Chapter 16

Chapter 16

Launching a Successful

Online Business

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Learning Objectives

1. Understand the fundamental requirements for initiating an online business.

2. Describe the funding options available to startup businesses.

3. Evaluate the options for hosting Web sites.

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Learning Objectives (cont.)

4. Understand the processes and business decisions associated with managing Web site development.

5. Understand the importance of providing content that meets the needs and expectations of the intended audience.

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6. Evaluate Web sites on design criteria such as appearance, navigation, consistency, and performance.

7. Know the techniques of search engine optimization to obtain high placement in search engines.

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8. Understand the benefits of customer relationship management through customer self-service, listening to customers, and increasing trust.

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OBO Sets Its Goals for Success• The Problem

– OBO sells protective gear for field hockey goalkeepers

– OBO’s unique three-dimensional thermo-bonding manufacturing process produces equipment that is shaped to reflect the way the body moves

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OBO Sets Its Goals for Success (cont.)

– By manufacturing a quality product and listening to the customer, OBO has become the market leader

– OBO is based in a small provincial town in New Zealand that is a very long way from its principal markets

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– OBO sells a niche product that is best sold thorough agents or stores to ensure a proper fit

– How does OBO use its Web site to market an experiential product to a global market from New Zealand?

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• The Solution– The goals of the obo.co.nz Web site are:

• community building• product sales• research and development

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– Community building happens through:• online discussion forums• sponsored players• an image gallery

– The principal marketing and sales goal of the Web site is to:

• convince the visitor of the value of the product• direct the customer to a store or agent to

make the purchase

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– The Web site is a support mechanism for the brand and the sale of equipment through the agents

– Research and development goal is met through:

• online surveys• solicitation of players’ opinions of the products• focus groups

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OBO Sets Its Goals for Success (cont.)• The Results

– The OBO Web site is most successful at community building

– The site also builds community by promoting a goalie-friendly approach to OBO’s customers

– Online product sales are modest because the Web site supports, not competes, with OBO’s agent network

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– Online sales are expected to grow because OBO has introduced a new line of clothes designed to be sold exclusively through the Web site

– The focus groups deliver high-value feedback at almost no cost

– The discussion forums contribute to both community building and feedback about OBO’s product

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OBO Sets Its Goals for Success (cont.)• What we can learn…

– A small company with a great product is using its Web site to reach its target markets in distant countries

– OBO is using the site to support business goals, as well as to meet the needs and expectations of its target audience

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– The Web site is simple and well designed, includes:

• “attractors” that encourage customer interaction and keep customers coming back

• content that promotes cross selling• effectively promotes sustainable customer

relationships

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Doing Business Online:Getting Started• Business formation process:

– Identify a consumer or business need in the marketplace

– Investigate the opportunity– Determine the business owner’s ability to

meet the need

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Doing Business Online:Getting Started (cont.)

• Requirements that reflect the online nature of a business:– Need to understand Internet culture

Customers are active in how they absorb and use information, and the Internet is a personal, helping, and sharing place for most users

– Consider the nature of appropriate products and services

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• E-business planningBusiness plan: A written document that identifies a company’s goals and outlines how the company intends to achieve the goals

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– Biggest difference in e-business planning is for the ontrepreneur to recognize that the Internet is unlike any other sales channel; companies can:

• interact with consumers with both reach and richness

• introduce new and innovative business models

• distribute information at the speed of light at almost zero cost

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– An existing brick-and-mortar business looking to move online also needs a:

Business case: A document that is used to justify the investment of internal, organizational resources in a specific application or project

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• Business case template includes:– Goals– Cost savings– New revenue– Extra benefits– Cost of the solution– Net benefits– Recommendation

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• Funding the online business– Venture capital (VC): Money invested

in a business by an individual or a group of individuals (venture capitalists) in exchange for equity in the business

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– Angel investor: A wealthy individual who contributes personal funds and expertise at the earliest stage of business development

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– Incubator: A company, university, or not-for-profit organization that supports businesses in their initial stages of development

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Doing Business Online:Building the Web Site• Classifications of Web sites

– Informational Web site: A Web site that does little more than provide information about the business and its products and services

– Interactive Web site: A Web site that provides opportunities for the customers and the business to communicate and share information

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Doing Business Online:Building the Web Site (cont.)

– Attractors: Web site features that attract and interact with visitors in the target stakeholder group

– Transactional Web site: A Web site that sells products and services

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Doing Business Online:Building the Web Site (cont.)

• Building the Web site1. Select a Web host

2. Register a domain name

3. Create and manage content

4. Design the Web site

5. Construct the Web site and test

6. Market and promote the Web site

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Web Site Hosting

• Web hosting options:– Storebuilder service: A hosting service

that provides disk space and services to help small and micro businesses build a Web site quickly and cheaply

– ISP hosting service: A hosting service that provides an independent, standalone Web site for small- and medium-sized businesses

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Web Site Hosting (cont.)

