E-business offers unthought-of opportunities to tailor your product
to your customers' requirements, but getting the right technology
is vital, writes Mark Vernon
Electronic business has reasserted the primacy of the customer
focus. It has underlined a change in the balance of power from
company or product to client. In retailing, customers are lured
with propositions that even months before would have seemed
ridiculous: a leading mobile phone retailer will give cash back on
handsets if the price falls up to three months after purchase, and
no-one needs reminding of the dramatic appearance of the free
Internet service provider (ISP). Similarly rapid and profound
developments are taking place in the business-to-business space,
whether that be the collapse of the "four walls" organisation in
the shape of supply chains integrated more tightly than ever
before, as say in the automotive sector, or large retailers
clubbing together to source common products from small suppliers.
At the heart of building customer relationships online is the
ability to act on data. On one level there is nothing new in this.
Supermarkets with loyalty card schemes have for years been
gathering vast quantities of data about customer spending habits in
order to reflect it back to them in more personalised offers and
enticements. But where e-business is different is that it is
nothing without the ability to analyse and use this kind of
information. In fact the loyalty card provides a good case in
point. Generally speaking, supermarkets are still unable to convert
their enormous customer databases into detailed commercial
knowledge. The exploitation of loyalty cards lies in the future.
The difference with the Web scenario is that an online store is
worthless without the ability to put back in front of customers
what they bought last week, and is missing a trick if it cannot
make offers and suggestions on the back of that. High street
supermarkets on the other hand, do clearly continue to function
well for all their clumsy attempts at data analytics.
Customisation as a way of life
Putting the case more positively, e-business is the opportunity
to take customer relationships to another level. It is not just
about surprising the customer for loyalty's sake with a
personalised proposition, it is about making customisation a way of
life. "Because your every move on a Web site generates click stream
data, you leave a detailed trail of everything you did before
arriving at a buying decision - unlike a conventional
across-the-counter purchase where placing an order is usually the
only recorded event," says Ian Maclachlan, managing director of
Accurate Business Solutions. "But this rich source of information
about customer behaviour is a major analytical challenge."
It is a challenge that many are realising they must face with
some urgency. The alternative is to face a bleak future. Take the
automotive industry. Customised car production so that individual
orders can be fulfilled all the way down the assembly line was
unthinkable just a few short years ago. Now it is possible because
so much can be known, and devolved without loss of controlled,
across the multiple relationships in the supply chain.
At the mercy of technology
Customer relationships online are at the mercy of technology,
and technology alone. The point is that unlike being in a shop or
even on the telephone, on the Web there is no human contact to iron
out technical glitches that might threaten service. Glitches extend
beyond just lumpy Web sites too. Any trouble the customer has in
finding the item they want to buy is often down to poor HTML
programming, and hiccups with fulfilment usually arise because
systems are not integrated properly.
These kind of problems are damaging customer relationships.
According to a recent report, 28 per cent of all attempted online
purchases failed due to technical problems, difficulties in finding
products, and logistical and delivery problems after the sale. "The
first online purchase experience is the moment of truth for
consumers and retailers," says Winning the Online Consumer:
Insights into Online Consumer Behaviour, by The Boston Consulting
Group (BCG). "It is the beginning of a brand connection... the
frustrations and failures that are commonplace in these early days
of electronic retailing could be the kiss of death for the brands
of Internet retailers."
From mass marketing to dealing with one
Atadeeperlevel, thepushtowards increased personalisation takes
the logic of customer service one step further. Before, the
emphasis was on understanding mass audiences to get the feel of a
one-to-one relationship: now segmentation multiplies until the
audience is literally reduced to one. Phil Hulme, a consultant
specialising in customer management issues with KPMG Consulting
explains how this dynamic of customer relationships differs online.
The relationship becomes more direct and immediate with business
discovering the ability to receive immediate feedback from
customers."Monologue becomes dialogue," he says. "However, this
also means that customer expectations for speed and responsiveness
go up and businesses who don't rise to the challenge soon
disappoint." This represents a major change for organisations
working to the doctrine of mass sales and marketing campaigns. With
the Internet, consumer tolerance for broadcasted communications
falls. "The art of predicting the product service that will appeal
to the most people is reducing," Hulme says. "In its place comes
the art of understanding a complexity of needs and designing mass
customisable solutions to meet them." He cites the US credit card
company, Capital One, as a firm moving in the right direction. "The
call centres anticipate the needs of incoming callers, and reroute
the calls accordingly. They get it right 60 to 70 per cent of the
time, and up to 15 per cent of incoming service queries turn into
additional sales," he says.
Don't stop!
But just when companies were beginning to get to grips with the
Web and its impact, a new challenge looms on the horizon.
M-commerce is the name of the new game, played out not on the PC
but on the wireless mobile phone, and advocates believe it will
revolutionise customer relationships again. To date, most services
are at the trial stage, but the savvy are pushing ahead. UK based
aproperty4u (AP4U) for example, has recently announced the first
property search engine in Britain to incorporate Wap technology.
"Wap technology is bringing the Internet, mobile phones and people
together in one great leap," says Mark Brown, AP4U's managing
director. "Using a mobile to access the Internet will, in ten years
time, be as usual as owning an ordinary mobile phone is today." The
point about moving today is that it steals a march on competitors.
The warning then is clear. M-commerce is likely to initiate a new
wave of customer driven demands that will change online
relationships again. As the saying goes, we live in exciting
times.
