Topic 7

1. Topic 7 Using the Internet to reach customers Effectively

2. Too many sites follow The “Field of Dreams” principle If you build it They will come 1st Generation (Brochure) sites But why will they? Net Gain (Jim Higgins), page 55 © R. Barnes, 2001

3. Internet Revenue ModelsHow do you make $$ from the web? • The four revenue models for Internet Commerce • Subscription eg NBR • Advertising eg Yahoo! • Commission/Direct sales eg Amazon.com, Dell • Referrals eg Edmunds.com • Cost Savings • Supply chain communication • Provide information © R. Barnes, 2001

4. Subscription • Information has value, so sell it • cf magazine, textbook sales • This is a difficult model • Customer doesn’t know value of information until it’s received • Then vendor has nothing to sell • Needs strong reputation (brand) • Examples • NBR - (now closed), HBR, Gartner © R. Barnes, 2001

5. Advertising • The Internet is INTERACTIVE • Ability to KNOW your audience • Tailor offers to appeal to them specifically • Trivial incremental cost of reaching audience • => ability to develop specific sales campaign • => ability to customize to individuals, on a mass scale • Hard to make $$ with this model • Successes: Yahoo, www.cuisine.co.nz © R. Barnes, 2001

6. Communities of Interest • Web Communities • Motely Fool • Firefly • The Well • Magnet sites • Example. Edmunds.com Hagel - Believes that Communities, Infomediaries will be centers of value Net Gain, Net Worth © R. Barnes, 2001

7. Commission/Direct Sales.What can you sell over the Internet? • Physical goods • books, CD’s, computers • Groceries • Services • Travel • Information • Shares, insurance, mortgages • What else? © R. Barnes, 2001

8. Discount Brokerage Lessons • A “no advice” brokerage service • 20 years old • Bigger market cap than Merrill Lynch ($22Bn) • 7 million clients • 2/3 of trades now over the Web in 4 years • Minimum staffing (10 k employees), online brokerage • Now selling Zurich Direct Life Insurance (Quote only) - Minimum overhead of selling

9. 1 Set Strategy - Make it easy for the Customer to do business with you 2 Focus on the End-Customer Identify the End-Customer and his/her needs Distinguish from Channel Partners Identify other key Stakeholders Internal, External 3 Redesign Customer-Facing Business Processes 4 Wire your company for profit 5 Foster Customer Loyalty Decide what to measure Put objectives in place Measure profitability 5 Steps to E-Commerce Success © R. Barnes, 2001

10. Eight Critical Success Factors • Target the right customers • Own the customer’s total experience • Streamline business practices that impact the customer • Provide a 360-degree view of the customer relationship • Let customers help themselves • Help customers do their jobs • Deliver personalized service • Foster Community © R. Barnes, 2001

11. Target the Right Customers • American Airlines - target their Aadvantage Frequent Fliers • Can plan travel, reserve, electronically ticket, and locate hotels etc offering Aadvantage miles • National Semiconductor - targets design engineers (they influence buying decision) • Search for appropriate chips, • Download sample sheets • Order © R. Barnes, 2001

12. Own the Customer’s Total Experience • Amazon.com - “The worlds biggest bookstore” • Shopping On-Line • Purchasing On-Line • Order Fulfillment • Account Maintenance • Notifications • Personalized Service • Building Community 7.1 7.2 Www.bestbookbuys.com © R. Barnes, 2001

13. Streamline Business Practices that Impact the Customer • Babson College • Put all student admin processes on-line • Through internet, students can • Register for courses, (full? Alternatives? Review?) • View records, maintain data • Handle finances. • Access to Electronic Classroom • National Science Foundation • On-line Grant applications - streamlined, more transparent © R. Barnes, 2001

14. Provide a 360-degree View of the Customer Relationship Pre-Sales Sales Marketing Post-Sales Support Product Development Delivery Billing Field Service Quality Control © R. Barnes, 2001

15. Let Customers Help Themselves • Example: Dell • Support site • Configure, quote, order, track delivery • Update information (emails) • Premier Pages • Example: iPrint • Customers design their own stationery © R. Barnes, 2001

16. Help Customers do their Jobs • Example: Boeing. • Customers are Airline Managers • Need up-to-minute info. about spare parts • Boeing put Web front-end to inventory/edi systems © R. Barnes, 2001

17. Deliver Personalized Service • Example: Dow Jones Wall Street Journal Interactive Edition • Customers can specify a (or several) profile[s] • General Motors On-Star service • Cell phone/GPS/link to 24-hr customer support © R. Barnes, 2001

18. Foster Community • Cisco • Provides technical support info over web • Customers answer one-another’s technical questions, and help one another at company’s Web site • Log support calls, and their resolution • Answers available to other customers • => has fostered a community of loyal Cisco customers. • (Amazon.com another good example) © R. Barnes, 2001

19. The Economics of E-Retailing • Not always cheaper • Selling - convenience • Price-comparison sites • eg www.bestbookbuys.com • Locality still important - “Clustering” Clusters and the New Economics of Competition, HBR Nov 1998 © R. Barnes, 2001

20. Some relevant articles e-Retailing 7.3 7.4 7.5 © R. Barnes, 2001