– Web hosting service: A dedicated Web site hosting company that offers a wide range of hosting services and functionality to businesses of all sizes

– Mirror site: An exact duplicate of the original Web site, but it is physically located on a Web server on another continent

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– Co-location: A Web server owned and maintained by the business is placed in a Web hosting service that manages the server’s connection to the Internet

– Self-hosting: When a business acquires the hardware, software, staff, and dedicated telecommunications services necessary to set up and manage its own Web site

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• Contracting the Web host– The search for an ISP host:

• contacting local ISPs for information• asking others in the business community for

recommendations• consulting with local telecommunications and

computer user groups

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– When a short list of potential ISPs has been compiled, a RFQ can be used to ensure that complete and consistent bids for provision of service are submitted

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• Consider: – service quality

measures– guaranteed uptime– number of clients– current traffic rates

– software support – security– site traffic analysis– technical support

services– costs

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• Registering a domain name– Domain name: A name-based address that

identifies an Internet-connected server– Domain name registrar: A business that

assists prospective Web site owners with finding and registering a domain name of their choice

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• Selecting a good domain name:– Make it memorable– Make it easy to spell– Avoid numbers and special characters– Keep it short and sensible

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– Be flexible– Think about the future– Give products their own name– Investigate the competition– Avoid trademarked names

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Content Creation and Management• Content: The text, images, sound, and

video that make up a Web page

• Commodity content: Information that is widely available and generally free to access on the Web

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Content Creation and Management (cont.)

• Premium content: Content not available elsewhere on the Web

• Cross selling: Offering similar or related products and services to increase sales

• Up selling: Offering an upgraded version of the product in order to boost sales and profit

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• Up-selling activities usually include offering products with a different design, color, fabric, or size– Promotion

secondary content that can increase sales or improve customer service

– Commentfurther explanation about the product can be offered after introducing the product

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– Creating content• collecting all the content that is currently available• value of additional content is assessed for

inclusion in the Web site• consider how each bit of content will serve the

site’s goals and whether customers will want it or expect it

• created by customers through reviews etc.

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– Buying content• Content can be purchased or licensed• Content that is acquired from outside sources

should be supplemental content, not primary content

• If primary content is purchased and no value is added, visitors will go to the originating site and not return

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– Personalizing contentPersonalized content: Web content that is prepared to match the needs and expectations of the individual visitor

– Delivering content by e-newsletterE-newsletter: A collection of short, informative articles sent at regular intervals by e-mail to individuals who have an interest in the newsletter’s topic

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– Writing effective content• Write scannable text• Break long sections into smaller ones with clearly

noted headings• Grab the reader’s attention at the beginning of

every page and section• Write in a tone and with language that reflects the

purpose of the material

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• Consistency in site content can be achieved using a style guide

• Make the material available in a .pdf file when necessary

• Create compelling links that encourage a reader to click

• External links can offer good content for visitors• Avoid material that is not highly valued by

customers

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• Content managementContent management: The process of adding, revising, and removing content from a Web site to keep content fresh, accurate, compelling, and credible

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– Content testing—frequent checks of material for:

• Accuracy• Clarity• Typos

– poor punctuation– misspelled words– inconsistencies

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– Content removalExpired pages should be deleted or moved to an off-line location that can serve as an archive

– Content management softwareAllows nontechnical staff to create, edit, and delete content on the company’s Web site

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– Purchasing a content management software1. Do a thorough needs analysis

2. Document requirements and discuss with at least two companies that have purchased a CMS

3. Start small with CMS that has a trial version or low entry cost

4. Assess the system after 30 days

5. Repeat the assessment process regularly

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Web Site Design

• The goal of any Web site is to deliver quality content to its intended audience and to do so with an elegant design

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Web Site Design (cont.)

• Information architectureInformation architecture: How the site and its Web pages are organized, labeled, and navigated to support browsing and searching throughout the Web site

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• Web site design criteria:– Navigation– Consistency– Performance

– Appearance– Quality assurance– Interactivity– Security– Scalability

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– Site structure is:• hierarchical• circular • linear

– Getting the homepage right is critical– All pages within the site should link back

to the homepage

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– Deep linking: Entry into a Web site via the site’s interior pages, not the homepage, typically through search engines or external links

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• Organizing and labeling the site support browsing and searching:– Obey the three-click rule– Place the most important content at the

top of the page– Keep pages short

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– Keep page layouts simple– Follow commonsense publishing rules– Make the primary content easy to find– Show the products in many ways

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• Site navigationSite navigation: Aids that help visitors find the information they need quickly and easily

– The simplest navigation aid is a navigation bar at the top and bottom of each page

– Frame: An HTML element that divides the browser window into two or more separate windows

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• Other suggestions for designing successful Web site navigation:– Use small lists and menus– Do not rely entirely on graphical

images for navigation– Make the homepage easy to find– Integrate navigation into content– Avoid frames– Follow accessibility guidelines

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• Consistency– Look and feel: The elements that visually

distinguish a site from any other, including layout, typeface, colors, graphics, and navigation aids

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– Elements of page content also should be consistent:

• company logo• contact information• short, descriptive title

– Design a Web site for all of these browsers, but to use designated World Wide Web Consortium standards

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• Performance– Speed ranks at or near the top of every list

of essential design considerations– The most widely recognized cause of long

download times is a large graphic or a large number of small graphics on a single page

