Database Reference
In-Depth Information
9.1.1 Basic E-Business Strategy Patterns
Patricia Seybold was the first person to point out that the Internet economy was first and foremost
a
customer
economy because of the power that it gave to customers in terms of the information
on competitive products and real-term pricing that it made available to them via any channel of
interaction of their immediate choice.
The customer economy heralded the following:
◾
Significance of the customer relationships in a way that they had never done before
◾
Fundamental strategy of making it easy for customers to do business with the enterprise
Success in the customer economy will demand that companies manage their enterprises by and
for customer value—they will have to use customer lifetime value (CLV) as a strategic manage-
ment tool. Company's source of investor value will increasingly be based on the value of their
customer franchise, the lifetime customer value of their present and future customers (discussed
in Chapter 15, Section 15.4.1 “Time Value of Customers and Shareholder Value”).
Companies will have to focus on the branded customer experience whenever they interact with
the company's products via any touch point (Web, e-mail, phone, or face to face) and across any
channel (retail, dealer, agent, or broker). To win in the customer economy, companies will have to
build and sustain an exquisite branded experience and to measure and monitor what matters to
customers in the real term that may get tracked not unlike financial information and share price
information at present. Just as customer satisfaction indexes are by now well established as good
indicators of profitability, in the future, investment decisions may get made based on the changing
values of the customer metrics and value indexes.
In the customer economy, the employees' performance-linked pay may be based on such cus-
tomer metrics that assess achievement of customer satisfaction and customer loyalty goals like
◾
Growth in active number of customers
◾
Customers' commitment to the company's products, strategy, and vision
◾
Customers' propensity to defect
◾
Customer retention
◾
Customer referrals
◾
Customer acquisition costs
The concept of pattern was introduced by Christopher Alexander in the late 1970s in the field of
architecture. A pattern describes a commonly occurring solution that generates decidedly success-
ful outcomes (see Chapter 7, Section 7.1.3.1 “Patterns of Enterprise Agility”).
Listed in the following are the patterns learned from e-business efforts in the past few years:
9.1.1.1 Target the Right Customers
Some of the steps involved with this strategy pattern are as follows:
◾
Know customers and prospects
: This involves identifying the customers and then knowing as
much about them as possible.
◾
Identify profitable customers
: This involves looking not only at the revenue but also at the
costs to service particular customers or customer segments.
