eBusiness - Attracting and Keeping the Customer
Marketing
There are numerous methods to market your online store, and new ways to use the Internet to do so are popping up all the time. The most common and effective methods are: offline advertising, referrals, e-mail, viral marketing, search engines, virtual malls, and banner advertisements.
Your Retail Store and Gift Certificates
Physical retail stores and online stores should work in harmony. By using a brick-and-mortar retail presence to promote online stores, customers will not be encouraged to go online and buy products from competitors. To promote your new site, include the address on your receipts, invoices, shopping bags, print advertisements, and other sales literature. Another way to promote your new web site is to send electronic gift certificates to existing offline customers. The next step is to allow your customers to send the e-gift certificates to family and friends, thereby increasing referrals.
E-mail Marketing
Strictly speaking, any marketing message sent by e-mail is e-mail marketing. With a spectrum that stretches from one-to-one marketing to bulk messages, you can devise an e-mail marketing strategy that suits your company. For businesses serious about advertising online, e-mail is one of the most successful ways to target a specific audience.
Businesses should avoid the use of bulk e-mails sent without permission, also known as spam. Spam e-mail imposes costs and burdens on recipients by taking away access time and memory without permission. In high volumes, spam has been shown to clog networks and slow down communications between legitimate users. A marketing strategy using spam will do serious damage to a business’s credibility. The most effective way to identify a target market is to obtain the customer’s permission to send more information.
Permission Marketing
Permission marketing builds on the current practice of sending marketing material to interested customers. The Internet adds a new dimension because it allows consumers to volunteer. By taking only volunteers, permission marketing guarantees that the consumers who receive it are paying greater attention to the message. It also allows you to tell your story without being interrupted by competitors. Often customers participate because they are rewarded with coupons and special discounts. By allowing customers to opt into marketing, you are making a personal connection.
To opt in, customers check a box or give their e-mail address. The more specifically the recipients are told what they are opting into, the more valuable the list. An opt-out strategy assumes the reader wants to get e-mail but offers a chance to remove his or her address from the list. Most experts agree that the choice is less clear to newer Internet users and therefore the information is less valuable.
Affiliate Programs and Viral Marketing
Affiliate programs and viral marketing strategies are relatively new and rely on referrals. In the affiliate program, networks of web sites place banners or links on other web sites that promote each other’s brand names and products. Customers are referred to one another in exchange for a sales commission.
Viral marketing describes the pattern where information about Internet companies spreads via referrals. Customers pass information about services to those close to them, including friends, neighbours and co-workers. Those people then pass the service onto their own friends, neighbours and co-workers, and so on.
Search Engines and Search Directories
A search engine is a program that searches Internet sites for specified keywords and returns a list of sites where the keywords are located. Acting as funnels for the enormous amount of information on the Internet, search engines are important in advertising your business. In comparison, a search directory does not search web sites but searches a directory of keywords that have been registered with each web site.
Submitting to search engines is easy because you only have to submit your web site address and e-mail address. The process for submitting to a directory is much stricter than a search engine, and submission does not guarantee registration.
Directories require more specific information during registration, and a human editor will review your site to decide whether to include you in the directory. An example of a directory is Yahoo!. To add your site to a search engine or directory is as easy as going to the search engine’s web site and clicking on a link that says “Add your web site.” Registration can take as short as a few weeks or as long as a few months. The ideal situation is to have your web site included in both the search engine’s directory and its full-text index of web pages.
Because there are a number of popular search engines, you should register with more than one. Currently, the most popular search engines include Yahoo!, Altavista, Lycos, Excite, Infoseek, Hotbot, and Canada.com. If there are Canadian and American versions, like Yahoo.ca and Yahoo.com, registration with the Canadian version will include registration with the American version. Because there are so many search engines, software has been developed that allows you to submit information once and then it registers you with several search engines.
| Clickz Top 4 Directory Databases | Clickz Top 4 Search Engines |
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Source: P.J. Bruemmer, “The Engines and Directories That Count,” May 10, 2000 , online: www.clickz.com/experts/search/opt/article.php/823771
Site optimization
As search engines actually read your pages, it is important to provide search engine friendly pages. Many marketers submit their sites to the search engines carefully, only to find they did not get listed in this search engine or that one. The solution to this problem is site optimization—making your site search engine friendly It is a good idea to have someone evaluate the HTML (HyperText Markup Language) that your web site is built on to ensure that search engines can find everything they require.
