Creating a Successful E-Business
Jul 7, 2004 6:30 AM PT
Many companies understand that, to be successful, they must be aware of political environments and regulations, cultural and labor considerations, national and international economic pressures, and technological developments, but perhaps one factor affecting companies most intensely in the new millennium is the competitive environment.
The ramifications of this environment have spurred marketing managers to be extremely diligent in making sure their message is convincing; after all, customers have an abundance of choice, and the competition is global.
For example, companies that have had a Web site merely "up and running" for the past few years now recognize that it is not enough merely to post Web pages; those pages must be found. There is therefore increased awareness of the need to optimize sites so that they can rank highly in search engines.
Moreover, if a company's site already ranks well and people are finding it, what are some things the company can do to be "convincing" so that site visitors will actually buy its product or service?
Warrantees and Returns
In an age of consumer skepticism, describing a warranty service and return policy in detail is one activity that can be convincing. Detailed warranty information may reassure an online shopper that he or she can go ahead with a purchase; after all, if any problems arise, the shopper can return the item.
For example, Mountain Equipment Co-op has operated a transactional e-commerce Web site since 2001 and considers it an extension of its mail-order catalog business. Karen Berrisford, who manages MEC's mail-order and e-commerce service, says the company is trying "to keep barriers low and [make] returns easy." She explained that MEC built its business on the philosophy that mail-order purchases could be returned to any MEC store across Canada, so extending this philosophy to online customers has been a natural progression.
Additionally, because MEC traditionally has provided advice along with its specialty hiking and climbing products, it has taken full advantage of the Web to describe in great detail how its products can be used and to identify the appropriate product for each user's skill level.
Does it work? As Berrisford explains: "Many members will purchase two or more of the same product in several sizes and return the items that don't fit -- which is common for products like climbing shoes and hiking boots. These members appear to have great confidence that the returns-refund policy is reliable and will work for them." Validating MEC's strategy is the fact that the "MEC Web site and catalog sales are similar in size to one of the mid-size stores," and "Web sales continue to have significant growth."
Meanwhile, for "pure plays" -- Web sites that have no physical-store presence -- it is critical that the vendor create a process that lets customers easily return products and that this process be described in detail in marketing promotions material. E-commerce experts have suggested that companies with no "brick" store might establish a relationship with a known retailer and arrange for customers to drop off items there for warranty service, return or replacement; however, this advice may be harder to effect in reality than in theory.
Of the companies interviewed for this article, none said it would put itself in a position to handle returns of products purchased at an unrelated firm -- which perhaps suggests an opportunity for launching a new, unique service.
Another way to convince a possible buyer is to make the warranty period longer than that provided by the competition. Too-short warranty periods are discouraging because most people consider the time required to receive a product by mail, try it out and then ship it back if needed, and they worry this could not be done within, say, six weeks.
Size, Price and Product Info
Presume that viewers of your Web pages are people who also have looked at similar products on other sites. It is important to describe sizes, shape and colors in a way that is precise, so viewers will have no unanswered questions. Clothing size measurements cannot be simply small, medium and large, but rather small=34" chest, medium=36" chest and so on -- and if you expect inquiries from other parts of the world, you must use units of measurement that are globally recognized.
Toward this goal, many mid-size and large companies have exploited the graphical capabilities of the Web and high connection speeds to create "build sites" where customers can mix parts and assemble modules and features online. Ford Canada's corporate product manager, Christine Hollander, says the company's build-and-price site has been successful as an online tool for driving sales at dealerships. She enthused that the company "received more than 750,000 people a month doing a build and price on the site" and that "three-fourths of all Canadians who purchased a Ford vehicle said they had been on the build-and-price site."
In another vein, some people are suspicious about extremely low prices online. There may be an expectation that a product will not be "as described" when a courier delivers it. One possible solution is to explain why you have a low price (without giving away competitively sensitive information). If you can say, for example, that your large number of stores allows you to get big discounts from manufacturers, or that by selling online you save 12 percent on advertising or distribution, you may be convincing to potential customers.
