Strategies Must Accept Net’s Growth

How soon people take things for granted: The big thing in marketing today, and for a long time to come, is the Internet. Though most people just think of the Internet as a way to search and get their blessed e-mail, the Internet is still the “newest, hottest thing.”

The Internet’s growth and viability will continue unabated to such a degree that soon it will be almost impossible to do effective marketing without it. And, in many ways, the Internet will continue to be a direct marketer’s dream.

It is amazing to send a communication via the Internet and get back a 30 percent to 40 percent response at a fraction of the costs of acquisition, while reducing operation and customer service costs by 10 times. However, you must remember that this marketing world has still not bought into digital delivery 100 percent. The offline and online worlds still need to blend.

In the next 10 to 15 years, we will see an almost complete migration to online. This will include wireless interactivity and the adoption of a truly holistic approach to marketing that will be driven entirely by the consumer and preference-based technologies. Until quite recently, the online and offline marketing worlds were looked at separately and were not considered as a single marketing strategy. Enablers of this marketing – the mass media and telecommunications – still remain, but they are now more than 20 years old.

The business model that direct and interactive marketers use must change. The current and future business model must be one that uses technology to customize a company’s marketing efforts directly and specifically to each individual consumer. A company will have to customize the Web experience wherever it touches the customer, not just within the confines of its banner advertisements or Web site.

There are compelling reasons to take a hard look at the strategies an enterprise is using to collect information as well as how to use the information to drive the interactivity. Many large corporations are beginning to understand the power of their databases, and they are finding methods to merge the databases with online and wireless strategies. The big questions are whose customers are they, and who will determine what the customers will receive in both online and offline communications?

Key strategy: Get organized. A core strategy for the revamped infrastructure is to develop a new media department that has the ability and authority to work across departments and divisions. This infrastructure is a critical component that must be in place before the enterprise can move to the next step of finding out who the customer is.

How women use the Internet has relevance to marketing. A report by Millward Brown IntelliQuest, Austin, TX, commissioned by MSN found that 78 percent of women reported that they used the Internet to get product information before making a purchase, and 33 percent researched products and services online before buying offline. The study also noted that 69 percent of the women surveyed go online daily. Sixty percent of the women noted that they click on banner ads, and 34 percent return to an advertiser’s site at some point after viewing the ad online.

About 900 new mothers were polled as part of the survey, and 32 percent of these said they now go to the mall less often, preferring to shop online instead. New mothers were more likely than other women in the survey to seek expert advice online and visit Web sites devoted to family, children and online games.

Information like this should make you stop and think. Are you targeting the correct audience? In almost every engagement into which you are brought, the chief marketing officer says, “The best thing you can do is tell me who my customers are.” Well, looking only at the current customer data is a snapshot of the past. True, when you are in the desert, the only thing you want is water. But what about a map, shelter, food and other necessities? You not only need to know who the current customer is; you need to identify the next important customer segment that may emerge.

Key strategy: The enterprise must identify its most important customer segments and group them by importance to the organization. This will allow the communications to take on a different voice for each segment. This must be a friendly voice that says, “I understand you.”

The business is BTB or BTC, or are you sure? Gartner Inc., Stamford, CT, defines business-to-business e-commerce as sales of goods and services for which the order-taking process was completed via the Internet. The forecast is based on the value of BTB nonfinancial goods and services sold, resold and brokered over the Internet through establishments every time they are turned over.

Nielsen//NetRatings, Milpitas, CA, reported the top five demographic groups that had the highest increase in Internet use. Its findings show that home Internet access for blue-collar workers (factory operators and laborers) rose 52 percent in the past year – from 6.2 million to 9.5 million – faster than any other occupational group online and twice the growth rate of the Internet overall (at 25 percent in the past year).

Homemakers were the second-fastest-growing group, with Internet use rising 49 percent in the past year to 2.5 million people. People working in the service field accessed the Net 37 percent more frequently (an increase of 2.9 million), workers in sales rose 37 percent to more than 5.6 million, and clerical or administrative users rose 31 percent, with more than 5.5 million having access to the Web from home. Nielsen//NetRatings found that Internet users spent an average of 11 minutes online and viewed 698 pages during the month.

Key strategy: Move off traditional operational or financial paradigms. It is easy to see that companies trying to hold on to traditional strategies while spouting their revolutionary ideas about their use of the Internet do not get it. The business models are changing, and traditional companies need to develop new systems that focus on customer-centric marketing and finance.

Without a new customer service delivery, you are out. A survey by Andersen, Chicago, has found that e-tailing sites associated with brick-and-mortar stores are delivering the best overall customer satisfaction. The survey revealed that 49 percent of online users perceive companies that are doing business both online and at physical locations as better at providing customer service for online transactions than companies that operate exclusively online. Only 9 percent of users found greater customer satisfaction from pure-play Internet retailers. Almost half of the respondents saw a lack of coordination among channels as a problem among multichannel operations.

Nearly 60 percent of online users prefer to use e-mail to communicate with customer service representatives, while 40 percent prefer to make a phone call. Only 2 percent selected in-person locations such as a retail store to communicate complaints.

Key strategy: Get your customer service to be available online and offline. Some customers will never migrate to the Net, while others will use it exclusively. Let customers determine how they want to interact with the company. Customer service must have the ability to use or blend legacy systems with online systems to answer customer questions.

Is technology the tail that wags the dog? Frequently, companies rush for the newest technology, hoping it will solve their problems and provide a quick fix as a competitive advantage.

The focus must be first on solving the business problem. A company must ask itself what it wants to have happen with its customer interaction. How will it make money for the corporation? Pure-play Internet companies want to invest millions of dollars in technology before they have any idea of who their customers are or whether they have enough customers to pay the rent. Why? Because they do not know what more mature companies innately understand – that without a profit, a business will fail. The market will consume the weaker of the species. It is pure Darwinism.

Key strategy: Defer the technology until the business problems are clear. As direct marketers, you must ensure that you have the technology to present the right person with the right offer at the right time. To succeed, it is critical to work hard to understand your online and offline consumers and to make sure they are satisfied with their opt-in relationship. Then decide on the most reasonable and fastest payback technology that you can employ.

The technology you purchase today more than likely will be outdated by cheaper and more robust technology before you even get your systems fully working. So focus on solving the business problems first. Then you will be able to find the appropriate technology to make your business thrive and prosper.

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