Business models change to make business transactions more efficient or more effective. For example, in previous models, consumers who wanted to travel called a travel agent, who then contacted the airlines and booked the tickets. Today, consumers work directly with the airlines, because the Internet facilitates their direct exchange.
Such online relationships do not happen overnight. According to the founder of both Travelocity and kayak, they require attraction, which exists because a customer is trying to fill a need. Customers know they have a problem, and they know they need a solution, even if they are not sure what that solution is. They are not necessarily looking for a specific product when they begin. As Theodore Leavitt’s famous marketing rule points out, customers are attracted to visit the hardware store because they want to make a quarter-inch hole, regardless of which tool will enable them to do so. They don’t want the drill; they want the hole.
As they search for the solution to their need, customers enter a curiosity stage, during which they look for information, demonstrations, videos, and extra insights. Much of this information might come from a store visit, but experiences in the store tend to be less convenient or simple than online information provision. So the hypothetical customer who needs a hole can search “drills” and watch videos that describe how they work and which ones are ideally suited to making quarter-inch holes. Through gaining such product and customer review knowledge, the customer achieves the capability to make a decision.
The last step is conversion, the stage when the customer makes a purchase, and the company has initiated a relationship with the customer. It is now the company’s job to bring the customer back for more purchases. The retailer cannot assume that the customer will need many more holes, but through careful research and well-founded inference, it could determine that perhaps the customer would like to drill some screws into that new hole—and then show the new customer just the right screws to fit.
Discussion Questions:
- What are the steps to developing a relationship online?
- How does relationship building differ online versus offline?
Peter Johnston, “Sell Solutions, Not Products,” Stores, October 2011.
Grewal Levy Marketing News 
It is interesting to think about a shopping experience as a customer solely looking for a solution to their specific problem instead of looking for a product to solve that problem. If a retailer can capitalize on finding out the problem that the customer is trying to solve instead of the product they are looking for they will more likely be able to point them towards better and more expensive products than they normally would if the customer had a specific product in mind. In this instance the retailer makes a larger profit and the customer gets their problem solved.
I feel as though building a relationship online as compared to in person differs in that online people are less forthcoming with information about themselves. The tendency for consumers to be hesitant about releasing personal information via the internet hinders firms which could use this valuable data to further refine their relationship building strategies.
I find it interesting how nowadays relationships can be built without any customer to employee interaction. I think this has changed incredibly over the years; it used to be you patron your local mom and pop store because there’s a relationship you have built with the employees at the store but now relationships between consumers and businesses are built based on value and efficiency, no longer the connection to the employees. It’s no longer personal.
As the article states, the benefit of engaging customer interest online is the increased exposure to information. At the very least, there is the opportunity for access and to then identify the means to achieve their end. I also agree with Kelly in that it really is amazing how in just the last few years, customer interaction has been broken down to a science, to the point where we can actually extract an employee from the equation. Beyond initial engagement and peaking of interest though, I still believe in the merits of employee interaction since there are still intricacies that are limited by technology. Like we talked about during session with the guest speaker from Staples.com, there are still some consumers that prefer individualized assistance.
It is very interesting to see how the internet has made it much easier to create for companies to build relationships with their customers. Through this relationship companies are able to better supply their customer’s needs and wants. They are able to see what type of products customers have bought or searched and market other related products and promotions. The problem with this new method of selling is that customers no longer buy on their own terms. Customer’s lose their privacy and if the company is not careful with their marketing methods, they can overstep their boundaries and push the customer away.
I think that it is indeed fascinating how companys now seek to move the advantages of in store education to less expensive and possibly more effective online settings. I wonder if the customer is more open to developing loyalty and and also if they are more open to exploring auxilairy products and services in the phase. But also, I wonder if self education can ever replace the expertise and advice of the proprietor. Home Depot as it started was staffed by former hardware store personnel and owners, but now many of their employees are percieved as not being knowledgeable about the products they sell and the uses they are intended for. Does this hurt Home Depot or is just a result of the consumer assuming the power of self education in the 21st century.
I think that this article perfectly articulates the need to start with the problem facing the consumer in order to market effectively and then projects this idea onto the internet. As the article points out, many customers desire a solution but have no idea as to what that solution is. It is first important to serve as an information source for the customer, that way they can gather the information needed to determine the best solution to their problem. Companies are capitalizing on the ability to provide quick and convenient information online by incorporating advertisements and links to the products in question. For example, Black and Decker power tools may have a YouTube account that has videos about improving the home. The indirect advertising builds a consumer’s interest without skipping the information gathering step of the buying process. At the end of the video there may be a link to the site in question and, if they incorporate targeted advertising through the use of cookies, there may be a deal on the exact power tool you just watched on the side of the page.
This all differs from offline relationships because there is no personal element. This is very cost effective, but may not appeal to older consumers. All of these factors come together, though, to begin the customer on building a relationship not with a representative of the company, but the company itself. Quality control becomes much easier and reach expands exponentially.
It is imperative that firms create high quality websites that offer many demonstrations, videos, and ideas. By doing this, companies have a greater chance of showing the ‘solution’ to a consumers problem. Having a great website that is convenient for consumers to look through can also lead to more sales through ‘word of mouth’, and therefore more purchases altogether. It is important to remember that when building an online relationship it is hard to gauge a consumers reaction as they scroll through your website and look at the demonstrations and videos you have to offer. It is much easier to do this in person, where you can give a customer an idea, and if they don’t like it, you can simply suggest another idea or and adjustment your original idea to tailor their needs.
The Internet is a key factor in the evolution and innovation of today’s business world. Where people once traveled to receive products from a particular store, the Internet makes everything easier and more convenient with the click of the button. I find it interesting that through social media: YouTube videos, ads on the side of Facebook page, and Twitter, people are able to learn about products and services faster and easier than actually going to the store and viewing the product itself. As customers search for a random product online, there are so many features that allows’ them to have an easier and enjoyable experience, including tutorial videos, various employee chats on websites, and customer reviews. When a customer enters into the cyber world, most of the time they become easily distracted, which is why online shopping cites need to improve their customer retention rates. In order to get to the last step in developing a customer relationship, which is making a purchase, the company should make sure that they stay loyal to this new relationship by providing customer feedback and sending them emails regarding discounts and sales.