Netting custom

The Internet is a revolutionary marketing tool. Well so the hype goes; but how do SMEs harness the its potential? Alan Reed discovers how some businesses have managed to gain that Net advantage

If the Internet was supposed to do anything, it was to be the great leveller, allowing all sizes of business to go online and compete globally on the same playing field.

Design a website, slap it online and suddenly every company could be a multinational, its services accessible from Toronto to Timbuktu. Anyone with a PC and telephone line could sell coal to Newcastle and pilchards to Padstow.

And for anyone wanting to communicate with small and medium-sized businesses (SMEs), the Web was meant to provide a new, more personal contact channel: one that would allow suppliers to offer exactly what was needed and build a greater level of trust with customers.

But as with any new marketing channel, and especially one reaching out to such a time-poor market, it’s essential to use new media in the right way. Jonathan Cummings, marketing director at Iod.com, warns that the wrong communication could do more harm that good.

Opportunity knocks

“The opportunities for organisations of any size to enhance their customer relationship management (CRM) and marketing reach cost effectively are huge, but these tools must be used wisely. A poor website, or a badly executed e-mail marketing campaign, could have a very negative impact on the image of a brand or company,” he says.

And he warns that businesses will have to be very careful when using e-mail as a marketing tool.

“E-mail marketing in particular is very direct and personal and it’s critical that organisations maintain respect for their customers’ privacy. Therefore ‘opt-in’ e-mail strategies are clearly best practice and ‘permission-based’ campaigns always preferable,” he says.

“From a relationship marketing point of view, it is far too easy for an e-mail recipient to unsubscribe if they receive too many messages or communications that are not relevant – thereby rendering the channel permanently closed to that customer. For companies of all sizes, but especially for SMEs, a high level of ‘unsubscribes’ could be disastrous.”

Nevertheless, online communications can prove a highly effective way of generating customer response. Russell Abbott, managing director of marketing communications agency WDPA, says e-mail campaigns have proved very effective for IT clients such as Lucent Technology and Apple Computers, with response rates on average 50 to 70 per cent higher than those for postal campaigns.

However, he says companies should be aware of the technology issues, for example when using HTML or Flash formats. “Obviously SMEs will have less sophisticated versions of software and hardware. Therefore it is important to ensure that communication is kept brief and relatively simple,” he says. But he adds that SMEs are rapidly updating their technology to ensure they can participate in the new economy.

There are other benefits as well: a rapid response – most responses come within 48 hours – as well as no printing costs and the ability to segment your communication to a level that’s comparatively expensive offline.

Adaptability

This ability to adapt marketing communication to the needs of the different segments of the SME market is one crucial benefit of online marketing. A recent report, compiled by Dynamic Markets for web-based services provider Elance.com, shows just how truly varied the sector can be.

The survey found that while 44 per cent of SMEs were using the Internet to source suppliers, take-up varied dramatically depending on the size of the company. Sixty-one per cent of larger SMEs – those with between 51 and 500 employees – were using the Web for this purpose but only 36 per cent of the smallest companies – with one to ten staff – had taken the same decision.

It’s a point echoed by Bob McNinch, UK managing director of Netscalibur, who says his company has segmented the market into nine categories depending on the SMEs’ relationship with the Internet service provider (ISP) and their size.

For larger companies, he says, with a high level of in-house technical knowledge, marketing strategy is likely to focus on building relationships mainly through e-mail. But for smaller operations, more traditional channels such as post and the telephone are used to help guide them through any online issues.

As offers change there is also the added benefit that a corporate website can be easily updated with new and more enticing deals. “The Web enables me to provide a richer online brochure rather than having to constantly reprint our brochures,” says McNinch. Prompts can then be used to alert existing customers to any offers that are deemed to be of value to them.

The Elance survey also found that companies hoping to win business from SMEs had also to overcome a trust barrier: 29 per cent of SMEs prefer local suppliers.

This cautious attitude to new opportunities is one that marketing specialists are all too aware off. Mark Selawry, chief customer advocate at SME e-procurement specialist Ezoka, says its research has found SMEs to be wary of new technology. “We found SME directors to be highly sceptical of anything new or unproven, as adoption is often associated with risk.”

