Careful with that launch button!

McKinsey consultants Diana Vaturi and Vittoria Varianini ask how second phase dotcom launches can learn the lessons of failed...

McKinsey consultants Diana Vaturi and Vittoria Varianini ask how second phase dotcom launches can learn the lessons of failed pioneers

When electronic commerce was young and the outlook was rosy, it seemed that the basic rules of marketing could be cast aside.

The most important thing was thought to be a speedy launch to grab a share of the market space. Profit wasn't a near-term, or even a medium-term, goal. The aim was to get as many visitors as possible to your site, on the assumption that this would, at some stage, translate into profits.

Today that strategy is in tatters. Business-to-consumer Internet businesses are haemorrhaging money. Since so few of them appear to have found the key to success, investors - for the time being, at least - are wary of backing new ventures or providing second-round financing to the early movers.

The second wave of business-to-consumer businesses - many of them set up by incumbents slower off the mark and only now planning an e-launch - have the luxury of learning from the pioneers' mistakes. Although no one can yet claim to proffer universal truths about e-marketing, it is clear that many of the basic elements of the traditional marketing process still hold good.

So why have so many companies failed to follow this basic process? One of the main reasons is the speed with which the e-marketing process unfolds. That speed gives rise to difficult trade-offs. When you consider how to make them, the oldest of marketing principles remains the best guide: don't lose sight of your customers and theirneeds. You can't make sensible trade-offsifyou don't have a clear idea of what customers really value.

In the offline world, a successful marketing process is well understood. First, identify customer needs and define a distinctive value proposition that will meet them, at a profit. The value proposition must then be delivered through the right product or service and the right channels, and it must be communicated consistently.

The ultimate aim of the process is to build a strong, long-lasting brand that delivers value to the company marketing it.

All this remains true in the new world of e-marketing. But certain characteristics of online marketing, though by now well recognised, frequently trip up e-businesses.

Golden rules

It is easy - and dangerous - to lose sight of the customer during the launch process. But certain process and organisational rules can help companies stay on track.

  • Maintain a constant flow of market information and feedback on your activities and use it. It doesn't matter how statistically relevant your information is; what matters is staying in touch with your customers. Instead of a major, three-month-long quantitative market research project, undertake frequent informal interviews with small focus groups and analyse the results; that way, you will be in touch with new trends. Use the Web itself as your key informationsource. Monitor the reaction to youroff- and online communications, and use brief online surveys to ask your customers for feedback on new features or service performance.

  • See to it that your organisation is flexible and has processes to ensure the adoption of the insights you gain into your value proposition and the way it is communicated to customers. Too often, once the pressure is on, organisations don't want to hear about marketing ideas that could entail a change of direction, particularly if they require significant changes in a company's IT system.

  • Establish up-front objectives and minimum marketing standards, and make sure you meet them. Anyone who has launched an e-business will attest to the boundless enthusiasm at the start of a project and the fatigue at the end. This cycle explains why it is so important to be realistic at the beginning about the difficulties you will probablyencounter. A great many trade-offs andunpredictable complexities emerge in the launch process, so it is crucial to set minimum requirements for launch at the outset, both for your own organisation and for your external partners: IT suppliers, designers, content providers and logistics suppliers. All of them play an important role in helping you meet your marketing objectives.

  • Give marketing a strong organisational role in the launch phase. Make marketing the integrator of the business-building process by hiring marketing people with plenty of experience and credibility. Make sure that they are involved in all activities, and give them substantial authority in the organisation. Although most e-launches start with the intention of keeping the customer in mind, they very often become driven by technology; the needs of customers are sacrificed on the altar of speed, and marketing isn't consulted about the trade-offs that inevitably must be made. From business planning and design all the way through improvements after launch, marketing must always be involved, acting as the protector of customers. Exhibit 5 shows the key roles of marketing in each of these phases.

  • Plan and phase, re-plan and re-phase. Even when plans must be redesigned as soon as they are finished, it is vital not to lose control over the process and to maintain order.

    Every change to one part of the launch plan will bring countless others elsewhere. If the graphics of the site have to be redesigned, for example, this will in turn delay the printing of billboards, which means that you will have to reschedule the media plan. If the site prototype is late, market research will have to be postponed, and you might need to delay meetings with potential co-branding partners whose input you require to design the final version of the site. Make sure someone in marketing has a full and updated picture, so that this person can spot emerging bottlenecks, communicate them to others, and reassess organisational priorities.

    It makes no sense to look at past launches to determine how to market your new e-business. The time for "land grabbing" is past. The challenge for new e-businesses is to deliver what customers want, and will pay for, as quickly as possible - without getting tripped up by the problems that the need for haste creates.

    Vittoria Varianini is a principal in McKinsey's London office, and Diana Vaturi is a consultant in the Milan office. Read the full article in The McKinsey Quarterly, 2000 Number 4

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