COMP 7880 EBusiness Strategies Interaction with customers Dickson

COMP 7880: E-Business Strategies Interaction with customers Dickson K. W. Chiu Ph. D, SMIEEE, SMACM, Life MHKCS Jelassi & Enders: Chapter 11 1

Our Roadmap Mobile e-commerce strategy E-business strategy Strategy implementatio Strategy formulation n 12 Strategic analysis 3 External analysis 9 5 Internal organisation Strategy options Opportunities/ threats Strengths/ weaknesses 4 Internal analysis 6 Sustaining competitive advantage 8 7 Exploring new market spaces Creating and capturing value 10 13 Interaction with suppliers Implementation 11 Interaction with users/customers COMP 7880 -IC-2

Customer relationship management consists of four elements 'What criteria determine who will be our most profitable customers? ' 1 Customer selection 2 Customer acquisition 'How can we acquire this customer in the most efficient and effective way? ' Customer relationship management cycle 4 Customer 'How can we extension increase the loyalty and the profitability of this customer? ' 3 Customer retention 'How can we keep this customer for as long as possible? ' COMP 7880 -IC-3

Mass-customization value chain puts the user in charge of many traditional steps Support activities Firm infrastructure Human resource management Research & development Information & communication technology Elicitation of customer preferences Orderspecific construction Orderspecific inbound logistics Marketing/ sales forecast General purpose inbound logistics Orderneutral preoperations Orderspecific outbound logistics Customer service/ building a learning relationship Primary activities Order-neutral Order-specific Source: Adapted from F. Piller (2006), p. 175. COMP 7880 -IC-4

E-marketing strategy essentials n n n 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. 2. 3. 4. Communicate benefits of using this channel Prioritise audiences targeted through channel Prioritise products available through channel Hit our channel leads & sales targets n n n Acquisition, Conversion, Retention Channel strategies thrives on differentials BUT, need to manage channel integration COMP 7880 -IC-5

Internal and external influences on Internet marketing strategy COMP 7880 -IC-6

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Hierarchy of organisation plans including e-marketing plans COMP 7880 -IC-9

Problems if no E-marketing strategy n n n n n 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 COMP 7880 -IC-10

Usage of detailed e-marketing plans in UK e-commerce organizations Source: EConsultancy (2008) COMP 7880 -IC-11

The SOSTAC® planning framework applied to digital Internet marketing strategy development Figure 4. 4 Source: Chaffey and Smith (2008) COMP 7880 -IC-12

Linkages between CRM and related marketing approaches COMP 7880 -IC-13

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 Dialogue and tailored communications Empowered clients Mass market broadcast Passive consumers COMP 7880 -IC-14

5 Is for CRM n n n 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? COMP 7880 -IC-15

CRM applications 1. 2. 3. 4. 5. Sales force automation Customer service management Managing the sales process Campaign management Analysis COMP 7880 -IC-16

CRM data n Personal and profile data n n n Transaction data n n Contact details Preferences Sales history Communications data n n n Campaign history Research / Feedback / Support queries Contact reports (B 2 B) COMP 7880 -IC-17

Categoriszng customers according to value COMP 7880 -IC-18

E-CRM benefits n n n Customer development Managing e-mail list quality Implementing e-mail marketing Data mining Personalisation and customization Customer service quality and multi-channel experience COMP 7880 -IC-19

Permission marketing n n n 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 COMP 7880 -IC-20

Options for mass customization and personalization using the Internet COMP 7880 -IC-21

Summary of an effective process of permissionbased online relationship building COMP 7880 -IC-22

Matrix of customer touch points for collecting and updating customer e-mail contact / profile COMP 7880 -IC-23

Extent to which different types of segmentation variables tend to be predictive of response COMP 7880 -IC-24

Elements of the IDIC framework COMP 7880 -IC-25

Different representations of lifetime value calculation COMP 7880 -IC-26

An example of an LTV-based segmentation plan COMP 7880 -IC-27

Relationship between service quality, customer satisfaction, loyalty COMP 7880 -IC-28

Social networking offers communication motives of discovery, homogeneity, sharing Social networking site A Person A Matching B Peers Profile • Contact data Peers • Multimedia • Personal network Instant Boards/ Chats Vo. IP messaging groups • … Person Profile B • Contact dat • Multimedia • Personal Private messages network • … Communication tools COMP 7880 -IC-29

Internet help dissolve the trade-off between richness and reach Richness • bandwidth • customization • interactivity The Internet Reach (Number of people interacting) TV Sales- Tele Postal person marketingmailing advertising Source: Adapted from P. Evans and T. Wurster (1999) COMP 7880 -IC-30

When seeding a message, one has to concentrate on 3 types of people Connectors Maven Salesmen People with an extraordinary high number of contacts, friends and acquaintances, who ideally belong to ‘different worlds’; i. e. different areas of life. People who have expertise in various products, prices or places. They enjoy sharing their knowledge with friends and acquaintances on Internet platforms. People who have the skills to persuade others when they are unconvinced. Source: M. Gladwell (2000). COMP 7880 -IC-31

10, 000 Songs available at Rhapsody and Wal. Mart Songs available only at Rhapsody 5, 000 Downloads ‘Long tail’ represents large addition to product range of traditional retailers 0 25, 000 Source: Adapted from Anderson C. (2006). 50, 000 100, 000 900, 000 Titles, ranked by popularity COMP 7880 -IC-32

Networking frequency ‘Long tail’ of social networking provides access to previously inaccessible market niches Contact pool acessible via traditional networking tools Source: Adapted from Anderson C. (2006). Additional network potential of online networking Contacts ranked by frequency COMP 7880 -IC-33

Implications for companies to access and leverage the ‘long tail’ Lengthen the tail By giving people access to a large pool of individuals, SNS lengthens the tail of potential social contacts. Fatten the tail SNS uses a variety of mechanisms to enrich communication between users and thereby fattens the tail by increasing the frequency of interaction. Drive demand down the tail This can be achieved by shifting users’ attention to content that normally is not as easy to find. Source: Anderson C. (2006). COMP 7880 -IC-34