The permission in permission marketing is granted through an individual opting in to communications by proactively agreeing to receive communications. Seth Godin says: ‘Permission Marketers spend as little time and money talking to strangers as they can. Instead, they move as quickly as they can to turn strangers into prospects who choose to "opt-in" to a series of communications.’

Online, opt-in is usually achieved through the ubiquitous tick box. It is now a legal requirement enforced by the UK Privacy and Electronic Communications Regulations 2003 that there is a proactive agreement to receive electronic communications (see the detailed guidelines fro the UK Information Commissioner at http://makeashorterlink.com/?X26862EA6). You could even say that one of the core principles of permission marketing is now a legal requirement in many countries.

E-permission Marketing principle 3: ‘Offer selective opt-in to communications’

Although many legitimate marketers are now practicing basic opt-in to an e-newsletter,  principleincentives to gain opt-in

Incentives are needed to obtain permission. Seth Godin talks about offering a range of incentives as part of ‘dating the customer’.

E-permission Marketing principle 5: ‘Offer a range of opt-in incentives

Many web sites now have ‘free-win-save’ incentives to encourage opt-in, but often it is one incentive fits all visitors. Different incentives for different audiences will generate a higher volume of permission, particularly for business-to-business web sites. We can also gauge the characteristics of the respondent by the type of incentives or communications they have requested, without the need to ask them.

Consider, a B2B site for a CRM software vendor which offers white-papers to encourage opt-in. Different whitepapers could be developed for influencers such as junior managers, marketing directors and IT managers who will implement the system. However, without thinking through the incentive options for different audiences, white-papers might exclude the IT managers who are important in the buying process. Best practice in this area is provided by Siebel which has collected a large range of resources relevant to different members of the buying unit and different vertical markets (www.siebel.com/resource_library). Collecting these information resources together and branding them as a ‘library’ or ‘resource centre’ emphasises their value and encourages repeated access.

E-permission Marketing principle 6: ‘Maximise learning, minimise attrition’

As our visitors respond to our incentives, we present them with an online data capture form. This, of course, is our opportunity to understand more about the customer. There is a balance to strike between too many questions which will help us understand our customer well, but may well put-off subscribers and too few questions which will increase the size of the list, but not allow us to qualify interest and determine characteristics. Sometimes over half the people who visit a data capture form used to obtain permission may not complete the process. They are put off by the number of questions or concern about their privacy. Although it can be argued that this is a form of qualification, some good prospects may be missed.

Search Engine Marketing

The Importance of Search Engine Optimization/Search Engine Marketing for B2B Marketers – Part 1 of 2
By: Paul J. Bruemmer

Is Search Engine Marketing cost effective enough to increase profits for B2B marketers? You bet, and here’s why. It’s always been conventional wisdom that the fastest and most efficient way to research products and pricing is on the Web. Now Enquiro has documented survey research on the role of search engines in B2B transactions.

As you know, B2B transactions differ from most consumer transactions because these decisions require coordination between a number of different personnel before the final transaction is made. Therefore, the process requires a period of time between researching the product and placing the order. It’s an ongoing rather than snap decision.

“The Role of Search in Business to Business Buying Decisions” is a well-designed study of approximately 1500 participants responding to a 40-question survey that was validated with pre-testing before implementation. You can download the entire report for free, and here are a few highlights:

• When participants were asked to indicate how they would go about making a B2B purchase, 93.2 percent said they would research the purchase online.
• When asked if they would use a search engine at some point in this task, 95.5 percent of participants indicated that they would.
• When asked where they would start their search for information, 63.9 percent of participants chose a search engine over consumer review sites, e-commerce sites, manufacturer’s sites, and industry portals.
• When taking budget into consideration, manufacturer’s sites and industry portals were the chosen starting place as budgets increased. However, 86.9 percent of participants said they would visit a search engine after visiting those sites.

