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Marketing in the Internet - as seen from Italy

by Giancarlo Livraghi

No. 4 - June 6, 1997
1. Editorial: the @ and a couple of ifs
2. Four quotations
3. Getting out of the trap
4. Why we should not intrude
5. Not only selling
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1. Editorial: the "@" and a couple of "ifs"
When people talk about the internet (especially in places like Italy, where a widespread knowledge of the Net is quite recent) they generally think of the World Wide Web. And they are quite confused. In a prime time television debate, a few days ago, they were talking about "addresses with http and @", which of course don't exist. I believe we should think a little more about those @ addresses, when we discuss the growth potential of the Net. In Italian net jargon the @ is called a chioccioletta, a little snail. There were such snails, and there were sysops, long before there were webs or webmasters. E-mail (which is fifteen years older than the Web) has become quite a large global animal - maybe a caterpillar that could turn into an unexpected and unpredictable butterfly. In any case, it's not slow.

With much less noise than the current web-hype, it has been spreading and is still on the move. Extensively for private use, but even more so in business. As companies begin to understand how expensive it is to use telephone and fax, e-mail will spread further. We shall feel in Italy, and worldwide, the effect of global "traction": not only the local offices of multinational companies and organizations, but all those who have frequent international relationships (that's practically everybody) sooner or later will find it necessary to use e-mail every day. It's not easy to understand how much it has already happened, or when it will happen on a larger scale. Daily experience confirms, once again, that the driving force is not technology, but human behavior. How many people do we know who have a mailbox but hardly ever use it, and out of habit continue to prefer telephone and fax?

This type of trend is strongly influenced by aggregation: when in a set of relationships (personal or business) a "critical threshold" is reached, it accelerates. As happened for cellular phones, a day will come when an e-mail address on a business card or a letterhead will no longer be seen as snobbism, but as normality. At that point we may see the growth curve turn sharply upward; though nobody knows when.

But... there are two "buts". The first is that use of e-mail does not imply net navigation. There are, and will be, large numbers of people that use only e-mail. We know that half of the people using e-mail never, or rarely, use other internet services. This has a practical consequence: many people that potentially could read our message will not be reached, unless we find a way, that is interesting for them, to inform them of what we have to offer.

The other problem is not, at this stage, easy to understand; but potentially quite relevant. We don't need to read the monumental study by Philips Tarifica to understand that telephone companies worldwide are under pressure, because of the internet and because of the increasing competition stemming from "liberalization"; and that as a result there will be a further, and considerable, decrease in long-distance phone prices. Already today the cost of a London - New York conversation is 15 US cents a minute - and it's expected that it will drop to 3 cents.

There are also urban cellular networks, such as DECT, competing with wire service; new wireless options, including satellite systems; the development of "paging" and "short message" services on digital telephones... the entire telephone system is going into a stage of radical change.

The difference of cost between the internet and other means of communication, such as phone and fax, could be reduced to the point of being irrelevant. At the same time, more and more companies and organizations are developing internal networks, that communicate mainly with themselves with only a few "doors" to the internet - as has always been the case with some large universities and other big private or public systems.

What influence can all this have on the growth of e-mail, and even on the structure of the internet? I don't know, and I wonder who can make any reliable prophecies; but its seems likely that the evolution of telephone and data transfer services will lead to a complex system, where the internet as we know it now could be just one of several components. Once again, one thing is sure: the factors (and interests) at play are so complex that the future is unpredictable.

But if we base our study and discipline on human relations, not on technology, all of this is only marginally relevant. Tools may evolve in surprising ways, offering unexpected opportunities and creating unpredicted difficulties. But what we can learn in the experience of interpersonal relations will continue to build up as a "capital of knowledge" - therefore a competitive edge - for those of us who will have the patience and the consistency to experiment and learn.

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2. Four quotations
Three books, many years ago, helped to grow in me the curiosity that eventually led me to navigate every day on the Net. A fourth, more recently, contributed some basic thoughts to my understanding of the general evolution in which new communication systems have a crucial role.

Two were published in 1980: when it was almost impossible to imagine the widespread availability of technology that we experience today.

