January, 2001

Think way back in time. You know, one year ago. In the Internet we say we live in dog years d it seems so appropriate.

We had a different President. We had a stock market that seemed to know no upper limit. The Super Bowl was packed full of dot.com ads that seemed to all trumpet a New Economy that some felt had changed the basic rules of business. Many even believed we had entered the 21st Century and a New Millennium.

Welcome to 2001. Not only is it the real New Millennium, but also we have learned that the stock market doesn't always go up. We have learned that basics of business are still vital for success. Hard times have a way of teaching us a lot.

Learning From Mistakes

Companies like eToys.com provide a lesson in learning what not to do. Although staffed with a bevy of very smart MBAs from Harvard and Stanford, this online pure-play company overestimated the size of the online market and the speed of growth for the Internet. They thought it would continue to grow.

eToys.com did many things right. They tried to be very "parent friendly" in their offerings. They even tried to focus on what they do best by outsourcing packaging and shipping to Federated Department Stores' Fingerhut unit. (Remember "stick to your knitting" advice?)

However, they failed to gain more customers. This basic tenant of business success somehow eluded this good company. Constant advertising and marketing are necessary to attract new customers.

The market for toys hinged on price in a down economy. Christmas 2000 was a market focused on bargains and brand loyalty was as elusive as a quick voting decision in Florida.

What can we learn from a good company like eToys.com that made some errors (and I believe will come back stronger than ever)? Three key principles: 1) Control costs, 2) generate intensely fervent customer loyalty, 3) Realize the realities of the Internet.

Know Your Customer

Barbara Kahn, marketing professor at the Wharton Business School makes the case to focus on the customers who generate most profits. She talks about the banking industry where many customers with low balances and numerous checks written contribute to lowers profits. She makes the case that by keeping records of costs associated with each account banks can focus on those more profitable areas.

Advertisers will need to utilize the Internet more for greater tracking of profitable business. The advent of the personal video recorder (PVR) like TiVo and Replay TV give the consumer the option to skip commercials. All those billions of dollars invested in slick television advertising can now be skipped over faster than the quickest remote control couch potato can change channels. Businesses have to know their customers and, most important, their customers' likes and dislikes.

This means we have to engage in web marketing and database marketing. Make sure that you get permission from customers to use their names and buying habit data. Provide incentives and value for those that choose to give you that vital information.

Time For Reinvention

When people in my seminars ask me if things are over for the Internet and technology I jokingly say that we are throwing it all out and going back to "stone knives and bearskins." Obviously the role of the Internet is here to stay.

The role of the Net will be largely what it was designed for, a great source of collecting information and communicating with others. A recent Greenfield Online study showed that 93% of those who went online felt that the Net makes the auto shopping experience easier. The Net helps customers feel more in control in the buying process.

The majority of these Net shoppers then complete the purchase through the traditional method. For buying a large-ticket item like a car, a combination of clicks and mortar, online information and traditional retail stores, represents the best combination for selling.

Bob Metcalfe, the creator of Ethernet technology and a noted technology columnist has entered the world of the venture capitalist joining Polaris Venture Partners in Boston. Why would such a great thinker and innovator go into an industry that is in hard times now? Metcalfe, 54 years old, says that he is looking for a chance to get some training. He feels that a boom is ahead and now is the time to get prepared.

The world is different today and enormous opportunities are there for the person who has the savvy to learn from mistakes of others, translate and transform those lessons into his or her own situation and profit from them. Now is a great time for learning, bonding with customers and leveraging the Internet for profit.

Terry Brock is an internationally recognized professional speaker, consultant and author in the fields of business productivity, technology and marketing. His is a syndicated columnist for Biz Journals across America and can be reached at 407-363-0505 or by e-mail at terry@terrybrock.com.