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Make Your Website Purposes Crystal Clear
'
Tips on Web Site Needs for Success '
Clarity here can help
you develop a lean, clean Internet machine that will accomplish your purposes. Let's look at the four major missions companies seek to accomplish on the Internet: (1) brand development, (2) revenue generation, (3) cost savings, and (4) customer support.
Purpose 1. Brand Development
You may have never thought about your company as a brand, so this may be new to you, but track with me. One of the chief reasons your company has a website is to demonstrate that you're staying up with the times, that you're on the cutting edge. You're seeking to communicate an image about your company that will register in the minds of your potential customers. Professional marketers refer to this as brand development.
Your brand is the image of your business in the minds of customers and prospects. Everything about your site -- the quality of the design, the clarity of your wording, the sense of interest and excitement, the color scheme, the download time, and much more -- contributes to your image, and your image is your brand identity. Your goal is that when someone leaves your site they'll remember you -- positively. And that the next time they come, they'll make a purchase or pick up the phone. Your brand image is also the trust the customer has in you.
There are no real shortcuts here. Major corporations spends millions of dollars to develop their brand image and keep it fresh in the minds of consumers. Is there any way a small business can compete?
Yes, your site can look every bit as good on the Web as a major corporation's, and without spending the big bucks they do. Even though the Web is no longer a level playing field, small businesses can still compete for first impression.
How do I say this without offending you?
You need professional help.
Don't get agitated now and reach for your Valium. It's not a shrink we are talking about, but an experienced website designer. To compete today you either need to either have graphics training and an artistic sense yourself, or you need to hire it. Do-it-yourself will undercut the strong brand identity you are trying to build. Sure, it's cheaper to do it yourself or to have your nephew do it with that spiffy new software he's dying to use on you, but not if it means your business won't get off the ground. Design includes the color scheme and graphics, but also structure of the site, the all-important navigation system, the size and quality of the photos or illustrations. All these affect your brand image. Your nephew doesn't understand brand image yet.
Be very clear about this, whether you're General Motors or a one-person small business, brand development -- image -- is first on your list of purposes. It is a precondition for sales since it relates directly to customer trust. Fail at this and you will fail at the core purposes of your site.
Purpose 2. Revenue Generation
The second major goal is revenue generation. Hobby sites don't need to generate revenue. (Neither, seemingly does Amazon.com. Just
kidding). Your company may be putting off revenue generation until they learn the ropes of
e-business, or until they generate enough site
traffic to produce revenue. But the bottom line for all companies that want to stay in business is revenue generation. There are three primary models at present -- (1) prospect generation, (2) online sales transactions, and (3) advertising and referral income. We'll look at each in turn.
Prospect Generation
In the first model, you use the Web to bring you leads and provide information to support the sale. Then you close the sale by phone, e-mail, or face-to-face. Many small businesses, especially service businesses, use this model successfully.
For example, we can use the Web to attract prospects for our online store design business. Our information provides the attraction, then visitors discover what business we're in and e-mail or phone us. A conversation ensues that sometimes results in a sale.
A main tool for the prospect generation model businesses is a carefully designed online response form. Mailto: e-mail links allow people to contact you, but the online form allows you to structure the information people give you, so you can qualify the prospect and know how to respond. Some years ago a police products cataloger set up a website to generate requests for a print catalog. He was astounded at all the internationals who requested a catalog, and found that the people who requested a catalog via his Internet site were more likely to purchase products than the leads he developed from conventional sources -- and, at a much lower cost. He qualified his leads by asking the name of the organization the inquirer was a member of. It helped him cut down on catalog requests from people who weren't likely to purchase.
If yours is the kind of business where people take a while to come to a decision, or need customized information before they purchase that can only be supplied by a real human being, then prospect generation is probably your main revenue model. This is especially true of products that have a higher price tag or need customization.
You can do a great deal to support the sale, however, by providing a wealth of information online. Sometimes
we hear businessmen protest, "If we tell them everything they need to know, they won't phone me, and I won't be able to complete the sale."
Perhaps. But increasingly, if the prospect doesn't find the information on your site, he'll surf until he finds it on your competitor's site, and then call your competitor instead of you. One of the rules of Internet business is that your competitor is but a click away. Your online presentation and information should be so complete and compelling that your prospect has no need to leave.
