Network Marketing

1.1 Introduction

The past two years have seen considerable changes in the environment for e-business, in the technologies available and the way in which they are deployed. Some of these changes have slowed the pace of e-business development, and there have been some highly publicized business collapses. Coupled with a major correction in April 2000, and the subsequent global economic downturn, some companies think e-business is no longer an issue——that it can be ignored, and that business can go on as it always has gone on. Such a belief is ill founded and dangerous.

E-business continues to be one of the major issues facing businesses today. How well they adapt, and how flexibly they respond to changes in technology, in business relationships and in customer behavior will determine their success, and indeed their ability to survive. The adoption of e-business is even more important for businesses in a global economic downturn. Accenture analysis has shown that firms who use e-business effectively are able to generate revenue increases of 10% to 20% and cut costs by 20% to 45%. In an era when firms will be facing an increasingly competitive environment, it is essential that they adopt e-business to cut costs and to drive revenues.

1.2 E-Business Revenues

Despite the economic slowdown, worldwide revenues from e-business should continue to grow strongly. eMarketer, an internet consultancy estimates that worldwide revenues are projected to grow to .5 trillion by 2004. E-business growth will be stronger in Europe than in the US, as Europe catches up.

Business-to-business(B2B) rather than Business-to-consumer(B2C) revenues account for the most significant element of e-business revenues. White much of the hype surrounding e-business was in the business-to-consumer arena, it is now clear that business-to-business e-business provides the greatest opportunities for the enterprise sector. eMarketer estimated that the relative importance of business-to-business e-business will grow from 69% of total European e-business revenues in 2000 to 77% of total European e-business revenues by 2004. In the US, the relative share of business-to-business revenues will increase from 70% in 2000 to 88% of total e-business revenues by 2004.

1.3 Business-to-Business

While most media attention has focused on companies that serve consumers, it is the use of e-business within and between companies that is of real importance. The use of e-business by companies to integrate their supply chains slashes transaction costs and offers companies real tangible business benefits. For example, the use of e-business in supply chain integration has led to inventory reduction of 25% to 60%, and lowered overall supply chain costs by 25% to 50%. Therefore it remains critical that the enterprise sector continues to develop and implement e-business strategies to build on their e-business capabilities, and to seize on the real opportunities that information and communication technologies(ICT) offer to increase revenues and to reduce costs.

1.4 Stock market correction and the global economic downturn

The most significant event affecting the development of e-business in the past two years. Is the stock market correction of April 2000, which set a trend for lower valuations for technology stocks. This caused, directly or indirectly:

A shift in investment emphasis from dot-coms to dot-crops, and from pure-play Internet companies to software products firms;

The spectacular collapse of a large number of dot-coms;

An increase in merger and acquisition activity in the technology and Internet sector; slower developments throughout the sector and among users.

The European technology sector was seriously hit by capital rationing in the Telecommunications sector, due to the inflated prices paid by telecommunications companies for 3G licenses. The slowdown is, in large part, being driven by the proportionally greater exposure of European technology firms to the Telecommunications sector. The terrorist attack on the World Trade Center has accelerated the negative impact of these trends and sharply reduced business and consumer confidence in the US and Europe. The immediate impact has been a delay in investment decisions, particularly foreign investments and this has focused corporate attention on cost reduction. However, while information technology capital investment in Europe is projected to fall by bn, or 20%, in 2001, Accenture research highlights that leading companies are continuing to invest in ICT as a mechanism to increase revenues and reduce costs.

Change in the rate of adoption

Fears of a sustained recession in the US, the downtown in the technology sector, and the subsequent shift in investment interest from dot-coms (pure-play Internet companies) to dot-crops (existing companies who are using e-business) have begun to affect the adoption of e-business.

Large enterprises are taking a more considered approach to the implementation of e-business, since they no longer fear the loss of business to dot-coms has reduces the perceived competitive threat from e-business. Increasingly, e-business is being regarded as a process that can make existing companies and Governments more efficient in how they manage suppliers, customers and internal business process. Given the complexity of integrating e-business into existing business processes, many organizations are incrementally adopting e-business technologies in order to increase revenues and to reduce costs, though activity is not as apparent as in the dot-com era. However, the number of enterprises that are successfully implementing e-business strategies is growing.

