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The eBusiness Myth

What is commonly called electronic business, or eBusiness, is only an extension of traditional business strategies layered onto a relatively new marketing channel: electronic communications. The success or failure of a particular venture depends entirely on the business owner realizing that the medium is not the business.

Why? Because in order to create a sustainable business model, the business owner must forge a relationship with their customers which is also sustainable and competitive in relationship to all of its competition. When a business owner focuses a disproportionate amount of time on the media, they increase their competition in the market place to include markets that wouldn’t normally be considered competition. While the strategy may provide for a temporary influx of hits, without the underlying strategic infrastructure, the relationship becomes transient and therefore the business model becomes unsustainable.

This article will provide an overview of the key elements required to develop a successful eBusiness from first principles through to the promotion of the venture.

Building the Foundation

There are three key areas that a business needs to focus on prior to developing its electronic presence.

  • Product and/or Service Development
  • Target Demographics and Marketing
  • Financial Budget

Product/Service Development is the primary driver for everything else in the business model. The business owner must understand their product or service inside and out. The product dictates everything from budgets, to infrastructures, to marketing and how the business owner needs to build their relationship with their customers. A poorly understood product or service will move the business in the wrong direction. Marketing of the product ends up focusing on the wrong emotional triggers or wrong demographics. Financially the business may start sinking money into the strategic infrastructures that are either poorly placed or unsustainable.

Once the product is well understood, the next drivers are both related to Marketing: Understanding your target demographics and establishing the marketing plan. In order for any business to survive, it needs to develop a sustainable customer base that can support both continued product development and the basic financial obligations of the business. This means knowing who the potential customers are and planning the content such that it supports the information requirements of both the product and the customer.

For example, a number of web sites have developed around the promotion of discount drug cards. The one of the key markets for this type of product are Seniors. This is also one of the key demographics that least understands technology and is the least likely to disseminate credit card information for online purchases. Web sites that focused their marketing efforts strictly online with minimal real world sales / technical support found themselves at a disadvantage to other “bricks and clicks” companies who focused on the needs of the market rather than the medium.

Financial budgets are critical to the success of any business, and nowhere is this truer than in businesses that have a substantial online presence. Between 1996 and 2002, one of the key factors in the dot com crash was the overspending that occurred in the creation of eBusiness web sites. Too much emphasis was focused on a “build it and they will come” philosophy. The ease for which a web site could be built suggested a level of strategic business knowledge that was far below what was actually required to run a successful business.

eBay is a phenomenal case study in how a properly managed business using the internet as its primary distribution channel can work. One of the key considerations for eBay has always been to grow the technological infrastructure at a pace which matches the ability of the company to generate income. The growth of eBay in terms of content, technology, and market share has allowed for it to become one of the most profitable electronic based companies to-date.

It is only once these three components are firmly understood as part of an overall business strategy that attention should be turned to the development of the internet presence itself.

Establishing the Infrastructure

Once the strategy, marketing, and financials of the business have been mapped out, many key questions can be easily answered directly from the business strategy. Key content and infrastructure questions such as:

  • What type of information to put onto the web site
  • Is an electronic payment gateway required
  • What are the data storage / retrieval requirements
  • What technologies should be considered for use
  • What type of security precautions are required
  • How will the web site be administered
  • How will the web site be monitored

These questions must be answered before the first design elements are considered. Unless the business has very deep pockets, there is always a trade-off between time, money, and functionality. It is important to qualify the infrastructure aspects of the presence first before determining where those trade-offs need to be made.

For example, if your business is considering an online payment gateway and an updatable database of personally identifiable information (names, addresses, credit card numbers) then one of the key considerations has to be security. A breach in security can result in personally identifiable information being stolen and the company legally liable for any misuse of that information. Depending on the type of information being retained, the company may have a requirement to use dedicated servers with multiple firewalls in order to ensure privacy and security.

It is not possible to underestimate the importance of getting a business’s underlying infrastructure correct up front in the process. A business’s infrastructure has a tendency to take on a life of its own independent from the business model. This can lead to complications. Too little technology and the business stands the risk of not being able to manage it’s operations effectively. Too much technology and the business can spend more time managing the infrastructure rather than the customer.

Content is King

There are two aspects to content that must work in conjunction in order to retain a customer. The site content and the site navigation. Most people will not simply stumble upon your web site by accident. They are there because they already have a good idea that your business has something that they need. What they want now is to be shown what you can do for them.

When designing for success there is one simple rule to keep in mind: Content is King. Content will make or break a business’s web presence. The best graphics and the latest in cutting edge technology will not help a web presence that has little to say.

Content will generally fall into one of three different categories:

  • Marketing (Promotion),
  • Information (Training, Diagnostic), or
  • Distribution (Direct Sales)

Marketing Content will include any content that promotes your business’s identity, products, or services. Of all the pages that could be included, one of the key pages which is often overlooked in its importance is the ‘Contact Us’ page. Many businesses that focus exclusively on electronic commerce also fail to provide valid contact information. They use the internet as a barrier between themselves and their customers. By hiding behind the technology, many companies typically lose potential sales and are seen as transient organizations without any staying power.

