Webonomics: Nine Essential Principles for Growing Your Business on the World Wide Web

By Evan I. Schwartz

The growth of the Internet has far exceeded most everyone’s expectations. Even more exciting are the predictions of electronic commerce.

In an effort to keep up with competition, many companies are launching websites and rushing onto the Internet without completely understanding it. The Internet is much more than colorful pictures and words, it is an interactive communication medium. This new medium makes electronic commerce possible. However, the traditional model of commerce no longer applies to the new medium. Electronic commerce is redefining the rules of buying and selling. There are new economic rules, new types of currency, and new consumer behaviors.

The main objective of Webonomics is to introduce nine principles that the author, Evan Schwartz, feels are essential to succeed at commerce over the Internet. Mr. Schwartz presents stories and case studies as examples of the dos and don’ts of electronic commerce.

1. The quantity of people visiting your site is less important than the quality of their experience.

A website should not be judged solely by the number of visits it receives. In order to construct a sustainable business on the Internet, creators must do more than momentarily seize users attention. Creators should provide a unique value to customers that cause them to visit repeatedly and at length. A website should also do more than just supply information. Each user’s experience on the Internet is different, making it a personal, not mass medium. A website should provide an online community where users can communicate and interact. Online publications will not replace print ones. When creating an online publication, creators must reinvent their print counterparts and offer additional value-added services to attract and retain subscribing customers.

2. Marketers shouldn’t be on the web for exposure, but for results.

Although the Internet does provide global exposure, it is not best suited for mass marketing. Merely displaying a brand name and summarized information about a product on a website won’t be effective on the Internet. Websites should go farther than traditional advertising by allowing customers to drill down to detailed product information. The website should act just as a real salesperson by understanding customer preferences and delivering services that lead to sales. Traditional mass advertising is pushed to customers. The Internet allows customers to pull information, thus requiring the customer’s permission receive information. Instead of trying to reach as many people as possible, websites should be tailored to entice a small number of qualified and attracted customers. The author identifies four reasons that mass marketing is decreasing. He calls them the four C’s: clutter (too many ads reaching customers), clicking (customers changing channels during commercials), cynicism (people don’t believe ads anymore), and competition (from direct marketers and interactive media).

3. Consumers must be compensated for disclosing data about themselves.

For the most part, surfing the Internet is an anonymous activity. Customers value their anonymity when visiting web sites; therefore they should be compensated when revealing their personal information. Customers will give this information only if the exchange is in their favor. They should receive something that is meaningful and of value, such as customized news, entertainment, guidance, or membership in an online community. Collecting customer information can be extremely useful to marketers, however, it should also be used to provide customers with real benefits. For example, Hotwired media provides free information and entertainment to users who visit the site, however, users who choose to register their name and personal information receive personalized views of the content. Advertisers should also provide discounts and rebates in return for customer’s demographic information. In addition, advertisers should inform customers of how their information will be used and allow them the option of canceling.

4. Consumers will shop online only for information-rich products.

The Internet is very good at distributing volumes of information. For this reason, customers will shop for products online that typically require much information prior to purchase. On the Internet, information sells products. Marketers should provide as much information and advice about their products as possible. For example, many consumers extensively use the Internet when purchasing an automobile. An automobile is a product that customers typically research at length prior to purchasing. Although they may not make the final purchase over the Internet, the decision to buy is made through the information that is viewed on the Internet. People typically will not waste time comparison shopping for a product that does not require much information prior to purchasing. For example, customers will not want to search and compare grocery items on the Internet, but they will order groceries online for home delivery.

5. Self-service provides for the highest level of customer comfort.

Allowing customers to help themselves provides the exact level of service at the exact time required. This provides customers with the most appropriate level of customer service. For example, Federal Express was the first shipping company to offer package tracking over the Internet. Customers can go to the FedEx website, enter a package number, and receive detailed tracking information about the destinations of their package. This model of service has not only reduced the number of operators that are necessary at call centers, but also increased the level of customer satisfaction by allowing customers to service themselves. Federal Express set the standard in services associated with package delivery. Competitors such as UPS and the U.S. Postal Office are now forced to provide similar services because customers demanded the same level of convenience and control. The Internet is well suited to provide customer self service because it is available twenty-four hours a day, seven days a week. However, the Internet cannot completely replace customer service personnel. They still will be required to handle complex and complicated situations, but no longer will be burdened with frequent, simple, and routine questions.

6. "Value-based currencies" enable you to create your own monetary system.

"Value-based currencies" are similar to the frequent flyer miles that airlines offer. Companies reward customers with points that can be used to purchase goods and services. Many times these points can be used and accrued across industries, thus creating a new monetary system. The author believes that "Value-based currencies" will be most successful in establishing relationships with customers over the Internet. This is a point on which I disagree with the author. The author says the use of digital cash on the Internet will fail because it adds an additional layer of complexity to the purchase of goods and services. I believe that the use of point and reward systems also adds a layer of complexity that customer will shun. Reward points for purchases are fine for some customers, but many do not want to bother tracking all of these points accumulated at various vendors. In addition, initial purchases have to occur from somewhere, either credit card or debit. The initial or ultimate monetary system at work is actual cash. Business cannot just issue points to customers that haven’t purchased something just to establish their monetary system. Frequent flyer miles are traded because they have real value, that is not only the value of the goods and services they can purchase, but also the dollars that were spent to acquire those frequent flyer miles. So instead of simplifying buying and selling on the Internet, the author is actually proposing the Internet operate with many monetary systems, one that requires credit or debit payments to acquire points, and many others that issue and accept points. Potentially each vendor could establish his or her own system of points. Lastly, I believe that most people are comfortable using credit cards when placing orders on the Internet and most merchants are comfortable accepting them. I don’t think this trend will change anytime soon.

7. Trusted brand names matter even more on the web.

Brand names are everywhere we go. Brand names save customers time when purchasing goods and services because they allow the customer to make certain assumptions about them. The customer who selects the familiar brand name doesn’t have to evaluate the alternatives. Because of the myriad of choices available, this becomes even more important on the Internet. Commerce over the Internet is relatively new, so there are relatively few established brands on the Internet. Businesses are quickly attempting to establish brands that people will recognize and turn to automatically. Such is the case with Amazon.com. Amazon initially became well known for selling books. Amazon has since branched out into other items such as music, DVDs, and most recently auctions. However, most people who do a little research soon discover that they can find a much better price at book sites other than Amazon. So why do people continue to use Amazon’s services? The reason, Amazon has become a brand name that customers trust and recognize. In addition, established companies that are considering Internet ventures should seek to exploit their existing brand names.

8. Even the smallest business can compete in the web’s global "marketplace."

The availability of the Internet allows vendors to reach customers throughout the world. With even a small amount of capital a business can quickly be competing on an international scale. A well-designed website can make a small company appear as if they are a large established company. Companies should consider the international implications of selling goods and services globally. Most of the content on the Internet is in English. If a company wants to compete in a particular country, they should think about the cultural implications of the website such as language and context.

9. Agility rules – web sites must continually adapt to the market.

The competition on the Internet is fierce. Companies must constantly monitor changes in the market and quickly adapt to them. Competitive advantages on the Internet rarely last more than a few months. Companies wishing to succeed on the Internet must continuously and proactively experiment with Internet products and services. Customers provide the best feedback when evaluating these new ideas. Companies should pay close attention to the suggestions that customers offer. This is the best way for companies to stay on top of rapid changes in the market.