 

2  Six principles to guide the development of global e-commerce

2.1 Take a cautious approach to regulation: allow global e-commerce time to develop before determining which areas will require government action.

There are two major threats to global e-commerce. One is rushing to impose legal and regulatory frameworks before gaining a full understanding of the issues and needs involved.  Though it is easy to imagine “any number of “ problems that governments might seek to solve, to do so at this early stage could be counterproductive. Cross border business-to-consumer transaction represent a brand new form of trade; the old ways of regulating trade will not work on the internet.

The other threat, however, is doing nothing. Global e-commerce faces many “natural” barriers, including language, currency, and cultural differences; overseas shipping costs; and national brand identification. If nothing is done, the natural tendency will be for e-commerce to become Balkanized into local zones, with consumers visiting only sites in their own country or a small number of countries with which they feel comfortable. In order to realize fully the benefits of global e-commerce, governments must lend a helping hand where necessary to reduce the risks of cross border transactions, but it will take time to determine when and where government action can be used effectively.

2.2 Increase global market access: maximize opportunities for buyers and sellers to come together.

Empowering consumers and sellers——especially small enterprise——by expanding market access should be the main goal of any government action( or forbearance of action) regarding global e-commerce. The reasons for this are basic, but very important. First, a larger market lowers the marginal costs associated with running Internet-bases business, allowing the companies to spread their fixed costs over more customers, which lowers prices. E-commerce will become more efficient and less costly by gaining global economies of scale. Greater market access also gives small entrepreneurial ventures a better chance at success: a comic book store at a local strip mall selling to nearby residents may have a hard time, because comic book buyers are a niche market and the number of customers is small, whereas an online comic book store selling around the world stands a much better chance in a larger customer pool. Low cost access to global markets is especially important for ventures in developing nations, which can use the power of global e-commerce to “leapfrog” their economic development efforts and sell to an array of wealthier consumers.

Second, a global Internet provides consumers with global choice. Shopping “bots” ——automated buyer agents that seek out the best price on a given item——are increasing in popularity, and promise to bring tremendous efficiency to the pricing of goods and services on the Internet. Expanding the bot’s range, from national to international, will encourage competition and reduce prices. Moreover, the Internet is not just a retailing channel——diverse services and media can be delivered over ever-expanding broadband networks, creating new business opportunities for communications, information, and entertainment ventures. Greater market access gives all of these business, in whatever country they happen to be located, a better chance at success, and gives consumers of all nations a border choice of goods and services.

Finally, as the infrastructure and systems to facilitate global e-commerce develop, access will also be increased in a more important market: the marketplace of ideas. History has taught us time and again that trade is the most powerful catalyst for cultural exchange and greater understanding between societies.

2.3 Don’t use regulations for protectionism: signatories to the World Trade Organization(WTO) or other multilateral trade agreements should not be allowed to impose rules on e-commerce or the Internet with the intent if reducing online foreign competition.

The practice of protecting domestic producers through the use of subtle or seemingly unrelated regulations is an old one, but the growth of global e-commerce presents the opportunity to take it to a new level.

As global e-commerce grows, the WTO will see more disputes about regulations aimed at the Internet and designed to give advantage to domestic industries. Exchange include requiring Web sites to be delivered in the country’s native language, requiring transactions to occur in the country’s currency, requiring certain licenses or certifications to operate or use electronic equipment within the country, or requiring the use of nonstandard security protocols. Even more troubling is the process by which some of these regulations likely will be derived: the stoking of nationalistic fears that a country is being left behind in the new world economy. Countries that use such tactics might gain in the short run, but over the long run they will limit their standard of living and hinder global e-commerce. Rather than try to create rules and regulations to limit global e-commerce, nations would be better off pursuing policies designed to build a robust digital domestic economy.

2.4 Enforce regulations domestically: governments cannot impose their laws on foreign companies unless their activities within the government’s territory or a treaty is in effect.

