Web Exclusive: e-Tailer Tips

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Clear away the rubble and wipe away the carnage that has occurred recently in the online retailing space, and what you'll find is a medium that can still serve as a highly effective method of driving revenue and reaching new and existing customer audiences. The bottom line is that online retailing and e-business isn't going away despite some of the doom and gloom predictions we have become accustomed to hearing. The benefits--to both customers and companies--of online channel experiences are just too great.

Many online retailers have failed to date because they lost sight of what makes a business successful--the establishment of a sound business model, a compelling value proposition, and a strong focus on customer-driven marketing strategies. As the economy continues to struggle, there are four basic guiding principles for developing or enhancing an effective online retailing business that companies need to remember to ensure ongoing profitability.

1. Focus First on Existing Customers

Sometimes companies and their marketing departments try so hard to attract new customers to their e-business initiative that they simply overlook the best resource, their current traditional customers. Companies should look to develop a deliberate strategy to migrate customer interactions from traditional channels to e-channels--to both ensure that their major technology investments are maximized and that the added-value strengths of the e-business are experienced by the broadest set of customers.

The key is to first introduce the channel to customers at a variety of touchpoints and then offer a compelling value proposition at that introduction in order to generate interest. Installing kiosks at retail outlets that offer broader selections introduces a Web site to traditional shoppers while providing a compelling reason to explore. On-hold messages can direct waiting callers to web-based capabilities at a time when self-service might be most appealing. Telephone customer service reps can mention online reference materials and then follow-up with callers via e-mail, including links to richer information related to the caller's request. Although few customers will ever adopt an entirely online relationship, with the right efforts, many customers can benefit from e-based experiences.

2. Prioritize Prospects

Just a little more than one year ago, a very common misconception was that site traffic equaled profitability. Whether it would ultimately come in the form of advertising dollars or e-commerce sales, many marketing strategies were developed with the singular goal of driving traffic to a site. Clearly, the past year has taught us otherwise. While many companies were forced to shut down operations, the ones that did survive the dot com carnage have learned the important lesson that the overall marketing strategy for an e-business needs to encompass more than just driving traffic to a site.

strategies--and investment analysts--are now focused on a longer term view, with companies looking more discerningly at prospects. This is especially true where expensive incentives - free shipping, deep discounts, etc.--are required for trial. By keeping lifetime value top-of-mind, and creating a marketing strategy that drives customers instead of visitors, a solid foundation for a profitable e-business is established.

3. Create Value Based on Customer Needs

Understanding customer needs, and with a broader context than traditionally considered, is the best basis for creating value. Companies that have realized the greatest success online are those that leverage the power of the e-channel to offer added-value services reflecting an appreciation of the customer's real goal.

An example of one such needs-based retailer is Shutterfly. Shutterfly is an online retailer of photography services. They could have defined their offering as simply photo-finishing and printing--a service that customers are accustomed to, need, and understand. But instead, they leveraged the medium to create a portfolio of products and capabilities that allows them to be a full-service photo solution. Shutterfly customers can create and share highly customized online albums. They can crop, resize, and enhance any or every photo. Additionally, they can make cards and gifts using photos. Essentially, Shutterfly has created a wide variety of new services that consider what people really do (or want to do) with photos offline, thus recognizing and responding to the customer's real goal in order to create a value proposition that is unique to the online channel. Every company operating in the digital realm should ensure that their online offering does the same - leverages the medium to create more value, and that value supports a broader set of customer needs.

4. Think Customers Not Channels

The Internet is increasingly becoming more sophisticated and as a result, increasingly irrelevant. Irrelevant? Yes, to customers who think they have a relationship with a company, the notion of that relationship being tied to any one channel or inconsistent across several channels is just weird--an unconscious expectation that only becomes apparent when it's unmet.

Today the true potential for bricks and clicks is now clear, and exciting, given the opportunity to blend "live" and "virtual" relationships. The emergence of virtual retailers as bold new competitors has given way to the resurgence of the power of "bricks and clicks". Now we see those companies that orient around customers first and channels second, are proving to have the greatest staying power.

Getting to this next level means greater exploitation of the data-richness of the medium, designing organizational structures that foster cross-channel and cross-functional teamwork, and implementing reward systems that keep customers, not channels, at their center. Although some merchants still design e-business plans to operate in a structure that isolates activities in a separate organization, for most companies, integration into the core business is likely inevitable and highly recommended. By assuming customers will expect integrated experiences, impacts on each functional area can be anticipated, greater efficiencies can be realized and cross-channel activities can be better supported.

The key ingredient to keep in mind through the whole process is your customer's perspective. From integrating your marketing strategy to integrating your current customers to integrating your technology and operations, your customer's perspective must be your focus and your operating lens. The truth is that as you plan to launch and manage an e-business program, keep in mind that its goals should not be too much different than your traditional business. This means that having traffic in your store won't make you money and bring profitability, but qualified shoppers will. This means never overlook your current customers and use a key understanding of their needs to help your business succeed. Effectively following these four basic principles could make the difference between success and failure of your next e-business venture.

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