Is the e-Channel important?

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So last year's fashion is this year's second-hand rose. Suddenly the e-channel and e-business have lost the attractions they had last year, at least to the financiers. But is there an underlying value to the e-channel or should we pack up our bags and return to call centers and retail outlets?

Of course nearly all commentators are saying that the current market reaction to technology stocks and the dot.com companies specifically, is an over-reaction to the greedy feeding frenzy of last year, and we also affirm that. Our own commitment to the e-channel is such that we intend to launch shortly a newsletter dedicated to the use of the e-channel for CRM. However, it is worth reminding ourselves of the fundamentals which make the e-channel worth investing in.

Firstly, the economics and timescales of replicating and communicating information between different parties reduces radically, compared with conventional channels:

  • Excluding creative costs, the cost of a conventional letter in the UK is of the order of .50p - £1 per piece. The equivalent cost of an email is probably of the order of less than a tenth of a penny, i.e. perhaps a 1000-fold reduction.
  • The time to produce multiple copies of a set of information has similar reductions: the cost of producing a copy of a book has reduced from the year's work of a monk to copy it, prior to the printing press, to the days or weeks of a print-run, to the seconds, or minutes for replication of electronic material.
  • Delivery timescales also shorten, delivery of mail reduces from days to hours with the move to email, and to virtually
    instantaneous with wireless devices such as the Blackberry email device currently taking off in the US.

Secondly, the development of standard forms of communication (TCP/IP at the communications level; HTML or XML at the application level), with near ubiquitous availability of IT devices (at least in the '1st world') is supporting the automation of processes which cross organisational boundaries (from consumer to business, and from business to business), introducing substantial savings in all such processes - notably marketing, sales, and service, as well as supply-chain management.

The substantial cost reductions in these areas offer opportunities to organisations using these channels to develop new value propositions to their customers. At the simplest level this could merely be the passing on of cost savings to the customer. However, much more important are the opportunities which the changed economics open up for delivering new services to customers which have only become viable through the changes in costs and timescales relating to these processes.

Will these new value propositions offer companies the opportunity to make substantially more profit per customer? Perhaps in the short-term, but competitive pressures in the long-term are likely to reduce those profits. Even in the short-term, companies might well be advised to use the new value proposition to build market share in the window of opportunity, rather than maximise profits - always of course, within the normal economic parameters of maintaining company profitability.

Much was made during the dot.com boom, of the opportunity for creating electronic markets. However, as David Chen of GeoTrust said at the recent HNC conference, markets are much more than the actual marketplace. There needs to be a whole support industry surrounding the marketplace to make it work - including the financing, insurance, delivery, and legal frameworks to surround it - and each of these support services adds significant value.

There are, of course, large numbers of different business models out there which can be used to deliver improved value to customers. We are following a modified 'community model', but there are many others from 'clicks and mortar; to e-tailers; to yet another customer channel, and 'online transactor'. You can find more details of further models in a presentation on the site at:
/library/pre/pre-024/brandframe.html

Which of these models will win out? The jury is still out, and in our view will be out for some time. In new IT developments, the ideas of what is possible always run ahead of what actually we can implement. How long does it take for these developments to mature? Our view is a generation - say 20 years. Why such a long time? Because, in the final analysis, the judge and jury are our customers, and it takes perhaps a generation for them to decide how new technology will be used. See the difference today in how a youngster uses the mobile phone compared with their parents. Another example: the 'Office Automation' revolution of the 80's is only now, through Intranets, the Internet and Extranets, becoming a reality.

We believe firmly in the long-term future of the e-channel, and hope to contribute to that development with a special focus on that channel within the CRM-Forum.

Awaiting that development, there are a number of presentations available on the site worth viewing, or re-visiting, including:

As ever, we're always interested to hear others' views, so if you feel moved, please add your experiences to this list, either by posting on the Bulletin Board, adding a comment to this editorial, or by mailing me directly at [email protected]

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