Tested methods

Jonathan Kirsten, interactive director at brand agency Brandhouse WTS argues that one way to overcome this scepticism about new media products and services is to get SMEs to sample them and, initially at least, this can mean targeting them offline.

“There is a cost involved in going to them offline but it’s basically a case of there not being an option because that’s the traditional channel,” he says. “They are taking an exploratory approach and they want to see it working. They want to see the advantage and the benefit before they invest in it.”

And for some of the smaller SMEs, managing the resulting relationship can be more akin to a business-to-consumer marketing exercise. “It becomes a very personal relationship, some businesses do need to be nurtured,” he says.

For business portals, he argues, some kind of added benefit such as articles on tax advice can also encourage SMEs to return regularly even if they don’t sample the service at first.

Online business-to-business marketplace Mondus.co.uk, for example, is currently providing information on stakeholder pensions and the legislation regarding them. But its main attraction to SMEs is its ability to access quotes from a wide range of suppliers and help them manage their purchasing from existing suppliers.

UK managing director Michael Leavy says communication with its 7,500 suppliers and 100,000 plus registered users is primarily through alert e-mails and through information held on the site in “virtual accounts”.

“A new piece of business comes in from a buyer and we send ou

t e-mails and the suppliers come back to the site to see whether they can quote on it,” he explains.

Affiliated marketing

Another approach to building an online relationship with SMEs is to take up an affiliate marketing role, linking your service to a tried and trusted brand or organisation. In addition to having its own destination site, Mondus has also adopted this role, effectively setting up extranets on partner sites such as Dun & Bradstreet’s do-business.net.

One company that has taken the approach a stage further is Ezoka. It maintains that the approach has provided clear benefits, with its group-buying platform offering a mix of trusted brands such as IBM and Norwich Union to members of bodies such as professional associations and chambers of commerce.

“The Chartered Institute of Purchasing & Supply (CIPS) and Northeast Chamber of Commerce offer their members access to office goods and services at attractive terms via Ezoka’s procurement services. It’s a true partnership that benefits CIPS, their members and Ezoka,” explains Selawry.

He adds that it’s a much cheaper way to reach SMEs: “Another benefit of affiliate marketing is the ability to build a brand cost effectively. Not only do we have higher conversion rates than destination sites but we’ve spent a fraction of the cost in acquiring customers.”

Building trust

Linking up with an existing community clearly helps build trust for new products but creating an online community can also help build a relationship, adding value for SMEs by helping them overcome any sense of isolation.

Miles Murphy, managing director of direct marketing agency Grey Desire, says that isolation is a problem that can affect IT programmers. His client Oracle has instituted a series of chat sessions, open only to invited figures, as part of its wider marketing programme, which also includes conferences, direct mail and newsletters.

“Programmers tend to be quite isolated, even in big companies. In the past there’s been no professional body or recognition but in a sense this gives them some of that,” says Murphy. “What we need to make sure is that it doesn’t come across as Oracle trying to sell to them all the time.”

The closed chat sessions also help overcome the openness of the Internet and allow senior staff from Oracle to discuss industry developments with potential customers. It’s this chance to keep up with latest technology that attracts the senior programmer and chief information officer-level participants.

“On the Internet there are no barriers and there’s no sifting and so if you go into a general chat room you could be hearing the views of anyone. Because this is a closed group of people you are hearing the views of important people,” adds Murphy.

Don’t believe the hype

But, while the new economy hype may have convinced a few people to drop the traditional approaches of telephone and direct mail, it’s not an approach that’s likely to be widely adopted.

Kevin Still, managing director at online payment control service PayMentor, says that the key to marketing and customer communication with SMEs is to take the best from both worlds.

As part of its marketing strategy, PayMentor has opted to team up with accounting software dealers, which can promote the ability to link direct from finance packages such as Sage, to their customers. This is backed up by use of a call centre, subscriber packs, e-mails and newswire services.

“It’s the combination of old world and new world – packaging the best of both. One thing we know is that a pure Internet marketing strategy will fail completely,” says Still.

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