10 tips for successful customer service online:
1. Differentiate - Ensure that you know what it is that
makes your online business better than the rest and then translate
this to features.
2. Customer focus - Localise and personalise. What does
your site achieve for an individual in 6 seconds and 2 clicks?
Alternatively in B2B, according to Business Objects, 74 per cent of
customers would like access to operational information such as
stock levels online but only 24 per cent of suppliers provide
this.
3. Business focus - Develop a cohesive e-business
intelligence strategy. According to Business Objects, 89 per cent
of organisations think the Internet will have a high level of
impact on their business over the next 12 months, yet 70 per cent
of organisations have an unclear e-business strategy.
4. Share information - If you can, give it away! Place an
extranet at the heart of your e-business strategy, to share
information with customers, partners and suppliers via the
Internet. Tell customers about their goods, what they cost, and
where they are before, during and at the point of fulfillment.
5. Continuous development - Continue to develop new
features quickly to respond, stay ahead and stay differentiated.
Think about new technology such as Wap and iTV today to be
future-proof.
6. Keep it human - The Internet is only a medium and is
always limited in its ability to communicate with real people.
There's always a worry or two that puts people off clicking the
"buy now" button. Try a call me button too.
7. Don't ignore email - Do write back, now.
8. Work on site navigation - Lay the Web site out the way
the customer sees the world, not the way your organisation sees
itself.
9. Build relationships, don't just start them - Next time
they come back, don't ask them if they'd like a tour of the site.
Perhaps, ask them how they liked their last purchase.
10. Never go down - Neither site nor stock. Get every bit
of fail-over you can lay your hands on.
Who is doing what?
Vauxhall Motors
One sector in which the word revolution might be justified as a
description of change is in the automotive sector, not only across
the supply chain but in terms of relationships with end-purchasers
too. At Vauxhall, work with IBM Global Services has resulted in a
Web site for direct car sales over the Internet. "When laying the
groundwork for its Internet strategy, Vauxhall realised that to
deal with customers online, it must provide them with the same
information, service and support that it makes available through
other channels," explains Paul Confrey, relationship marketing and
new media spokesperson at Vauxhall. This was no mean feat, but the
expected results are startling. "Research shows that we might
expect 40 per cent of serious enquiries from the new site to lead
to sales. This demonstrates the power of the Internet as a
marketing tool, by enabling Vauxhall to build up an individual
relationship with our customers through providing the best possible
support and information during each purchase," says Confrey.
totalbabyshop.com
There is a mentality which states that online retailing is all
about adding value. Clearly this is true, but sometimes less is
more - taking features away builds value for customers more so than
endlessly adding the new. This is demonstrated in the success of
Web store, totalbabyshop.com. "Totalbabyshop.com is one
hundred per cent dedicated to selling baby products, and it's
this targeted business model that sets us apart," says founder
Tony Abis. "Other sites may have hundreds of pages devoted to
the art of parenthood, but being a Dad and an Internet user
myself, I know I'm far more likely to buy from an easy-to-use,
customer friendly Web site such as totalbabyshop.com, than I am
to wade through pages and pages of irrelevant information before
I get to the products I'm interested in." And Abis continues:
"The buzz phrase at the moment seems to be 'value add', for
e-commerce companies this should mean good customer service, not
pages and pages of editorial, java-powered baby name pickers,
interactive picture galleries etc." Less can mean more.
Iron Trades Insurance
A close customer relationship cannot be acheived without rich
customer data, a reality that firms not used to having to be so
close to clients are finding out as they move online. Take Iron
Trades Insurance, a specialist provider of employers liability
insurance. "The fast-moving nature of e-commerce and rising
customer expectations mean management information must be available
extremely quickly," says Peter Cooper, business technology manager
at Iron Trades. "As the Web-based insurance quotes we provide are
instantaneous, we need instantaneous information, too. The data
that's generated by our Web front-end is very important to us - we
need to know where our business is coming from, how many people are
logging on and taking quotes, how many are accepting or rejecting
quotes, the total value of business transacted on a particular day,
and so on. It's also extremely valuable for us to build up a
profile of the types of people who are using the site which means,
for example, knowing their age and gender. We can then find out,
say, the proportion of customers who are 21-years-old and driving
group 3 cars." This degree of data functionality is provided in
this case by SAS software.
LetsBuyIt.com
Looking after customers should not only be about staying abreast
or catching up with competitors. It is a real opportunity to be
innovative in terms of customer relationships. An example is
LetsBuyIt.com. This business has developed a
dynamic pricing model. Members request products and services on
the company's site, and then LetsBuyIt.com works to source these
products and services at the lowest price. That is pretty smart
in itself. But it would be nothing without technology to
deliver, in this case Art Technology Group's Dynamo platform.
"Fourteen languages, 50 sites, over 50,000 products, several
payment and delivery alternatives, and localized prices and
taxes all add up to a very complex site," explains Jan-Erik
Gustavsson, CTO. "It just wouldn't be feasible to run this type
of site without dynamic personalization. In e-business, choosing
the wrong technology can be very expensive in the long run. It
can put you out of business if your ability to deliver content
can't support the marketing plan." The point here is that
innovation must not be at the cost of the usual rules of
retailing. Everything that applies to the quality of the
shopping experience in the High Street applies online, but all
the more so because people can't actually see and try products
in the same way. So, navigating a virtual store must be made at
least as easy as walking down the aisles in a real one.