Paul McCarthy highlights the main pitfalls that trap large
companies when setting up online, and offers a 10-point guide for
small and medium sized firms looking to develop multi-channel
strategies.
The phrase the bigger they are, the harder they fall bears a great
deal of relevance to the world of business. Just look at the stock
freefall of large telecoms and retail firms over the past three
months. Or the high-profile Internet names which lack the substance
to fill their big, branded boots. The top companies are there to be
shot at and the biggest challenges they face are mobile and
e-commerce.
Large companies often fail to respond to the changing world of
business, especially in the unpredictable and fast moving
multi-channel business environment. The Web and other channels
demand pace like never before. If firms don't react quickly, they
will fall behind. With e-commerce now well-established and other
channels, such as wireless application protocol (Wap) and digital
TV, in even greater demand, slow movers will find their most
successful days behind them.
What follows is a look at the main pitfalls that large
companies, backed by deep financial pockets, tend to fall into. It
also provides advice for SMEs moving online whom, without
substantial cash resources, need to maximise awareness and minimise
costs.
Pitfalls
- Culture shock: large companies find that their sheer bulk and
bureaucracy inhibits their ability to move with haste. This is no
surprise, but it's not as cut and dried as that. Cisco is bigger
than some of the largest banks, but it has grown up in a totally
different era. The company's approach to the new economy has
ensured that it has geared itself up towards multiple channels. For
more traditional organisations, this constitutes a sea change in
thinking and in processes and technology. It's amazing how
entrepreneurial Web ideas and strong online branding are watered
down on by red tape and board meetings.
- A piecemeal approach: ironically, large companies are often
more guilty than their smaller counterparts of lapsing into "token
Web site" syndrome - the practice of building a sterile site packed
with info, but lacking interaction. These sites have then evolved
by being bolted onto back-office systems, followed by databases,
then having some kind of response or commerce mechanism shoehorned
in.
The result is a hotch-potch of ideas glued together flimsily,
which just don't reflect back-office processes or the things that
the Internet and other channels are good at - flexibility,
targeting etc.
First-e is an example of a virtual bank that has successfully
scaled this challenge. Customers can now bank using electronic
channels (ie Wap, the Internet and call centres), whilst obtaining
the same view of the bank with each interaction. This gives the
customer a reassuringly consistent banking experience.
An Internet strategy should be indivisible with corporate
strategy and processes. A project-based approach creates disparate,
distributed systems that then have to be linked together. Seeing
this occur time and time again, makes you wonder if companies will
ever learn from the mistakes made by others.
- The scalability trap: if a company is to grow and compete, it's
inevitably going to offer new services to customers. If it wants to
do this effectively, it's going to have to deliver these services
to customers and partners over the channels they demand. Find an
organisation that doesn't consider these factors and you'll see a
bad investment.
A far-sighted, forward-thinking approach should underpin any
Internet strategy. Therefore, any platform this is based on should
be scalable and flexible and offer the potential to roll services
out over multiple channels. Unfortunately for many large firms,
which haven't thought this through, big, time-consuming and costly
integration projects are very much on the horizon.
- Security shortfalls: it's not necessary to say too much about
this - the recent glut of high-profile security breaches are
evidence of its importance. Needless to say, customer and partner
confidence is essential for any company wanting to do business over
the new channels. This means everything from a basic firewall to
encryption and authentication, backed up by a cast-iron security
policy.
Unfortunately, many companies don't see security as a strategic
buy - it eats money and delivers no tangible results on the bottom
line. But as a base for e-commerce, it's a fundamental building
block. Not thinking about it is no excuse.
- Integration issues: from offline to online is usually a gaping
chasm, especially for those companies with huge legacy systems.
These need to be incorporated into new channels in a way that
reflects the business conducted on them. To build trust and retain
business, companies need to ensure that customers get the same
experience through each channel.
For this to happen, individual channel branding must be
consistent and tied into the core business. This means making sure
systems can talk to each other, but without compromising on agility
or aims.
Tips for SMEs
Smaller organisations often have the guts to go out on a limb,
but cast an envious eye at the resources of their larger
competitors. This often stifles drive and makes ideas appear
unworkable. But that isn't necessarily so. For these organisations,
here are 10 keys to being a success on the Web:
- Strategy: remember people - staff, partners and customers;
proposition - what's the killer idea, how do you promote it
(through which channels etc); process - this isn't your traditional
shop window, so don't treat it as such and apply sound business
principles to the online environment; and platform - what
technology are you going to base your strategy on, and does it
reflect your needs?
- Know it all: understand the market you are competing in. This
does not just refer to the traditional market, the online one
contains new economy competitors already running at full tilt while
you are still searching for your Dunlop Green Flash. Effective
competitor analysis and due-diligence are essential to ensure that
your firm does not take a pounding from the Internet-savvy
start-ups and become another dotcom casualty.
- Partners, applications, services, professional skills, global
reach, financial backing: these are very important - you cannot do
everything yourself. Choose them early on, and get them involved in
the process and strategy. Don't ignore outsourcing, hosting and the
application service provider market. Often it's a more cost- and
labour-effective way of achieving the desired results.
- Address your audience: tailor services to your customers and
partners. This means everything from content to loyalty schemes and
promotions. One of the Internet's killer applications is the
ability to tailor information and services to individuals - so
ignore this at your peril.
- Don't reject anything: things change quickly in the new economy
so don't ignore media such as the mobile channel which, when used
correctly, could outstrip the PC. Equally, funds may be tight, so
don't commit to anything you or your customers are not ready for.
The key phrase is "leave the door open". Make sure new services and
channels can be factored in quickly, easily and cost-effectively
when time is right for change.
- Don't scrimp: do it properly. If you're committed to entering
into multi-channel strategies, you should be looking at a
substantial investment - something like an initial outlay of £3m.
Resist the temptation to start too small and then try to scale up -
you may have to throw away much of the original system and end up
paying much more than expected.
- Get the message right: an online service shouldn't be staid and
sterile - it should reflect the mentality and demands of customers.
A site can't just be "funky", branding has to be appropriate for it
to work.
- Constant re-evaluation: test the site, try it yourself. Look at
what competitors are doing. Don't stand still or you'll find your
offering is out of date before you know it.
- Stress test: don't assume your venture will work without
testing the systems thoroughly and repeatedly. Stress testing all
systems and software beforehand to ensure they can cope with
expected demand is not just a good idea, it is essential to
success, but not to detriment of performance. Fancy graphics will
only get you so far.
- Front and back: although it is the back-office that stores all
the power and technological wizardry that runs the online service,
cables and grey boxes will never lure customers through your 'shop
window'. It is still vital to match your back-office clout and
capabilities with an appealing site.
Provided companies prepare and plan the strategy for online
campaigns effectively and thoroughly, there is no reason why they
should hit the ground at all.
The companies that are true forward thinkers and industry
pioneers, will also incorporate the personalised multi-channel
capability into the online strategy. Those that do not embrace the
multi-channel environment can expect to experience the slippery
slope towards dotcom failure.
Paul McCarthy is managing director at e-commerce software
company Brokat UK