Found that Jesus' saying, "Treat people the way you'd like to be treated," works very well in business. Trust prospects with all the information they need to make a decision and you increase the chances that they'll trust you with their business.
Be aware, however, that increasingly, companies are finding ways to automate the delivery of customized information, provide quotes via database queries, and then consummate the sale online. Though you may begin with a prospect generation model, you may eventually be forced to adopt an automated system or be crushed by your competition.
Sales Transactions
The second revenue model is completing the actual sales transaction over
the Internet. This is often referred to as "e-commerce." In
spite of all the media hype, during Christmas 1998 only about half of one
percent of retail sales took place on the Web. But after a few years it
has grow to be 35% approximately. It will begin to eat into sales at
brick-and-mortar stores, and those that don't sell online, too, may go out
of business.
The real promise of the Internet, we believe, is its ability to extend your company's reach beyond your present market area. If you can sell products or services on the Web that can be delivered outside your geographical area, then the world is your marketplace.
Business-to-business e-commerce is growing even faster than online retail; nearly 80% of online transactions are between businesses. While this may not represent so much new money as a new sales channel, it does represent substantial cost savings by reducing transaction costs.
Nirvana for an Internet business is to complete both sales transactions and product delivery over the Web. Entertainment and information sites do this, cutting the staffing and inventory costs for product fulfillment immensely. Industry analysts believe that nearly all software will be delivered over the Internet in the future. Ironically, product fulfillment and delivery is probably where an online businesses will either rise or fall. With stiff price competition in some industries, the remaining competitive advantage will be how efficiently you can pick, pack, and ship product. Or how cost-effectively you can pay someone else to drop-ship it for you.
While it's much easier now that in 1995 when we built our first online store, e-commerce is still not simple. While its relatively easy these days to set up a online store, that's no guarantee it'll be successful. You need to have a number of ingredients in place to make it work. But when they are in place, an online store can be very profitable.
Advertising and Referral Revenue
The third common revenue generation model is advertising and referral income.
We've grouped these, because from the advertiser's point of view, referral fees are often considered an advertising cost.
Many site owners dream of sitting back and letting advertising revenue from their site support them from their easy chair. Few realize this dream. Since the number of commercial websites is increasing faster than the demand for online advertising, many millions of
web pages go without paid advertising, and this tends to drive the cost of advertising down. A couple of years ago the average price of banner advertising was $37 CPM (Cost Per Thousand page views or "impressions"). In mid-1999 it has fallen to about $35 CPM. And much advertising sells for less than the stated rate card prices. Unless you have millions of impressions for sale per month, you can't hire an ad rep to find advertisers for you, so signing up advertisers is part of the work involved for this type of site.
To make a site pay for itself on advertising revenue alone requires a great deal of traffic. For example, at the rate of $20 CPM that less targeted site might generate, you'd need to have half a million page views sold to bring in $10,000 gross revenue in a month,. That's a lot! The way you attract that kind of traffic is to have outstanding content: information, entertainment, news, an online community, etc. And that content itself is expensive. Most portals realize that they need multiple streams of revenue in order to prosper, so many are now try to sell products directly to their visitors as they pass by. Time-Warner's Pathfinder site will close down because, given their site traffic, an advertising model alone is not sufficient to underwrite the costs of publishing. On the other hand, Slate found that charging subscribers cut into their ad revenue (because they had fewer page views); Slate content is now free, therefore, and total revenues are said to be higher as a result. Finding the right combination of revenue streams can be difficult.
Affiliate Programs
A promising source of revenue, especially for smaller site owners, is affiliate program referral revenue. If the genius of the Internet is the hyperlink that connects every site in a vast network, then affiliate programs are native-born sons and daughters of the Web. Amazon.com pioneered the revenue sharing model, and now pays affiliates 15% for sales that result from direct links to a book, and 5% of sales that result from the affiliate bringing the shopper to the Amazon.com site. Merchants have found that customer acquisition costs from an affiliate program are substantially less than paying for banner ads with CPM prices. For example, at $35 CPM, a 0.5% click-through rate, and a 5% conversion rate (the percentage of visitors who make a purchase), it would cost a merchant $140 to make a sale. With an affiliate program, the merchant only pays after an actual sale occurs, and the cost per sale is usually 10% or less than the cost of banner advertising.