The study is rich with too many details to cover in this article, but following are some important conclusions:

• Search engines play a dominant role in B2B purchases.
• Search engines are used in the early or mid research phase in the buying cycle.
• Google is favored over other search engines.
• Search engine research takes place at least one to two months before the buying decision.
• Good balance between organic and paid search is necessary. Organic SEO gets over 70 percent of the clicks.
• Position is a factor, with over 60 percent clicking on the top 3 listings.
• Most users decide which listing to click on in seconds upon scanning the page.

With all this qualified traffic originating from search engines, it is more important than ever for B2B marketers, wholesalers, and B2B exchanges to ensure their Web sites are correctly optimized for good positioning in search results. There is also great value in SEO/SEM as a user-friendly marketing tool.

The Uniqueness of Search Engine Marketing

Search engine traffic is highly targeted. That's because potential buyers who find your B2B offerings through search engines are looking for your products and services on their own, so they are predisposed to hear your marketing message. You can’t find a more qualified prospect than that. Here’s what distinguishes search engine marketing from other types of advertising:

Non-Intrusive: Search marketing is a non-intrusive marketing tool. Most advertising, both online and offline, interrupts consumer behavior. If a user goes to a web site for info, up pops an intrusive ad. Reading a newspaper? Ads dominate and force articles to be continued on another page. With search engine marketing, the user is actively seeking your products, services, and information. They are delighted to be driven to your site.

2. Voluntary: Search marketing is the result of user-originated behavior. Your visitors from search engines and directories have voluntarily clicked on your listing rather than any competitors, thus they are motivated to explore your offerings.

Affiliate marketing introduction

In this article we look at how affiliate marketing has become an important tool for those selling online. We will see that for online-only brands such as ASOS.com, a well managed affiliate programme can deliver over 30% of sales. Even for traditional brands which get many brand-related referrals, it may drive double digit percentage of sales.

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E-marketing Strategy - Strategy definition and goal setting

In last months article we looked at approaches to developing an e-marketing strategy and factors to consider for situation analysis and objective setting. In this months article we outline eight key decisions that marketers face when developing an e-marketing strategy. It will be evident that many of these decisions are similar to those for marketing strategy. However, we will highlight ‘e-specific’ issues. There are a lot of issues to cover, so without more ado, let’s examine the 8 e-strategy decisions.

Decision 1. Target market strategies

The first key decision involves the evaluation and selection of appropriate segments and the development of appropriate offers.

In an Internet context, organisations typically target those customer groupings with the highest propensity to access, choose and buy online (See WNIM 5 and 6 for approach and data sources). Segments for targeting online are selected which are most attractive in terms of growth and profitability. Resources are never sufficient to develop comparable quality content and services for all segments.

Some examples of customer segments that are often targeted online include:

• the most profitable customers – using the Internet to provide tailored offers to the top 20 per cent of customers by profit may result in more repeat business and cross-sales;
• larger companies (B2B) – an extranet could be produced to service these customers, and increase their loyalty (e.g. Dell Premier Pages services);
• smaller companies(B2B) –larger companies are traditionally serviced through sales representatives and account managers, but smaller companies may not warrant the expense of account managers. However, the Internet can be used to reach smaller companies more cost effectively.
• particular members of the buying unit (B2B) – the site should provide detailed information for different interests which supports the buying decision, for example, technical documentation for users of products, information on savings from e-procurement for IS or purchasing managers and information to establish the credibility of the company for decision makers.
• customers who are difficult to reach using other media – an insurance company looking to target younger drivers could use the Web as a ‘vehicle’ for this;
• customers who are brand loyal – services to appeal to brand loyalists can be provided to support them in their role as advocates of a brand;
• customers who are not brand loyal – conversely, incentives, promotion and a good level of service quality could be provided by the web site to try and move such customers up the ladder of loyalty.

Decision 2. Positioning and differentiation strategies.

Deise et al. (2000) have suggested that, in an online context, retailers can position their products relative to competitor offerings according to four main variables: product quality, service quality, price and fulfillment time. They suggest it is useful to review these as an equation of how they combine to influence customer perceptions of value or brand.

Product quality * Service quality

Customer value (brand perception) = ---------------------------------------

Price * Fulfillment time

These positioning options have much in common with Porter’s competitive strategies of cost leadership, product differentiation and innovation

The aim of positioning is to develop a perceived differential advantage over rivals’ products. In an e-marketing context the differential advantage and positioning can be clarified and communicated by developing an online customer value proposition (OVP).