Functions and Features
One reason why online shoppers find it convincing to view Web pages that describe product features in detail is simply that many consumer products have complicated functions that are intimidating to new users.
According to Scott Bonikowsky, a divisional vice president at Canadian Tire, the repercussions of providing a lot of information online about a product are actually stronger than one might expect. Bonikowsky explains that canadiantire.ca has attracted a core group of users who spend time researching products on the site and then visit one of the company's physical stores to make purchases.
Quoting a Gartner study of a couple of years ago, Bonikowsky says, "we experience approximately one dollar spent online translating into seven dollars from customers who [browsed online and then] went and bought in a Canadian Tire store."
As merchandising experts know, once a prospect is walking down a store's aisles, the chance exists to cross-sell and upsell to them, employing various in-store sales techniques. Also, if the customer already has browsed the Web site, he or she likely is already informed about the company's products. "An informed customer is a good thing," concludes Bonikowsky, "and our Web site certainly plays a role."
Long-Term Use and Upgradability
For electronic products, it can be very convincing to explain in detail how -- and at what cost -- upgrades can be obtained and installed. For products that come with important parts and consumables, it can be convincing if you establish that those parts will be available for a competitively long period of time. For example, if you had a warehouse that stocked extra parts by the thousands, you could take a photo of the parts on the shelves and include it on your Web site to validate your claim.
For example, John Challinor, general manager of advertising for Sony of Canada, explains that his company's popular Vaio PC "can be upgraded, and we stock parts and accessories to support that end, fully communicating this information online as part of the process." Challinor notes that "some Vaio PC customers have viewed the ability of our products to be upgraded as one important factor in their buying decision."
He also says Sony "recently initiated an online build-to-order program for the Vaio PC, which is enabling our customers to build and order a solution that not only meets their near-term requirements, but their longer-term needs as well. The warranty and ability to upgrade are ... important and differentiating to our customers online."
Another potentially useful method of converting e-commerce browsers to buyers involves posting testimonials from satisfied customers. Bob Davis, who runs mywatchmaker.net, says testimonials can be convincing, but you also have to be aware of privacy issues.
"Just because someone sends you a nice e-mail doesn't mean you can put their full name and address on your Web site without having explicitly asked to do so," he cautions. If you don't ask permission, according to Davis, "you run the risk of putting people in vulnerable situations where the owner of a luxury watch is identified by e-mail, name and sometimes city and region."
Testimonials are also often used in government-to-business (G2B) situations in which the government wants to convince businesses of the merits of a particular program. In the case of Canada's Department of Foreign Affairs and its highly publicized Team Canada missions, the department devotes considerable space on its Web site to profiling companies that participated in past missions and provides a lengthy testimonial from the participating firm.
For example, what is convincing about Prospectus providing a testimonial on the DFAIT site is the words of the specific Prospectus executive quoted, plus the direct link to the prospectus.com page.
Associations, Affiliations and Awards
Membership in a recognized industry association, along with the appearance of that association's logo on your Web site, can be convincing to viewers who may not have heard of your company. This sort of affiliation with an identifiable association can add legitimacy because your membership in the organization can be confirmed, helping to validate your business. Association membership also may include the benefit of participating in conferences and trade shows, and it may be an opportunity to profile your company executives through their involvement in events.
Meanwhile, affiliations with industry-accepted standards can be convincing to potential customers who want to know if your product meets their requirements for a particular use. These affiliations may include being certified as providing a certain level of service. For example, Navantis.com, a Toronto, Ontario-based e-commerce and IT professional services firm, prominently displays the Microsoft Gold Certified Partner logo on its main page.
Michelle McLay, vice president of marketing at Navantis, explains that "the logo enables visitors to immediately make an association with one of the world's leading software brands. It establishes a sense of trust and credibility with visitors who may not have heard of Navantis before." McLay added that "the affiliation with Microsoft also offers Navantis a substantial endorsement, given the considerable barriers to entry in this competitive market segment."
Companies that sell a product or service that is eligible for industry or association awards can make a spot on their Web site to identify awards they have won, particularly if those awards are well known.