One was Le Défi Mondial, by Jean-Jacques Servan-Schrieber, who explained how new technologies open spaces to human thinking that were unimaginable before; and how in today's world the dominating factor is no longer the control of resources, but information and thought. He said: "In the post-industrial era the "finiteness", that had always oppressed and imprisoned us, is broken. Within the reach of people is, at last, the infinite resource: information, knowledge, intelligence.". This may sound like poetry, or a dream; it's a theory that we have heard many times and we seldom see practiced. But it's no utopia - even though, so far, we have been unable to turn it into facts.

The other was The Third Wave, by Alvin Toffler. There are three "waves" in human history. The first was agriculture; the second, industry; the third is communication. Of course communication has always been an essential element of human nature; but only in recent times (an tiny fragment in the history of our species) communication systems have become as widespread, and as fast, as they are today. In the information age there are totally new possibilities for marketing; even a new definition of product, which van be much more personalized. Toffler talked about a new kind of customer, which he called a prosumer: producer and consumer at the same time. This goes far beyond "do it yourself" or "semi manufactured" products; more broadly, it means involving the customer in the production process. Of course this concept is already practiced in many industries, but we have only scratched the surface of its potential.

Another book that opened new perspectives was published in 1982: Megatrends by John Naisbitt.

Among many other interesting observations on how the world can change with new technologies, there was one that I think is as true today as ever. High tech - high touch was Naisbitt's formula for the way people respond to technology. Each time a new technology is introduced, a human drive is needed to re-establish the balance - or the technology is rejected. The more there is high tech, the more we need high touch. Fifteen years later, this observation is largely confirmed by facts. It's a principle that, I think, should be kept in mind when communicating on the Net.

In 1994 the same author published a new book, Global Paradox. The "paradox" is: The bigger the world economy, the more powerful its smallest players. I think that is very relevant for the subject we are discussing. With today's telecommunication systems it becomes possible for a small business to manage its market "segment" on a global scale - with a level of specialization and customer dedication that can hardly be matched by larger companies. Of course this doesn't put the biggest players out of business, but they must learn to be flexible - a change that can be quite difficult for large organizations.

John Naisbitt says: "Telecommunications is the driving force that is simultaneously creating the huge global economy and making its parts smaller and more powerful... In the process, the telecommunications industry has moved into a period of thrashing, creative chaos." This turbulence continues; the notion of "chaos" may scare or confuse people and organizations that don't understand its laws... but for those who can move with courage and imagination the opportunities can be extraordinary. As I said... many Italian companies are quite well suited for this challenge.

There are fascinating, though sometimes obscure, elaborations on the Theory of Chaos and complexity. But to operate effectively it is not necessary to understand all of its theoretical and scientific implications. This reminds me of an old fable, quoted sometimes in business schools.

A scientific study of the bumble bee's wing structure, body weight etc. proves that it can't fly. But the bumble bee can't read, so it flies...

In practice, it's enough to understand that the most obvious or "high probability" scenarios are hardly ever the most interesting; to know how to use "lateral thinking"; and to know how to take risks without jumping of a cliff. The practical history of many companies proves that all this is perfectly possible, and much easier in practice than it seems in theory. One of the greatest values of interactive communication is the opportunities it offers to widen and multiply experimentation, to feel your ground as you go, with relatively low investment and risk.

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3. Getting out of the trap
This is a true story, though (for reasons of confidentiality) I cannot name the company, nor the consultant. But I think there are several other such cases.

A large multinational company went to an internet communications consultancy and said: "We are not asking you to help us get into the Net. We want you to help us get out."

Like many others, it had hurried into a "presence on the net" without figuring out why or how. It had no clear strategy, but wanted "to be there". It didn't check out the project, not the technical implementation - the cost would be quite invisible in it's balance sheet, so why worry? The company's management knew it was there, but had set no precise objectives or performance yardsticks. The departments and divisions, including marketing, had much more important and urgent things to look after.

Two years later... they found themselves trapped. Not many people had come into contact with them on the net, nut some were important. Customers, distributors, counterparts that could not be ignored. They were all disappointed and irritated. Suddenly the company realized that they had not just wasted (not much) money, but they were positively hurting themselves.

