Keys to Success for Selling on the Internet

Faced with an ever-growing list of questions about how toleverage the Internet, many managers are increasingly reluctant, or at the veryleast perplexed, about how to sell over the Internet,” says Tom Knight,principal at Sibson & Company, global management consulting firm.

He adds, “This is particularly true in commercial businesseswhere many managers believe that selling over the Web is for consumer productsor commercial products that have become commodities.”

Knight says, “If you, or your company, hope to break throughby selling through e-channels (e-commerce), regularly reviewing the followingquestions will help ensure your success.”

1. What productsshould we sell and to which segments via e-channels?
Three critical inputs are required to make this determination: a) anunderstanding of the customer’s purchasing preferences, b) a product levelunderstanding of the cost to serve each segment via current channels, and c) aproduct level estimate of the cost to serve each segment via e-commerce.

2. How should were-define sales roles in light of the addition of e-commerce channels?
You must know: 1) Which activities would provide additional customer value? 2)Which activities would enable the firm to justify a higher price, and 3) Whatskills and capabilities do sellers require to take part in these activities?

3. How should weadjust our sales coverage models in light of our new channels?
Once decisions have been made about the new role of sales people, the firmmay begin to optimize its sales coverage model by considering: 1) What type ofseller is required for each account? 2) How many accounts can each seller covergiven his new role, and 3) Which accounts offer the most growth?

4. What incentivesshould we deliver to ensure the success of e-channels?
Ensuring the success of e-channels with incentives is a complex issue. Onone hand, organizations must decide how to reward sales people for salestransactions in which they play a part, as well as for marketing the use ofe-channels to customers.

On the other hand, managers must decide whether and how toencourage customers to conduct business over e-channels, and how to do so in acost-effective manner.

5. What type ofcustomer experience should we provide within e-channels?
As Web surfers know, all good Internet sites create a “reason to return.”Unfortunately, in the world of e-commerce, the equation is not so simple; notonly must the site be enjoyable, but it also must allow customers to dobusiness the way they want to do it.

6. What is requiredfor us to continue to deliver value with e-channels?
Many managers start e-channels because they allow companies to get intobusiness fast, but they fail to realize that faster order capture also meansgeometrically faster delivery.

Fast delivery requires superior integration of a company’sinformation systems, from order capture and entry to processing, fulfillment,shipping, and billing. Delivery is also complicated by the fact that orders anddeliveries now come in greater number and smaller increments, making it harderfor companies to achieve the same economies of scale of distribution as theyonce knew when they shipped by the freight car.

7. How should we thinkabout pricing our products?
The challenge of pricing for e-channels is complex and ongoing.Comparison-shopping is easier over the Web, particularly for non-commodityproducts. Managers must first decide whether discounts are warranted on certainproducts within certain segments. Then they must go to work creating a pricemonitoring and modeling system that frequently reviews the competitiveness oftheir prices and the profitability of products, as well as customers.

8. What decision support tools and information arerequired to manage selling over e-channels?
With the added complexities of regular customer re-segmentation, pricingmodifications, and leveraging free time created by new sales roles, a varietyof information and decision support tools are required.

Leading companies have learned to identify information anddecision support system requirements by thinking in terms of “exploitableexceptions” in their interactions with customers. The challenge is to equipsellers and managers with the information and decision support tools necessaryto take fast, full, and complete advantage of opportunities that yourcompetitors have not yet noticed.

9. What’s our returnon e-commerce?
As in most business cases, returns depend on where, when, and how much youinvest. E-commerce’s potential to affect all functions and units of a businessmakes calculating an ROI an illusory exercise. However, approximations arepossible, and most who have run the numbers agree that the returns are huge.

SOURCE: Sibson, Chicago, IL 1999.