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
E-business strategy
Strategy
Strategy formulation
implementation
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
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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
'How can we Customer
extension
increase
the loyalty and the
profitability of this
customer?'
3
Customer
retention
'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
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
operations
Orderspecific
outbound
logistics
Customer
service/
building a
learning
relationship
Primary activities
Order-neutral
Order-specific
Source: Adapted from F. Piller (2006), p. 175.
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E-marketing strategy essentials
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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

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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
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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
Dialogue and tailored
communications
Empowered clients
Mass market broadcast
Passive consumers
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5Is for CRM

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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.
2.
3.
4.
5.
Sales force automation
Customer service management
Managing the sales process
Campaign management
Analysis
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CRM data

Personal and profile data
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Transaction data

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Contact details
Preferences
Sales history
Communications data

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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
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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
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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 permissionbased 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
Person A
Matching
B
Peers
Peers
Peers
Profile
• Contact data
Peers
Peers
• Multimedia
• Personal
network
Instant
Boards/ Chats VoIP
messaging groups
•…
Person B
Profile
• Contact dat
• Multimedia
• Personal
Private
messages network
•…
Communication tools
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Internet help dissolve the tradeoff between richness and reach
Richness
•bandwidth
•customization
•interactivity
The Internet
Reach (Number of
people interacting)
SalesTele
Postal
person marketing mailing
Source: Adapted from P. Evans and T. Wurster (1999)
TV
advertising
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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).
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10,000
Songs
available at
Rhapsody
and WalMart
Songs
available
only at
Rhapsody
5,000
Downloads
‘Long tail’ represents large addition to
product range of traditional retailers
0
25,000
50,000
100,000
900,000
Titles, ranked by popularity
Source: Adapted from Anderson C. (2006).
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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
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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).
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