Selling on the Web: Revenue Models and Building a Web Presence

Revenue Models in Transition Several companies have changed their revenue models over the years in response to their new and changing Web customers: Subscription to Advertising-Supported Model –Slate Magazine Advertising-Supported to Advertising-Subscription Mixed Model –Salon.com Advertising-Supported to Fee-for-Service Model –Xdrive Technologies Advertising-Supported to Subscription Model –Northern Light

Multiple Transitions Encyclopedia Britannica Print publisher to Advertising-Supported model to Advertising-Subscription Mixed Model

Revenue Strategy Issues Problem: Channel conflict or cannibalization can occur when sales activity on a company’s website interferes with existing sales channels. Solution: Web sites provide product information but directs customers to online and physical stores where goods can be purchased.

Revenue Strategy Issues Problem: Goods purchased on company website can be returned to physical store thereby stressing retailers’ time and causing further inventory management. Solution: Channel cooperation: Retail stores are credited with inventory and labor costs for each Web site return they handle, while catalog division managers are given credit for customers who purchase goods from the Web site.

Strategic Alliances When two or more companies join forces to undertake an activity over a long period of time Example: Amazon.com has partnered with Target, Tool Crib of the North, Borders, Toys R Us, drugstore.com

Strategic Alliances

Creating an Effective Web Presence Businesses always create a presence in the physical world by building stores and office buildings. The only contact that customers and other stakeholders have with a firm on the Web is through its presence there. Creating an effective Web presence can be critical for even the smallest and newest firm operating on the Web.

Identifying Web Presence Goals On the Web, businesses have the luxury of intentionally creating a space that creates a distinctive presence. A Web site can perform many image-creation tasks very effectively, including: –Serving as a sales brochure –Serving as a product showroom –Showing a financial report –Posting an employment ad –Serving as a customer contact point

Making Web Presence Consistent with Brand Image Different firms, even those in the same industry, might establish different Web presence goals. Coca Cola and Pepsi are two companies that have developed strong brand images and are in the same business, but have developed different Web presences. The Web presence conveys the image the company wants to project.

Achieving Web Presence Goals An effective site is one that creates an attractive presence that meets the objectives of the business or other organization. Possible objectives include: –attracting visitors to the Web site –making the site interesting enough that visitors stay and explore –convincing visitors to follow the site’s links –creating an impression of corporate image –building a trusting relationship with visitors –reinforcing positive images of the organization –encouraging visitors to return to the site

Not-for-Profit Organizations A key goal for many not-for-profit organizations is information dissemination. The combination of information dissemination and a two-way contact channel is a key element in any Web site. The American Civil Liberties Union and American Red Cross have created effective Web presences. Political parties and museums also use Web sites for their image presences.

How the Web is Different When firms started creating Web sites in the mid 1990s, they often built simple sites that conveyed basic information about their business. The failure to understand how the Web is different from other presence-building media is one reason that businesses fail to achieve their Web objectives. Firms must use the Web’s capability for two-way, meaningful communication with their customers.

Meeting the Needs of Web Site Visitors Businesses that are successful on the Web realize that every visitor to their Web site is a potential customer. An important concern for businesses is the variation in important visitor characteristics. People who visit a Web site seldom arrive by accident; they are there for a reason. Technology variations among visitors (e.g., connection speed) should be a concern for Web sites.

Many Motivations of Web Site Visitors Creating a Web site that meets the needs of visitors with a wide range of motivations can be challenging. –to learn about products or services that the company offers –to buy the products or services that the company offers –to obtain information about warranty service, or repair policies for products they have purchased

Meeting the Needs of Web Site Visitors –to obtain general information about the company or organization –to obtain financial information for making an investment or credit granting decision –to identify the people who manage the company or organization –to obtain contact information for a person or department in the organization

Making Web Sites Accessible One of the best ways to accommodate a broad range of visitors’ needs is to build flexibility into the Web site’s interface. Many sites offers separate versions with and without frames and give visitors the option to choose either one. A good site design lets visitors choose among information attributes, such as level of detail, forms of aggregation, viewing format, and downloading format.

Trust and Loyalty When customers buy a product, they are also buying a service element. A seller can create value in a relationship with a customer by nurturing customers’ trust and developing it into loyalty. Customer service is a problem for many corporate sites. A primary weak spot for many sites is the lack of integration between the company's call centers and their Web sites.

Customer-Centric Web Site Design Putting the customer at the center of all site designs is called a customer-centric approach to Web site design. Electronic commerce sites are encouraged to focus on the customer’s buying process rather than the company’s perspective and organization.

Connecting with Customers An important element of corporate Web presence is connecting with site visitors who are customers or potential customers. Mass media is a one-to-many communication model, the Web is a many-to-one communication model, and personal contact is a one-to-one communication model.

Connecting with Customers Most businesses are familiar with two ways of identifying and reaching customers: personal contact and mass media. These two ways are referred to as communication modes. Some experts also distinguish between broadcast and addressable media.

Connecting with Customers The Web is an intermediate step between mass media and personal contact. Using the Web to communicate with potential customers offers many of the advantages of personal contact selling and many of the cost savings of mass media.