How to Make (or Break) Your Online Business

Jan 19, 2003 -- Moving your business online presents considerable challenge. It is a revolutionary departure from traditional business methods: distance shrinks to zero and users have nearly universal access to information and technology. However, the Internet is not the new alchemy. The same factors that make or break your business off-line will make or break your business online. Let's look at three: capitalization, marketing and service.

Capitalization
Get the stars out of your eyes: it is highly unlikely that you will get rich quick. Electronic commerce is possibly the most punishing sales channel ever. Yes, millions are online, but, by some estimates, 80 percent of them have yet to be persuaded to make online purchases.

Most new businesses fail within the first five years. Do you have enough cash on hand to sustain your online business? When you write your business plan for your online store (and you should if you're serious about the venture), extend your projections for three years and be realistic about sales. Expect to declare a loss your first year.

Don't make the mistake of thinking your online business is going to cut costs. Companies are realizing incredible savings because of the technology, but costs are costs. Look at the dollars being invested to implement and maintain the technology. How are you going to transfer orders from the server or your e-mail program to your database or AS400?

Automation is not cheap. How much will you spend to promote your site? The Amazons and eBays are spending millions. How will you manage your site? You won't need a huge staff, but the people you hire to help demand big salaries and are difficult to find.

Marketing
Simply establishing a presence on the Internet does not guarantee your business will succeed. Building awareness through marketing is critical, particularly on the Internet where users have a choice of spending their time and money at thousands of different sites.

Capitalize on the free- and low-cost marketing methods available on the Web (ask visitors to bookmark your site, use an e-mail signature, participate in mailing lists and discussion groups, list your site on search engines, place free classifieds...), but do not overlook the cost marketing methods (public relations, e-zine or e-mail newsletters, advertising, trade shows, sponsorships, direct mail...).

Remember these three words: continuity, consistency and cumulative effect. Building an image is a slow and cumulative process. If interrupted, the cumulative gains evaporate quickly. If you can afford to run only one or two ads, keep that money in your checking account. You'd be better off paying a professional to edit your sales letters or Web site or to write a single press release each month.

If your marketing efforts are not continuous and consistent, traffic on your site will be slow or non-existent. And if you don't have traffic, you won't have sales.

Service
A 1998 Jupiter Communications study of major Web sites found that 42 percent of the 125 surveyed sites never responded to customer requests or took more than five days to respond.

A more recent 11-country study by Consumers International found that eight percent of the products the study team bought never arrived. Only 53 percent of Web sites had policies on returning goods, and only 32 percent provided information on how to complain if something went wrong.

Can you stand one more?

Another study found that 67 percent of potential online purchases are abandoned because of lack of real-time online customer support. Further, only 5.75 percent of those who visit e-commerce Web sites place orders.

Use this checklist to make sure you don't commit these shameful acts:

* Put a map of your site or a page of frequently asked questions and their answers.
* Add a search engine to every page on your site.
* Ensure that customers can quickly find the right department to contact via e-mail or phone.
* Dedicate a space for your return policy.
* List your cancellation terms.
* Send e-mail confirmations for orders and shipments.
* Give detailed product specifications.
* Respond to all e-mails within 48 hours.
* Mind your manners: say please, thank you and measure satisfaction.

Customer service isn't about what goes right. It's about what you do when things go wrong, because sooner or later, they will.

Questions or comments? feedback@i-genuity.com

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About The Author

Mary A. Sicard is president of i-Genuity, the Click-Here Strategy and Services firm in Augusta, Georgia.

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