Many smaller site owners, and some large online companies, have entered into affiliate agreements with a merchants. While the monthly income amounts are relatively modest for most
siteo wners, added to other sources of revenue they can help make a site profitable. Don't expect your small site to support you from affiliate referrals or advertising alone, but consider these an additional revenue stream for your business.
Purpose 3. Cost Savings
If you like, you might consider the purpose of cost savings as a fourth revenue generation model. New Internet-only companies may not appreciate the cost-savings possible on the Web, but many businesses are able to lower costs significantly by moving essential business processes to the Internet. Ben Franklin recognized this revenue source when he told us, "A penny saved is a penny earned." Let
us outline some of the ways that the Internet can save costs:
1. Staffing. Simply stated, the Internet saves time. It is significantly less expensive -- and more accurate -- to have a customer enter an order over the Internet than it is to take it by phone or
re-enter it into your computer system after the sale. In online stores, customers usually wait on themselves, so you don't need as many sales clerks.
However, you will need to increase staffing in other areas -- answering e-mail, for example. Since it is so easy to ask questions, many more customers are doing so on the Web, overwhelming some businesses. A few react by making it impossible to e-mail them at all (huh?). Others automate their e-mail response systems and provide enough staff to respond to more complex inquires.
Procurement departments have found that online transactions dramatically cut the cost of processing a purchase order. With the availability of Web-based EDI (Electronic Data Interchange), many smaller businesses are able to conduct B2B commerce electronically where it was previously cost-prohibitive.
2. Distribution of sales materials. If you've ever run a catalog business, or sent sales materials to your far-flung offices, you know how much money and energy is invested in printing and postage. The Web shines as a way to distribute great amounts of information inexpensively. Many companies put their entire catalog on the Web and then keep it up-to-date, longing for the year when they won't have to print a catalog at all. Others put their sales materials on the Internet (or on a company Intranet for employees). While there is some expense in converting text and graphics to the Web, once the material is there, it costs next to nothing to keep it there. Updating of data is simpler, too, especially on database-driven sites.
3. Advertising costs. For some businesses, especially those in neatly-defined niches, advertising costs are lower. Sierra Digital Communications in Rocklin makes microwave radios that transfer data over short distances where trenching and hardwiring would be cost prohibitive. Since more and more purchasing agents are using the Web for shopping, and since this is an established product they can search for, advertising costs are low; search engines do much of the work. But most new online businesses seriously underestimate the costs of advertising. People must have a reason to come to your site. If they don't find you by search engines, then you'll need to drive them there by a combination of paid online and offline advertising.
4. Start-Up Costs. When you compare the costs of beginning an Internet business to opening a new brick-and-mortar store, the Web wins hands down.
You can probably think of other ways the Internet saves your company money. But the point is easy to make. One of the purposes of your website should be saving money. For some businesses this will be more significant than any other purpose.
Purpose 4. Customer Support
As Patricia Seybold so eloquently states in her best-selling book Customers.com, successful businesses have this in common: they focus on the customer's needs. This ought to be an important purpose for most business websites.
Pre-sales support can be enumerated under revenue generation, but post-sales support to your customers is a category all of its own. Fortunately, the Web can provide the very best in customer support.
Your system may be as simple as an FAQ or troubleshooting decision tree. What a great way to help your customers. The more material you have, the more valuable a searchable database becomes. Microsoft's site, for example, provides a huge amount of product support information on. Epson's site links you to any driver software you may need.
Providing customer support on the Web is not only efficient for the customer, it is also a boon to company customer support departments, who can refer callers to their website for detailed and complete information, substantially shortening phone calls.
There's no need to be fuzzy about your website's purposes. Ask yourself these questions:
How can I present my company in the best possible light? (brand development)
What source(s) of revenue can we realistically expect from our online business.
How can we achieve maximal cost savings on the Internet? and
How can we provide excellent online customer support?
Answer these four questions and you're well on your way to online success.
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