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Why E-business? 

The whole idea behind a profitable business is to make more money than is spent.  Businesses are desperately seeking a Web business model.  It is harder to be seen or heard on the Web because media dispersion causes intense competition for customer eyeballs.  While web site creation and maintenance costs explode, few E-business sites increase customer value.  Equally dismal is the performance of costly web sites that show little-to-no return as sales or revenue generators.

The hope for E-business is to 

·        Build a Web-based brand experience that transcends the Web.  The Web experience becomes part of the brand platform that extends the brand’s proposition.  Most E-businesses have not achieved this.

·        Enhance customer relationships.  E-business is not just a transaction but an opportunity to begin an ongoing dialogue with the customer.

·        Orchestrate new channel mixes.  The Web supports channel outlets .  It is not a standalone unless it is a pure play, “dot.com” company.

·        Leverage Web channel economies.  For example when done correctly, E-mail should be less expense than traditional mail.

·        Optimize the organization.  Leveraging the cross functional opportunities the Web presents has great potential. 

Alterations in the Business Model 

Today’s business model is changing.  Going by the way side is

·        Untailored, unspecific, and mass distributed marketing

·        Reactive customer service

·        Organization-centric behavior

·        Revenue stream

In its place comes

·        One-to-one marketing

·        Proactive customer management

·        Customer-centric behavior

·        Revenue pools

The imperatives for E-business become

·        Building customer relationships that reach new customers in a meaningful way

·        Changing the business model to exploit the Web economic model

·        Altering the organization for a major shift in how it conducts business 

Online Profitability Drivers 

Focusing on business value drivers is pivotal to online profitability.  Raising revenues means attracting new customers, serving existing customers, and offering new products via the Web.  Brand awareness, customer satisfaction, and organization perception are indirect benefits of an effective Web presence.  The Web can lower expenses by improving productivity, eliminating costly offline actions with cheaper online capabilities, and decreasing capital costs.  Speed to market and customer satisfaction are some indirect advantages of lowered costs.

Customers want reduced prices and benefit from reduced business transaction costs.  The Web can provide them with that as well as improved service via faster response and delivery times, more convenience, customized information, and other intangibles.

Some key aspects when building brand experience are

·        Entry point access.  This should to be easy to locate and use.

·        Navigation.  This needs to be intuitive with appropriate architecture supporting it.

·        Use models.  A deep understanding and appreciation of how the customer wants to use the site is required.  This addresses content (what is purchased), commerce (how purchases are made), community (where the user gets help), and customization (what level of personalization makes sense).

·        Reliability.  The web site must be 24-7.

·        Measurement.  There needs to be a method of capturing customer behavior and proactively leveraging it for additional value.

The premise of E-business is the relationship approach.  This consists of 

·        Adapting the overall business strategy to include E-business and its role in customer acquisition, delivery, support, vendor services, and other strategic actions.

·        Identifying and attracting visitors.

·        Initiating customer relationships and rapport.

·        Building and nurturing these relationships over time.

·        Measuring, analyzing, and improving customer relationships for their lifetime value. 

Improving ROI 

Improvement in the ROI is a matter of focusing on behavior change and what must be done to achieve it.  Build a balanced scorecard 

·        Begin with data collection.  Online surveys and registration information gauge customer awareness and interest.  Monitor online traffic patterns, user flow, repeat visitors, and completion of online forms to understand user behavior.  From that, devise specific actions for customer lead generation/qualification and revenue generation.  Follow through and execute them.

·        Measure and analyze actions for effectiveness.  Reporting capabilities should be in place that give comprehensive profile analysis; ROI analysis for channel, campaign, and message effectiveness; effectiveness analysis for demand generation awareness and interest; and cause and effect analysis. 

The Revised Economic Model 

Evaluate E-business using the revised economic model.  This revised model changes traditional revenue and cost reduction strategies.  It generates revenue by 

·        Focusing on high value customers.  Sales support concentrates its efforts on this profiled, segment of customers that buy often, spend a lot, and show a strong potential for lifetime purchases/revenue.

·        Adopting co-marketing techniques.  Trade support increases efficiencies.

·        Improving consumer marketing.  New markets and value propositions along with customer assistance with buying decisions enhance your organization’s opportunity for sales.

·        Taking a proactive customer management stance.  Anticipate customers needs before they do and then deliver them.

This modified model reduces costs by 

·        Eliminating the need for large sales staffs.  Sales support is targeted to high value customers whose numbers are fewer.  “Paperless” sales transactions become a cost saver.

·        Optimizing channel mixes.  “Paperless” electronic marketing within the trade brings added value at little cost.

·        Reducing marketing expenditures.  Shared customer data bases as well as communication economies of scale reduce advertising costs.

·        Institutionalizing customer self-service.  As an example, migration of frequently asked questions (FAQs) to the Web bypasses call center personnel.

Enterprise optimalization means building a new operations model with new core competencies, new common practices and infrastructure, and top level sponsorship of such an initiative.  Taking a holistic, organizational approach and viewpoint is much easier said than done.  Consistent Web content management and distribution across the entire enterprise is hard to accomplish.  Technology alone is not the answer.

Currently, many people shop on the Web but few buy online.  Customers gave the reason for this as not having received help when shopping for complicated products.  Because they were not guided through the online purchase process, web site abandonment and no sale resulted.  Incorporate that key insight among others when adopting E-business as part of your business.

Written and Edited by Judy Kong, Editor TechDivas, in a report on the ICE Conference, copyright 2000, Diva Networks, All rights reserved