The number one reason for a web presense

Someone once asked in the Marketing Challenge Private Site's discussion forums, "What's the number one reason a business should have a web presence?" This is a fascinating question because, very often, many businesses (particularly with those I've consulted in my practice) have no clue as to why they are online. Yes, it is a new medium that's affordable, more effective and wrought with opportunity -- especially for smaller businesses.

But many businesses currently operating offline jump into the web for a variety of reasons that are often unclear to the business owner. Of course, the hype can be very enticing. But it can also make things hazy for the entrepreneur -- making that jump often a blind leap. I believe that the main reason for a web presence, in most cases but particularly for bricks-and-mortar businesses, is the awesome potential for reducing costs and/or increasing revenues.

However, depending on the type of business, the path that leads to such outcomes is not as specific as one might think. The number one reason for any given business to go online can vary tremendously from industry to industry and business to business. But if I were to summarize by isolating several categories, I would say that a website can offer one of four benefits:

1. A distribution channel,
2. A marketing channel,
3. A sales channel,
4. A communications (support) channel,
   

Or a combination of any of the above.

So here's a quick look at some examples based on those four benefits. Maybe this could enlighten you on potential breakthroughs hidden in your business:

Increased Reach

Doing business online expands the marketplace to national and international markets, and offers the ability to reach new, untapped markets that would have been potentially unreachable otherwise. On the Internet, boundaries (at least in terms of communication) are nonexistent or less restrictive.

For one, a website can provide a supplementary sales channel that can reach, promote to and serve markets that would have been difficult or even impossible to reach in the real world. For another, the Internet provides a unique benefit not available elsewhere: Through what is often referred to as "viral marketing," the web can help propagate the knowledge of a website, company or product faster and more extensively than ever before.

Increased Savings

An ebusiness decreases administrative costs normally associated with managing paper-based information (and that can be quite a lot in some cases). It also lowers telecommunications costs since the Internet is more economical than other conventional forms of communication.

For example, for a totally bricks-and-mortar business the Internet mainly provides an additional and inexpensive form of advertising. Among others, it helps to reduce the costs associated with conducting business such as providing information -- like a brochure or catalog -- quickly and efficiently, without the need for publishing a physical one or for its postage.

Increased Speed

It also reduces the time that normally lapses between the launch of a product, building its consumer awareness, selling the product and delivering it to the market. In other words, it reduces cycle times (like the adoption and sales cycles) and time-to-market, and shortens the distribution channel by delivering directly to the end-user or removing excess layers.

For instance, a new product can be manufactured, launched and deployed -- as well as promoted, sold and delivered to the marketplace -- faster than any other traditional forms of media. As a result, increased market share can also be achievable in a vastly shorter period of time.

Increased Automation

With the Internet, the need for human attention or involvement traditionally required in a bricks-and-mortar business, from labor to middle management, is considerably lessened. And the web increases and improves productivity, output, delivery of services at a reduced cost, effectiveness and quality.

Many parts of the traditional sales process can be completely automated with the help of a website, thus saving time, money and person-hours usually required. Also, being electronic especially in the sales order and fulfillment processes, the Internet eliminates much of the potential for human errors one often encounters when such are processed by personnel.

Increased Control

A web business also allows reduced inventories and overhead by facilitating a "pull" type of supply chain management (e.g., "just-in-time" inventory) and allows for the customization of products and services, which in turn provides a significant competitive advantage often not available in the real world.

Above all, the greatest benefit of the web is the ability for online businesses to offer customized and/or personalized services. As my respected colleague and marketer Dr. Kevin Nunley of http://www.drnunley.com/ once noted, "If current trends offer any indication, the demand for personalized services [...] will continue to grow [and] the future of the Internet lies in personalized services supplied by small businesses and individuals."

Also, with the help of the web products can be stocked and orders can be fulfilled more efficiently, thereby reducing the time between the outlay of capital and the receipt of products and services. Take, for example, Dell computers' enormously effective "just-in-time" inventory control process, where parts for its customized computer sales are ordered and shipped on a daily basis -- there's no need to maintain a huge, costly inventory.

Improved Management

An added advantage to doing business online is that the web enhances communications within organizations, between business partners and with a company' various publics (e.g., the media, specific market segments, the government, related agencies, trade associations, etc).

To illustrate, news releases can be distributed quicker on the Internet. Additionally, complete follow-up information, among others, can be posted on one's website for retrieval by the press. On top of the rapid dissemination of information, the correction of errors, as well as the modification and update of data, can be done quicker and more effectively through the help of the web.

Improved Branding

Being a branding and positioning consultant, I've personally noticed that the Internet greatly facilitates the adoption and branding processes -- such as with the ability to project a strong corporate identity and to build brand equity, both over a shorter period of time. Moreover, it removes potentially critical, physical comparisons (i.e., on the Internet, the element of size no longer exists).

Take for instance a large multinational corporation like Dell Computers and a smaller, single location rival like Stupid PC. Online you can look just as big and be just as effective as the "big guns." Similarly, the web offers the capacity to project a favorable, positive corporate image -- and do so easily and cost-effectively -- where in the physical dimension a mere fancy catalog will not cut it for most.

Improved Promotion

This one is my favorite. The web is an extraordinary market research tool. It facilitates intelligence gathering, tracking and measuring of marketing efforts (often referred as "data mining"). As well, it offers new promotional avenues, and opens new customer service and product support channels.

For example, in a physical store it's virtually impossible and often extremely difficult to track buyer behavior. You can't, for instance, follow your customers around your store with a video camera and track their every move in order to see which aisles they visited, at which products they looked, how long they looked at them, which ones they put in their carts (or put back on the shelves), how many aisles they visited, what their interests are, what their shopping trajectories are (i.e., who referred them to your store and where they are going next) and so on.

Arguably, you can obtain this type of information through market research, focus groups, surveys and so on -- which takes money, time and the willingness of customers. But with a website, all this and more can be mined from your server logs or tracking software -- even in a matter of seconds.

Final Word

Of course, there are many drawbacks too. The lack of privacy, security, tangibility, human response and so on can become and are, in many cases, impediments to online sales. But there are ways to overcome these. (I have brought you a few in previous articles, on this website, in my newsletter and especially in the Marketing Challenge private site.)

Nevertheless, weighing the differences between the benefits and the drawbacks of doing business on the web is an exercise most businesses should do at some point. It might prove itself to be quite revealing …

And profitable.