E-businesses challenged create trust customers. People don’t send money strangers . Read article: Mangiaracina,
When considering a business model for you company it is highly important to pattern it on that of other successful companies that are also based online. Jeff Beer’s article “Outlook 2011: The new dotcom boom” provides several case studies of online companies with robust business models that have proven records of success. The unifying factor of all organizations mentioned, and the ones that provide the most tangible examples of success, Groupon and Twitter, is that their models are all based on solid marketing. One of the most critical elements of marketing for online businesses is to create a sense of community with one’s customer base. Doing so in turn increases that customer base by readily involving more members of the general population as part of an organization’s community. However, there are a set of management concerns that are native to internet-based marketing that must be taken into consideration to generate a sense of community with customers. These concerns pertain to dealing with the transparent nature of web-based organizations, utilizing laissez faire management principles and knowing when to adjust them accordingly, and structuring operations and business processes to a younger, technologically savvy market, among others.
One of the most unique aspects about internet marketing is that it allows for virtually instantaneous feedback and response from customers and potential customers alike. With chat rooms and social media sites such as Twitter and Facebook readily exchanging information regarding an organization’s services and products, there is a degree of transparency regarding internet-based businesses that seems to exceed that of traditional bricks-and-mortar companies. Groupon is one of the companies that has readily maximized this principle. In addition emailing its subscribers about potential discounts for a variety of products and services throughout multiple industries, the website also disseminates its deals via social media sites (Beer, 2011) to maximize exposure and allow for virtually everyone online to be cognizant of — and take advantage of — its deals. This sort advertising transparency is also found within other companies such as eBay, which uses this degree of transparency with its customer base to provide a valuable lesson that this particular internet-based company (that collects information and resources on health and fitness) can use to effectively influence its own business model, The following quotation proves this fact. “â€¦this new people power offers rich rewards for companies that figure out how to channel it. The key is to embrace this new transparency and use it to turn customers and vendors into collaborators and colleagues” (Hof, 2003). This is exactly what Groupon does.
Although the prior quotation applies to eBay and its marketplace environment in which its customer base is two-fold (including both vendors and buyers), the overall premise of this quote regarding the proper utilization of the internet’s transparency has certain repercussions regarding management style that are also incorporated within Twitter’s successful business model. Since the goal is to ultimately foster an environment in which marketing is extended to include positive customer feedback over the web, traditional pyramidal, top down management approaches do not always facilitate such an environment. Instead, eBay proves that a more hands-off, laissez faire type of management style can ultimately provide such an atmosphere for agreeable customer interaction — providing that the company keeps those customers pleased. eBay’s management style is “based on cooperation and finesses, not coercion and force. To make sure eBay doesn’t do something that incurs the wrath of its citizens and incites a revolt, eBay’s executives work more like civil servants than corporate managers” (Hof, 2003). Twitter readily incorporates this laissez-faire approach by functioning as a platform in which information is not so much regulated as it is readily exchanged. This freedom of expression is invaluable as a means of promoting various products and services (Beer, 2011), and requires a managerial liberty to function as such.
Thus, it would behoove this health and fitness organization to utilize a management style that emphasizes and works on appeasing customer in order that they will issue favorable interactions about services and products on the internet. Doing so can assist it in “positioning itself as a bridge between the online and physical world” (Beer, 2011, much as Groupon has succeeded in doing. Its managmenet style and business model is basedon establishing points of commonalities between customers around the globe and reaching them via social media. There are number of specific ways in which an organization can go beyond conventional measures of customer service to ensure consumer satisfaction. For example, eBay has both vendors and customers evaluate individual transactions via a number of different points, so that vendors effectively have a report card with which future customers can view and consider before purchasing from them. The value in doing so is that “both buyers and sellers build up reputations they then strive to maintain, setting a standard of behavior that reinforces eBay’s appeal” (Hof, 2003). Regular customer surveys and other methods that provide consumer feedback for an organization’s service is integral for any business based on the web.