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– 12-second rule: Every page on the Web site should appear within 12 seconds

– 4-second rule: something should appear in the visitor’s browser in 4 seconds or less

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• Colors and graphics rules:– Match the expectations of the target

audience– Use standard colors– Follow color standards– Use complementary colors– Specify the background color

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– Use bandwidth-intensive features selectively

– Design for visually or hearing-impaired visitors

– Use the ALT tag– Avoid distracting features

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• Quality assurance– make sure the Web site design is properly

tested before it is launched– ensure that it continues to perform up to

expectations after launch

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– design the site for easy maintenance– responsible owners frequently test all

features of the site personally– quality Web sites are tested regularly– Web site performance is also an ongoing

concern

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Web Site Construction

• Who builds the Web site?– Internal staff, an outside contractor, or a

combination of these two– Internal Web site development: The

process of building and/or maintaining the Web site with company staff

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Web Site Construction (cont.)

• Companies build their own site because:– Use of existing in-house expertise– Desire to build in-house expertise– Protection of proprietary technologies– Tighter control and responsiveness

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• External Web site development: When the business hires another firm to build and/or maintain the Web site– Speed to market– Not a core competency– Access to special expertise

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• Partnering Web site development: When a mixture of internal and external development is used to build and/or maintain a Web site

The principal downside to partnering is the additional overhead of contract and relationship management

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• Web site construction: The initial content creation, design, programming, and installation phases of a Web site’s development

• Web site maintenance: The on-going process of keeping the Web site open for business, managing content, fixing problems, and making incremental additions to the site

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• Managing Web site construction:– Start with a plan– Set goals early and stick to them– Use a fixed-price contract– Justify graphics and features

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• Accepting credit cardsCard-not-present (CNP) transaction: When there is no signature and no verification of the credit card signature by the merchant

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• To accept credit cards online a company must:– Open a merchant account– Purchase credit card processing software– Integrate the credit card processing

software into the transaction system

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Web Site Promotion

• Internal Web site promotion– Include content that establishes the site as

a useful site for customers to remember so that they return and make a purchase

– Signature file: A simple text message an e-mail program automatically adds to outgoing messages

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Web Site Promotion (cont.)

– Search engine optimization (SEO): The application of strategies intended to position a Web site at the top of Web search engines

– The key to SEO is understanding the algorithms the search engines use to determine the ranking of the results returned to the searcher

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• Strategies for keyword creation and placement:– Create keywords the target audience is

most likely to use– Use specific phrases, not general

keywords– Optimize the title

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– Use meta tags• Meta tag: An HTML element that describes the

contents of a Web page

– Use keywords early and often in page content

– Include keywords in ALT tags– Avoid spider-hostile features– Do not spam search engines

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• Strategies for maximizing link popularity:– Create content that promotes linking– Seek reciprocal links– Determine what sites already link to the

target site

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– Visit competitors– Seek highly placed links– Seek links from well-known sites– Do not use free-for-all (FFA) or link farms

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Customer Relationship Management• Customer relationship management

(CRM): A customer service approach that focuses on building long-term and sustainable customer relationships that add value for the customer and the company

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Customer Relationship Management (cont.)

• Using content to create customer relationships– Provide membership– Personalize the user experience– Support users– Communicate via the community– Reward visitors– Market effectively– Set up smart affiliate relationships

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• Customer self-service with FAQ pages:FAQ page: A Web site page that lists questions that are frequently asked by customers and the answers to those questions

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• Characteristics of an effective FAQ page:– The FAQ page is easy to find– The FAQ page loads fast– The questions are easy to find

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– The answers are written from a customer’s perspective

– The answers do not repeat information offered elsewhere

– Offer an opportunity to ask a question not on the FAQ

– The FAQ page is never done

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• Listening to customers– Mine e-mail for information– Survey customers quickly and frequently– Create an e-mail list

E-mail discussion list: A group of people who share a common interest and who communicate with each other via e-mail messages managed by e-mail list software

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– Create a discussion forumElectronic discussion forum: A portion of the Web site where visitors can post questions, comments, and answers

– Create a chat groupChat group: A portion of the Web site where visitors can communicate synchronously

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• Increasing trustTrust: A psychological state-of-mind when two or more parties are willing to pursue further interactions to achieve a planned goal

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• Ways to increase trust:– Tell the customer about the company– Include testimonials from loyal,

satisfied customers– Provide numerous opportunities for

feedback– Answer customer e-mail promptly– Provide information to the customer

about an order

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Managerial Issues

1. What does it take to create a successful online business?

2. Is creating a Web site a technical task or a management task?

3. How do we attract visitors to the Web site?

4. How do we turn visitors into buyers?

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Summary

1. Fundamental requirements for initiating an online business.

2. Funding options for a start-up online business.

3. Web site hosting options for an online business.

4. Web site construction options for an online business.

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Summary (cont.)

5. Provide content that attracts and keeps Web site visitors.

6. Design a visitor-friendly site.

7. High placement in search engines is key.

8. Customer relationship management can contribute to success.

Documents

Chapter 16