In the off-line world, activities engaged in by citizens of one country don’t normally affect the citizens of another country unless those activities are specifically aimed at them (such as sending international mail). The online world should be no different. An online business based in one country cannot be expected to comply with the laws of other countries——such as privacy regulations or marketing restrictions——rarely because their Web site is accessible in other countries.

On the other hand, if the Internet seller targets its goods or services to citizens of another country, that seller should be prepared to comply with the laws of that country. Put another way, a government cannot ”reach out” and exercise authority in another country, but it can exercise authority if someone in another country ”reach out” to consumers in its jurisdiction. Similarly, if two nations are part of a bilateral or multilateral trade agreement that imposes requirements on Web site, then web sites in both nations must comply with the terms of that agreement.

2.5 Limit restrictions on social, cultural, and political content: government restrictions on content cannot block trade in violation of WTO principles and must be enforced only within the restricting government’s territory.

Given the wide variety of objectionable material available on the Internet, it is no surprise that some governments may seek to keep their citizens from accessing some content. Disputes in this vein are already arising for content that portrays of promotes racial hatred, violence, sexual activity, or drug use, to name a few. These issues go to the very heart of national sovereignty. Moreover, policies for global e-commerce should not be used as bargaining levers for these non-economic disputes over freedom and human rights; if internet technology is made to bear responsibility for intractable social and political disagreements, it will not succeed.

But if governments choose to exercise control over the foreign internet content that their citizens may access, every nation must demand that every other nation adhere to two conditions. The first is that such controls must apply only to cultural, social, and political content, not trade. Though the internet will change the character of a portion of international trade transactions, there is no need to scrap the hard-won international cooperation that the WTO represents. Claims of cultural or political infringement should not be used as a back door method of discrimination against imports. If a country restricts global e-commerce on grounds that are (explicitly or implicitly) trade related rather than cultural or political, the WTO can and should take up the matter in the established dispute resolution process.

The second condition is that all content controls must be implemented domestically. In keeping with principle 4 above, governments cannot “reach out” to shut down internet operators that reside outside of their jurisdiction. Governments must control content through laws and regulations that apply to their own citizens, such as requiring internet service providers to filter certain content or punishing individual users for downloading prohibited content. Of course, exercising control over every citizen’s internet behavior, while technically possible, requires control over the technology and communications infrastructure that only a few governments are likely to exercise. Inherent in the spread of internet technology and the attendant economic benefits is a realization that the more time citizens spend in cyberspace, the less control their governments will have over them. This is why expansion of global e-commerce must be balanced with respect for sovereignty; if a government feels that the trade-off between commerce and social stability is not in its interest, the former is more likely to be rejected.

2.6 Take advantage of technology: encourage innovation in the development of technological tools and industry best practices that solve public policy problems.

Not every problem needs to be addressed by government regulation, especially with regard to the internet. The internet lends itself to creative solution to policy problem precisely because software is a powerful tool to give people the ability to manage their own transactions.

Many technological solutions are being developed to facilitate an efficient and trusted environment for both buyers and sellers. One of the best examples is the Platform for Privacy Preferences Project (P3P). The project of the world wide web consortium(W3C) is creating a system that allows browsers to look at a web page’s underlying source code to determine the privacy policy that cover the page; if the privacy level is below a predetermined level set by the user, the web browser (or other P3P implementation tool) will warn the user. This consumer-empowering technology, when fully implemented, may help alleviate the desire for strict government controls on data privacy practices and facilitate easier negotiation between nations with different privacy regimes. Technology promises other solutions as well, in areas from language translation to content control to dispute resolution.

Policymakers should turn to technology whenever possible and, more importantly, they should think in terms of what technology could do in the future rather than what it can do now. in order to facilitate the growth of global e-commerce, PPI(progressive policy institute) makes the following proposals:

Stay within the current international trade framework;

Make the moratorium on tariffs for electronic transmissions permanent;

Treat digitally delivered products as intangible goods;

Eliminate tariffs on small-value transactions;

Work with third parties seeking to provide solutions;

Promote consumer education efforts; and

Draft an enact global treaties governing criminal activity on the internet.

