eCommerce Strategy is Hard (Too)...
Regarding Steve’s posting, “eCommerce Engineering is Hard”, I have to put in a couple cents about the up-front strategy portion of an eCommerce project, which in my experience is just as hard—and often not sufficiently addressed by many companies.
Let me be clear that I agree 100% with all of Steve’s points, and having worked with him on a very aggressive strategy-through-implementation ecommerce project, I’m (fairly:^) sure he’d agree with mine. In fact, my central theme is that in order to optimally execute an eCommerce project—even one of relatively limited or “tactical” scope—one must take a view that is holistic across the entire software development lifecycle—from strategy to engineering to coding, QA, and ongoing maintenance.
In this post, however, as you may have guessed, I’ll focus on the strategy phase.
My pat definition of “the strategy phase” revolves around rationalizing the investment—ultimately including all the applicable technology components Steve mentioned. To do this, one must figure out:The Value: How to provide value to both customers and investors, and what are the associated customer and investor (e.g. business) metrics you will use to measure this value?
The Capabilities: What are the online capabilities that will best deliver these values and positively impact these metrics?
- The Realization: How to best optimize process, people, and technology investments to realize these capabilities? All three of these take time and resources; in other words, they are hard.
Figuring out the Value first requires an analysis of customer needs and business goals. Ideally, this includes:
- An analysis of competitive sites and the customer satisfaction they produce—this can be done by looking at industry research reports and performing a structured analysis of competitive sites that evaluates the broad categories of user experience, features and functionality, performance metrics, and content.
- An analysis of customer needs, which really requires talking to real customers—customers from all the segments and channels (including offline channels, if these customers are targeted for migration to online) served by the company. Ideally, the output from this exercise provides customer profiles, usage scenarios, and value propositions by segment and across channels if appropriate.
- An analysis of what the business hopes to accomplish using the online channel—e.g. what levers does the business hope to move? There are a number of ways eCommerce can be used to increase revenues (think lifetime customer value, cross-sell/up-sell), but depending on your business, cost-to-serve reductions may make for a compelling business case as well. The next step is determining what capabilities best serve the above goals. Again, you’ll want to look at user experience, features and functionality, performance metrics, and content. Do your customers visit the site to buy a specific product (focus on navigation and search capabilities), or do they want to interact with the company or other users (focus on community capabilities)? Are your customers technologically sophisticated or not so much? How do they organize information—e.g. do they think about specific products (hp.com) or about activities (rei.com)?
Almost done! The final step is to look at these capabilities in the context of:- Business processes: how will implementing these capabilities require changes to your processes? E.g. if buy online/pick up in store provides value, what are the processes necessary to support it? People: how will the capabilities and their attendant process changes affect your people? What changes in organization, roles/responsibilities, and incentives will be required? What will the governance implications be (e.g. if you are providing community capabilities, who will monitor/manage forums, and how will you manage customer dissent in them?)?
- Technology: this is where the rubber hits the road, as Steve discussed in his post. What technologies should you invest in to realize the capabilities and process changes you’ve defined? Will you build or buy? What will the overall technology architecture look like? And most important, does the business case make sense based on incremental revenues/costs reductions you expect owing to the targeted capabilities vs. the cost of these investments?
eCommerce strategy isn’t quick or easy, but based on my experience across a number of clients in this space, companies that skip this crucial upfront activity run a substantial risk of implementing sites that fail to justify the substantial outlays they make in technology infrastructure.
- An analysis of competitive sites and the customer satisfaction they produce—this can be done by looking at industry research reports and performing a structured analysis of competitive sites that evaluates the broad categories of user experience, features and functionality, performance metrics, and content.