Virtual Malls and Portals
Physical stores open in shopping malls because they are guaranteed a share of the traffic that walks through the mall. For online stores, the Internet offers virtual malls and the associated benefits. When considering whether to join a virtual mall, you should decide whether you are getting the national and international exposure you require for the price. Often, virtual malls ask for a percentage of sales in return for listing you in their directories.
A portal is a web site that is intended to be an all-in-one entry to the Internet. It provides search engines, e-mail, chat rooms, free personal web pages, shopping, and guides.
Banner Advertisements
Banner advertisements are the “Click here” messages you see at the top of web pages that try to tempt consumers into visiting companies’ web sites. Currently costing about $30 per month, banner advertising can add up. There are two ways to get your business’s banner ads online. You can buy the ad space from the site you are interested in advertising on. A less expensive option is joining a banner exchange network, like Link Exchange (www.linkexchange.com). In exchange for displaying banner advertisements on your web site for other companies, these companies agree to display your banner ads on their web sites. For the greatest return on investment, seek out complimentary sites and arrange a reciprocal banner agreement.
A new concept in banner ads is rich media e-business banners. With a built-in order area, expandable forms, and security measures to protect credit cards transactions, customers can purchase products within the banner. By having the entire e-business transaction within the banner, the prospect does not have to leave the host site. These banners work best for products or services that do not require much explanation and are easy to order.
The global e-commerce revolution is entering a new phase. While the first stage was fueled by the vision and innovation of business-to-consumer Internet companies, the next phase will be defined by the leadership and market success of companies engaged in business-to business or B2B e-commerce. This refers to electronic transactions between and among companies and their employees and suppliers.
The early consumer-focused, e-commerce winners created the Internet business model, but it will be their business-to-business (B2B) successors that realize the full potential of the new electronic economy.
From the perspective of today's enterprise managers, this second Internet revolution consists of equal parts threat and opportunity. The new B2B wave will split most industries' competitive field into two camps - the prepared and the unaware. Many organizations, reluctant or unable to initiate the deep change that the new business climate requires, have made only minor technical changes so far. These changes modify their culture or business processes. These organizations have yet to make the investment in the strategy, people, and money necessary to survive in the B2B
e-commerce world. Those who fail to address the opportunity at hand risk becoming displaced by more forward-thinking competitors.
For those who do respond to the new realities of B2B e-commerce, the worldwide B2B market offers opportunities on a grand scale. Still in its infancy, B2B
e-commerce is already the fastest growth area in the Internet economy and carries potential almost beyond measure. A Boston Consulting Group report estimates that Internet-based electronic business relationships will account for $2.8 trillion in sales by 2003. Gartner Group places this figure even higher at $7.2 trillion.
But although helpful in sizing the growth of B2B Internet sales, such projections of transaction volume give a false impression of the future importance of the
e-commerce market. More important than volume, from a business-to-business perspective, is value. Today's volume projections only hint at the value that the Internet will provide in the years to come as an enabling technology for e-business.
Businesses have three choices in how they prepare for the coming B2B storm: (1) they may ignore the trends and leave their organizations unchanged; (2) they may take half-hearted steps to adapt for Internet business, superficially altering their organizations but leaving their core processes unchanged; Or (3), they may recognize the tremendous opportunity offered by this paradigm shift, transform the way they serve their customers, and ensure their future in the digital age.
Developing a B2B Presence
The rise of Internet-based electronic commerce has changed the global business landscape forever. After a few years of explosive growth in the worldwide adoption of web technology, business leaders have completely changed the way they perceive online technology. Once seen as an unfamiliar and threatening medium, the Internet has proven itself as a superb environment for commerce. In today's fast-paced competitive atmosphere, no B2B supplier that lacks a strategy to conduct sales and operations over the Internet may be considered a leader.