3  A NEW MARKETING STRATEGY FOR E-COMMERCE

Exploring the ideas if product, place, price and promotion, and applying them to e-commerce problem is the main focal point of this article. It is believed that the four concepts of the marketing mix equally play a critical part in the success of e-commerce. Therefore, concentrating on these concepts will prove to be of the utmost importance as an e-commerce provider.

Applying the marketing mix

3.1 Product

One of the main issues of concern is the intangibility is purchasing online. The intangibility is caused by not being able to focus on tangible aspects when purchasing online. The customer can’t actually touch or feel a product, which increases the risk of the purchase. The key to reducing intangibility is creating tangible cues that the customer recognizes. Creating a positive brand image will reduce the risk. For example, buying a product that has a quality image will reduce the risk for customer. Companies need to focus on creating a positive an reliable brand name.

Stressing the actual or perceived benefits received from the product can also reduce intangibility. Relaying to the customer that they will be very satisfied with the benefits of the product is important. For example, if a company sales golf clubs online, they want to stress concept that they will hit the ball farther and straighter, which will allow the person to increase their enjoyment when playing golf. Also, focusing on the actual components of the products is important. Explaining the benefits of the clubs grip and shaft in the product will also redirect the attention away from the intangible aspects.

Focusing on advantages of buying on line is also important for companies to achieve increased sales. On the web site it is important to convey the convenience of buying your product online. Conveying the message that your product is conveniently accessible, lets the customer understand that they don’t need to stand in lines or deal with other customers. Long lines and other customers can keep customers from buying or decrease the amount they are willing to purchase. Explaining the convenience of buying on line is a good way to reduce the problem of intangibility.

There are some instances where the convenience of online buying can be diminished. When the customer finally decides to purchase a good it’s important for this transaction to be quick and concise. The quicker this action, customers many defect and buy the product through a local retail outlet. Companies need to be aware of this and implement the proper technology to assure that this barrier is minimized.

Since products can’t be seen in person, it creates a barrier between the company and the buyer. A possible way to overcome this factor is through technology. By providing actual pictures of the product, it will allow the customer to get a better understanding of the products. If the web site has high quality pictures, it will reduce the perceive risk, which can increase the sales for a company.

Products that are produced in different sizes, such as clothing, create a problem for companies. Customers that want to buy the product may not because they are not sure how the policy, but even more importantly, they should purchase software that helps in sizing. This software will allow customers to input their measurements and the web site will recommend which size is best for them. This type of technology will reduce the risk involved, which will increase the number of products sold.

The service involved is also a barrier that must be understood an managed correctly. Having a lenient or fair return system will lower the perceived risk involved. The customer if more likely to purchase the product if they know that retuning the product will be of minimal hassle and at no expense. Providing the high service is directly related to increasing sales. Companies should also pay the postage to have the product returned. Paying the postage will again, lower the perceived risk, will most likely help in stimulating sales. Of course, this can only prove to be beneficial if the product doesn’t have a high defective rate.

3.2 PLACE

Some of the distribution problems are uncontrollable at this point in the life cycle of the Internet. In some instances the problem of delivering the product to the customers isn’t the fault of the online company. Nearly every online company does choose to outsource the delivery function, which at this point is the most effient. Online companies are having a difficult time satisfying their customers, because of something that isn’t their fault. The company that they select to ship their product isn’t handling the demand. For high volume companies this can be easier to solve.

There is a definite need for companies to manage the relationship with the shipping companies. The bigger the company the more power it posses in the supply chain. They have the ability to hurt the shipping company by choosing to change shippers. Even though there are few shipping companies, the online company can claim they will switch, if their quality of service doesn’t increase. By threatening a switch, it will hopefully create better service for a large company.

One of the biggest problems with online buying is the lack of automated inventory and warehousing system. The lack of automation really hinders in the efficient enough to meet customers’ needs. Outsourcing will reduce the actual profit, because it is expensive. Over time it will prove to be beneficial, because it will help in building loyalty. The most important thing to understand is choosing the correct outsourcer. Companies want to pick an outsourcer that isn’t overbooked with clients so they can efficiently handle demand requirements.

