COMP7880: E-Business Strategies

Interaction with customers

Dickson K.W. Chiu

PhD, SMIEEE, SMACM, Life MHKCS
Jelassi & Enders: Chapter 11

1
 Our Roadmap
Mobile e-commerce strategy
12
E-business strategy
Strategic Strategy formulation Strategy
analysis implementation
3 External
analysis 5 9
Strategy Internal
options organisation

Opportunities/
threats

6 7 10 13
Strengths/ Sustaining Exploring Interaction with
weaknesses competitive new market suppliers Implementation
advantage spaces

4
Internal
analysis
8 11
Creating and
capturing Interaction with
value users/customers

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 Customer relationship management
consists of four elements
'What criteria 'How can we
determine who will acquire this
be our most customer in the
profitable most efficient and
customers?' 1 2 effective way?'
Customer Customer
selection acquisition

Customer
relationship
management cycle
4 3

'How can we Customer Customer 'How can we keep

increase extension retention this customer for
the loyalty and the as long as
profitability of this possible?'
customer?'
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 Mass-customization value chain puts the
user in charge of many traditional steps
Firm infrastructure
Support activities

Human resource management

Research & development

Information & communication technology

Elicitation Order- Order-

of customer specific specific
preferences construction inbound Customer
logistics Order- Order- service/
specific specific
outbound building a
General operations learning
Marketing/ Order- logistics relationship
sales purpose neutral pre-
forecast inbound operations
logistics

Primary activities

Order-neutral Order-specific
Source: Adapted from F. Piller (2006), p. 175.

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 E-marketing strategy essentials

 E-marketing strategy is a channel strategy

 Objectives for online contribution %
- sales, service, profitability should drive our strategy
 E-marketing strategy defines how we should:
1. Communicate benefits of using this channel
2. Prioritise audiences targeted through channel
3. Prioritise products available through channel
4. Hit our channel leads & sales targets
 Acquisition, Conversion, Retention

 Channel strategies thrives on differentials

 BUT, need to manage channel integration

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Internal and external influences on
Internet marketing strategy

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Hierarchy of organisation plans
including e-marketing plans

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Problems if no E-marketing strategy
 1 Underestimated demand for online services
 2 Market share loss
 3 Resource duplication
 4 Insufficient resource
 5 Insufficient customer data
 6 Efficiencies available through online
marketing
 7 Opportunities for applying online marketing
tols
 8 Changes required to internal IT systems
 9 Inadequate tracking
 10 Senior management support limited
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Usage of detailed e-marketing plans
in UK e-commerce organizations

Source: EConsultancy (2008)

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 The SOSTAC® planning framework applied to
digital Internet marketing strategy development

Figure 4.4 Source: Chaffey and Smith (2008)

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Linkages between CRM and related
marketing approaches

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 Differences between relational and
transactional marketing

Transactional paradigm Relational paradigm

Market segment Individual customer
Transaction duration Lifetime
Margin Lifetime value
Market share Most valued customers
and customer share
Mass market broadcast Dialogue and tailored
communications
Passive consumers Empowered clients
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5Is for CRM
 Identification – can the customer be
recognised for different channel contacts?
 Individualisation – can communications and
products be tailored?
 Interaction – are communications two-way?
 Integration – is there a 360 degree view of
the customer?
 Integrity – is the relationship built on trust?

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CRM applications
1. Sales force automation
2. Customer service management
3. Managing the sales process
4. Campaign management
5. Analysis

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CRM data
 Personal and profile data
 Contact details
 Preferences
 Transaction data
 Sales history
 Communications data
 Campaign history
 Research / Feedback / Support queries
 Contact reports (B2B)

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Categoriszng customers according
to value

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E-CRM benefits
 Customer development
 Managing e-mail list quality
 Implementing e-mail marketing
 Data mining
 Personalisation and customization
 Customer service quality and multi-channel
experience

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Permission marketing
 Not interruption marketing
 Not SPAM
 Requires opt-in (online to e-mail)
 Opt-out
 Learning about the customer
 Initial and continued relationship is based on
incentives

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Options for mass customization and
personalization using the Internet

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Summary of an effective process of permission-
based online relationship building

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Matrix of customer touch points for collecting
and updating customer e-mail contact / profile

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Extent to which different types of segmentation
variables tend to be predictive of response

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Elements of the IDIC framework

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Different representations of lifetime
value calculation

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An example of an LTV-based
segmentation plan

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Relationship between service quality,
customer satisfaction, loyalty

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 Social networking offers communication
motives of discovery, homogeneity, sharing

Social networking site

A Peers B
Matching
Person A Peers Peers Person B
Profile
Profile
• Contact data
Peers Peers • Contact dat
• Multimedia
• Multimedia
• Personal
• Personal
network Instant Boards/ Chats VoIP Private
•… messaging groups messages network
•…
Communication tools

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 Internet help dissolve the trade-
off between richness and reach
Richness
•bandwidth
•customization
The Internet
•interactivity

Reach (Number of
people interacting)
Sales- Tele Postal TV
person marketing mailing advertising
Source: Adapted from P. Evans and T. Wurster (1999)
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 When seeding a message, one has to
concentrate on 3 types of people

People with an extraordinary high number of contacts,

Connectors friends and acquaintances, who ideally belong to
‘different worlds’; i.e. different areas of life.
People who have expertise in various products,
Maven prices or places. They enjoy sharing their
knowledge with friends and acquaintances on
Internet platforms.
Salesmen People who have the skills to persuade others
when they are unconvinced.

Source: M. Gladwell (2000).

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 ‘Long tail’ represents large addition to
10,000
product range of traditional retailers

Songs
Downloads

available at
Rhapsody Songs
and Wal- available
Mart only at
Rhapsody
5,000

0 25,000 50,000 100,000 900,000

Titles, ranked by popularity

Source: Adapted from Anderson C. (2006).

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 ‘Long tail’ of social networking provides access
to previously inaccessible market niches

Contact
pool
acessible
Networking

via
frequency

traditional
networking Additional
tools network
potential of
online
networking

Contacts ranked by
frequency
Source: Adapted from Anderson C. (2006).

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 Implications for companies to access
and leverage the ‘long tail’

By giving people access to a large pool of

Lengthen the individuals, SNS lengthens the tail of
tail potential social contacts.
SNS uses a variety of mechanisms to enrich
Fatten the tail communication between users and thereby fattens
the tail by increasing the frequency of interaction.
Drive demand This can be achieved by shifting users’ attention
down the tail to content that normally is not as easy to find.

Source: Anderson C. (2006).

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