Key Internet marketing strategy decisions

The key strategic decisions for e-marketing are in common with strategic decisions for traditional marketing. They involve selecting target customer groups and specifying how to deliver value to these groups. Segmentation, Targeting, Differentiation and Positioning are all key to effective digital marketing.

The main thrust of e-marketing strategy is taking decisions on the selective targeting of customer groups and different forms of value delivery for online channels.

It is a similar issue with e-business strategies - see link at footer of article. In an e-marketing context we can say:

• E-marketing strategy is a channel strategy
• Specific E-marketing objectives need to be set to benchmark adoption of e-channels compared to other channels (for different audiences).
• E-channel strategies thrives on creating differential value for all parties to a transaction
• BUT e-channels do not exist in isolation, so we still need to manage channel integration and acknowledge that the adoption of e-channels will not be appropriate for all products or services or generate sufficient value for all partners.

So, E-marketing strategy defines how we should:

1. Communicate the benefits of using e-channels
2. Prioritise audiences or partners targeted for e-channel adoption
3. Prioritise products sold or purchased through e-channel
4. Achieve our e-channel targets through tactics for online customer acquisition, conversion (engagement) and retention.

One strategic option is to replicate existing offline segmentation, targeting, differentiation and positioning in the online channels. While this is relatively easy to implement the company will likely lose market share relative to more nimble competitors who modify their approach for online channels.

An example of a do nothing strategy is grocery shopping where some have not rolled out home shopping to all parts of the country or do not offer the service at all. These supermarkets will lose customers to the most enthusiastic adopters of online channels such as Tesco.com and Sainsbury which will be difficult to win-back in the future.

• Segmentation/Targeting strategy - A companies online customers have different demographic characteristics, needs and behaviours to its offline customers. It follows that different approaches to segmentation may be required and specific segments may need to be selectively targeted.
• Positioning/Differentiation strategy - Competitors' online product and service offerings will often differ in the online environment. Developing an appropriate online value proposition as described below is an important aspect of this strategy.

Many examples of differentiated online offerings are based on the lower costs in acquiring and retaining online customers which are then passed onto customers. Examples include:

• Retailers offering lower prices online. Example Tesco.com (price promotions on selected products), Comet (discounts relative to in-store on some products)
• Airlines offering lower cost flights for online bookings. Examples: easyJet, Ryanair, BA
• Financial services companies offering higher interest rates on savings products, lower interest rates on credit products such as credit cards and loans . Examples: Nationwide, Alliance and Leicester.
• Mobile phone network providers or utilities offering lower cost tariffs or discounts for customers accounts who are managed online without paper billing. Examples: O2, British Gas.

Other options for differentiation are available online for companies where their products are not appropriate for sale online such as high-value or complex products or FMCG brands sold through retailers. These companies can use online to add value to the brand or product through providing added value services or different types of experience.

1. Online CRM strategy.

Can specify a focus on different aspects of the customer lifecycle for online customers in terms of:

• Acquisition - Strategies to gain new customers to a company AND migrate existing customers across to online channels. Separate targets should be set for each.
• Retention - Using online channels to increase retention and value of customer to company.
• Reactivation - Encouraging continued use of online channels by customers who have lapsed, e.g. used to use online banking or home shopping service, but have now stopped. This can be driven by setting targets for % active customers.
• Customer knowledge (intimacy) - learning more about the customer through profiling and monitoring of behaviour.

2. Online value proposition strategy

Defining the value proposition for acquisition and retention to engage with customers online. Includes informational and promotional incentives used to encourage trial. Also defines programme of value creation through time - e.g. whitepapers made available e.g. month or seasonal sales promotions.

3. Online targeted reach strategy.

Objective: To communicate with relevant audiences online to achieve communications objectives. The communications commonly include: Building brand awareness or favourability, driving online purchase, increasing offline purchase intent, list-building or migrating existing customers to online channels.

Focus: New customer acquisition.

Strategy to communicate with selected customer segments online through media buys, PR, e-mail, viral campaigns and sponsorship or partnership arrangements. Driven by objectives of online audience share and number of site visitors in different segments.

The strategy may involve (1) to drive visitors to the company site, or (2) To achieve brand awareness and interactions on third party sites. Building brand awareness, favorability and purchase intent on third party sites may be a more effective strategy for low-involvement FMCG brands where it will be difficult to encourage visitors to the site.

4. Offline targeted reach strategy.

Objective: To encourage potential customers to use online channel, i.e. visit website and transact where relevant.

Focus: New customer acquisition and migration of existing customers online.

Strategy to communicate with selected customer segments offline through direct mail, media buys, PR and sponsorship. Driven by objectives of online audience share and number of site visitors in different segments.

5. Offline sales impact strategy

Objective: Use online communications to achieve sales through offline channels.

Focus: Achieving sales offline (May be new or existing customers)

Strategy defines how online communications through the web site and e-mail can influence sales offline i.e. by phone, mail-order or in-store.

6. Online sales efficiency strategy

Objective: To convert site visitors to buy

Focus: Achieving sales online (May be new or existing customers)

For transactional e-commerce sites, a strategy to encourage site visitors to buy-online - merchandising, promotions, etc. For other types of site, increasing conversion rates to leads. As part of this strategy, options to convert visitors to action (or reduce attriution rates) are explored, i.e. first-time buyer promotions, site design improvements, home page and landing page optimisation. Event-triggered, automated e-mails also be used to convert potential sales to sale.