Large online companies really need to consider automating the inventory and warehousing functions. This may be the best way to stay competitive in the future. The use of logistics consultants is a good strategy to assist in choosing an automated system that matches company needs.

Large companies that use outsourcers should look into instituting their own logistics system. Even though it is working for the company, it may be reducing profit. Each part of the supply chain makes a small profit in the online commerce. The actual sale of the product makes a small profit, the warehousing makes a small profit, and the packager makes a small profit. Add up these areas and that means there is a larger profit to be made by taking over these functions. If a company can do these functions themselves they will increase their profits, because they can do it cheaper than an outsourcer.

Managing warehouse systems can be improved through the use of software. Warehouse-management software systems are now available for online companies to purchase. These software packages can increase the efficiency by handling orders and tracking the delivery function. These are possible solutions that a company can do to implement automation in the company.

3.3 PRICE

Price is very important when dealing with e-commerce problems. Price can be a key issue when trying to increase demand or when decreasing demand. Price is definitely a weapon of choice by many companies. The two typical pricing methods are skimming and penetration. Skimming pricing if charging a high price when the product if relatively new, in hope of making more profit. Penetration pricing is deployed to capture a large market share. The theory is based on creating a large market share, by being lower than competitors.

To increase demand, e-commerce companies need to focus on penetrating the market. This will work best for products that are in the introduction and growth stage. If the product is near the maturity stage, lowering the price won’t increase profits very much. For relatively new products, offering the product below competitors will increase demand.

Pricing of a product can reduce demand without reducing profit. If an online company is doing very well, but isn’t able to keep up with the current demand, it may be smart to actually raise the price of the product. This will do two things; it will keep profits at the same level, but allows the logistics department to handle the orders more efficiently. If companies can’t keep up with demand, it will reduce the satisfaction of the customer, which will reduce the loyalty of the customer. A solution to keep customers happy is by reducing the demand through increasing the price, which will lower the number of purchases. Reducing the purchases will allow the company to match demand; in return it will be easier to keep current customers. It is believed that keeping current customers if five times cheaper than finding new ones. When raising the price, it must be by a marginal amount, enough not to cause switching of loyal customers. Doing this will allow a company to keep the same profit and manage demand more efficiently. This solution may want to be done until the company can acquire an automated system.

Price bundling, which is packaging products together for one price. Using this tactic can be beneficial when doing business online. This can increase sales for a company, because customers feel they are getting more value for their money. Increasing the value will reduce the risk for customers. Reducing the price by say 10%, it can allow a company to increase sales. Sometimes this can be done with a product that is trying to be liquidated. This is a chance for the company to accomplish two things: increase sales and reduce unwanted inventory.

3.4 Promotion

Promotion is an important part when selling the product; it is a necessary function for e-commerce companies. This is one of the key facets in acquiring and keeping customers. Keeping and acquiring customers is important, but more attention and money needs to be spent on the place factors, such as warehousing and distribution functions. Some of the budget promotion money should be spent on developing better relation with distributor. Creating a strong bond with the delivery carriers will enhance the the value of the company. This can be done through personal dealings with vendors. Doing such things as taking their representatives to events or to dinner can build a loyal relationship. These activities are inexpensive means that can really give an advantage to an e-commerce company.

Some troubles for e-commerce companies are the inability of customers to find the web page. If they can’t find the web page, it creates a barrier in achieving increased sales. The current technology of search engines, such as Yahoo and Excite, are very broad in nature. When looking for a specific company it will bring up a vast variety of topics. It takes a while to narrow down the possible entries to find the intended company. Reducing the time spent looking for a web site can increase the satisfaction of the customers. If they must spend twenty minutes looking for a particular site, they may stop before they find it. A company can use promotion to combat these problems.

The best way to combat the problem is using promotions that give the web site address. If the product is high involvement, using advertising that is in magazines and newspapers should be efficient. For high involvement goods, people actively search for possible solution to their problem. If the product is low involvement, people will not be actively searching for the product, so promotional activities must be intense. This can be accomplished by getting a large number of advertisements into television and radio vehicles.

