Home-based e-business - an option for the self-employed?

 

4.2. Strategic Aspects

4.2.1. Promotion

With the exception of selling products through auction sites where a web site is not required, all online businesses with a web site requires a great deal of promotion in order for the business to succeed. No matter whether it is an online store, site selling services or sites that have joined affiliate programs, promotion should be regarded as the most important component of the business. However good you web site is, it will not generate a single sale if nobody can find it.

A lot of online retail businesses failed in the first place because they did not know how to utilize their advertising budget effectively. Many different promotion techniques are available, and it could be very daunting for the beginner. There are lots of advertising programs that sound impressive and charge a lot, but deliver little or nothing in terms of sales. It takes a lot of experience to sort through this minefield.

 

Top Ways Web Sites are Discovered

 

 

Banner Ads

1.0%

Targeted emails

1.2%

TV spots

1.4%

By Accident

2.1%

Magazine Ads

4.4%

Word-of-mouth

20.0%

Random surfing

20.0%

Search engines

46.0%

(Exhibit 22)

Source: IMT Strategies – imtstrategies.com, April 2000

 

The table above shows the relative importance of various sources of web site promotion in relation to each other. In general, for small business sites, the most important means of referrals come from Search Engines and Directories, classified advertisements, and referrals from past customers. Banner advertising and pop-up ads are least effective but they allow a site to have the greatest amount of exposure throughout the Internet. One has to spend one's advertising budget very carefully. The different promotion techniques available are discussed further below.

 

•  Search Engines and Directories

This is usually the main means by which a particular Web site can be found. Therefore it is extremely important to be included in all-major search engines and directories such as Yahoo, Google, Inktomi, Alta Vista, MSN, Looksmart, DMOZ and Excite. However, being included in them is not enough, your site must be returned within the first 10 results for any particular search term in order for there to be a reasonable chance of the searcher visiting your site. Achieving a good ranking is not an accident but can be done through the design of the web page. It is an extremely complicated subject that is often very time-consuming and costly. The biggest problem with search engines and directories is that it will take weeks or months before a site is listed and even with expert help, top ranking cannot be guaranteed especially for common search terms. It may take a lot of experimentation in order to achieve top ranking but even then, a good ranking in one search engine doesn't mean it will rank well in others.

Some search engines such as Google Adwords, Overture, Findwhat and Kanoodle will list your site for particular search terms for a price. The actual ranking in the search result depend on the price you are willing to pay for an individual click to your site. The bidding usually starts at US$ 0.05 but can easily go up to several dollars for pole position. Pay per click engines are widely believed to be the most effective means of advertising but one must be very careful since some large shops may be willing to bid any price for top positions. The best strategy would probably be to concentrate on rarer search terms. Country or region specific pay per click engines will also be used.

 

•  Classified Sites, Message Board and Forums

Classified ad sites, message boards and forums can be surprisingly effective. The keyword here is targeting. One must target your ad to the target audience; therefore ads in sites with related categories in general would be the most effective. Advertisement in other sites such as web site design would be far less effective. It is essential to write eye-catching ads that stand out. It may be a good idea to couple the ad with a discount coupon. One added bonus of this approach is that the effectiveness of various campaigns can be monitored.

•  Unsolicited e-mail

A lot of companies seem to think that this approach is effective and spend a lot of time and money. In experience, the response rate is very poor (around one in a million) and none of our customers have returned for further purchases. Furthermore, your web site may be forced to shut down or the ISP will threaten to withdraw its services due to a lot of complaint. There is also a lot of potential damage to the image of your company.

•  Opt-in mailing lists

This could be a very effective means of promotion if you have your own opt-in mailing list from your site. However, this list will take some time to build. The key would be to give news on new editions and discounts from time to time. Response rates of as much as 15% have been reported. Another approach could be to pay an advertising agency to send e-mails to third party opt-in lists. However this is very expensive in comparison to other methods of advertising.

•  Banners and Pop-ups

Banners are the most widely used form of advertising but is also the poorest. The click-through rate is very poor and the industrial average is around 0.4%. Even after a click-through, their response rate is reported to be poor relative to other forms of promotion. Despite their poor response rates, banners remain the most popular of advertising because there is no form of advertising that can generate such a massive exposure. There are only a finite number of searches performed on a search engine on a given day but there are thousands of high traffic sites that can take banners. One can use banner advertising sparingly in the beginning until satisfied that the response rate justifies the cost of the campaigns.

Pop-ups generate a higher response rate but are generally annoying to web surfers and may damage the reputation of the company. Again one can only use pop-ups sparingly in the beginning until one is satisfied with the response rate. Despite the well-known poor response rate of Banners and Pop-ups, it is still necessary to use Banners and Pop-ups because this is the only way of generating huge exposure on the Internet. However, this has to be conducted extremely carefully.

•  Shopping and Auction Sites

Shopping such as Yahoo shopping and Amazon provide a highly effective means for third party online retailers to sell their products. However, these sites are not open to retailers based in Hong Kong . Auction sites such as eBay provide a useful means to sell products. However, prices realized on auction sites are generally very low and therefore auctions will normally be reserved for unsold stock.

•  Affiliate Programs

Affiliate programs are now recognized as one of the most efficient means of generating sales. A web site owner is paid for a fixed amount or percentage of every sale he generate. Affiliate programs are now thought to account for up to one-third of all Internet transactions. The downside of affiliate programs is that they can be very expensive and complicated to maintain, and are also subjected to a high level of credit card fraud.

•  Other online methods

Other online methods of promotion include hit-exchanges, banner-exchanges, FFA sites. However, the response rates of these programs are low and those that take part in them tend to be very small business promoting multi-level marketing, promotional techniques or even fraud. Therefore it is not advised to participate in these programs.

•  Off-line Advertising

Off-line advertising includes advertising in magazines, newspapers, billboards and even television. One may consider advertising in magazines devoted to a related field in different countries

 

4.2.2. Customer Service Management

The Internet has often been criticized for its lack of human contact and interaction. This is a major hurdle for the growth of e-commerce because many prospective customers are very wary of sending their credit card details over the Internet, particularly so to businesses based in another country. Therefore, many consumers would prefer to pay more by purchasing at a physical establishment locally rather than from another country through the Internet. Therefore it is very important to gain the trust of prospective customers, and there by retaining them and gaining their recommendation. The following are aspects of customer services that an online e-business should look at:

(1). Access to customer service – most online business, including provides access by e-mail only. Access can be enhanced by the provision of a telephone number, preferably one that is toll-free. However this is not practical for many businesses because of the time difference between different countries. Where e-mail is the only means of contact, it is essential that they be answered promptly, courteously, and in detail. It is also a good idea to provide a contact form on the web site so as to allow the customer to make inquiries more easily. More specialized third party customer service modules are available where a support ticket system is used. Another possibility is the use of the live chat system which is essential a variation of ICQ where the customer and merchant can communicate in real time.

(2). Timely and Quality Service – when delivering products or services, it is essential that it is done in timely manner. Products should be packed in a presentable manner and sent off promptly. Where services are involved such as web site design, it should be done in a professional manner with the input of the customer.

(3). Contact with customers – online businesses should make every opportunity to contact their customers. The customer should be notified once an order / service has been completed. They should be encouraged to give feedback and also join the mailing list of the company.