Organizations that move decisively and intelligently into web business can register significant competitive gains. These gains include increased revenue, lowered costs, new customer relationships, innovative branding opportunities, and the creation of new lines of customer service. Sellers who fail to gear up for the coming B2B
e-commerce explosion will not only pass up those opportunities, but in many industries will find their very survival threatened. As their customers and competitors outpace them, they will slide further into irrelevancy.
How can suppliers ensure their place in the B2B Internet revolution? Participation in the new economy means very different things to different selling organizations. Generally speaking, the most important requirements for sellers seeking to push their business onto the Internet are a total commitment to success, recognition of the infrastructure challenges involved, and an intelligent plan of action.
Commitment
Whether your organization sells office supplies to multinational companies or provides specialized consulting services to a handful of clients, strong commitment is a prerequisite for engaging in Internet business. If the web is to be central to the way any company operates, the effort to gear up for e-commerce and an Internet-enabled value chain must be understood and accepted by key functional areas within your organization, as well as by executive management. This is true for sellers large and small, highly centralized or distributed along several continents.
This commitment is necessary because each incremental advance down the path of web-enabled commerce carries deep implications for business processes and organizational culture. Company leadership must be willing to commit the resources in the people, money, and focus necessary to carry the e-commerce deployment through to fulfillment. Line managers and employees must embrace new tools for internal communications, sales processing, and customer fulfillment.
At every level of e-business adoption, organizations must evolve and adapt to new ways of working and delivering customer value. The new processes and responsibilities required by world-class, B2B e-commerce are demanding; management cannot easily force their creation and execution. Establishing leadership in the new economy requires company-wide commitment. The commitment to adapt and transform must be built into all levels of the organization.
Understanding Digital Infrastructure
Suppliers seeking to make the web a significant platform for sales and order fulfillment must gain an understanding of e-commerce infrastructure requirements. These infrastructure challenges are frequently misunderstood, and often exaggerated, by new deployers of Internet business solutions.
Sellers are already familiar with the physical infrastructure that allows them to deliver their goods or services to their customers. Elements of this physical infrastructure include storefronts, processing centers, and transportation fleets. What is less familiar to new entrants to the electronic economy is the digital infrastructure of business - the combination of internal applications, network connectivity, online presence and web-based customer fulfillment that allows companies to track and satisfy a customer's total experience.
The Internet is creating a paradigm shift in B2B commerce, a transformation that enables new business processes and improves upon existing ones. The key to online success is the creation of a digital infrastructure that is tightly integrated with the company's physical infrastructure. Establishing the right flow of information links the organization's digital and physical infrastructures, providing target elements of the company with data about all aspects of the acquisition decision, including order fulfillment, payment, and customer support.
Plan for Action
Under pressure to perform in a new, unfamiliar arena, many companies sacrifice strategy to urgency. These initiatives fail because of a lack of forethought. By not taking the time to carefully assess the market, companies sometimes fail to realize where the real areas of opportunity lie in this new economy.
Many sellers are already well down the path of transforming their business processes and implementing the necessary infrastructure for their e-commerce operations. These companies may already have found their entry point in the new digital economy and are concentrating on expanding their operations or improving their business results.
Other B2B players have not yet begun to address the challenge, and face the need for a much more concerted and far-reaching deployment to integrate the web into their customer communication and transaction processes. Regardless of their deployment stage, however, e-commerce ventures’ success or demise depend on the quality of their conception and execution.
Each supplier's specific strategy, objectives and technical infrastructure for e-commerce will be shaped by variables that include the supplier’s size and scope, market pressures, industry focus, and available resources. Management must develop a coherent course of action that is both feasible and appropriate to the company's overall situation.
It is also critical to ensure that the organization's e-commerce strategy contains both a short-term and long-term perspective. For companies lacking a quality presence online, rapid time to market is essential; these organizations should seek the execution path that allows them access to business results quickly.
But the velocity of change online demands that companies also plan for the future, whether that be six months or three years down the road. The action plan for
e-commerce deployment is never completed. It is best thought of as a living strategy, one that will evolve to fit the organization as its requirements and capabilities grow over time.