For example, Archibald Orchards & Estate Winery near Bowmanville has a modest Web site on which it describes the product, location and events typical of a seasonal vendor. Moreover, the company lists its Gold Medal for "Canadian Maple" at the National Fruit Wineries of Canada Competition. As Sandy Archibald of the company told ECT: "I have had a number of people comment on the awards listed on the Web site. It is definitely perceived as credibility to many."
Distribution often seems to be a weak link in e-commerce customer satisfaction. In fact, a couple of years ago, the U.S. Federal Trade Commission went so far as to warn specific online vendors that they had to stop breaking promises about shipping times or they would be charged penalties. The charges stemmed from the fact that some large online vendors of seasonal gifts had not sent notices to inform customers that shipments would not arrive as promised -- violating several regulations about making certain service claims in marketing materials.
As a result, if you can explain (in more detail than the competition) how a product will be wrapped, packaged and sent -- especially if you can describe each stage in the process with words that indicate care and consideration for maintaining the product in good condition -- this can be convincing to potential customers.
Do you think engaging the services of a large shipping or courier company will solve your challenges? Think again. Any problems facing these companies will become your problems if the customer doesn't receive the package on time or in the expected condition. Gary Wright, logistics supervisor at ATI Technologies, told ECT that online vendors need to be careful about the delivery techniques offered by shipping and courier companies.
"Companies like ATI can be hit for a lot of problems if the shipping company leaves the package at an address and walks away," Wright said, whereas other companies might have a policy of leaving packages only if a person signs for them. Wright added that "one of the [steps] to ensure that your customers are convinced of your reliability for shipping is to make sure you do not boast on the site about delivery times that cannot be met."
The ATI site is quite detailed in describing how items will be shipped and what limitations there might be on distribution.
While shipping may directly affect the bottom line, more indirect considerations also are important. Some of the most vital are environmental considerations, social-cultural considerations, gender issues and human-rights issues.
There are a number of e-commerce examples of how environmental concerns can contribute to customer loyalty among some consumer segments while also serving to deflect criticism. For instance, The Body Shop, which has strategically profiled environmental considerations as part of building its brand, has an extensive "Profit With Principles" section on its site, thebodyshop.ca, discussing its commitment to the environment, its actions to support that commitment and how customers can help.
"Trust is an increasingly important brand quality and consumer value," explains Rifka Khalilieh, values facilitator at The Body Shop, and "by communicating to the customer what we believe, what we do and how customers can help, we build a sense of trust and transparency that builds consumer loyalty.
"To be competitive and successful and attract customers and develop their loyalty, corporations have to be able to communicate about -- and prove their willingness to include -- environmental and ethical considerations in their business procedures, practices and policies," Khalilieh adds.
Also, with the advent of chat rooms and weblogs, it is wise to avoid being cited online as a company that, for example, pollutes or uses toxic materials in packaging. For example, McDonald's has long borne the brunt of many activists' criticism and has responded in part by establishing a lengthy description on its Web site about its policies to reduce, reuse and recycle.
Ron Christianson, manager of corporate communications for McDonalds Canada, says the firm goes to some lengths to describe an "Environment Rainforest Preservation Policy" on its Canadian Web site.
Christianson explains that "official positioning statements on business practices and key issues are readily available for various audiences to access at any time online, which helps to avoid the spread of misinformation." He adds that "increasingly, consumers want to know that the companies they give their business to share their values and ethics, and having such detail explained on a Web site helps get the message across."
In terms of social and cultural considerations, dot-com companies are just as vulnerable as traditional brick-and-mortar companies to situations in which customer groups or employees may be discriminated against. In fact, because dot-coms operate in a global environment (whether they like it or not), they must hold themselves to the highest standard of citizenship, which can be challenging if the company is located in a region of great cultural diversity or ethnic and religious controversy.
For instance, Alan Vernon, managing editor of Toronto.com, says, "It is a challenge to handle the diverse range of the thousands of topics and events that are profiled on our site." But Vernon adds that "over time you get a feel for all the different cultural communities, and you develop contacts that help to ensure the credibility of each submission."