Another possible promotional vehicle is using hyperlinks. Hyperlinks allow a direct passage from another web site. This makes it very easy to find a particular web site. Hyperlinks are usually most efficient when implemented on a web site of similar material. In addition, there is no need to alienate customers or potential customers through promotional tactics. False or unethical marketing as become an issue in recent years, it isn’t uncommon to find many of these web sites. This can be just puffery or it can be full blown bait-and-switch tactics.

Buy.com has built a reputation in participating in false advertising on their web site. This is definitely something e-commerce companies need to get away from. With growing popularity of e-commerce, the more this is done the more it will create havoc in the future. With increase volume in online buying, there will be more restrictions and patrolling of false and unethical promotions. With increase in online buyers, it will increate havoc in the future. With increase volume in online buying, there will be more restrictions and patrolling of false and unethical promotions. With increase in online buyers, it will increase the importance of word-of-mouth communications, which can cause problems. Doing this type of promotion will decrease the confidence and loyalty of customers, which will reduce sales in the future. A company’s profit is directly related to customer loyalty, and these types of promotions will decrease loyalty. The question is clear, do they want to make a profit in the short run or be able to make a profit in the long run?

4  Customer Differentiation and Lifecycle Management of E-marketing

In the world of e-marking, success is defined by your ability to build long-term customer relationships that bring value to your customer and sustained profitability to your organization.

Technology alone cannot provide a magic solution that will immediately resolve all your marketing challenges. Worldwide, companies are finding e-marketing success by investing in a combination of innovative implementations of technology, business process enhancements, and organizational changes that are part of an overall e-marketing strategy.

4.1 Customer differentiation

The first step toward building successful customer relationships begins by adopting a corporate culture that recognizes that every customer is different. Your customers have different interests, different levels of disposable income, different perceptions of value and perhaps most important, different historical experiences with your company.

The world of one-size-fits-all mass marketing fails to recognize these differences and use them for competitive advantage. The more you can evangelize a customer-centric corporate culture, revising technology, business process and organizational structure around recognition of customer difference, the more effective your relationship building strategies will be.

This does not mean that you need to develop a separate plan for each individual customer; Rather it challenges you to identify the relative value of customers and create a strategy that effectively targets collective customer needs——starting with your most profitable customers.

Using customer differentiation for e-marketing purposes require that you not only identify who your customers are, but more importantly that you recognize who are or are likely to become your best customers. You need to develop profiles based on the characteristics of your best customers and use them as the basis for understanding the profile of customers that you want to acquire. Additionally, it is important to recognize differences in profiles based on where the customer is within the customer lifecycle. This will provide you with insight into customer behavior and allow you to address customer needs most effectively.

The metrics you use to define customer value will vary considerably based on the types of customers you have and your goal. A few key value indicators you may want to consider include:

l        Transaction history

l        Profitability

l        Length of the customer relationship

l        Cost to service

To ensure that your value indicators continue to provide valid measurement over time, you’ll need to regularly reassess the components that define customer value.

4.2 Customer lifecycle management

Customer lifecycle is another key e-marketing factor you must address to successfully build customer relationships. While markers have traditionally used a variety of terms to define the stages of the customer lifecycle, for the purposes of this document we’ll use acquire, engage, extend, and retain.

As we focus on strategies for building relationships across phases of the customer lifecycle, our emphasis will be on the business benefits of these strategies. Fundamental to the assumption of business benefit is that the strategy also delivers value to the customer. Like personal relationship, business relationships are best when built on mutual respect, trust, and value to all parties involved.

4.2.1Acquire

Recent studies show a decrease in the cost to acquire new online customers. However, this doesn’t mean your acquisition efforts don’t  need a well thought out plan and approach. Some of the basic elements that make your site appealing to new customers are detailed below.

Registration incentives: contests, promotions, white papers product samples, and demos are all examples of incentives you can provide to get new customers to register or purchase products or services. Customers need to have a clear value proposition in order to be willing to disclose information and begin a relationship with you. develop a plan to entice customers to come to your site, and track the effectiveness of the promotions and other incentives. Prominently display incentives on your site——so much the better if these incentives are tightly bound to relevant services.