So for the first time they analyzed costs, objectives and results: and they discovered that to solve the problem they needed not only to provide better service on the net, but also to change many things in their corporate culture and operating systems. A complex and time-consuming operation, with no projection of "return on investment" that could justify not only the expense, but the waste of management time and the cumbersome re-training of staff. They had rushed down the wrong road and found out too late that it was a dead alley. The only practical solution was to count their losses and close down - then stay out of the net or re-think from scratch.

But now they know it isn't easy. Without realizing what they were doing, they have established relationships, made promises and commitments. They can no longer just "close".

Unfortunately I am not the consultant involved in this project... and in any case I could not reveal the details, nor explain the solution for this specific problem.

But a lesson can be learnt from this story, that can be summarized in three simple points:

  • Don't go on the Net without a clear strategy.
  • Move gradually, step by step; keep testing and learning.
  • Be ready to change direction, or move back, before you reach the edge of the cliff.

If you don't have the time, or the money, to take these steps... probably the project is not well defined, and needs re-designing. That is much less expensive than fixing the mistakes caused by poor planning.

Obvious, isn't it? But when I say to someone who is working in this field "You should insist that your clients have clearer strategies, and provide them with better planned projects" the answer often is "Do you think I'm stupid? I know that; but I must earn a living... most of my clients say "don't waste my time, just do me a pretty homepage" or "this is my catalog, take at it is, add a few frills and put it on the net" - and I must obey". Of course we all understand that with so few years of experience we can't expect much of an offering of qualified service and advice; but the most serious problem is that, in spite of the lessons that can be learnt from the obvious failures and the delusion-disappointment cycle, we still have too much unqualified demand.

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4. Why we should not "intrude"
It's temptation - and it's dangerous. There are many offerings of technologies that can invade someone else's ground, to try to "manipulate" the way in which our site is accessed, or to collect information.

There are serious legal risks in any invasion of privacy or interference with someone's computing systems. But, even when it's legal, it's a minefield. I have already discussed in this newsletter the problems of spamming; elsewhere (but only in Italian) I wrote about the dangers of something a simple as a cookie. I don't want to get into the complex technical debate about the differences between several types of "objects", such as ActiveX, generally considered quite dangerous, or Java beans, which may be safer (and smaller) but may not be totally safe. Quite apart from any technical elaboration, there is a basic matter of manners and relationship.

There is a little tale being told on the Net; and I think it's a true story, because it's quoted by reliable sources. Apparently there is an explicit "sexy" website somewhere that offers viewers a piece of software to "see better". If it's downloaded, that software blocks the modem signals, closes the connection, re-dials to a pay line in Moldavia, then puts the modem back to normal condition. "Victims" don't know what is happening until they receive their telephone bill.

There are many more examples, less picturesque but not less worrying. If we decide to put something on our site that is "invasive", we run a double risk. Expert users will probably turn down our offer - and there is a strong chance that they will take our address out of their bookmarks, and cancel our name from their shopping list. Inexperienced users probably won't even notice what we are doing; but if later something goes wrong, or simply when they learn better they realize that they have been tricked... they will not be our friends.

Before we allow technology to "intrude", in our name, in someone else's home or office, I think we should ask ourselves if the potential benefit justifies the risk. Using technology "just because it's there" (as many, unfortunately, do) is not just useless: it can be a serious mistake.

Which real advantages could we gain? Which real and better service could we offer to our customers? Are the benefits worth the risks? Is it really necessary to use that technique or could we obtain the same results in a simpler, and less dangerous, manner?

Quite often, we shall discover that it's not in our best interest to do anything of this sort. And even when it is really convenient for us to use an intrusive technology or collect private data, I think there is a simple solution. Tell visitors clearly, so they understand what we are doing and share in the decision. It can be surprisingly easy, if we really offer something interesting, to have people's agreement and cooperation. This will protect us from risks, improve the relationship, and can have an added advantage: selectivity. People who choose to cooperate (if the offer is related to our business, and not just entertainment) are likely to be those that are more interested in what we have to offer.

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5. Not only selling
When people talk about marketing on the Net, they seem to concentrate mostly on the simplest idea: a website where something is offered for sale. I believe this way of thinking is too narrow and shallow, and may miss many opportunities.

There are several marketing activities that can be effective in the Net and are not the selling of products or services to the final user. It's impossible to list them all; and each company can develop its own original concept, to suit its specific needs and relationships. But here are a few examples.