Suppliers should develop an e-commerce action plan that is appropriate for their size, competitive situation, industry focus, and available resources.
B2B E-Marketplaces
Online markets, also known as B2B marketplaces, are commerce sites on the public Internet. These e-marketplaces allow large communities of buyers and suppliers to "meet" and trade with each other. They present ideal structures for commercial exchange, achieving new levels of market efficiency by tightening and automating the relationship between supplier and buyer.
They allow participants to access various mechanisms to buy and sell almost anything, from services to direct materials. The extreme flexibility of these marketplaces, which may be customized to serve the full supply chain of virtually any industry, will establish themselves as pillars of the new B2B e-commerce economy.
Ultimately, all businesses will buy on a marketplace, sell on a marketplace, host a marketplace, or be marginalized by a marketplace. For organizations committed to participating in the coming wave of online business, B2B marketplaces offer a compelling entry point into the new economy. As e-commerce becomes more central to the operations of mainline companies, a diversity of marketplaces will arise in every sector.
So far, most of the early movers have been small, aggressive third-party, dot-coms seeking first-mover advantage, which they hope to leverage into market dominance. But they will not have the playing field to themselves for long. Already the established brick-and-mortar players are moving to leverage their existing trade relationships and access to buyer liquidity into established B2B marketplaces.
B2B marketplaces are redefining how businesses interact with each other. Inevitably, all businesses will be affected by this revolution. The important question that all companies must answer is: "How?"
B2B E-Marketplaces and Supply Chains
Marketplaces and exchanges are emerging to serve each point of every industry's supply chain. Whether it's a spot market to clear excess raw materials in the metals industry or a new "virtual" distributor in the life science chemicals industry, these electronic markets bring buyers and suppliers together through new methods of dynamic collaboration and trade. They remove costly inefficiencies and deliver bottom-line savings to all participants.
Although still in their infancy, B2B marketplaces have the potential to drive the B2B e-commerce revolution. By virtue of their structure, which unites member companies in seamless trading communities of common business interest, B2B marketplaces maximize speed and efficiency. They offer buyers and sellers uniquely powerful forums to reduce transaction costs, enhance sales and distribution processes, deliver and consume value-added services, and streamline customer management.
Evolution of E-Commerce Mechanisms
To understand the step forward that B2B marketplaces represent, it is useful to examine the progression of electronic business. A brief review of the rapid evolution of B2B e-commerce helps set the context for B2B marketplaces:
EDI/ERP
EDI (Electronic Data Interchange) and ERP ( Enterprise Resource Planning)
Businesses with well-defined trading relationships use EDI and ERP to create point-to-point interfaces with each other
Expensive to implement, outside the reach of all but the largest companies
Useful for transactions involving replenishment orders for direct production goods tied to a previously negotiated contract.
Sell-Side Storefront
Primary model used in current business-to-consumer scenarios
Single seller, typically a distributor, constructs a web storefront to sell to many consumers (i.e. Amazon.com)
Unless a single distributor can aggregate all the suppliers in a given industry, the buyer remains responsible for comparison shopping between stores
Expensive for buyer and does not meet the needs of corporate procurement organizations.
Buy-Side E-Procurement
Buy-side applications generally consist of a browser-based self-service front end to ERP and legacy purchasing systems
Corporate procurement aggregates many supplier catalogs into a single "universal" catalog and allows end-user requisitioning from the desktop, facilitating standard procurement for the organization and cutting down on "maverick" purchasing
Purchases made through this system are linked to the back-office ERP or accounting system, cutting time and expense from the transaction and avoiding potential bookkeeping errors
Model yields reduced transaction costs but not lower purchase costs; no impact on size of supplier base, no enablement of dynamic trade; buying organizations must set-up and maintain catalogs for each of their suppliers; too costly and technically demanding for most small and medium-sized businesses.
B2B Marketplace
Latest evolution of B2B e-commerce, enabling a many-to-many (M:M) relationship between buyers and suppliers
Buyers and suppliers leverage economies of scale in their trading relationships and access a more "liquid" marketplace
Sellers find buyers for their goods, buyers find suppliers with goods to sell
Many-to-many liquidity allows the use of dynamic pricing models such as auctions and exchanges, further improving the economic efficiency of the market.
