ELECTRONIC COMMERCE AND ELECTRONIC PROCUREMENT

ELECTRONIC COMMERCE AND ELECTRONIC PROCUREMENT

While the role of the salesperson has changed considerably, there have also been significant changes in the way sales and procurement are carried out, particularly between large organizations and their suppliers. In these business-to-business (B2B) environments, the nature of electric commerce, or e-commerce, has certainly undergone a revolution in recent years.

E-commerce and B2B trading

The term ‘electronic commerce’ or e-commerce refers to any sales or trading activity that is carried out over an electronic network. Today, e-commerce is synonymous with business-to-business (B2B) trading, as opposed to its business-to-consumer (B2C) counterpart. Although the first wave of growth of e-commerce was in the B2C domain, the B2B area is between five and ten times larger.

E-commerce comes in many different flavors. For many years, electronic data interchange (EDI) allowed companies to place orders and facilitated suppliers’ sending invoices electronically. However, the growth of internet use has seen an accompanying expansion of e-commerce through this medium. No one should be misled into believing that success on the internet is guaranteed. For every success story there are hundreds of expensive e-commerce failures. Poor website design, reluctance to conduct transactions through a new medium, problems with the adoption of common standards, difficulties with the integration of back-end computer systems and security fears are all barriers that hinder the faster adoption of e-commerce consumers and businesses alike.

E-commerce can take place at four levels

Level 1: Publish

This is the provision of information to the customer electronically. It is one-way communication that may involve annual reports, press releases, information on products and services, recruitment opportunities and advertising. Sometimes referred to as Internet and IT applications in selling and sales management brochure ware’, it is little more than the establishment of an online presence and has little to do with selling.

Level 2: Interact

The next level refers to interactive engagement with the user on the internet. For example, Dell’s website provides online technical support services including email links to online technical support representatives. Again, this has little to do with sales but does provide an additional layer of functionality to the ‘publish’ level.

Level 3: Transact

The third level of e-commerce allows goods and services to be bought and sold over the internet. Reaching this level can be costly in terms of initial investment, and although operating costs should be lower than more traditional ways of conducting business, usually costs need to be driven down in other areas of the business for cost savings overall to fall.

Level 4: Integrate

The highest level of e-commerce is where integration of the computer system and processes of traders is achieved to create a strong, formalized relationship. This may involve the establishment of a business-to-business extranet which is an electronic network linking companies to their trading partners. Extranets allow partners to exchange information such as that relating to ordering, delivery and invoicing in a secure environment. For example, Mobil’s extranet allows the oil company to accept orders from 300 distributors globally.

CUSTOMER RELATIONSHIP MANAGEMENT

Customer relationship management (CRM) is a term for methodologies, technologies and e-commerce capabilities used firms to manage customer relationships.

In particular, CRM software packages aid the interaction between customer and company, enabling the firm to co-ordinate all its communications so that the customer is presented with a unified message and image. CRM vendors offer a range of IT based services including call centers, data analysis services and website management.

One basic principle behind CRM is that company personnel should have a ‘single customer view’ of each client. As customers are now using multiple channels more frequently, they may buy one product from a salesperson and another from a website. Indeed, a website may provide product information which is used to buy the product from a distributor. Interactions between customer and company may take place through a combination of some, or even all, of the following: direct sales force, call centers, websites, email and fax services or distributors. Therefore it is crucial that no matter how a customer contacts a company, front-line staff have instant access to the same data about the customer, such as their details as well as past purchases. This usually means consolidation of the many databases held individual company

departments into one centralized database that can be accessed all relevant staff on a computer screen.

Although the term CRM is relatively new, the ideas and principles behind it are not. Businesses have long practiced some form of customer relationship management.

What sets present-day CRM apart is that companies now have an increased opportunity to use technology and manage one-to-one relationships with huge numbers of consumers. This is facilitated companies such as Seibel (www.seibel.com), SNT (www.snt.com) and Sales force (www.salesforce.com), which provide specialist consultancy services.

In practice, CRM projects have not always achieved their objectives. It is therefore important to take note of the following factors, which research has shown to be related to successful implementation:

  • having a customer orientation and organizing the CRM system around customers;
  • taking a single view of customers across departments and designing an integrated system so that all customer-facing staff can draw information from a common database;
  • having the ability to manage cultural change issues that arise as a result of system development and implementation;
  • involving users in the CRM design process;
  • designing the system in such a way that it can readily be changed to meet future requirements;
  • having a board-level champion of the CRM project, and commitment within each of the affected departments to the benefits of taking a single view of the customer and the need for common strategies – for example, prioritizing resources on profitable customers;
  • creating ‘quick wins’ to provide positive feedback on the project programmes;
  • ensuring face-to-face contact (rather than paper or email) between marketing and IT staff’
  • piloting the new system before full launch.

 

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