Dotcom to Customers'.com

DOTCOM TO CUSTOMERS’ DOTCOM: Dotcom Survival Strategies


Dotcom Boom
Dotcom Doom
Lack of Customer Focus
Customer Experience
Customer Experience Gap
Bridging Customer Experience Gap
Internet Economy
The Future


In the late 1990s and in 2000 we saw the dotcom boom. We saw the emergence of thousands of new dotcom companies. We saw them spending astronomical amounts on marketing, advertisement and promotion. We saw them recruiting (most of the times poaching) personnel at fancy salaries and even fancier perks. We saw the media glorifying the entrepreneurs (the new age CEOs, they were called). We saw their pictures on the covers of myriad business magazines and their stories inside. We heard them predicting their success stories on television talk shows. We saw venture capitalists vying with one another to get their attention. We heard about the million dollar mergers and acquisitions. We saw many young entrepreneurs making more money than they could spend.


In 2001 we saw the dotcom doom. All the hype, all the glitz, all the ads, all the money and most importantly most of the dotcoms were gone. Gone were the high paying jobs, the posh offices, the power lunches with venture capitalists and the media adulation. Many ventures went down, many got acquired and very few managed to survive. Established companies spent almost $40 billion last year to scoop up bankrupt dotcom companies, taking advantage of bargain prices left by the Internet shakeout to bolster their online assets. A total of $39.7 billion was spent in 2001 for 1,289 Internet companies after a brutal market downturn forced scores of Web start-ups into bankruptcy sales, said, a San Francisco online marketplace for Internet companies.

How did this happen? Was it bad luck or was it change in government policies? Was it recession or was it some other environmental factor? In my opinion all these factors must have contributed to some extent; but most of the dotcoms failed because of bad business ideas, nonviable business plans, flawed business models, bad financial management, use of wrong technology, inadequate use of technology, overuse of technology and so on.


There was one more reason—lack of customer focus—the reason that led to the downfall of more than 80% of the dotcoms. Most dotcom entrepreneurs thought that once they put up a fancy web site, spend a lot of money on advertisement and promotions, hire a lot of people, pay them fancy salaries, they can make their venture a great success. They were wrong; dead wrong. What they failed to realize was that they needed customers to succeed. They forgot the fact that customers just won’t surf into their shops. They failed to realize the fact that, they need to device strategies and formulate plans to make people visit the shops, turn the visitors into buyers and convert the one-time buyers into loyal customers. On the Internet, where the next shop is just a ‘mouse-click’ away; the customer is really the KING.

Customers can provide the revenues needed to attain profitability. Customers can give the word-of-mouth marketing to drive traffic. Customers can give the feedback needed to continually improve the website. Customers are a dotcom’s most important asset. To survive dotcoms must turn to their most important asset—CUSTOMERS. In other words, serve the customer and the money and profits will follow. Serving the consumer is the only business model that has a 100% guarantee of success.


Where does a dotcom connect with its customers? The dotcom can connect with its customers during all activities of the online shopping and fulfillment. This includes everything from surfing the web site, to the shopping and buying process, to the fulfillment of products and even to the after sales service. The customer experience is the combination of everything the customer sees, clicks, reads or otherwise interacts with on the web site. The quality of your customers’ experience when they do business with you determines brand loyalty. And the quality of that experience is based on several factors, including a thoughtful Web design, streamlined business processes, great customer service and flawless execution. The customer experience is the key to dotcom survival.

One way to improving the customer experience is to shift the business strategy to focus on the customer—solving customers’ problems, recognizing the limitations of technology (both on the web site and the at the customer end) and achieving simplicity in all respects.


As the Web has become increasingly popular and accessible, the number of people who are online have grown exponentially. In the early days of e-commerce, mainly computer experts used the web and the web sites contained only text and graphics. Today for a customer base of new users, the Web serves up a complicated soup of frames, Java, cookies, plug-ins, banners, flash movies, secure servers, streaming audio, streaming video and so on.

Clearly, there is a difference between what the Web gives its customers and what they actually want. Customers want simplicity, but the Web offers complexity. Customers want service, but the Web offers technology. Customers want to accomplish their goal, but the Web offers “features.” In each case the Web doesn’t offer the experience that the customer wants. This phenomenon is called the customer experience gap—the difference between what customers want and what they get. There is a widening customer experience gap online. To survive, dotcoms must bridge the customer experience gap.


