Commentary

Are You Offering a Compelling Online Experience?

For consumers, price competition is good. Stuff is cheap and getting cheaper. Just ask Patricia Vanlester, a central Florida Wal-Mart shopper, who was allegedly trampled by a mad stampede of bargain hunters determined to get their hands on $29 DVD players. Beyond its obvious absurdity, what struck me most about the story was the price of the DVD player. In New York, $29 gets you a decent hamburger and beer or a cab from LaGuardia to mid-town. Maybe a cheap haircut. But a DVD player? What does this mean for your business?

With China asserting itself as a manufacturing powerhouse, and technology driving massive improvements in productivity, prices are coming down faster than you can say "$1000, 52 inch plasma TV." It's not just manufacturers that are feeling the pinch-pricing pressure is hitting services big time. Just ask a programmer whose job has recently been outsourced to India.

At Organic, we think that the market is going through a profound transition-a change that has everything to do with the Internet. If you want to differentiate, ask yourself tough questions about the experience you are delivering. Otherwise, everyone will be reduced to a vicious game of pricing competition that will erode brands and profits.

Ask yourself: how would the Internet factor into your plans to launch up a new retail offering? A magazine? A hotel? An airline? The wonderful thing about the Internet is that has quickly introduced a dizzying array of business opportunities that not only shift cost structures, but also well-established conventions about how to design and deliver your product or service offering.

When Organic was founded 10 years ago, we said the Internet would present strategic options to do some, or all, of the following:

  • Offer a new sales channel
  • Offer new ways to augment a product or service offering
  • Offer a new relationship-marketing channel
  • Offer access to new markets

    While the web continues to present businesses all of the above, what it really does is force everyone to re-think the marketing/sales/delivery/service continuum, and how it connects to the brand and the needs of an elusive consumer.

    Consider a few examples that illustrate the point.

    Apple's triumphant foray into the entertainment space is the business story du jour. While it has always done an admirable job of simplifying complex technology by controlling the hardware/software experience, the iPod takes it a step further. More than an electronic device, it is a seamless system for enjoying music-marketing, buying, playing, sharing, and managing. Its success, and defensibility, relies on the total experience, one only made possible by the blurring of product/service boundaries enabled by the Internet. Most importantly, iPod's sell at a 25% premium over competitive devices.

    Let's take a look at Jeep, an Organic client since 1999. By now we have a pretty good idea how the Internet influences the marketing and sales process in the automotive business. But where it really gets interesting is the post-sale experience and connecting that experience to the selling process itself. Jeep.com becomes a community hub-connecting to Jeep aficionados to events like "Camp Jeep," enticing owners to connect with fellow Jeep lovers through message boards, updating them on new model releases, offering branded merchandise, etc. For affinity auto brands, the post sale strategy is all about creating a compelling ownership experience-offering a real connection to the Jeep lifestyle. The marketing strategy is about merchandising that experience.

    Imagine you were launching a new hotel. Consider how you might design that experience with the traveler's profile as its nuclear core. What if every dimension of the experience was driven off of your profile-from in-room media choices to restaurant recommendations. What if the relevant dimensions of your profile were available to everyone that influenced your experience-front desk, housekeeping, concierge, and room service? Think about how you might design wireless in-room Intranet or the check-in kiosk. Consider the marketing and loyalty opportunities.

    What does this mean to the way you look at your business strategy in 2004 and beyond? Here are some thoughts:

  • Increasingly, a company's value will be driven not by its ability to create products but by its ability to understand and respond to consumer needs. Companies need to establish direct relationships to do this effectively. The Internet is the ultimate low-cost direct channel. How are you designing your web strategy to build a dialog and enhance your relationship with your customers?

  • Managing relationships with customers using the Internet is hard for most companies. Why? It forces structural organizational changes in the way they manage business day to day. IT, marketing, product management and service all have a place at the table. Getting teams to work together cost-effectively will take companies years to get right. How are you preparing internal development and governance processes to accelerate the change?

  • With more people vying for the customers' attention and fewer mass vehicles available, how will you keep customer acquisition costs down? What content investments and partnerships will enable you to start and maintain a relevant dialog with you customers? How will you evolve your marketing strategy for the "on demand" marketplace?

    Complex questions. The networked world is indeed reworking the value equation for businesses. One thing that we know is true-creating truly exceptional online experiences that build deep customer relationships keeps pricing pressure at bay and our products/services differentiated.

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    About the Author

    , president, SAY Media