This is similar to a unique selling proposition, but is developed for e-commerce services. For maximum effectiveness the OVP should clarify:

• A clear differentiation of the online proposition compared to the companies conventional offline proposition.
• A clear differentiation of the online proposition from competitors based on cost, product innovation or service quality.
• Target market segment(s) that the proposition will appeal to.
• How the proposition will be communicated to site visitors and in all marketing communications.
• How the proposition is delivered across different parts of the buying process
• How the proposition will be delivered and supported by resources – is the proposition genuine?

Decision 3. Resourcing - Internet marketing priorities

Internet marketing priorities have been summarised by Gulati and Garino (2000) as ‘Getting the Right Mix of Bricks and Clicks’. These expressions have been used to refer to traditional ‘bricks and mortar’ enterprises with a physical presence, but limited Internet presence. In the UK, an example of a ‘Bricks and Mortar’ store would be the bookseller Waterstones (www.waterstones.co.uk), that when it ventured online would become ‘Clicks and Mortar’.

Kumar (1999) suggests that a company should decide whether the Internet will primarily complement the company’s other channels or primarily replace other channels. Clearly, if it is believed that the Internet will primarily replace other channels, then it is important to invest in the resources, promotion and infrastructure to achieve this. This is a key decision as the company is essentially deciding whether the Internet is ‘just another communications and/or sales channel’ or whether it will fundamentally change the way it interacts with its customers and channel partners.

Kumar (1999) suggests that replacement is most likely to happen when:

- customer access to the Internet is high;

- the Internet can offer a better value proposition than other media (see the section on this topic later in this chapter);

- the product can be delivered over the Internet (it can be argued that this condition is not essential for replacement, so it is not shown in the figure);

- the product can be standardised (the user does not usually need to view to purchase).

Only if all three conditions are met will there be primarily a replacement effect. The fewer the conditions met, the more likely is it that there will be a complementary effect.

Decision 4. CRM focus and financial control

A further strategic decision is the balance on investment on customer acquisition and retention. Many startup companies have invested primarily on customer acquisition. This resulted in a cost of customer acquisition of hundreds of pounds, euros or dollars which was impossible to recoup without effective retention strategies. For existing companies, there is a decision whether to focus expenditure on strategies for customer acquisition, customer retention or to use a balanced approach.

Agrawal et al. (2001) suggest that the success of retail or media e-commerce sites can be modelled and controlled using a scorecard based on these performance drivers:

1. Attraction. Size of visitors base, visitor acquisition cost and visitor advertising revenue (for media sites).

2. Conversion. Customer base, customer acquisition costs, customer conversion rate, number of transactions per customer, revenue per transaction, revenue per customer, customer gross income, customer maintenance cost, customer operating income, customer churn rate, customer operating income before marketing spending.

3. Retention. This uses similar measures as for conversion customers.

A survey performed by these authors showed that:

‘companies were successful at luring visitors to their sites, but not at getting these visitors to buy or at turning occasional buyers into frequent ones’

Agrawal et al. (2001) have performed a further analysis where they modeled the theoretical change in net present value contributed by an e-commerce site in response to a 10% change in these performance drivers:

Attraction

- Visitor acquisition cost – 0.74 % change in NPV

- Visitor growth – 3.09 % change in NPV

Conversion

- Customer conversion rate – 0.84 % change in NPV

- Revenue per customer – 2.32 % change in NPV

Retention

- Cost of repeat customer – 0.69 % change in NPV

- Revenue per repeat customer – 5.78 % change in NPV

- Repeat customer churn rate – 6.65 % change in NPV

- Repeat customer conversion rate – 9.49 % change in NPV

This modeling highlights the importance of on-site marketing communications and the quality of service delivery in converting browsers to buyers and buyers into repeat buyers.