In order to bridge the customer experience gap the dotcoms should make it easy for customers to find and buy products they want from the site. This may sound obvious, but many top e-commerce sites still make it too difficult for customers to find and buy their products. Another way to improve the quality of the customer service is offering personalized service to the loyal customers. A satisfied customer is worth his/her weight in gold. In addition to the revenue from the customer’s purchases, a happy customer also brings free word-of-mouth exposure—bringing even more customers to the site. Satisfied customers bring loyal, buying customers who want to bring in more loyal, buying customers. Thus by taking care of the needs of a single customer you are starting a chain reaction that will increase site traffic, number of visitors, number of buyers and definitely the revenues. But this has a negative side too. A dissatisfied customer will not only abandon the site permanently but also generate negative publicity by telling about the experience to others. An e-business may lose the lifetime value of several customers by providing one bad experience. With plenty of competing sites to visit, customers have little incentive to return to a site that has failed to meet their needs. One must always be on the alert—reading customer mails, responding to customer queries, suggestions and grievances, taking corrective actions before problems escalate, getting feedback from customers, and constantly monitoring the quality of service and customer care. Ensuring customer satisfaction is an ongoing process and everyone in the organization should be involved in the endeavor.

The art of merchandising or merchandise planning has enjoyed decades of refinement in the traditional brick and mortar shops. Today, e-commerce retailers have just begun to figure out how to effectively merchandise online. One way to think about online merchandising is to compare it to what works best offline—the salesperson. A literal translation of the live salesperson to the Internet usually creates a bad customer experience. By not recognizing the technological constraints of the medium, sites that have tried to emulate the salesperson with “virtual sales assistants ”have mostly failed in their merchandising attempts.

A Forrester report (“The Promotion Commotion,” April 2000) found that targeting is the most important factor of success for online promotions. For perfect targeting, the retailer needs to have complete information on the specific shopper, including past purchase patterns, known needs, and even unarticulated desires. Obviously it is unreasonable for e-tailers to expect to capture that much information about their customers. But with a little common sense the online merchants can target their customers. They can study the purchasing patterns and offer similar products. They can organize occasion-based sales programs (for example, Christmas sales, Diwali sales, Valentine’s Day sales, etc.). The merchants can offer products suitable for each such occasion or season along with the regular products that the shop is offering. Special discounts, promotional offers, gifts, etc. can be used to attract more customers. The merchants can target the markets that make sense for their business and even can look for well-defined segments within that market. They must make sure that the marketing budget is being spent on attracting, retaining, and managing actual customers, and not just creating brand awareness. While advertising, spend well within the means. E-mail lists costs only a fraction of the cost of a contest or newspaper/magazine advertisement, but can be much more effective. Merchants can generate more revenue by a focused e-mail campaign than by placing a newspaper advertisement.

Another important aspect where most merchants fail is in effectively communicating with the customers. In the brick and mortar variety, face-to-face communication is possible. But in the online form, most of the communication is through e-mail. From order confirmations to responding to customer queries and complaints, e-mail is an increasingly important aspect of the customer experience. By giving timely order confirmations, order status reports, shipment intimations, and by responding promptly to customer complaints, the online merchant can make use of e-mail in improving the customer satisfaction.

Last but not the least, the online merchant should build trust among the customers. The goal should be building a reputation and not short-term profits. The shop should not engage in unfair trading practices. Cheating on prices, hiding the profits in exorbitant shipping charges, misleading the customers using currency conversion techniques, cheating the customer by displaying one product and then sending another, all these can bring in quick profits. But these strategies will definitely fail in the long run as the customers will soon find out these tricks and the word will spread like a bush fire (thanks to technology—e-mails, newsletters, newsgroups, bulletin boards, etc.) and soon the business will have to close.


So the ‘Internet Economy’ is really just the ‘Old Economy’ of setting up a business on a new street. Online retailers are still retailers. Sure it is a little different, they have to use technology and use it sensibly. But they have to follow the same business and economic rules as their brick and mortar peers. They still have to do research, plan, manage and finance carefully. They have to keep in mind the fact that the customers are their real assets and keeping the customers satisfied with quality products, bargain prices, good customer care, timely shipments, and fair and honest business practices is the secret for online success too.


It is 2002. What is in store for the dotcoms? Is it all over for them? Yes the bubble has burst; the boom is long gone. The venture capitalists are not as enthusiastic and funding is difficult to get. Survey after survey predicts that the future is bleak for dotcoms. But there is still scope and hope for good business ideas. The dotcoms that plan their operations well, invest wisely in technology, manage the finances efficiently, promote effectively, sell high quality products or services and most importantly keep the customers happy and satisfied can still get off to a good start, buck the trend, thrive, survive, and grow.

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