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WebTrends Live Service Development

WebTrends Live Service Development. Discussion Focus: Pricing & “Lock-In” Recap Service Development Exercise. Network Models. Few Network Externalities: No standards, many substitutes, no advantage to work with dominant player

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WebTrends Live Service Development

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  1. WebTrends Live Service Development Discussion Focus: Pricing & “Lock-In” Recap Service Development Exercise

  2. Network Models Few Network Externalities: No standards, many substitutes, no advantage to work with dominant player Network Properties: only if WTL moves toward Virtual Community and Infomediary (Knowledge Leadership) role Control OpennessEvolution: Recommended:Controlled Open Up sell Migration Migration Revolution:Performance Discontinuity Current Play Build Migration Path to WT, NETIQ product line and full CRM systems

  3. Causes of Service Switching BehaviorKeaveney (1995) • Current Service: • Satisfied But Need Service Recovery System • Recommendation: • Enhance Assurance and Responsiveness • 24/7 Service • Remote & On-Site Training is Key • Leverage Database as Knowledge Asset (1) Core Service Failure (2) Inconvenience (3) Pricing Service Encounter Failure Response to Service Failure Competition Ethical Problems Involuntary Switching

  4. Service Switching BehaviorKeaveney (1995) • Current Service: • “One thing that would help customers is a subscription analysis service for their site.” • “One area that would be a nice complement to WTL would be an analysis service. Provide analysis of your site statistics for a fee and make recommendations for improvement.” • “More in depth information on what the statistics mean and how they can be used.” • Recommendation: • Mass Customize Analysis, Reporting and Training • (Transparent or Collaborative Customization?) (1) Core Service Failure (2) Inconvenience (3) Pricing Service Encounter Failure Response to Service Failure Competition Ethical Problems Involuntary Switching

  5. Service Switching BehaviorKeaveney (1995) • E-Biz Recommendations: • Reward long-term commitments • Price for low/intermediate ($0 - $35) user • Base Rate Plus Volume or Service Component • ---Volume based pricing .. • PRO: allows WTL to grow with clients • CON: costs don’t fall/ strains capacity • raise price with volume • --- Service-based pricing .. • Reporting format (text vs. graphic) • Standard vs. Custom Reports • Number and Nature of Reports • Enterprise Recommendation: • Collaborative Pricing • 50% core & 50% tech support/consulting • Displaying base costs minimize contact opportunity (1) Core Service Failure (2) Inconvenience (3) Pricing Service Encounter Failure Response to Service Failure Competition Ethical Problems Involuntary Switching

  6. Switching Costs – “Lock-In” • Switching Costs … Currently Recommended • Contractual Costs quarterly reward annual • commitment commitment • Psychological Search Costs marginal • Continuity Costsmarginal account mgmt • preference profiling • training • community

  7. E-Business Lock-In CycleShapiro and Varian 1999 Lock-in…How Long Does the Cycle Run? Scalability is Key Brand Selection Lock-In (__ years) Sampling (__ months) Fully Integrated intoFull-Service Trial Web-Management Process Profile Usage Test price/feature sensitivity Hi Brand Awareness Personalize WOM Referral Program Conversion -Transparent Customization to Cross sell -WTL Training -Community

  8. Enterprise Lock-In CycleShapiro and Varian 1999 Lock-in…How Long Does the Cycle Run? Value-Based Service Brand Selection Lock-In ( __ years) Sampling (__ months) Fully Integrated intoFull-Service Trial Web-Management Process Account Management Collaborative Customization Training Entrenchment Cross Sell through Profiling & Collaborative Customization Hi Brand Awareness Personalize WOM Referral Programs

  9. Revenue OptionsHagel and Armstrong 1997 Currently: At or Above Market Price Dollars Unlikely Ad Revenue Model • Usage-Based Pricing • (Infrequent Usage) • Going Rate: E-Biz • Perceived Value: Enterprise Differential Pricing Preemptive Acquisition Limited Trial: All Versions Start-up Time Year 1 Year 2 Year 3+

  10. Service Development Process Compile Recommended Feature List Define Features Evaluate Sustainability Prioritize Feature List Operational Feasibility Competitive Impact Examine Impact on: Structural Position Service Loyalty Model

  11. Relative Structural Position How will WTL be repositioned?

  12. Customer Value in Relationships CPV = Core Solution + Additional Services Price + Relationship Costs What is Impact of Recommendations on Customer Perceived Value?

  13. Service Loyalty Model How Do Quality Enhancements Impact The Loyalty Model? Switching Costs ValueLoyalty Interpersonal Bond

  14. WebTrends Live Presentation Outline(Tentative) Situational Analysis: SWOT ServQual and CIT insights Current Structural & Market Positioning Key Marketing Goals Service Development Framework: Current Loyalty Drivers Value: Enhance Benefits/Reduce Costs Building Relationships Pricing Strategy & Building Lock-In Revised Loyalty Drivers and Sustainability of Offering Recommended Priorities and Market Positioning Appendix: Define and summarize feature list

  15. WebTrends Live Assignment • Distribute Workload and Develop Team Contract (3/4) • Walk-Through First Draft Presentation (3/11) • Deliver Final Executive Summary & Presentation (3/18)

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