Informational Content is information that goes beyond the marketing of your product or service. Self-help guides with frequently asked questions or additional information on product and services would be a typical example. Informational content can be of great importance in the retention of customers. Businesses that provide informational content on a regular basis tend to get more hits, especially when that content is relevant to the changing needs of the customer base.

A common mistake made in providing frequently asked question (FAQ) information is to not pay attention to the questions which are actually being asked but rather provide answers to questions the company wishes people would ask. Support forums are a good way to help avoid this pitfall however even these should be monitored periodically to ensure that the most relevant information is easily accessible by customers.

Distribution Content will include information necessary to provision the sale. This information may be stored in a database and require some type of search and display program. This information also typically requires specially handing. What may surprise a good many customers is that many business web presences are not fully integrated with the ‘back office’. This isn’t necessarily a bad thing. For many smaller businesses it is more efficient and less expensive to manually process an order than to fully integrate the complete supply chain. Businesses that do this however should ensure they have the appropriate reserves to do further back-end development as the company grows. Several electronic businesses have disappeared directly as a result of their inability to keep up with online orders once the company became successful through internet sales.

Supporting Design Elements

If content is king, then Navigation must be Queen. It is the marriage of these two aspects that will retain customers. Navigational aids must be clear, concise, and allows a customer to easily move forward and back through your information with a minimum amount of effort. Everything else on a web site is basically a supporting design element and should only be used in so far as it supports the content or the navigation of the site.

A good test of any web site is to strip away all supporting design elements and see if the web site is still competitive. The term competitive in this case requires a bit of explanation. In a medium where information is everything, competitiveness needs to be based on how quickly a customer can find relevant information on your web site verses your competitors’ web sites. If the web site can maintain competitive parity with its major competition then it is ready for supporting design elements to be added.

There are a number of generic rules about how to build a good web site and considerably more about what makes a bad web site. The best advice is to keep it short and simple. Only use those design elements that reinforce the message or clarify a particular element of information.

Jacob Neilson (www.useit.com) is an Analyst who focuses on usability and has spent a number of years analyzing what works and what doesn’t in terms of website design. Most of his recommendations are good rules to follow for the average web however for some businesses (such as the movie industry) some of his advice is counter to the direction of the content being marketed. Some of the more pertinent recommendations include avoiding:

  • Gratuitous Use of Bleeding Edge Technologies
  • Scrolling Text, Marquees, and Constantly Running Animations
  • Complex URLs
  • Long Scrolling Pages
  • Overly Long Download Times
  • Anything that looks like Advertising

Graphical design elements can substantially enhance a web site’s appearance and retain customers. Professional graphical elements can mean the difference between someone skipping by your web site and making a sale. Graphics should be small, crisp, and clean. Clip art should be avoided wherever possible.

Promoting Your Business

In order to market your new web presence, it is extremely important to remember:

The Internet cannot be used as a substitute for building
deep personalized business relationships with your customers.

In other words, all the standard marketing techniques still apply for marketing your business. What is different is the introduction of a few additional outlets for those same marketing techniques.

Direct Marketing is probably the most known type of marketing on the internet and is most commonly referred to as SPAM. Similar to postal Ad-Mail, Spam in of itself is not necessarily bad in cases where legitimate marketing is conducted through the use of double opt-in mail distribution lists. These are lists where a person has signed up to accept advertisement through the use of double confirmation process; one at the time of sign-up and a second one confirming the sign-up. All legitimate direct marketing companies use double opt-in email lists.

Unfortunately this is not always the case with a large number of direct marketing firms. A business owner considering this type promotion should be extremely wary as a direct marketing campaign by an unscrupulous firm can result in the business being banned, sued, or their contract with their ISP terminated. Word does get around and repeat offenders quite frequently find themselves unable to procure stable internet hosting services.

Search Engines are probably the most useful and yet benign method of promotion. Some of the more popular search engines charge to be placed on their sites or to expedite the update process. Others are free of charge. The four key search engines to be listed on are Google, Yahoo, MSN, and AOL. Most of the other major search engines all derive their information based on one of these four such that if you get listed on these, you will eventually be listed on the others.

There are also a large number of specialty search engines and directories that are much smaller. These search engines / directories tend to have focus within a given specialty. As part of the marketing plan for the business is it a good idea to research which directories are of key importance for being found.

Web Advertising, such as banner ads, is another good way to get noticed. Knowing your target market and demographics should assist you in identifying other vertical and horizontal markets that may be good sources for purchasing web advertisement.

Summary

The creation of an eBusiness is no different from that of any other business. The idea that an eBusiness is easier and cheaper is simply not the case. While their were several stories in the early days of the Internet which supported the idea that two teenagers working with second hand equipment in their basement can make millions, the number of failures far outstripped the successes.

In order to establish a sustainable ongoing enterprise, the business must pay close attention to the fundamentals and not allow the Internet medium to overtake solid business planning and financial accountability. In the end, it will be those businesses that find a balanced approach to the electronic world and the real world that will end up gaining the most benefit out of electronic commerce satisfying both themselves and their customers.

Kevin Feenan
Managing Director
Knomaze Corporation

Posted in Business.

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