   Purchase orientation

Net users (especially the most experienced) often use the internet to collect information. They explore, check, compare - and then buy in a store or through another traditional channel.

This gives us an excellent opportunity to provide, through the different channels offered by the Net, information and explanations on our products or services. It also allows us to keep an eye on the activities of our competitors.

But... we need to be careful, and show respect for our potential customers. A poorly organized site, inadequate information, a promise that is not fully kept... can do more harm than good.

   Service to distributors

The Net can be a very useful tool for service and support to retailers or distributors. We can provide assistance, update and exchange information, check inventories, reply promptly to customer inquiries, collect orders, check quality and service standards, etc.

The connection can be instant in any corner of the planet - and so improve the competitive power even of a company that doesn't have, or cannot afford, large and extended distribution structures.

This type of activity (as many others) can be carried out by simply using the internet or by setting up an ad hoc network.

   Technical support

Not all products can be supported by remote technical assistance, but for many it is possible to provide some form of instant support to customers or to local service centers. There are all sorts of systems that can provide better service while reducing costs - and checking quality standards.

In one may or another, I am convinced that online technical support can be a major competitive advantage.

It's surprising that even information technology companies are not always able to provide competent service (online or by phone) that meets the needs and standards of their customers. But companies that do, in this or other sectors, are often very successful. Even when it's not possible to provide full assistance online, the process can be greatly simplified, with substantial savings (of time and money) and better customer satisfaction. For instance, in the case of a complex product, the diagnose of the problem can be carried out in a direct dialogue between technicians at both ends: so even if someone has to travel, that person will be better prepared, and carry the right equipment or spare parts.

Someone may say: "But this isn't marketing." I think it is. Good and fast customer service is an essential part of successful marketing.

   Lead generation

This is a traditional direct marketing technique which, I think can be applied very effectively online. Customers are offered an opportunity to collect information, verify, check, evaluate; and then their address is passed on to the local retailer, with all the appropriate information to best satisfy their needs. (Of course the customer must know what we are doing, for the sake of "good manners" and quality of the relationship even before we consider legal implications.)

This process can simplify the sale process, reducing costs and improving service quality. It can also help to identify potential customers and thus grow the business of a company as well as it's local partners.

Of course this process is particularly fit for complex, high-price goods or services, or for products that require local service or installation; but I believe the same concept can be applied, with the appropriate changes, to a variety of categories.

    "Club" management

This is another well known direct marketing practice. People or companies that are interested in a specific subject (or buy a specific product) are invited to join a club, in which they receive useful information and have certain privileges.

There is no room here to get into the details, but the concept is simple: to develop and strengthen relationships with existing or potential customers, and to encourage "loyalty" by providing benefits.

A new "club" can be started online, or an existing one can have online support. It is not absurd to imagine that, for particularly interesting customers or prospects (or other categories, such as retailers) and ad-hoc intrantet may be created, or an internet connection may be offered as a present. There are cases in which this has been done.

There are also cases of existing online communities (such as forums or mailing lists) that accept a commercial "sponsor". But - as I shall never stop repeating - this is a matter of "good manners" and agreement. A heavy handed attempt to "take over" a group is likely to kill the discussion area that we thought we could "buy" - or at least the most interesting members will unsubscribe. But if it's done with the agreement of the list owner (and of all participants) and handled with civility and a genuine spirit of service, this can be one of many ways to establish ongoing relationships, grounds for learning and testing, and binds of mutual trust that grow over time.


It's pretty obvious that the Net van be a market or opinion research tool. Of course we must be careful is defining the methodology and reading results. Using online questionnaires can produce warped results if we are not careful in comparing the sample and the universe: people who are more active online, and willing to answer, generally have different attitudes and behavior than the rest of the "target audience".

But online questionnaires are only one of many ways of using the net to collect information.

Another way, for instance, is joining mailing lists, forums or newsgroups. Of course this should not be done in an "intrusive" manner, and respecting netiquette: we are there to listen and learn, not to sell. We want to be accepted as a member of the group, not "flamed" or rejected as an unwanted intruder.

The Net can also be used for area testing. With the difference that we are not limited by geography; online "areas" can be global, defined by criteria that can be tailored to our needs.

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