eshopping:
the consumer first, virtually

Companies are seizing on new technologies that enable them to switchfrom mass marketing to target the individual consumer, but it's a mixed blessing, according to Burke Campbell and Murray Conron.

The Ottawa Citizen 
Monday 29 May 2000 

 

For spring break I booked my flight to a tropical isle via the World Wide Web. No sooner had I paid for my trip at the travel Web site than banner ads on my screen were inviting me to dine at the island's finest. Then some e-mails came, promoting sightseeing tours and complimentary scuba classes. Then the phone rang, as the new pet parlour down the street offered to watch the house and walk Lobo twice a day while I was away. So how did they learn about my trip? My dog? His name?" 

All this was more than happy coincidence for our pampered traveller, of course. Increasingly, corporations are moving from mass marketing to new strategies that market to the individual. For years they've splurged on print ads, radio and TV commercials to reach millions, but now businesses can use more discreet methods, especially effective on the Web, to analyse consumers' buying habits. Personalized ad campaigns simply have more impact and garner far more success. But you may find this new "Customer Intimacy" an invasion of your personal privacy. 

What's driving these new marketing initiatives? The rapid expansion and popularity of the Web, combined with the spectacular growth of electronic commerce or e-commerce, that's what. According to Forrester Research, Inc., Canadian retail revenues from online business will rise from $2.2 billion this year to $17.7 billion by 2004, from 17 per cent of all households to 45 per cent, as each household that shops online will triple spending to more than $3,300 in the same period. 

The more we can learn about you, the better we can entice you back, figure the online businesses, as they spiff up their Web sites to exploit the time you spend with them. 

New Internet surveillance tools include the "cookie," which is a text file your browser writes on your hard drive, that identifies you by number on any Web page and whenever you return to the site. 

Cookies benefit both vendor and visitor. For example, amazon.com, the highly successful Web bookstore, uses your cookie to fetch that cart you left in the aisle, so you can continue your shopping spree. 

You don't have to check out your purchases in one visit. The vendor uses cookies to present only fresh material and the kind you like to see, based on your previous selections or "behaviour." 

Then there are "Web bugs," which act like spy cams. Invisible on the Web page, they record your Internet port address (a series of numbers), the time and duration of your visit, and the cookie identifier. You remain personally anonymous, though, unless you supply your e-mail address. 

Augment this information with other records about you or your "type" from a data warehouse, and the vendor has an exquisitely detailed portrait of your daily schedule, interests and preferences, income and spending habits. Advertisers use these buyer profiles to select the banners that flash on the screen as you visit other Web sites. 

If you're concerned about all this snooping you'll be happy to know that you can disable your browser from storing cookies. 

E-Business Lets You Know Your Customer, Just Like in the Old Days 

"As a business person, I can now use technology to do what the local shopkeeper, with only a small number of customers, used to do", notes John McIntyre, vice-president of e-business strategy at SAS Institute, the world's largest privately owned software vendor. 

"Whenever you entered the store, the shopkeeper greeted you and was committed to build that relationship, to learn more about you, so that each time you returned, he or she was better stocked and ready to sell you what you came for," Mr. McIntyre explains. 

"Let's say, you always had relatives staying at Easter and always baked them a holiday recipe. The shopkeeper would be sure to stock the special supplies for you for just this occasion. 

"That's how commerce used to be done, but we got away from that when mass marketing came along, with mass customer acquisition and product-centric selling," Mr. McIntyre recalls. 

"Now we can go back to that style, and the bonus is we can do it for millions of people, because the technology lets us remember literally all our previous dealings with our customers. And we don't have to transact face-to-face -- the success of the Web has shown us that." 

Business to Business: Company Supports Business Partners Online 

To maintain a detailed marketing strategy, businesses find they must manage the entire supply chain, from head office to the consumer's doorstep. This requires sharing information and co-ordination with the "middle" suppliers and resellers. For example, Newbridge Networks, based in Kanata, designs, manufactures and markets wide area networking solutions to the 350 largest telecommunication service providers in more than 100 countries. 

Newbridge has streamlined product delivery and technical support by launching a global online sales and marketing system. Paul Haskins, director of e-business strategies, explains: 

cont'd ...
 

"We're now understanding more of our customers' behaviour, trends and stimuli. By applying market analysis from software like the SAS System, which we already use in data mining and process control, we ultimately improve the effectiveness of our Web site, our marketing programs, our e-servicing and our customer interaction in the channel and end-user markets." 

Bank Hones Marketing Campaigns With Unprecedented Success 

John Tulley, NCR Canada's director of relationship technology solutions, underscores how technology can revitalize the business bond with customers, as part of the new focus called "Customer relationship management," or CRM. "Business, government, and especially financial institutions are realizing the strategic power contained in warehoused data. They see how CRM technology helps them build rapport with the individual customer." 

For example, the Royal Bank, with more than 10 million consumer and corporate accounts, uses NCR's Value Analyzer, software that monitors each transaction for profitability and selects the best opportunities to sell the customer a useful service. Royal's marketing campaigns have targeted customers so effectively that favourable response rates have multiplied many times over. 

Web marketing requires highly specialized expertise. Headquartered in Norwalk, Connecticut, Modem Media is a full service firm that helps companies develop and market e-business models and evolve marketing strategies. 

"Customer knowledge is key to business success," agrees Connie O'Brien, vice-president and managing director of Modem Media in Toronto. 

However, the companies must toe a fine line between customer intimacy and privacy. 
"The privacy statement is crucial. To establish trust, an online business must openly declare what it will or will not do with collected information," Ms. O'Brien cautions. 

Modem Media's policy, in part, reads: "We collect standard, non-personally identifiable (anonymous) information about you, such as the server into which your computer is logged, service provider, local time, your browser type ... and how you use the information you receive on the Web pages, also called "clickstream" ... We do gather personally identifiable information on our Web site only when and where you volunteer to provide it ... which may be processed for us by outside vendors, who have an obligation of confidentiality to us with respect to such information, who keep it only for Modem Media's benefit and who do not give it to any third parties." 

The Doubleclick Controversy 

Just the thought that each keystroke at the computer may reveal personal information raises concerns for some consumers. In some cases, this alarm has turned to action. In California, the New York-based advertising firm DoubleClick was recently hit with a lawsuit from a woman who claimed the company had used high-tech stealth when she visited health-related Web sites, and so had violated her privacy rights. Although DoubleClick stood by its privacy policy and denied any misuse of information, the incident reflects how much consumer groups want companies to be accountable for any secret gathering of information and for any damages resulting from its careless dissemination. 

Legislation 

Litigation has pressured many states to formulate laws to protect consumers. In Canada, Bill C-6, to become effective January 2001, will include personal information protection and an Electronic Documents Act as part of the federal government's e-commerce strategy. 

The federal privacy commissioner will have the power to receive and investigate complaints and attempt dispute resolution. Unresolved disputes will escalate to the Federal Court. 

'Let my broker find me the best deal' 

While many buyers feel victimized by this encroachment on their privacy, others apply Net tools proactively, directing their own prospecting for goods. Increasingly, businesses and consumers alike are using "price brokers" to find the lowest prices on the Net. Log on to particular sites, list the product, quantity and your location, then just wait for the returns as your "intelligent agent" combs hundreds of Web catalogues for the best deals in office products, bulk foods, camping equipment, CDs or books. You can try this bargain-hunting right now at sites like priceline.com or evenbetter.com, or with shareware agents like Winshare's BestPrice. 

A Mobile Marketplace 

The same Web intelligence is set for interactive and individualized marketing on wireless devices, as cell phones, Palm Pilots, laptops and other digital portables explode into a global marketing network. These devices provide an immediate point of contact between vendor and consumer anywhere. Businesses and brokers that successfully market via this new medium (already dubbed "mobile-commerce" or "m-commerce") will become the corporate giants of the future. Imagine loading your shopping cart into the cell phone and while on the road having it ring you back that one of your bargains is waiting for you at the next stop! 

The global expansion of online technologies combined with wireless devices empowers consumers and transforms the way goods are marketed. It's likely that consumers will also demand greater safeguards on information gathering and subsequent use. As NCR's John Tulley observes, "Customer relationship management is really turning into customer managed relationships, as it will be the buyers who manage the vendors." 

END