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E-Business Up Close And Personalized

By Constance J. Petersen for Enterprise Development Magazine
Copyright 2000 Fawcette Technical Publications

Use personalization and one-to-one marketing techniques to improve your company's e-business.

If your company is intent on making itself an e-business, get ready to deal with a slew of new acronyms and buzzwords. To name a few: eCRM, personalization, one-to-one marketing, B2B, and B2C.

But relax. Like most trends in information technology, when we examine the concepts behind the buzzwords, we find the ideas aren't totally new and more than a smidgen of common sense lies behind them.

E-business—doing business with the customer on the Web—is all about using the Web to improve customer relations. We term this Customer Relationship Management (CRM). When customer relationships are managed via the Web, we call it eCRM.

A well-done business website can improve customer relationships by being informative and helpful. But it's hard to be informative and helpful without knowing an individual customer's needs. Salespeople and customer service representatives sometimes spend years learning these needs and responding to their customers as individuals.

A personalized website provides information tailored to your needs. Because it reflects your interests, you'll be tempted to stay and explore the site, and maybe even buy.

A well-designed website, like a smart sales rep, understands that you're not always in the market to buy. Sometimes you need help with a product you already own. Other times you're researching products, but the time is not right for buying. A website that is personalized to all your needs, not just your immediate purchasing needs, will help you do the research.

These principles hold true whether your company sells to other businesses or to individual customers. And that leads us to two more acronyms—B2B (for business-to-business customer relationships) and B2C (for business-to-consumer relationships).

While the principles are the same, there are certain differences in the needs of B2B customers versus B2C customers. B2B relationships often involve written agreements about payment terms and special discounts for higher sales volumes. B2B sales cycles are often long and require regular interaction.

What you can find out about a customer

Knowledge management can aid in creating a personalized or one-to-one relationship with customers online. Knowledge management is the act of capturing in a database what we know about customers and then analyzing that information. A customer's transaction history contributes to a profile of that customer, as does data from third-party sources such as credit reporting bureaus.

A potential customer doesn't have to buy anything on your website to provide you with valuable information. Web logs provide data on how the person navigated the site, what pages they viewed, and how long they viewed them.

By tracking the reaction of customers to varying sales offers and other sets of information, a decision engine can recommend which offer or set of information is most likely to be effective. After learning what works, custom Web software can identify the customer's profile on the fly and present information in a way that improves the customer's experience, and, at least in theory, sells more products to that customer.

Self-learning technologies

A number of software packages are designed to help with this marketing analysis. NetPerceptions' Realtime Recommendation Platform software predicts customer preferences and adjusts Web-page contents dynamically. It is self-learning—adjusting what it knows about the customer's preferences by watching navigation and measuring it against the customer's history. It then finds a matching customer profile that directs the software on how to make the presentation more relevant.

Andromedia LikeMinds Personalization Server and Open Sesame Learn Sesame, work in a similar way. They watch and learn from customers' online activities, and use what they learn to create customer profiles that improve customers' online experience.

But enough theory. Let's see some of this technology in action.

NetPerceptions' software is used at eToys.com to encourage customers to buy more by matching their interests with those of other customers. When you select a toy, you will also see "Wish List Favorites—Kids who like this item also like:" followed by a list of related toys. Below that is a link to "See more related Wish List Favorites." Clicking that link presents you with a list of related items labeled, "Kids who have this product on their Wish Lists also wished for these items:"

Figure 1. eToys.com personalizes sales suggestions. This product detail page on www.eToys.com shows how eToys up-sells and cross-sells by suggesting related products.

This works because the customer isn't required to provide any personal information or do any extra work to take advantage of the feature. The system uses other customers' wish lists to make the associations.

For customers that make the effort to create them, wish lists are a convenient way to keep track of items for purchasing later—a virtual shopping list. eToys lets you create wish lists for each child in the family. You can convert them to gift registries for sharing with grandma, grandpa, aunts, and uncles.

EToys offers the gift registry to provide its customers with another sort of personalized service. The gift registry keeps track when items on it are purchased. During the past holidays it provided a 10% discount to family and friends who ordered from it—good incentives for the customers.

Notice what eToys gains when its customers use wish lists and gift registries—advanced warning of customer demand. Getting an estimate of anticipated demand directly from the customer helps eToys to project sales and avoid out-of-stock situations.

CRM experts Don Peppers and Martha Rogers (www.1to1.com) note that customers are individuals with names, addresses, and individual buying patterns. Some customers are more valuable than others, based on these buying patterns.

They recommend differentiating customers by their needs and values, and then addressing those needs. They ask, "How can you differentiate your customers and gain a greater share of their business?"

Peppers and Rogers suggest that one-to-one marketers make customer interaction an important part of their growth strategy. Know what the customer has bought in the past, and explore the incremental business that you might get from the customer by asking more.

Finally they tell you to customize. By following the first three steps, you will have the knowledge you need to customize your products for each customer.

As an example, the Brightware Advice software package engages customers in Web-based question-and-answer sessions to determine their needs and present relevant solutions in dynamically created Web pages.

Annoyance avoidance

On iQualify.com, a Web-based mortgage underwriter, Brightware Advice asks potential customers a series of questions to determine how much they want to borrow and how they will use their loans. The site then recommends mortgage options, based on the customer's answers.

Figure 2. iQualify gets personal. This iQualify.com Web page serves as an automated loan officer, clarifying questions and gathering answers from mortgage applicants.

Some may consider Web personalization an annoying intrusion, but I don't believe eToys.com is unreasonable in making recommendations based on other customers' wish lists. Nor is iQualify.com with its one-to-one interviews.

Best advice: Weigh all factors when deciding how to include personalization in your company's e-business.

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