The next generation of Net tools

First they established their presence on the Web. Then they enlivened their sites with interactive and e-commerce components that went well beyond "brochureware." Now, marketers are exploring a variety of Internet-based tools to take their online customer relationships to a whole...

First they established their presence on the Web. Then they enlivened their sites with interactive and e-commerce components that went well beyond "brochureware." Now, marketers are exploring a variety of Internet-based tools to take their online customer relationships to a whole new level.

Think of it as: Internet Marketing: The Next Generation.

While few people are willing to call them "killer apps" just yet, it seems that permission-based e-mail marketing, online behavioural profiling, and more customized content delivery are definitely on the rise.

"Where the industry has moved rapidly is anything ‘e’ is now less about advertising and more about building relationships online, and the core of that really is customer relationship management," says David Feldt, vice-president and director of e-business solutions at Toronto-based direct response agency Impiric.

"The major trend that we’re seeing now…is a realization that the technology can help you retain your customers, but you have to have the strategy in your organization to be able to effectively do that," says Robert Clarkson, general manager of Carlson Marketing Group. "And sometimes that means you have to change the organizational structure because marketing organizations of companies tend to be geared towards acquisition [of customers]."

While Internet companies are generally sophisticated at using direct communications, says Clarkson, it’s still "early days" for traditional marketers.

One of the chief obstacles facing Canadian corporations that want to leverage their Internet strategies, says Feldt, is the lack of financial support.

"The case really hasn’t been made that this can make money for us, so let’s do it," he says. Such initiatives take money, time and effort to build, he adds, because they tie in to a company’s databases, call centres, inventory systems, distribution, accounting systems and all its business activities. Still, he predicts that a significant number of Canadian companies are developing initiatives that will be ready by the fall or the end of the year.

Among those marketers that are on the verge of taking their Web strategy to the next level is The Shopping Channel. It will be using e-mail direct marketing to deliver weekly information updates and monthly product category newsletters to customers’ in-boxes by the beginning of this summer. The Toronto-based broadcast retailer has built a list of 50,000-plus customers who have opted to receive information from The Shopping Channel by e-mail.

"Our customers are fanatics about our brand and about what we do," says Ted Starkman, TSC’s vice-president of electronic commerce. Based on inbound e-mail to its customer service group, the company sees a "constant request for a further dialogue," says Starkman. This provides the company the opportunity to tailor its one-to-one communications to individual customers’ interests.

"We really can see, over time, niching down into as small a group as possible, so it will get to a point where Joan Rivers devotees will have an e-mail hit their box just before her next appearance – [bringing] it down right to the star or to the particular product line," says Starkman.

Meanwhile, at Hudson’s Bay Co., both the Bay and Zellers have already experimented with e-mail direct marketing. The company’s now defunct HBC Outfitters store in Toronto first made the move in fall 1998. Zellers has been offering a monthly infant products newsletter since last summer and the Bay has been producing a monthly cosmetics newsletter for the last few months. The retailer is also looking to produce general newsletters for Zellers and the Bay in the "short-term future," says Michael LeBlanc, director of HBC Online.

The company has been pleased with clickthrough rates so far. "If you take a standard of 2%, it’s consistently been above that," LeBlanc says, adding that links to the sites to register for contests help to drive rates higher.

LeBlanc says the newsletter medium allows direct marketers to convey a message quickly and cheaply and that new technologies are making it possible to create e-mails with images that allow the communication to go beyond just straight text.

For Sears Canada, the focus is on making its Web site more of a place for one-to-one interaction by taking a service-oriented approach. Examples include the retailer’s wedding and baby gift registries – available online since last November – which incorporate customer self-service and self-profiling features. The major appliances section, launched online last fall, also brings an element of self-service by allowing customers to specify the kind of product they’re looking for in particular product categories. The site then narrows down the list of products to those that fit the customer’s preferences, and does a side-by-side comparison.

For the future, "part of the strategy is pretty clearly to encourage the customer to disclose information for which we’re going to exchange some kind of value," says Bruce Clarkson, Sears’ general manager, relationship marketing. "And to emphasize the security, the privacy and the fact that the customer is the agent to control their information."

Since last November, computer giant IBM has been implementing two features designed to produce a "seamless channel" between its main Web site and its call centres. A "call me now" button sends a message to a call centre representative instructing them to call the customer by telephone within two minutes. Alternatively, the "chat online" button opens a window on-screen in which customers can have a real-time discussion with a rep. The features recognize the area of the site that customers are visiting and direct their requests to the rep with the appropriate knowledge. Both features are being used with Toronto and Atlanta call centres.

"We’ve learned as a company that when people go to the Web, there’s a very high percentage of people [who] want customer assistance before they’ll actually buy on the Web," says David Ball, Web, Tele/Web executive,, Americas. "These features can provide customers with information needed to complete transactions, and save customers who use their phone line to connect to the Internet from having to log off to get in touch with the call centre."

Ball says IBM is considering adding features that would recognize when a customer might need some live assistance, such as when experiencing difficulties downloading software. The program would be set up to ask the customer if they’d like to receive assistance, and with such features as text chat, a customer service rep would be able to view the information on the customer’s computer screen to help them, say, complete a product configuration.

Scotiabank is applying a direct marketing approach to an online demonstration it has installed on its Web site in an effort to convince customers to use its Scotia OnLine banking service. This month, the bank is launching a repeat campaign of an earlier successful effort that began last September.

"We’ve built one of the most easy-to-use, interactive demonstrations," says Michael Seaton, senior manager, database marketing at Scotiabank Retail Marketing, claiming that other banking institutions have generally failed to fully leverage the product demonstration capabilities of the Web.

"Conversion rates [for the initial campaign] were extremely encouraging, and resulted in the campaign being extended, as well as repeated," he says.

Customers whom the bank determines as likely to bank online will receive a direct-mail piece with a PIN inviting them to check an online demonstration. When customers come online, the welcome page and certain elements of the demonstration are personalized. The effort is also being supported by demo kiosks in selected branches and a contest to win a Volvo.

One benefit of using Internet direct marketing tools is cost-effectiveness, says Carlson Marketing Group’s Clarkson. "People who go to your Web site are there for a reason, so by definition they’re targeted," he says.

That said, Colin Tener, president of Toronto-based Tener Solutions Group, cautions that many products that offer off-the-shelf Internet direct marketing solutions can have their downsides. "Very often," he says, "those are black-box solutions, so that the rules that people are using to send messages are embedded in the software, and the end user doesn’t have a good ability to figure out why they received a particular message."

Given that fact, he says, there is a strong need for Internet marketing applications to have better test and control procedures. He predicts that significant strides will be made in that area over the next 12 to 24 months.

Also in this report:

- Why the current opt-in e-mail model won’t work: Three major problems – and a bunch of minor ones – to consider p.D14

- System links agents, data warehouse: Pivotal combines technologies required to build successful e-relationships p.D17

- Direct Tech p.D18

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