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Strategies for E-Business Applications White Paper 5.0 Connect 4.0 Interact 3.0 Personalize 2.0 Discover 1.0 Envision WRITTEN BY Ross B. Garber Vignette Corporation http://garber.CRMproject.com Strategies for E-Business Applications A new set of market dynamics is defining your company’s ability to compete and win online. These dynamics demand a fresh appreciation of customer relationships and organizational strategies. The Internet fundamentally alters the customer/vendor relationship and forever empowers customers to Ross B. Garber co-founded Vignette Corporation in 1995. control their destiny, demand more rapid satisfaction, and be harder to satisfy With more than 10 years of experience working for than ever before. The new ”digital” online value is based on how you enhance high-tech start-up companies, their attention and improve their ability to manage their time. These trends Garber's background is a unique blend of sales, marketing, and change your business chain in a very substantial fashion; they require you to product management expertise. Previously, Garber held senior rethink the assembly and delivery of your value and goods to your customers. and executive management Your business must accommodate your customer’s expectation of you as a positions with client/server software startups DAZEL knowledge provider, not just a product or services provider. Corporation and Epoch Systems, as well as industry giant EMC Corporation. Garber was Your strategies must absorb the fact that your cus- ness can develop and implement strategies for build- instrumental to the tomers now perceive the total collection of ways in ing customer relationships that provide your compa- marketing and channel sales which they access your business – whether directly ny with sustainable competitive and financial advan- launch at DAZEL and played a or through partners, distributors and the like – as a tage within your emerging online marketplace. major role in the $141 million single, blended business chain that needs to make acquisition of Epoch Systems by them successful. And this is what we call a The paper explores three topics: EMC. Garber graduated Magna ”Customer Chain.” Cum Laude from the University • What it means to truly compete online of Massachusetts, Amherst, Introduction • How to develop superior business strategies that where he holds a B.S. Over the last three or four years, an endless parade of leverage the new market dynamics degree in finance, with a minor experts has predicted that the Internet and the World • Which technology strategies will deliver the maxi- in Jewish history. Wide Web will forever change the face of business. In mum return fact, if you are reading this paper right now, you have probably been affected by the Web – in your career, We will show why relationship-based marketing, your company strategy, or your daily life. As leaders customer lifecycles, and the concept of an integrated of corporate strategy responsible for ushering in the customer chain can be used as the foundation for Web era for companies and customers, we are only designing and managing your online business strategy. now on the cusp of figuring out the potential impact of the Internet for our firms. For the first time, we are Competing and Winning Online beginning to understand the business and technical Defining the criteria for measuring corporate success strategies that will provide us with sustainable and on the Web is fairly easy. In fact, it’s largely the substantial competitive advantage. same set of measurements that industry has used This white paper explores a set of new perspec- throughout the ages: How can the Web substantially tives on using the Web for corporate advantage. increase corporate revenue and revenue growth, Specifically, we will explore ways in which your busi- lower the cost of doing business (operations and http://garber.CRMproject.com 1 White Paper 1.0 Envision 2.0 Discover 3.0 Personalize 4.0 Interact 5.0 Connect sales), increase market share, and allow a concepts into initiatives. Your best tionship. Lifetime value can be calculated business to become more important to its strategies and plans can be thoroughly in three parts: customers? If you want your business to diluted by a broad corporate inability to succeed based on these criteria, we must truly understand, deploy and support them. • The sum of the expected lifetime rev- start with a deeper look at the dynamics Consistently, the issues are: enues of a customer that impact online market behavior. • The lifetime cost of the customer, includ- • Lack of true strategic leadership from ing acquisition cost and operating Challenges your strategic IT systems vendors expense Let’s begin by exploring three challenges • Too many overlapping Internet initiatives • The operating-cost reduction due to that businesses face in the age of the Web: taking place in the company at once online self-service. customer management, internal operations, • Lack of consistent Web-centric skills and return on investment. across most business units and in IT Recently, quite a bit has been written Customer Management • Too many new business-critical Internet about measuring the lifetime value of a The Web has quickly ushered in an era of disciplines that have be mastered in the customer, and there are a few noteworthy total customer empowerment – dramatically short term. observations about it as the basis for deter- reducing your corporate power to manage, mining return on investment: direct and control your marketplace. Many These structural weaknesses negatively of your customer segments have benefited impact return on investment, and they • It is important to focus continually on from the Web because it has created a near- compromise the time-to-deployment and new customer acquisition, the conversion perfect market, without many of the time- time-to-benefit metrics that are so critical of new visitors to buyers, and the repeat and distance-related costs of working with to the success of your initiatives. Therefore, frequency of existing buyers. The greater many vendors. The Web allows customers to you need to make sure to build an appro- each of these values, the greater the life- know almost everything about their pur- priate level of insurance into your go-for- time value of a customer. chases, their vendors, and their competi- ward plans, and include internal operations • As expected, the costs of new customer tion, and easily pursue the lowest-cost leadership in your execution plans. acquisition are substantial, which options. Yet from the vendor perspective, Return on Investment suggests that existing customers are the Web has had a negative impact on your The Web changes the rules on how to mea- responsible for near-term profits, and business position by reducing customer- sure and achieve return on investment. new customers will only contribute in the switching costs, eroding customer loyalty, Achieving real impact online requires you to future. This simply means that it is not and creating further downward pressure on embrace the new attention-based dynamics economical to build your business only your profits. To reach these customers, the of the Web, and stop competing based on on first-time buyers, and that a challenge is to design a strategy that traditional industrial-age terms. Customer continued online customer relationship is reverses these trends and injects a sustain- facing Web systems do not pay for them- critical to short- and long-term profits. able competitive differentiation. selves by lowering manufacturing costs or Other customer segments continue to improving employee productivity. Over the Business Strategies for the resist the Web as a serious medium for next 20 years, the basis for competition will New Online Dynamics interacting with your business-probably be your company’s ability to get your mes- Now that we have explored some of the because they believe it to be frustrating, sage through to your audience, engage their dynamics and challenges affecting our abili- hard to understand and use, and it requires attention, and keep them from being ty to succeed online, we will shift the dis- them to work too hard for their answers. attracted by your competitors. Now, your cussion to the strategies that translate these Have you ever been asked to fill out a 17- return on investment comes through attract- new rules into success for your business. part questionnaire the first time you ing and retaining your customers’ attention. arrived at a new site, then only to hunt- In this attention-driven economy, the and-peck through the site trying to find critical calculation in determining online W3 what you want? The challenge here is to ROI is the ”lifetime value of a customer.”1 WEB LINK design a strategy that can deliver online How can we measure lifetime value? What is Read more about the lifetime value customer relationships in a valuable, satis- it right now? And how can your Web strate- of customers at the following links: fying, and lower-cost experience. gies positively impact lifetime value in order fingar.CRMproject.com Internal Operations to provide you with the revenue, cost and friedman.CRMproject.com You have been given the task of developing marketplace advantages we’ve discussed? garber.CRMproject.com your business successfully online, but are Roughly, the lifetime value of a cus- nash.CRMproject.com probably throttled by your technology tomer is the expected cash flow from each russell.CRMproject.com operations team’s ability to convert your online visitor over the lifetime of that rela- 2 Defying the Limits: Reaching New Heights in Customer Relationship Management The Customer Lifecycle their needs, and what you can do about it. tion, travel planning is purchased from a Success online is first and foremost an The best way to accommodate the customer travel agent, etc. Considering the fact that interaction challenge, not a transaction lifecycle concept in your marketing strategy most cars are merchandized on their challenge.
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