Printed
with permission from TCI
Management Consultants. A group of senior-level management
consultants, offering strategic planning and marketing services
to a wide range of public and private sector clients.
Webonomics
- Nine Essential Principles for Growing Your Business on
the World Wide Web
by Evan Schwartz
Broadway Books, New York, 1997
Evan Schwartz is a contributing editor for Wired magazine
and a former editor for Business Week. It follows that he
knows his stuff when it comes to the business and commercial
applications of the World Wide Web.
Schwartz
defines "Webonomics" as "the study of the
production, distribution, and consumption of goods, services
and ideas over the World Wide Web. It differs from ‘traditional
economics’ in the following manner:
"Traditional
economics is based on the notion of scarcity - that human
desires will always exceed available resources such as food,
clothing and shelter. It was Thomas Malthus, the English
economist, who first postulated that populations will always
increase faster than their food supply. This pessimistic
focus on the allocation of scarce resources is what earned
economics the reputation as "the dismal science".
Webonomics
is anything but dismal. On the Web, precisely the reverse
is true. Since the Web is a fast-growing world of intellectual
property that can be copied and downloaded ad infinitum,
its supply of resources will continue to soar past human
demand for these resources. Instead of a scarcity of supply,
the Web economy exhibits a scarcity of demand. Indeed, one
of the main complaints about the Web is that it is "mind
boggling" and "too overloaded" with information.
On the Web, the main commodity in limited supply is the
attention of the busy people using it. The underlying battle
in the Web economy is the ability to command and sustain
that attention." (pp. 1,2)
According
to Schwartz, there are nine "essential principles"
for doing business successfully on the Web. These are:
the
quantity of people visiting your site is less important
than the quality of their experience — Here Schwartz
argues that what is truly important from the perspective
of building a long-term business on the Web is to create
and sustain a community of users who refer to your site
again and again, because they derive value from it, rather
than to maximize the number of ‘hits’ through
flashy site design. He argues that to create this community
of users, one must recognize that the Web is not a broadcast
medium, it is an interactive one, and its capabilities in
this regard must be used.
marketers
shouldn’t be on the Web for exposure, but for results
— Mere exposure of a product or service on the Web
is insufficient, and does not take advantage of the capability
of the Web for developing detailed information about a prospect,
and providing them with information that will enhance the
likelihood of a buy decision. Schwartz argues that the Web
should be regarded more like a salesman than an advertising
medium — where specific results are expected.
consumers
must be compensated for disclosing data about themselves
— Schwartz maintains that "consumers are concerned
about data privacy but resigned to the fact that they won’t
get it. They will trade valuable information about themselves
— if the deal is favorable." (p.91) In other words,
consumers will provide you with data about themselves and
their preference and behavior patters, but only if they
get something in return, such as personalized news, a discount
on purchase, etc.
consumers
will shop on-line only for information-rich products —
"Information is what sells products on the Web. Marketers
and online retailers must stock their site with facts, news,
knowledge, wisdom and advice about their products."
(p.116) In particular, retailers on the Web can only gain
competitive advantage through the provision of broader selection,
superior product expertise or (that old standby) lower price.
self-service
provides for the highest level of customer comfort —
Increasingly, the comfort, convenience and control of self-service
on the Web (think, for example, of the ability to track
a courier parcel along all points of its journey) will become
a standard demanded by consumers. The interactive nature
of the Web is ideally suited to cater to this demand, and
web site designers and marketers should respond accordingly.
"value-based
currencies" enable you to create your own monetary
system — "Value-based currencies" are monetary
systems in which corporations reward loyal customers with
points that can be redeemed later for real goods and services.
These new currency systems will reach way beyond airline
frequent flyer miles, spreading to nearly every industry."
(p.154) Schwartz makes the point that the Web is the ideal
environment in which to create and track such currencies.
trusted
brand names matter even more on the Web — Schwartz
makes the point that in the Web economy, all brand names
are all up for reevaluation. Those that are attached to
sites that provide good value and information will be enhanced;
those that do not may be in danger of fading. Brand names
themselves will still be important, as they will act (as
they always have) as a short form of identification that
can cut through the advertising clutter.
even
the smallest companies can compete in the Web’s global
"marketplace" — "Well designed Web storefronts
enable small companies to act as if they are big and big
companies to act as if they are as flexible and responsive
as start-ups." (p.189)
agility
rules — Web sites must continually adapt to the market
— "The Web economy is a world in which a competitive
advantage may only last a few months, if not weeks. Those
running Web ventures must act quickly and take a proactive
stance toward deploying new technologies before competitors
do. Your customers are your best judges. Let your most loyal
customers test, troubleshoot, debug and try out new Web
services before you formally introduce them." (p. 200)
There is a Web site devoted to Webonomics; it can be found
at www.webonomics.com, and the visitor there can obtain
further details on the topics contained in the book, as
well as undertake a diagnostic assessment of their own site.
Also, in an Appendix to the book, Schwartz lists the addresses
of a few hundred of what he considers to be "important
and intriguing" Web sites, in the following areas:
