When electronic commerce was young and the outlook was rosy, it seemed that the basic rules of marketing could be cast aside. The most important thing was thought to be a speedy launch to grab a share of the market space. Profit wasn’t a near-term, or even a medium-term, goal. The aim was to get as many visitors as possible to your site, on the assumption that this would, at some stage, translate into profits. Today that strategy is in tatters. Business-to-consumer (B2C) Internet businesses are hemorrhaging money. Since so few of them appear to have found the key to success, investors—for the time being, at least—are wary of backing new ventures or providing second-round financing to the early movers.

When you consider how to make trade-offs, bear in mind the very oldest of all marketing principles: don’t forget your customers

The second wave of B2C businesses—many of them set up by incumbents slower off the mark and only now planning an e-launch—have the luxury of learning from the pioneers’ mistakes. Although no one can yet claim to proffer universal truths about e-marketing, it is clear that many of the basic elements of the traditional marketing process still hold good. So why have so many companies failed to follow this basic process? One of the main reasons is the speed with which the e-marketing process unfolds. That speed gives rise to difficult trade-offs. When you consider how to make them, the oldest of marketing principles remains the best guide: don’t lose sight of your customers and their needs. You can’t make sensible trade-offs if you don’t have a clear idea of what customers really value.

Snares of e-marketing

In the off-line world, a successful marketing process is well understood. First, identify customer needs and define a distinctive value proposition that will meet them, at a profit. The value proposition must then be delivered through the right product or service and the right channels, and it must be communicated consistently. The ultimate aim of the process is to build a strong, long-lasting brand that delivers value to the company marketing it.

All this remains true in the new world of e-marketing. But certain characteristics of on-line marketing, though by now well recognized, frequently trip up e-businesses.

A much shorter time frame

Speed is important in the launch of an e-business because the technology and competition move so fast. Unless you are actually running an on-line business, it is hard to compete with companies that are learning on the job.

The necessity for speed encourages too many companies to skimp on the essential process of ensuring that the business idea actually reflects a real customer need. Detailed consumer research insights can take many months to distill, but you may have only four months to launch the entire business. For too many companies, the solution is to plow ahead with little fact-based knowledge about customer needs and behavior, to say nothing of the competition. Such companies seem to believe that if they can just leverage something they are good at, or deliver what they consider to be a new concept on the Internet, they will automatically find a profitable market.

We know today that these assumptions are false. For example, more than 50 percent of visitors to a site never get past the home page, a fact clearly indicating that consumers will not spend time exploring a site if it doesn’t immediately show how it will fulfill some unmet need. In addition, dozens of e-commerce sites are selling their products and services well below cost months after the launch and still haven’t figured out how to raise prices to a profitable level.

The knowledge that is specific to an e-launch is knowing when you can cut corners and when you can’t, knowing what you have to know, and knowing that you don’t have to know everything before you launch. But you absolutely can’t afford not to understand the needs of your customers. Market research is therefore still essential, though often it has to be done with different tools.

Qualitative rather than quantitative research provides insights that might not have statistical relevance but do give marketers a sense of direction throughout the e-launch process. This kind of research is less time-consuming than the quantitative variety, so it can be repeated frequently to make sure you remain on course.

One kind of qualitative research involves observational techniques, such as sitting with users while they surf the World Wide Web for several hours at a time, sometimes over the course of a week. The idea is to learn how consumers navigate the Web, what guides their decisions and choices, and what they expect from various sites.

Another useful tool is graphic profiling: you make a drawing that attempts to capture some of the essential characteristics of your target customers, including not only demographic information but also things such as their needs and attitudes and how comfortable they are with the Internet. Exhibit 1 shows the characteristics that would make up the profile of the target customer of an on-line real-estate portal: a 30-something man who is affluent, relaxed, self-assured, and discerning. When such consumers make a transaction on-line, you can bet that they are well-informed and demanding. In the rush to the e-launch, companies often inadvertently disconnect themselves from their customers. With a picture, pinned on every wall, employees will not have to plow through a lengthy market research treatise to be reminded of who the customer is.

In all instances of qualitative research, the trade-off might be less accurate information, but your findings are meaningful and you get them quickly.

A different sequence of activities

E-launch marketing activities often have to be carried out in an order that may seem totally illogical

Since the time to market for an e-launch is very short, and planning must be very tight, marketing activities often have to be carried out in a totally illogical order, at times when little information is available. How, for example, can you test your value proposition on consumers if you don’t have a site to show them? But if you wait until it is built, you might be reluctant to make many major changes based on your findings because of the time and expense involved.

Likewise, a TV advertising campaign must be booked four to six weeks before the launch date, when the site prototype might not even be up and running. If information technology delays or other problems crop up—and they usually do—you might find yourself with millions committed to advertising and a site that doesn’t work. Although being first to market might give your site a premium, nothing can compensate for the disaster of a massive launch when a site isn’t working. (This actually happened in the case of the now defunct Boo.com, a would-be fashion clothing e-tailer that was launched with great fanfare.) On the other hand, waiting to be sure that everything works properly before booking air time might mean delaying the launch and failing to meet the requirements of your business plan.

Such decisions are hard to make, and the best you can do is to give yourself as much structure and information as possible to help you make them. Exhibit 2 shows how one company decided whether to book its media campaign when it was still unclear whether its Web site could be launched on time. The logistics of the business were in place, and there seemed little chance of fulfillment problems at launch. The financial figures still squared with the business plan, and a would-be competitor was preparing to launch. All this spoke in favor of booking the media campaign. Against that course were two facts: IT development was behind schedule—but not badly so—and the call-center was still understaffed, so there was a risk it wouldn’t be able to handle the additional traffic deriving from the likely increase in the number of visitors.

Such an analysis won’t necessarily lead to a clear-cut decision, but at least it helps you understand exactly what is at stake. In this case, the company decided that the best plan was to delay booking its media campaign, and hence the launch date, for ten days and meanwhile to put all of its efforts into fixing the IT problems and hiring and training call-center resources.

Again, knowledge about your consumer lies at the heart of handling sequencing issues. Knowing what the priorities are for your consumers will guide you in deciding which compromises to make and in which areas you can accept greater risk.

Minimum requirements

The sequencing problem illustrated above also touches upon one of the most important marketing issues for an e-business: when is it ready to be launched? How complete should the delivery of the value proposition be, for example? How distinctive the brand? How rich the content? How smooth the navigation process?

Most knowledgeable people think that an e-business can be launched before everything is quite right and that improvements can be made along the way. The content, for example, can be improved once it becomes clearer what visitors want. (In the off-line world, the same philosophy could prove disastrous—tantamount to trying to modify a factory so that it can make products quite different from those it was originally designed to manufacture.) Another argument in favor of launching an imperfect site and improving it later is the fact that Internet-savvy customers are accustomed to rapid change, and it has been acceptable for businesses to learn alongside them.

Although we agree, to some extent, that companies striving for perfection up front could miss the boat, the rush to launch means that many companies have failed to meet even minimum marketing requirements. Businesses are usually well aware of the minimum technical requirements for a successful site. But in the launch frenzy, too many companies forget to set a similar standard for marketing; their investors expect them to meet the launch date, and launch they will. As a result, they risk endangering their reputation and chances of success. There is so much on the Web and so little opportunity to seize the attention of consumers that a business might not be granted a second chance if it disappoints users initially.

Minimum marketing requirements have to be worked out through an examination of what is already available, both on- and off-line, and of consumer expectations of the medium. An e-business has to offer consumers all the basics that off-line competitors already offer, as well as something distinctive to differentiate it. And it will have to satisfy the perception, now common among e-consumers, that the on-line channel delivers breadth and depth well beyond the capabilities of the off-line world, and often at a lower price.

Exhibit 3 shows the "must haves" of an on-line real-estate business. The vertical axis indicates the site’s performance level, as perceived by the consumer, in view of what is currently available on the market. The horizontal axis measures the difficulty of implementing various features on the site.

Anything consumers perceive as a basic feature is a minimum requirement for launch. Once you have decided to set up an on-line real-estate portal, for instance, you are implicitly promising your potential customers that you will offer them great depth: they won’t accept a site that responds to a standard query by presenting them with fewer than, say, ten homes. Similarly, if off-line real-estate agents have photographs of their apartments or houses, consumers will expect photographs on-line as well.

"Average" features are also essential for launch, except for those that might significantly delay it. (After the launch, the development of those features should be an early priority, with a clear promise to the customer and a stated delivery date.) Finally, everything that is distinctive and easy to implement (usually features that are characteristic of the medium) should be there at launch to catch consumers’ attention.

The rest can wait, but not for too long. The greatest benefit of waiting is additional customer insight, which will increase your ability to deliver a more distinctive site.

Masses of information

Marketing in the Web era is different because of the incredible amount of real-time information that is potentially available about the behavior and interests of customers. E-CRM (continuous-relationship marketing) systems, for example, help companies to gather insightful information on customers, to segment them, and to base interactions with them on their preferences and needs. This is a marketer’s dream. But e-CRM systems are expensive and difficult to design, sometimes take a long time to set up, and are hard to manage. Hence, many start-ups find themselves overwhelmed with information that they do not know how to use. The temptation is to ignore it in the rush to get their operations off the ground. But in so doing, they fail to build the capabilities for monitoring customer behavior and are in danger of losing sight of their relationship with consumers. It is only by monitoring and using information that companies will be able to learn quickly about their customers’ needs, and thus how to convert, develop, and retain customers.

From the outset, a company should set very specific marketing goals for the relationship it wants to create with customers and establish some key indicators that will show if the business is on track. If, for example, a key element of the value proposition is the building of a customer community, the number of open discussion forums and the percentage of visitors who actively participate in them are good but simple indicators of the richness of the community. If the core of the value proposition is providing technical information, time spent on the site indicates whether the company is delivering. If the site specializes in news, the frequency of visits is a good performance indicator.

Given the substantial amount of money invested in communications, key performance indicators should probably include a measure of the effectiveness of media spending. After you have defined the marketing strategy and budget, you can set realistic communications objectives: awareness of the site, the number of visitors to it, and the rate at which visitors are converted into customers and infrequent customers are converted into loyal ones. The site’s performance in achieving these objectives should be tracked.

Exhibit 4 shows how a company might set up a structured process to evaluate the effectiveness of its media spending. For on-line expenditures, it is relatively easy to track the number of click-throughs from different kinds of banner ads or sites and then to work out how many click-throughs are converted into page views, sign-ups, and transactions.

The cost of an advertising-tracking survey usually constitutes quite a negligible percentage of a company’s advertising investment

On-line surveys tell you how much traffic off-line media are generating, or you can commission a basic advertisement-tracking survey to measure a campaign’s effect on the image of your brand and consumer awareness of it. The cost of undertaking this kind of research is usually a negligible percentage of a company’s investment in advertising, but, surprisingly, many companies don’t undertake it or don’t act on the insights they gain.

Some 10 to 15 key performance indicators should suffice at first. From there, you can hone in on problems and repair them quickly. Companies that fail to collect the right information, to analyze it, and to adjust their operations accordingly (and quickly) will be slow to learn what their customers want, to rectify their mistakes, and to make money.

Golden rules

It is easy—and dangerous—to lose sight of the customer during the launch process. But certain process and organizational rules can help companies stay on track.

1. Maintain a constant flow of market information and feedback on your activities—and use it. It doesn’t matter how statistically relevant your information is; what matters is staying in touch with your customers. Instead of a major, three-month-long quantitative market research project, undertake frequent informal interviews with small focus groups and analyze the results; that way, you will be in touch with new trends. Use the Web itself as your key information source. Monitor the reaction to your off- and on-line communications, and use brief on-line surveys to ask your customers for feedback on new features or service performance.
2. See to it that your organization is flexible and has processes to ensure the adoption of the insights you gain into your value proposition and the way it is communicated to customers. Too often, once the pressure is on, organizations don’t want to hear about marketing ideas that could entail a change of direction, particularly if they require significant changes in a company’s IT system.
3. Establish up-front objectives and minimum marketing standards, and make sure you meet them. Anyone who has launched an e-business will attest to the boundless enthusiasm at the start of a project and the fatigue at the end. This cycle explains why it is so important to be realistic at the beginning about the difficulties you will probably encounter. A great many trade-offs and unpredictable complexities emerge in the launch process, so it is crucial to set minimum requirements for launch at the outset, both for your own organization and for your external partners: IT suppliers, designers, content providers, and logistics suppliers. All of them play an important role in helping you meet your marketing objectives.
4. Give marketing a strong organizational role in the launch phase. Make marketing the integrator of the business-building process by hiring marketing people with plenty of experience and credibility. Make sure that they are involved in all activities, and give them substantial authority in the organization. Although most e-launches start with the intention of keeping the customer in mind, they very often become driven by technology; the needs of customers are sacrificed on the altar of speed, and marketing isn’t consulted about the trade-offs that inevitably must be made. From business planning and design all the way through improvements after launch, marketing must always be involved, acting as the protector of customers. Exhibit 5 shows the key roles of marketing in each of these phases.
   
5. Plan and phase, re-plan and re-phase. Even when plans must be redesigned as soon as they are finished, it is vital not to lose control over the process and to maintain order. Every change to one part of the launch plan will bring countless others elsewhere. If the graphics of the site have to be redesigned, for example, this will in turn delay the printing of billboards, which means that you will have to reschedule the media plan. If the site prototype is late, market research will have to be postponed, and you might need to delay meetings with potential co-branding partners whose input you require to design the final version of the site. Make sure someone in marketing has a full and updated picture, so that this person can spot emerging bottlenecks, communicate them to others, and reassess organizational priorities.

It makes no sense to look at past launches to determine how to market your new e-business. The time for "land grabbing" is past. The challenge for new e-businesses is to deliver what customers want, and will pay for, as quickly as possible—without getting tripped up by the problems that the need for haste creates.