Adding a letter 'e' to a company's business model description does not necessarily change its definition and may not change its business strategy either.
E-commerce in particular and the dot.com business fever seem to indicate that everything has changed in the way we do business. Reflection of this would be terms such as e-commerce, m-marketing, ERP, IT and many others.
This impression also gives us the frequent recurrence of topics such as Quality, Satisfaction, Customer Service, Positioning, Category Management, CRM or branding.
Marketing has recently been discovered by many people as a valuable discipline in both practical and academic terms and they are trying to improve their competitive performance in light of a market orientation.
Welcome. But know that not everything is new, not everything new is better, and not everything that was before was wrong. Many companies have been successful in the past and many continue to be successful today, based on doing things well.
I do not believe the prophets of radical change who seek to invalidate what already exists, replacing it with something that, although it contributes innovation, hardly replaces the way of doing business in its entirety.
It doesn't really matter so much whether the terms are new or not, nor does it matter so much if it's the background or just the form that has changed.
I don't pretend to be the party pooper that goes against change. Nor is it my intention to deny the advantages offered by information technology, combined with the advances in telecommunications, for conducting business transactions. Nor ignore the changing conditions of the global economic environment.
What I want is to rescue what is worth preserving from what we would call the 'old economy' and at the same time highlight the true values that the 'new economy' brings to companies. For this, rather than emphasizing the differences between before and after, I think it is worth reflecting on the conditions that have changed.
Commercial Philosophy
Since the 1960s, Peter Drucker emphasized that customers are the raison d'être of any company and from the 1970s Philip Kotler contributed to implement this business orientation in practice through the philosophy of the 'Marketing Concept' and its operationalization. through the Marketing Administration approach.
The transition that companies have undertaken when changing from an orientation to the manufacture of goods to an orientation towards the development of relationships with their customers, providing them with what they require and thus guaranteeing a solid and profitable relationship with them, is the end of a process that has required going through other types of orientation: towards sales, towards distribution and towards the market.
Open market
Therefore, customer orientation is not a novelty, nor is it a distinctive or exclusive feature of the new economy. It is, of course, an essential condition for the success of a company in an increasingly open, global and intensely competitive economy.
In the context of an open market, it is easier to understand why it is important to choose market segments or niches, differentiate products or services that deliver true added value, and position brands that, in essence, are worth much more than the products and services they cover..
Adding value to products and services to develop stronger brand loyalty is proof that a company has reached the last stage of that transition process.
The best indicator of the company's success is the one that shows the quality of the relationship between it and the market it serves, whether we call it Loyalty or Customer Loyalty. The Share Value is a consequence of the quality of this indicator.
Corporate culture
The most important change that companies are experiencing does not have to do exclusively with technology, but with a new business culture in which the entire company is customer-oriented, and not just a functional area that we call Customer Service, Marketing, Sales o Marketing.
What the new culture means is that we must change the lens with which we analyze companies, somewhat de-emphasizing traditional financial indicators such as cash flow, earnings or the value of the stock.
The first thing that a customer-oriented company must analyze are the behavioral responses that these show, such as brand awareness, preference and purchase intention that are requirements for sales to happen. And post-purchase responses, such as satisfaction, repeat purchase, and brand loyalty.
When these responses are in favor of the company and not its competition, then the other key performance indicators are generated. Not before.
This is a point of order and means, for example, that a board of directors or a board of directors must first schedule a review of behavioral responses and then a review of financial indicators.
Process Orientation
Two important changes that occur in the company that does not consider marketing as a function, but as a business orientation, are:
- Orientation to processes that transcend functional areas, with a beginning and an end, as well as a clear reference to the customer-supplier relationship at each stage, a hierarchical structure that changes towards the concept of collaboration networks, which, in fact, they exceed the company to include suppliers, intermediaries and end users through a value chain.
Understanding that production processes by themselves have no market value translates into more efficient forms of organization, better performance indicators and, mainly, a greater motivation of employees when realizing who and what they really work for.
Disintermediation
Our new realities also include a concept of 'disintermediation' across the value chain, a 'frictionless economy' as Bill Gates calls it. But the disappearance of intermediaries does not mean the disappearance of the value through the chain, but only the disappearance of the frictions that could hinder or diminish that value.
A more efficient value chain does not necessarily require electronic commerce, but rather agreements between its different members to facilitate exchanges, either with a purely transactional perspective, or with a strategic perspective that leads them to form collaborative alliances.
Information technology
The redefinition of business processes and the simplification of the value chain lead to a redefinition of the company's administrative processes, which must be supported by an adequate hardware and software infrastructure.
Today, Information Technology allows integrating the data generated at each stage of the chain and also allows handling large amounts of information. The company's technology platform may involve a comprehensive Enterprise Resource Planning (ERP) solution, or perhaps just a CRM solution.
In any case, the novelty is not in the concept of Customer Relationship Management but in the amount of information that we can manage to handle about them (their profile) and their transactions (relationship).
Customer relationship management is something that has always existed, without the need for information technology. In fact, the personal relationship with the customer is not necessarily the most important thing, especially in mass markets, but rather identifying niches of customers whose profile leads the company to serve them accurately.
So, the change is given by the technological capacity to generate information in electronic form and implies a very important task related to managing that enormous amount of information in such a way that tangible benefits are derived for the company and for its clients.
New Reality
The new business reality has as its main characteristic the global market economy, open and intensely competitive. In its context, the importance of guiding all the company's activities towards the client becomes evident.
This business philosophy, started in the 1960s, requires, however, a different business culture that emphasizes operating processes and the value chain, rather than production processes and financial performance indicators.
The indicators that the company must monitor in the first instance are those related to customer behavior responses, at any stage of the value chain.
In addition to this global competition, the development of Information Technology and the changes in Telecommunications reconfigure not only the business world, but also that of end customers.
Current technology involves moving from analog to digital thinking, which in a context of hyper competitiveness and time constraints, lead us to a new economy characterized by transformation vectors in three dimensions that modify the product offered, the relationship with customers. and the operation with the Companies.
- Space: the concept of space changes because the electronic spiderweb eliminates borders. Time: your perception is that there is no limit, everything is available 24 hours a day, every day. And you can share and interact at the same time. Intensity: the changes resulting from the digital age, due to the transformation of atoms into bits, lead us to an era of information and knowledge, of intangible rather than tangible values.
All this leads us to consider new ways of acting and competing, but what does not change is the methodology of defining a business based on the three dimensions of profit, market and technology.
Regardless of the delivery routes that a company chooses to deliver its products and services to the market, in an efficient and effective way, it is necessary to clearly establish what is the set of benefits that the clients that make up that market will receive in a differentiated way. from the competition.
A symbol of the new economy is the network. Although not its only symbol, it is convenient to implement an operation based on it to open the possibility of selling through the Internet (e-commerce), buying supplies at low cost (e-procurement), getting to know the individual customer better, personalizing products and personalizing communications (relationship marketing).
The company must offer multiple channels, among which it will be the customer who chooses the one they prefer. Often these channels are born from alliances or associations.
It is better to talk about businesses in general that take advantage of technological changes than about a business or electronic commerce in particular, since the technological dimension alone does not define the performance of the company, nor does the market dimension nor that of the company itself. the benefits it is intended to offer.