Referral incentives: giving incentive to current customers to refer new customers can be a cost-effective way to generate new business. Existing customers are happy to refer others, provided they are happy with the products or services they are receiving and see value in the incentive provided.

Easy navigation and robust search capability: to get customers to your site, make sure your basic design is planed with your customers in mind. Some of the basic requirements to consider include:

l        A visually appealing user interface with a clear message.

l        Straightforward navigation on the site; users should never get stranded or lost on your site.

l        Robust, easy-to-use search capabilities.

Brand establishment and messaging: new brands need development of messages and advertisements to convey their identity to customers. Make sure that online experience for existing brands with well-known messages is consistent and leverages the same message as their offline advertising and messaging.

4.2.2Engage

Use content or service to ensure a positive experience with your company. Engage visitors in an interactive dialog that goes beyond the initial interest or sale. Demonstrate your knowledge of the product offering as a way to distinguish yourself form your competitors. Welcome visitors to the community. Make it easy for them to do business with you. Provide engaging features that will keep them coming back, as follows:

Content: the most fundamentally engaging feature is simply a web resource that always has something new to offer when the visitor returns. Ever-changing content, like window-dressing in a storefront, provides a compelling reason for customers to return to your site. This may seem basic, but too few enterprises accurately forecast the staffing and organization needed to sustain lively content over time.

Community features: community feature such as discussion boards, feedback mechanisms, web casts, and live chats are proven methods for bringing visitors back to your site. These features actually involve visitor in creating much of your ever-changing content!

Pre-popular data: to simplify the ordering process, eliminate redundant data collection by pre-popular information. Pre-population data based on past visits or information entered during the session can expedite the ordering process and make it easier for your customers to use your site. Customers appreciate ease of use and will be more inclined to return to order again.

Notifications, recommendations, and alerts based on preferences: provide the ability to customize communications to your customers. Provide notice of promotions and news alerts based on user-indicated preferences.

Online product configuration: provide your customers with the ability to configure your products and services online. Give your customers the information they need to be able to configure products based on their specific requirements.

4.2.3Extend

When you have truly engaged your customers and established the foundation of a relationship, it is time to look at ways to extend that relationship. Uncovering opportunities to provide additional value-added products and services when built on a solid relationship will not only benefit the customer, but will also enhance the lifetime value of the customer.

Auto replenishment: develop a plan to auto-replenish products ordered by your top customers.

Personalized recommendations: use data mining and analysis of purchase and transaction history to identify personalized recommendations including potential cross-sell and up-sell opportunities. Intelligently suggesting related products or product upgrades is not only a valuable service to customers, but also a successful method of extending your customer share both vertically and horizontally. Develop targeted campaigns to promote cross-sell and up-sell products and services.

Lifetime event selling: based on the information you have from customers, anticipate lifetime events and develop promotions to make customers aware of products and services you provide based on the event. Examples include promoting PC’s when customer’s children reach school age, or promoting travel packages for active retirees.

4.2.4Retain

Retaining customers requires an ongoing commitment to provide increasing levels of value to the customer. Enhancing retention requires customers to continue to provide information about themselves, through their responses and their behavior, so that you are better able to target products and services. Additionally, if your established services make it significantly easier for customers to do businesses with your organization compared to your competition, these services provide barriers to attrition.

Customer-defines experience: provide the ability for your customers to customize the content they receive and when and how they receive it when visiting your site. Letting the customer define the experience as much as possible lets the customer know you are in business to serve them. By defining their experience with the information they want, the customer if providing you with valuable information about their needs. Additionally, they are indicating a willingness to do business with you and provide more information about themselves and their interests.

Differentiate service programs: provide higher levels of service for customers that you have designated as your best customers.

Loyalty and reward programs: develop specific programs that reward your customers for making purchases and that encourage them to continue to purchase from your site. Loyalty programs can vary from simple to complex depending upon the products and services you offer.