261) identify five basic steps that small business must take in order to complete the mechanics of establishing a viable website:
1. Find an Internet service provider (ISP). Finding an ISP is relatively easy; the telephone book is full to them. Finding a good and reliable ISP requires more work. Ask for referrals before contacting potential ISP candidates. Once several candidates with reputations for service and reliability are found, eliminate candidates who do not provide sufficient bandwidth, system redundancy, security measures, and service (twenty-four hour per day, seven day per week service, also called 24/7 service, is a must). The key thing to remember is that failure to consistently maintain Internet service equates to a failure to maintain customers.
2. Register a domain name. The businesses domain name must be registered in two places. The name must be registered with InterNIC (rs.internic.net/reg), and it must be registered with a search engine (e.g., Yahoo!). Registration with both entities is imperative because they have a symbiotic relationship, and the website will not function without registering with both.
3. Develop the website. It behooves a business to ensure that it contracts with a website developer who has proven expertise in technical website development and in E-commerce design and marketing. As with ISPs, there are countless website developers, but there are a limited numbers of developers who will have expertise in all areas necessary to design a successful E-commerce website.
4. Manage the website. This is a follow-on to website development. The key point to remember is that there?s more to having a website than simply establishing it on the Internet. Once the website is launched, it should be maintained and improved to meet customers? likes and needs. Just as inconsistent Internet connectivity will drive customers away, failure to adapt the website and keep it fresh will cause customers to look elsewhere.
5. Measure the website?s effectiveness. Measures of effectiveness are necessary to determine whether the benefits derived from the site justify the costs associated with establishing and maintaining the site. These measures of effectiveness should be conceptualized before website development begins, and a method for analyzing measures of effectiveness should be incorporated into the web development plan and in the website itself. This will ensure the measures are in place to analyze return on investment when the site is established.
Selling Power ? Enters E-Commerce
Having identified the key elements for building a successful E-commerce model, the second part of this research project shall be addressed. As stated in the research design, the researchers sought out a local company that recently ventured into the E-commerce realm. Upon finding a company to study, the group documented the company?s experiences to-date in order to evaluate whether the company?s actions incorporated the key strategy elements identified above. The name of the company is Selling Power, and the approximate beginning date for its E-commerce adventure was 1998. The following narrative on Selling Power?s E-commerce experience was compiled from personal interviews conducted between December 1 and December 29, 2000 with Ms. Irini Chaney of Selling Power and Mr. Aaron Schindler of the Javier Romero Design Group (JRDG).
Selling Power is a publishing company; it produces a magazine, numerous books, audio programs and other products for sales professionals. This private company has been in existence since 1980. The circulation for the magazine is approximately 200,000 and includes an international subscriber database. Currently, the company employs about 50 people who are located throughout the United States.
Selling Power?s original E-commerce goals were modest. In 1998, the company decided to incorporate a website into the company?s business model to enable customers to access additional information about sales. The website consisted of several pages of information dealing with past articles from the magazine. This approach did not prove successful because the information was difficult to retrieve, and it offered subscribers nothing in addition to the traditionally published products they already received. Selling Power hired several web-page developers to improve the website, and while each offered a new perspective, the website still was not an asset to the company.
In September of 2000, the Selling Power decided to hire a web contractor with E-commerce experience to analyze the website and assess whether the website could eventually benefit the company or whether the company should focus on another E-commerce venue. Concurrently, the company was experiencing a decline in the number of paid subscriptions, as well as a decline in product sales. These declines seemed to indicate that Selling Power?s average consumers were losing interested in purchasing hard copy subscriptions.
The contractor, Mr. Schindler, had some definitive ideas about the website and the focus that Selling Power should adopt for the future. He felt that the company would definitely benefit from improving the website, and he was subsequently hired to develop a long-term implementation plan. The first step in the planning process was to establish the corporate goals. Mr. Schindler worked with the Selling Power leadership to develop the following nine goals for Selling Power: (a) empower the company to take advantage of the internet to expand its global reach within the sales industry, (b) increase revenues for the company, (c) increase sales training opportunities for subscribers of the magazine as well as other visitors to the website, (d) attract high volume website hits to increase exposure to the magazine and to the products of Selling Power, (e) provide resources for sales professionals, (f) provide a business-to-business (B2B) marketplace ? a directory for buyers and sellers within the sales industry, (g) provide on-line career channels for sales professionals, (h) attract and retain customers via the Internet and (i) reduce the costs of maintaining the website.
The next step in the planning process was to conduct an on-line market overview for the sales industry. Approximately 56 percent of all companies will sell their products over the Internet by the end of 2001, according to a survey of Chief Financial Officers, conducted by Duke University. (A. Schindler, personal communication, December 2000) Based on this and other projection data provided by the contractor, Selling Power was motivated to continue pursuit of the project. This motivation was prompted by their recognition that they would risk being ?left behind? their competition by not participating and by the following advantages to participation. Two of the advantages of a website market are the relatively low costs and the opportunities for global reach. There is also the opportunity for new growth by using the Internet. In addition to selling products over the web, training sessions, conferences, seminars and research opportunities could also be added. Most importantly, Selling Power could be accessible to an unlimited audience with a quality website.
The company also had to identify its major competitors and analyze the Internet opportunities their competition was offering. The primary competitor is Sales and Marketing Magazine ?. While they maintain a website, their main focus appears to be informational rather than product sales. Selling Power viewed this as an advantageous situation because its primary competitor offered little more than brocureware. Consequently, selling Power decided to offer sales professionals a different portal with more options.