Any plan to exploit the Web must address five key questions. The questions include determining which Web functionalities will drive goal outcomes, and how will the new functionalities be integrated into the firm’s legacy systems and processes; how can Web content be kept robust and meaningful for the target audiences; and how to identify the investments that need to be made in people, technology and outsourcing. The answers to these and other questions are a road map for leveraging the power of the Internet.
Any company hoping to exploit the Web’s potential needs a road map, a compass and a flashlight. The first lays out the terrain, the second helps point the way to the destination and the last illuminates the pathway to opportunities. I outline a road map in this article.
Any plan to exploit the power of the Web must address five questions:
- What goals does the business have and how will the Web help attain them?
- What Web functionalities will drive goal outcomes, and how will these new functionalities be integrated into the firm’s legacy systems/processes?
- What stakeholder audiences do we want the Web to target? How will we exploit Web usage with business partners?
- How will we keep our Web content robust, fresh and meaningful for our target audiences?
- What investments do we need to make in technology, people and outsourcing to succeed?
Web-based goals tend to fall into three “buckets”—financial, marketing and operating. The Web can re p resent new ways to boost the balance sheet or profit/loss performance. It can also be used to grow brand awareness, market share and customer relationships. Or, it can be used to achieve operating goals—compressing supply chain cycle times, overhauling procurement, or radically changing order-management systems, technical service or after-sales support processes. A firm’s main decisions are about choosing the top three to five goals that are the most vital to its health.
Because of the Web’s reach, 7/24 orientation and networking characteristics, it re p resents a new avenue to reach formerly untapped markets (too expensive or inaccessible to reach in other ways) or to create new revenue streams. For instance, many firms use the Web to tap small customers who, collectively, re p resent great revenue potential, but who, individually, are too small to warrant great selling efforts. The Web also may be able to alter cost structures in transactions, as the airlines are discovering, by moving to on-line ticketing and eliminating travel-agent commissions.
Financial productivity can also be boosted by allowing parts of the market to migrate to Web commerce, thereby allowing more expensive resources, such as sales reps or technical services, to target strategic customers or channels. For example, Dell Computer has used the Web to lower working capital per dollar of sale, as it links Web ordering to the just-in-time production of PCs and servers. By taking the order on a credit card, Dell gets its cash instantly. By making-to-order, it keeps each day’s inventory to a minimum. Since its accounts payable cycle exceeds its receivable cycle and its days in inventory, Dell winds up with the best cash-recovery system in the industry.
The Web can help an organization achieve its marketing goals in several ways. It can:
- Educate and instruct customers about products or service configurations, and so demonstrate brand-building value. Brand building in Web space, however, is often more conversational and visual, and less formal than in print and other off-line media.
- Be a conduit for market promotions, new product announcements, special offers or loyalty program participation. For instance, HMV uses an e-mail, Web-based newsletter to reach customers with tastes in different musical genres.
- Boost strategic account relationships via dedicated extranets, as Sun Microsystems does with large workstation customers such as Boeing. It can also serve as an effective medium for reaching dealers or distributors with advice, program details, sales-lead pass-throughs, logistics data for delivery status, or in-stock product/parts availability.
Firms must decide whether the Web will be a complementary marketing strategy/tactical tool, or whether it will be transformational, and instrumental in maintaining the firm’s market share and meeting customer coverage challenges. For example, Chapters uses the Internet to augment, not displace, its stores, while CDNow uses the Web as its primary commercial platform (BusinessWeek, Oct. 23, 2000, page EB138). Boston Consulting Group forecasts that of the total B2B volume expected in 2004, only 11 percent will be conducted entirely on the Web; 89 percent will involve further phone or in-person negotiations on price and non-price sale finalization.
There is a host of possibilities for using the Web to transform a company’s operations.
- It can boost supply chain collaborations and cut costs and waste. E-enabled procurement exceeds 15 percent of all G.E.’s purchasing, and G.E.’s savings are in the tens of millions. IBM bought $9 billion worth of goods and services on-line in 1999, and saved millions by eliminating invoices alone.
- Human Resources operations benefit from e-recruitment and delivering training courses on the Internet. HR can use intranets to communicate corporate benefit plans and automate plan enrolments.
- Technical and machine service can often be more responsive when personnel can diagnose and suggest solutions to problems on-line. In its factory, Miller Brewing uses the Web to monitor its bottling lines, and make timely, waste-eliminating recommendations to plant operator’s consoles.
- In R&D, global teams can often use the Web to co-ordinate far-flung design inputs from labs to build new products faster. The auto companies do this on new models where Japanese and American car designers collaborate on new offerings, in the hope of having more worldwide design appeal.