Marketplace Requirements
As the new B2B trading hubs, marketplaces must enable certain processes and enterprise trading requirements. They should accommodate existing procurement processes and buyer-supplier interactions, and offer full interoperability with other markets.
Procurement Processes - Procurement professionals configure a "virtual procurement system" within B2B marketplaces. This replicates the buyers' unique procurement process down to individual permissions, rules and workflow, allowing the procurement organization to control the overall buying process while distributing the buying task to end users.
Buyer-Supplier Relationships - Before moving to a marketplace, most buyers and suppliers will have existing relationships that must be reflected in the marketplace. Suppliers can configure the system to reflect pre-negotiated discounts for certain buyers, which will automatically be applied when those buyers access the marketplace. This many-to-many marketplace combines the advantages of both
sell-side and buy-side models, but since it is hosted, avoids setup and maintenance costs for the participants. Significantly, this can allow access to smaller organizations that would not otherwise have had the resources for B2B trade online. Both buyers and suppliers gain the advantage of a much broader trading community. Both sides can also enjoy the benefits of a streamlined trading process.
Interoperable Marketplaces - One of the key factors in building a successful B2B marketplace is to focus on meeting all of the buying needs of the target user.
These needs may go beyond the specialist capabilities of any single marketplace. To cater to broader buying requirements, therefore, marketplaces may link to each other, effectively extending the product range without giving up "control" of the buyer.
The ability of marketplaces to interoperate extends the idea of liquidity and network effect by joining more buyers with more suppliers, but does not sacrifice the ability of each marketplace to be highly specific to the supply-chain node or target buyer group it serves.
Benefits of B2B E-Marketplaces
Sellers, buyers, and market makers each stand to benefit from the B2B marketplace.
Sellers use B2B e-commerce to lower costs and access new customers.
Marketplaces extend that reach still further by creating and leveraging close collaboration between trading partners, tightening the relationship between supplier and buyer, promoting price discovery and spend aggregation and slashing supply chain costs.
Buyers can use B2B marketplaces to reduce direct and indirect supply chain costs by leveraging their global scale, focusing their spending on preferred suppliers, and taking advantage of dynamic models such as auctions and bid-quote for efficient sourcing and spot buying. Beyond leveraging spend, new tools for logistics, payment and tax create new opportunities to build transparency in the supply chain, decrease logistics costs, increase inventory turns, and improve the overall performance of the manufacturing and procurement processes.
Market makers are the fulcrum of these new B2B e-commerce relationships, catalyzing the growth of the B2B economy by leveraging their domain expertise, customer relationships and supply chain strength to fuel the growth of B2B marketplaces. In return for delivering incredible value, market makers stand poised to reap substantial rewards by sharing in the returns achieved by buyers and suppliers.
Marketplace Characteristics
Customer Loyalty and Service
The Internet provides an infinite number of choices for consumers so the key is to build loyalty to your site. Customer loyalty is predicated on customer service, information, and value-added services.
Customer Service
Providing excellent customer service is the most important thing you can do to build customer loyalty to your online store. This includes selling high-quality and reliable products, delivering your products on time, answering e-mail messages promptly, and providing an accelerated checkout process.
Information
Almost as important as customer service is the information provided on your web site. If your site offers information on your products, customers realize that you are interested in developing a relationship. Newsletters, articles, tips, recipes, and special offers keep customers coming back.
Value-Added Services
To create loyalty, give your customers something they need but don’t expect from you. For example, an e-mail newsletter can keep your customers informed about special promotions, new products, and new content on your web site. Another idea is to send your customers an e-mail reminder for those products that customers reorder on a regular basis. You can also provide online storage of customers’ data such as wish lists and birthday and anniversary reminder services.