Decision 5. Market and product development strategies

E-commerce also offers opportunities to expand the scope of a business into new markets and products. As for decision 1 the decision is a balance between fear of the do-nothing option and fear of poor return on investment for strategies that fail. The Ansoff matrix is still useful as a means for marketers to discuss market and product development using electronic technologies. It highlights these options:

1. Market penetration. Digital channels can be used to sell more existing products into existing markets. This is a relatively conservative use of the Internet.

2. Market development. Here online channels are used to sell into new markets, taking advantage of the low cost of advertising internationally without the necessity for a supporting sales infrastructure. This is a relatively conservative use of the Internet, but is a great opportunity for SMEs to increase exports at a low cost, but it does require overcoming the barriers to exporting.

3. Product development. New digital products or services can be developed that can be delivered by the Internet. These are typically information products, for example online trade magazine Construction Weekly has diversified to a B2B portal Construction Plus (www.constructionplus.com) which has new revenue streams. This is innovative use of the Internet.

4. Diversification. In this sector, new products are developed which are sold into new markets. For example Construction Plus is now international while formerly it had a UK customer-base.
Decision 6. Business and revenue models including the marketing mix

A further aspect of Internet strategy formulation is review of opportunities from new business and revenue models. A business model is a summary of how a company will generate revenue, its target customers, core product offering, value-added services and partnership arrangements.

Evaluating new models is important since, if companies do not innovate, then competitors and new entrants will and companies will find it difficult to regain the initiative. Equally, if inappropriate business or distribution models are chosen, then companies may make substantial losses.

One example of how companies can review and revise their business model is provided by Dell Computer. Dell gained early mover advantage in the mid 1990s when it became one of the first companies to offer PCs for sale online. Its sales of PCs and peripherals grew from mid 1990s with online sales of $1 million per day to 2000 sales of $50 million per day. Based on this success it has looked at new business models it can use in combination with its powerful brand to provide new services to its existing customer base and also to generate revenue through new customers. In September 2000, Dell announced plans to become a supplier of IT consulting services through linking with enterprise resource planning specialists such as software suppliers, systems integrators and business consulting firms. This venture will enable the facility of Dell’s Premier Pages to be integrated into the procurement component of ERP systems such as SAP and Baan, thus avoiding the need for rekeying and reducing costs.

In a separate initiative, Dell launched a B2B marketplace aimed at discounted office goods and services procurements including PCs, peripherals, software, stationery and travel. However, this strategic option did not prove sustainable.

The marketing mix also provides a useful framework for developing e-marketing strategy. E-commerce provides many new opportunities for the marketer to vary the marketing mix. E-commerce also has far-reaching implications for the relative importance of different elements of the mix for many markets regardless of whether an organization is involved directly in e-commerce. We explore the implications of the Internet on the marketing mix in next months article.

Decision 7 Organisational restructuring required.

Organisational structure decisions form two main questions. First, is how should internal structures be changed to deliver e-marketing and second how should the structure of links with other organisations be changed to achieve e-marketing objectives? Such decisions should balance the benefits of the changes against the disruption to business operations caused by the changes. There are four basic options for internal structuring of e-marketing:

1. No formal structure for e-commerce. Examples: Many small businesses.

2. An individual, committee or small department manages and co-ordinates e-commerce. Example: Derbyshire Building Society (www.derbyshire.co.uk).

2. A separate business unit with independent budgets. Example: RS Components Internet Trading Company (www.rswww.com)

4. A separate operating company. Example Prudential and Egg (www.egg.com).

Gulati and Garino (2000) identify a continuum of approaches from integration to separation for delivering e-marketing through working with outside partners. The choices are:

1. In-house division. (Integration). Example RS Components Internet Trading Channel (www.rswww.com)

2. Joint venture. (Mixed). The company creates an online presence in association with another player. Waterstones ultimately chose this approach by partnering with Amazon.

3. Strategic Partnership. (Mixed). This may also be achieved through purchase of existing dot-coms, for example, in the UK, Great Universal Stores acquired e-tailer Jungle.com for its strength in selling technology products and strong brand while John Lewis purchased Buy.coms UK operations.

4. Spin-off. (Separation). Example: Egg bank is a spin-off from Prudential financial services company.

Decision 8. Channel structure modifications.