Online Business Planning: Know Your Customer and Value Proposition
Whether you’re opening a web-based company or adding an Internet extension to an existing company, your business plan needs to describe the customers you intend to attract — and how you expect them to behave when they get to your website. This step is essential.
After you know who you’re planning to attract and what visitors you expect from your site, you can configure your online offerings to match expectations and trigger desired consumer responses.
This task sounds straightforward, but it isn’t as easy as it seems. Even the 1,000-pound e-gorillas like Amazon and Orbitz constantly monitor what makes their online customers tick (or click), and they adjust their offerings accordingly. The latest software even allows retailers to anticipate the kinds of products and services customers might want in the future based on their previous purchases.
Websites that use these programs become shopping consultants, offering customers suggestions about what to buy next. When this feature works well, it goes a long way toward winning customer loyalty.
To increase your odds of e-business success, step back and consider your company from your customers’ point of view:
What benefits and solutions are you providing your customers?
What problems or needs do they have that your offering addresses?
How’s your solution better than the solution offered by any competitor?
What keeps customers coming back to your site?
The answers to these questions combine to form what’s called your value proposition — fancy jargon for a simple statement of the value that your product, service, or process delivers to your customers. Sometimes a company’s value proposition seems pretty obvious:
Walmart offers low everyday prices on a wide range of merchandise.
Rolls-Royce offers unparalleled luxury and the ultimate in snob appeal.
Travelocity.com offers cheap airline tickets to anywhere in the world.
However, a company’s value proposition may include offerings far beyond those that first come to mind. Think about Amazon again. It sells books and other merchandise at a discount, so part of its value proposition is clearly based on low prices. But Amazon also stocks one of the largest inventories of books anywhere in the world.
Thus, having a wide selection is also part of its value proposition. Amazon now even offers its own e-book reader and is fast becoming a publishing company in its own right.
Amazon’s appeal to book lovers doesn’t stop there. The online bookseller invites readers to review and rate books — a feature that many customers like so much that they wouldn’t dream of shopping for books anywhere else. Of course, Amazon has become far more than a bookseller. It’s even bigger than the biggest retailer.
By serving as the gateway for many small online stores, it has become a web-based marketplace where you can find virtually anything. The company is a textbook example of successfully enhancing its value proposition.
The more value customers place on your product, the more likely they are to remain loyal to your business. But that’s only part of the value equation. Online businesses have come to understand that loyalty also depends on customers’ satisfaction with the online interface, as well.
If a website is well-designed and easy to use, customers will return again and again. Maintaining an effective website isn’t easy. Most e-businesses will tell you that it takes a lot more time and effort than they first planned for. Keep that in mind as you formulate your own plans.