Data Mining
IBM states that, “The company that knows its customers best and uses what it knows to serve them better has a huge advantage in this one-to-one environment where competitors are only a click away.” Small retail businesses rely on their knowledge of the customer to inspire loyalty. On the Internet, the process of incorporating that same knowledge is called data mining. Although you cannot put a face to a name, the information you collect on your e-business site can identify needs and remember preferences. Data mining refers to taking the raw data your customer has provided and turning it into valuable information. To mine for data, information must first be collected; secondly, the collected information is stored and organized, called data warehousing; finally, the organized data is analyzed so it can be turned into the information you need.
Because information is money, the ability to break down the information is not cheap. Hardware and software are provided companies such as Oracle, IBM, Netscape, and Microsoft. Often hosting companies already have the right combination of hardware and software. For a fee the hosting company will sort out your traffic to increase your marketing effectiveness.
Data Mining Uses
With the ability to data mine, small businesses can capture important information on transactions and customers and use it to enhance their sales and service. This information can be used to segment tables, customize products, and improve customer service.
Sales Segmentation
Experts say getting the most out of existing customers is the most cost-effective strategy in retailing on the web. Repeat customers have already purchased products on your site, therefore you know their interests and buying habits. Based on prior purchases, you can e-mail information on products they are likely to be interested in. A data mining analysis of your customer interactions can reveal those clients who represent most of your sales and those who have not bought anything for a while. These are customers you may want to e-mail for the purpose of making them profitable again. Keep in mind that approximately 80% of your business will come from 20% of those who visit your site. Success can be achieved by targeting that 20%.
Product Customization
If your business manufactures goods, you can use the information gathered to customize your products to the specific needs of your customers. If you don’t manufacture your products, then you can use the same information to alter your orders from your suppliers. Loyalty is created when customers can order customized products.
Customer Service
Data mining can also be used to provide after-sale service, ensuring customers are satisfied and become long-term loyal clients. By tracking old customer problems, businesses can anticipate the services they will have to provide to new customers.
Data and Privacy Problems
Alberta, for the most part, has left privacy issues in the hands of industry; however, the Province is involved in developing legislation that speaks to consumer rights and privacy issues. Government and industry encourage a balance between obtaining information for your business and respect for your customers. Customers need to know that their purchasing data are not going to result in unwelcome postal or e-mail solicitations, telemarketing calls, or stolen identities. Retailers who show respect for their customers’ privacy will succeed.
To demonstrate trustworthiness, companies often post privacy statements on their web site. These state whether or not data are provided to third parties and whether or not the customer can choose to whom the data may be provided.
Summary
There are many methods to market your online business including traditional methods like advertising and coupons. The Internet’s unique environment opens new doors to marketing by allowing you to collect information from each transaction. This information can be used to target your marketing efforts and to provide meaningful customer service. The key is to make your web site address known and give customers a reason to come back.
Strong competitors will become dominant in efficient markets, since their comparative advantages become known and applicable across the entire market.
Weak competitors will get weaker as they lose geographic protection from stronger competitors.
Intermediaries who profited from the geographic fragmentation could be at risk if their only added value was bridging the spatial gap.
Suppliers will become more specialized as they search for comparative advantages by squaring off against the top tier of national and global competitors, instead of regional competitors. Specialization will lead to more choice, service, and customization.
Since buyers will be able to initiate and terminate supplier relation ships more easily, the cost of searching for and establishing new commercial relationships will fall.
In all likelihood, prices won't be driven through the floor and suppliers’ margins will not completely erode.
There will be some savings, but they’re more likely to come in the form of uniform prices for similar buyer needs. Transparency will root out inefficiencies and aberrations. Buyers with less efficient processes that enforce uniform buying across their own organizations will now have the tools to implement and monitor procurement policy. Suppliers can't count on the unknowledgeable buyer to prop up margins and will have to take care to target customers who value their products and services.
Internet marketing tips:
- Tell your customers about your web initiatives
- Offer gift certificates and coupons to those who shop online
- Allow customers to opt into marketing campaigns where they will receive coupons and discounts
- Register with many search engines
- Affiliate yourself with a virtual mall or portal
- Try using a banner exchange service, which will let you advertise your business on other sites and their businesses on your site
- Send 30- to 60-day, post-purchase e-mails with targeted specials to ensure the return of previous customers