Having a website or maintaining a presence on the Internet has not created “value” for many businesses. A common question is – “Is it worth the Investment?” Any investment must create value for your business, consequently the question one should be asking is “what value does my web site bring to my customers, and the corresponding value to my business”. This mutual value will define the relationship that your business will have with your customers and the customers with your business through your website. Understanding and being able to quantify this value will allow you to build a website that will enhance that value relationship.
Customer focus is the key to this relationship, but one must also ensure that there is a mutual benefit or value from that relationship hence the need to measure both sides of the relationship. The challenge is how to measure value. Value like quality initially appears to be a qualitative factor rather than a quantitative one and is usually defined in the “eye of the beholder”. Measuring quality has been around for many years through the use of various standards such as ISO 9000:2000, the National Quality Institute’s Canadian Awards for Excellence (CAE). Similarly “value” can be measured through like approaches.
The Customer–Value Relationship approach is one way to determine that value and identify what actions need to take place in order to grow the value-relationship.
There are four steps to this approach
1. Internet strategy
2. Develop and implement the plan
3. Measure the customer value relationship
4. Assess the impact
1. Internet Strategy
As with the rest of your business one has to have an Internet strategy that determines where you want to go with your web site and the basic steps to get there and it should be an integral part of the overall business strategy. The key element to understanding the Customer Value Relationship is
– the value that your customers place on your business having a website
– the corresponding value your business places on the Internet as an alternate distribution channel for your products and services
Developing this component of your business plan utilizes the information from the overall organization strategy, and focuses on the web specific parameters. Cross impacts with your other business channels will be a key consideration.
Some things to consider include:
– Type of business – is this a primarily personal contact environment that requires face to face meetings such as consulting or personal services? How will an Internet presence alter that relationship?
– Demographics – who are your primary customers? Traditionally, older customers tend to prefer physical contact rather than electronic, but one of the fastest growing sectors of Internet use is with the “senior” population.
– Customer base – where are your customers located, regionally, nationally or internationally. Does it make sense to have a wide exposure.
– On-line potential – could some of your services or products be provided over the Internet?- Marketing
– where does most of your new business originate from – word of mouth, advertising, Internet, Yellow Pages?
– Growth – what is the fastest growth segment of your business? What areas do you want to focus on for growth
– Feedback – what have your customers been telling you about your website (email feedback or through personal contact)?
One must clearly distinguish between the “now” and the “desired” state, your business may not be ready to expand or to provide all of the products and services an expanded market will require, but understanding the direction you want to go in will provide a basis for planning and roll out of the website services in an orderly and cost effective manner, which of course is the whole point of a well designed and thought out strategic plan.
The data gathered must now be analyzed and a comparison made between the customer value and the business value placed on the Internet. This comparison becomes your Customer Value Relationship indicator and will be used to develop the business strategy on how to optimize the development of your website to meet the needs of your customer and your business.
This Indicator includes factor such as:
– Critical elements identified in the Strategy
– Revenue generated by the website
– Overall Revenue and customer growth
– Relative importance of the website as viewed by the customer
– Relative importance of the website as viewed by the business
2. Develop and implement the Plan
Once a solid understanding of the role the Internet can play in your business is determined, a plan can then be formulated to implement that role. This plan should be developed independently of your current website (if you don’t have one yet, all that much better), since one is looking at the “should be” scenario and it should not be influenced at this stage by what is currently in place. This plan should also outline future needs based on the overall business objectives and a timeline to get there.
After completion of the plan, the existing website can then be assessed against that plan to determine whether or not the website is meeting your needs. Then implement the changes as required to align the website with the plan. At this stage consider:
– Overall layout and architecture of the site
– Is your Service provider/webmaster right
– How to maintain the contentWhich interactive features are required, now and in the future
– Cost to implement changes
– Cost to maintain and regularly update website
Implementing the plan then becomes an exercise in project management and with the right designers and service provider; you can have your web presence up and running within set time and costs and structured for growth.
3. Measuring the Customer Value Relationship.
Now that the new website is up and running, one has to validate the initial assumptions and adjust them as necessary. This is accomplished by using the same criteria that was used in developing the CVR Indicator with new values generated from the website that can be compared to the original assumptions.
Your website should be designed to capture parameters such as:
– Number of unique visits
– Type of visitors/locations
In addition customers need to be surveyed and financial impact analyzed to complete the picture.
4. Assess the impact.
The CVR Indicator value is then compared to the one developed in the strategy and analyzed to determine if any adjustments either in the strategy or CVR assumptions need to be made.
From this you should be able to determine what the current value of the website is, does it meet the current and future needs of your customer/business and the amount of investment ( if any) that needs to be placed into further developing and maintaining the website. For example, if the enterprise value is less than the customer value, this indicates an enterprise website that does not meet the potential needs of their customer. Ideally the Enterprise value should be just ahead of the customers’ expectation of value. The action required in this case is for the organization to determine how significant this is to their business and what investment is required to better meet their customers’ needs.
This assessment is a critical step in closing the loop with the business strategy. The Indicator will provide a reference point of where you and your customer stand relative to the perceived value of the website. Interpreting the Indicator and implementing the resulting action plan is critical to the enhancement of the value of the website.
Then the cycle is repeated and changes made that will move the Indicator in the direction that both you and your customers will benefit thus becoming a true representation of the Customer Value Relationship. This analysis should become an integral part of the inputs for the annual business plan since both business and customer needs are subject to change over time.
The important outcome of this approach is a solid understanding of the value that your website brings to your customers and to your business, an ability to measure that value so that you can optimize your investment in your website in order to meet the needs of the customers and business. It also provides a path for future growth that will position it to meet the changing business and customers’ needs. Let your website investment work for you and become a valuable asset to both your customers and to your business.