However, eBay employs some other means of incorporating customer feedback into its operational processes that are even more direct than the aforementioned one. In addition to garnering customer insight regarding transactions, it takes measures to understand customer opinion about the operational process of its website by publicly reviewing new web site features and inviting customers to sit down and discuss their needs so that “users feel like owners, and they take the initiative to expandâ€¦ (Hof, 2003).
In addition to understanding how customer opinion relates to innovations that are employed on their website, eBay is also actively querying customers to understand how it can improve its service. More importantly, it is acting based on that information to continue to assuage customers. The payoff, of course, is alluded to in the final sentence of this quotation, in which those happy customers do their part to expand the business and reputation of eBay. The goal is to engage customers as much as possible, which is an integral part of Twitter’s business model. It offers organizations accounts in which they can be listed in the site’s “Who to Follow” feature, and has also incorporated its most popular tweets into search engines such as Bing and Google. (Beer, 2011). This approach enables it to benefit from customer marketing — the proverbial ‘word-of-mouth’ approach that has become amplified in its digital form.
It is interesting to note that Twitter and Groupon are not the only company to utilize business models that regularly employs a laissez-faire management style to provide greater customer service. A San Francisco Bay Area-based gaming company, Rocket Science, has also found out how to extract value in allowing for employees to implement point-system solutions to problems, which ultimately dictates the particular style of management that is used at the time. However, what is most noteworthy about analyzing this aspect of Rocket Science’s business model is that it employs this principle within the larger context of utilizing the technical savvy of young people. Downes and Mui travelled with European executives to the company’s headquarters and saw that the employees were in their 20’s and 30’s, and readily flew in and out of offices holding spontaneous meetings to fix problems (Downes and Mui, 2000).
This type of model incorporates a hands-off managerial approach, in which employees have a degree of (literal) freedom to operate within their workspace as they see fit in order to accomplish tasks and ultimately fulfill the needs of customers. It is apparent that a management style that is bereft of bureaucracy has its distinct advantages, particularly as they apply to marketing when one realizes — and capitalizes on the fact that — the most valuable form of marketing is a satisfied customer, especially when he or she is given several different forms with which to trumpet that fact The result is that as Beer notes about Twitter, companies have the potential to “innovate, execute and experiment withoutâ€¦scrutiny” (Beer, 2011).
Finally, it is important to note that another important aspect of Groupon and Twitter’s business model, which is shared by Rocket Science, is the fact that by relying on internet-based technology (or even on technology in general) each of these organizations is using a medium that is intrinsic to and invaluable to young people. Thus, it is extremely beneficial to utilize this fact to one’s advantage for the purpose of marketing as well. Technological applications can become extremely popular and marketable by appealing to the innate relationship that young people seem to have for technology. The scores of teenagers and young adults who issue Twitter’s tweets attest to this fact (Beer, 2011). Employing technological innovations such as making modifications to a web site in a manner that is intuitive and easy to use in a way in which the perspective of young people is included “in the process of product development, strategy formation, and workplace design” (Downes and Mui, 2000) enables companies to stay current. This is an effective way of not only marketing an organization’s goods to the next generation, but also of keeping pace with developments as they happen (such as mashups) (Merrill, 2009) and staying ahead of the proverbial curve in the process.
Various aspects of the business models of Twitter and Groupon demonstrate that one of the most important aspects of a business model is inexpensive marketing via social media. As such, advantageous marketing utilizes a laissez-faire management style in which customers dictate the actions of businesses. This notion is predicated on the transparency provided by the internet as a means of facilitating peer-to-peer interactions and forming a community in the process. It is equally valuable to incorporate the perspective of young people especially when detailing organizations (such as web-based businesses) in their native environment, the technology laden and driven internet.
Downes, Larry and Mui, Chunka (2000). “Unleashing the killer app.” Harvard Business School Press. Retrieved from http://hbswk.hbs.edu/archive/1388.html
Hof, Robert (2003), “The eBay economy.” Business Week. Retrieved from http://www.businessweek.com/magazine/content/03_34/b3846650.htm
Merrill, Duane (2006) “Mashups: The New Breed of Web App.” www.ibm.com. Retrieved from http://www.ibm.com/developerworks/xml/library/x-mashups.html