Dickson K.W. Chiu

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COMP7880 E-Business Strategies Interaction with
customers

• Dickson K.W. Chiu
• PhD, SMIEEE, SMACM, Life MHKCS
• Jelassi Enders Chapter 11

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Our Roadmap
Mobile e-commerce strategy
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E-business strategy
Strategic analysis
Strategy implementation
Strategy formulation
3
Externalanalysis
5
9
Strategyoptions
Internal organisation
Opportunities/ threats
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7
10
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Sustaining competitive advantage
Implementation
Exploring new market spaces
Interaction with suppliers
Strengths/ weaknesses
4
Internalanalysis
11
8
Creating and capturing value
Interaction with users/customers
3
Customer relationship management consists of four
elements
'How can we acquire this customer in the most
efficient and effective way?'
'What criteria determine who will be our most
profitable customers?'
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2
Customer acquisition
Customer selection
Customer relationship management cycle
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4
Customer extension
Customer retention
'How can we increase the loyalty and the
profitability of this customer?'
'How can we keep this customer for as long as
possible?'
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Mass-customization value chain puts the user in
charge of many traditional steps
Firm infrastructure
Human resource management
Support activities
Research development
Information communication technology
Elicitation of customer preferences
Order-specific inbound logistics
Order-specific construction
Order-specific operations
Order-specific outbound logistics
Customer service/ building a learning
relationship
Marketing/ sales forecast
General purpose inbound logistics
Order-neutral pre-operations
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
• Communicate benefits of using this channel
• Prioritise audiences targeted through channel
• Prioritise products available through channel
• 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
Peers
A
B
Matching
Peers
Peers
Person A
Person B

• Profile
• Contact data
• Multimedia
• Personal network

• Profile
• Contact data
• Multimedia
• Personal network

Peers
Peers
Communication tools
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Internet help dissolve the trade-off between
richness and reach

• Richness
• bandwidth
• customization
• interactivity

The Internet
Reach (Number of people interacting)
TV advertising
Sales- person
Tele marketing
Postal mailing
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, friends and acquaintances, who ideally
belong to different worlds i.e. different
areas of life.
Connectors
People who have expertise in various products,
prices or places. They enjoy sharing their
knowledge with friends and acquaintances on
Internet platforms.
Maven
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 product
range of traditional retailers
10,000
Songs available at Rhapsody and Wal-Mart
Songs available only at Rhapsody
Downloads
5,000
100,000
900,000
50,000
25,000
0
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 via traditional networking
tools
Networking frequency
Additional 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
individuals, SNS lengthens the tail of potential
social contacts.
Lengthen the tail
SNS uses a variety of mechanisms to enrich
communication between users and thereby fattens
the tail by increasing the frequency of
interaction.
Fatten the tail
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).