The key in goal setting is to express any Web-based objectives with clear metrics, so that the next stages of planning can be focused.
FUNCTIONALITIES AND INTEGRATION
Once goals are made explicit, it becomes possible to see how the firm’s functions will be altered and enhanced. For instance, if the firm wants to use its Web site to grow product familiarity or brand identity, it can focus on what needs to be digitized. It may need to digitize product images, scan in product descriptions and load its pricing on to its site. If it wants to showcase products but still sell through its channels, it must hot-link its Web traffic to its dealers or distributors. This may require the company to help its dealers get their own Web sites in shape.
If it decides to use the Web for technical service outreach, it must upload tech data sheets and applications guides. It may need to link its site to 1-800 lines so that there is a seamless transition from Web inquiries to a “live” helper at the end of a technical hotline. Lands’ End has this type of tele-Web technology, so its 2,500 sales reps close 50 percent of on-line browser, twice as many as Web sites with no access to “live” tele-help.
If a company decides to focus on financial goals, it may need to move to on-line selling and responsive logistics data that allow customers to query the status of their order and delivery dates. If it decides to push for e-procurement, it must link up with suppliers’ systems or on-line exchanges/auctions.
Function follows from goal setting, and the scope of the Web’s functionality is driven entirely by the boldness and clarity of such goals. Functions also drive outsourcing partnerships, since the company may need either extensive consulting to re-engineer its processes or third-party allies who bring specific functions into their process, such as MasterCard, Visa or G.E. Capital, as a credit or leasing partner for on-line sales.
Just as firms use integration teams when they acquire other companies (and bring them into the corporate fold), they should use teams when integrating e-processes into core legacy processes. It is vital that the customer’s viewpoint not be lost in this process, however, since the Web is the most customer-empowering media of all. For instance, firms will often use the Web to grow global reach, but put up content and systems that are entirely in English, or without local currency-equivalent pricing.
Any strategy on audiences needs to explore other sites’ commercial partnerships and third-party outsourcers. It also needs to be aligned with outbound e-mail responsiveness strategies, since any audience outreach creates e-mail response expectations.
Sometimes audiences worth targeting are not direct product or service users, but rather standard setters, specifiers or influencers such as engineers or architects, when the user is the contractor (or doctors and pharmacists when the user is a nurse). Government officials often fall into the category of influencer audiences, with standard-setting regulatory power. They may be drawn to Web sites that provide a focus on industry developments well beyond product or service messages.
One piece of audience strategy that needs attention is the decision to hotlink to other sites in order to piggyback on their audiences. CDNow cross-links to thousands of Web sites in order to expose very broad and different audiences to its CDs. It then pays a commission to site owners if sales result from such links. This has had the effect of greatly lowering CDNow’s cost of acquiring new customers from $38, to its targeted cost of $20. In some markets, e-marketplace exchange links will be necessary to buy or sell from or to key audiences.
Content strategies need to consider an array of challenges. How much content will be deemed “basic must-haves” vs. richer, value-added features whose intent moves far beyond informing into either education or entertainment? How much content will be customized by the customer? Drugstore.com personalizes Web sites, relaying script histories, refills and the like to shoppers on its site shoppers.
Another factor is how the proportion of text/pictorial/charting in the mix should be structured. As the Web becomes accessible from cars and wireless devices, smaller screens will likely dictate less text and more chart/picture and audio clip links.
Content strategy also needs to consider whether the content should be generated by the firm or be obtained from others. Even very sophisticated Web sites such as CNBC purchase content from many sources to keep their sites interesting.
Intertwined with content strategies is the issue of site navigation. Increasingly, Web users value getting what they want from a site quickly, without too many detours or extra clicks. So, drop-down menuing content must balance site vitality to show respect for the user’s time. Function and user friendliness often beat flash in Web-site navigation design.
THE INVESTMENT PLAN
With goals, functions, audiences and content thought through, it now becomes necessary to quantify and describe the dollar, people and outsourcing investments necessary to exploit the Web. Clearly, some dollar investments will be in technology, whether in database software, data mining, security software, Web design, systems linkages or image repositories. Exploiting Web “real estate” always takes an upfront investment in infrastructure. Much of the cost is in turning paper-based systems into digitally compatible, appealing content—from price pages to choice-boarding product or service assortments. In addition, dedicated head-count investments require substantial foresight to ensure that the proper investment levels and skill sets are in place. The costs of all of these need to be determined, as do the timelines for completing the project.
At the end of the day, investment plans must be rolled into budgets, deadlines and fiscally disciplined actions that can be scrutinized for paybacks. Shareholders, employees, customers and other key stakeholders shouldn’t expect anything less.