He explains that it is not only accuracy that is critical when providing this kind of community exposure online; sensitivity is equally important. "When publishing these cultural events, both from the perspective of the event participants and our users as a whole, [the] bottom line is to maintain a site that people consider authentic, up-to-date and truly useable," he said.
In a BizRate Online Research Value Panel in September 2003, results showed 62 percent of online buyers were women. Online shoppers are a much different "demographic" than they were in the period from 1997 to 2001, and if a vendor ignores the growing numbers of women online, it will not be very credible, let alone convincing, in its marketing.
For example, Ford's Christine Hollander says that "86 percent of all vehicle purchases are influenced by women," which has been one of several factors driving the choice of content and features on Ford's Web site. Hollander explained that "women do a lot of research online, and among their friends and associates" before making a purchase decision.
Meanwhile, Anil Chopra, general manager of one of the leading Ford dealerships in Toronto, told ECT that "women walk on to the lot holding our Web site pages in their hands." Having customers who are preinformed of many of the vehicle's features makes some parts of the salesperson's job much easier, Chopra said.
In terms of addressing gender issues on a corporate site, there are many examples from across the spectrum of vendors. Ford.ca profiles its support for the Canadian Breast Cancer Foundation with the Pink Ribbon campaign featured on the main site during October of each year. Hollander said the partnership with the CBCF has proved fruitful in many ways and has allowed Ford to show it is involved in the cause to a significant degree.
Human Rights Issues
Human rights activists are often involved in letter-writing campaigns. If your online company wanted to champion a cause in a stressed region, you could use part of your Web site to explain about that cause and invite people to contribute comments.
If you want to appear determined in your support of Human Rights issues, you can link from your site to The Office of the United Nations High Commissioner for Human Rights and note specific procedures that you follow to be in compliance with established practices. The UN's Universal Declaration of Human Rights is at www.un.org/Overview/rights.html and is free to be copied and forwarded to people across the globe.
Companies that operate businesses in the clothing sector have been challenged to prove their products are made by suppliers in a way that takes into account the human rights considerations of their enlightened customers. The Hudson's Bay Company dealt with this issue some years ago by establishing a Code of Vendor Conduct, which is now explained in great detail on its site at www.hbc.ca.
As Rob Moore, vice president of corporate communications at HBC, says, "we use the site to move beyond the PR rhetoric and offer a chance to see the detailed policies behind public statements, for example explaining that the Vendor Conduct code is backed by an independent compliance and monitoring program." Moore acknowledges that companies are challenged these days to "meet the demands for increased disclosure for public companies."
"You have to be able to back up what you say," he says, "and this section on our Web site helps to be convincing."
Many corporate Web pages are conspicuous by their lack of specific contact information for "real people." It is disconcerting not to be able to find the real name of a real employee with a specific job title when you wish to communicate with someone at a company.
Publisher Rod Morris of Style Magazine, a Canadian fashion publication, agrees that displaying the names of all editors, writers and other senior staff on the magazine's contact page has been helpful in obtaining membership, advertising and story leads. The specific arrangement of information on the contact page should be designed to be easily printed out on 8.5" x 11" paper, because that is what most people do before making calls: They print the page, then write on it while talking to you.
Sometimes companies deliberately avoid putting detailed contact information on their site because they want to channel everybody through sales and customer service, presuming that 99 percent of inquiries will be customer-service issues. One of the fundamental consequences of being online, however, is that everybody in the company with e-mail is potentially empowered to deal with the public.
A significant rationale of providing contact information is to prove that you do, in fact, exist. Many people find it comforting to know there is a physical store, even if they never have a chance to visit it. In the same vein, placing an image of your store on the splash page also can be quite convincing, especially to older shoppers. Some stores go even further and show pictures of staff lined up in front of product-laden shelves.
Now that's easy to understand -- and it's a powerful illustrator of successful e-commerce in action.
W. Tim G. Richardson is a full-time professor at Seneca College, and concurrently teaches part-time at Centennial College. He also is a Lecturer in the Division of Management at the University of Toronto in Canada. He can be reached at witiger.com.