INMA_A01.QXD

change in these performance drivers. This shows the relative importance of these drivers

or ‘levers’, as they refer to them:

1 Attraction

Visitor acquisition cost: 0.74% change in NPV

Visitor growth: 3.09% change in NPV.

2 Conversion

Customer conversion rate: 0.84% change in NPV

Revenue per customer: 2.32% change in NPV.

3 Retention

Cost of repeat customer: 0.69% change in NPV

Revenue per repeat customer: 5.78% change in NPV

Repeat customer churn rate: 6.65% change in NPV

Repeat customer conversion rate: 9.49% change in NPV.

This modelling highlights the importance of on-site marketing communications and

the quality of service delivery in converting browsers to buyers and buyers into repeat

buyers. It is apparent that marketing spend is large relative to turnover initially, to

achieve customer growth, but is then carefully controlled to achieve profitability.

We will return to this topic in Chapter 8, where we will review the balance between

campaign-based e-communicationswhich are often tied into a particular event such as

the launch or re-launch of a web site or a product. For example, an interactive (banner)

advert campaign may last for a period of 2 months following a site re-launch or for a

5-month period around a new product launch.

In addition to campaign-based e-communications we also need continuous e-communi-

cations. Organisations need to ensure that there is sufficient investment in continuous

online marketing activities such as search marketing, affiliate marketing and sponsorship.

We observe that there is a significant change in mindset required to change budget

allocations from a traditional campaign-based approach to an increased proportion of

expenditure on continuous communications.

Decision 8: Organisational capabilities (7S)

A useful framework for reviewing an organisation’s capabilities to implement Internet

marketing strategy is shown in Table 4.5 applied to Internet marketing. This 7S frame-

work was developed by McKinsey consultants in the 1980s and summarised by

Waterman et al. (1980).

Which are the main challenges in implementing strategy? E-consultancy (2005) sur-

veyed UK e-commerce managers to assess their views on the main challenges of

managing e-commerce within an organisation. Their responses are summarised in Figure

4.22. In the context of the 7Ss, we can summarise the main challenges as follows:

 Strategy– limited capabilities to integrate into Internet strategy within core marketing

and business strategy as discussed earlier in this chapter is indicated by frustration on

gaining appropriate budgets;

 Structure– structural and process issues are indicated by the challenges of gaining

resource and buy-in from traditional marketing and IT functions;

 Skills and staff– these issues were indicated by difficulties in finding specialist staff or

agencies.

STRATEGY FORMULATION

Campaign-based
e-communications
E-marketing
communications that
are executed to support
a specific marketing
campaign such as a
product launch, price
promotion or a web site
launch.

Continuous
e-communications
Long-term use of
e-marketing
communications for
customer acquisition
(such as, search engine
and affiliate marketing)
and retention (for
example, e-newsletter
marketing).