Using XML to Implement E-Commerce Marketing Strategies

August 15, 2001

Introduction

When most people discuss the rationale for implementing large XML-based systems, they typically refer to the long term cost savings that will result from adopting a standard data methodology within their organization. Whether streamlining an electronic publishing process or facilitating the transfer of data among suppliers, XML's consistent way of representing business information has helped solve many costly data exchange problems across a variety of industries. However, despite the increasing number of XML success stories, which show significant reductions in IT costs, managers still face a difficult challenge when justifying the considerable upfront expense of developing an XML-based system. This problem is due in part to managers focusing solely on the internal cost saving opportunities and ignoring the ways that XML can help their companies expand their businesses through e-commerce.

In today's economy, substantial IT investments have to be justified both in terms of cost savings and ability to increase sales. This article will explore ways that, for each stage of the online customer relationship, companies can better leverage their e-commerce investment by using XML. With proper planning, XML-based solutions can play a wide range of roles in driving new online business from generating initial product awareness to creating customer loyalty after transactions.

Online Customer Relationship Model

The Online Customer Relationship Model defines the various stages of commitment through which customers progress when purchasing products or services over the Internet. This relationship starts with basic awareness as a company works to expose new customers to its e-commerce offering. If the marketing message is compelling and persistent, customers will be enticed to visit the company's site to learn more. The simple act of clicking on a hypertext link strengthens the relationship as customers enter the visitation stage when they begin to browse through the company's site. If a company can consistently deliver value during each subsequent site visit, customers often will be willing to let the company know more about them. Once customers disclose personal information they enter the registration stage; i.e., the company has earned the opportunity to communicate with the customer on a one-to-one basis. Only if the company can then capitalize on this opportunity, and use the registration data to provide relevant personalized information, will customers be encouraged to use the site to purchase goods or services. The following online sale, often mistakenly considered the consummating step of the online customer relationship, moves the customer to the transaction stage. The highest level of customer commitment that can be attained, however, is represented by satisfied repeat purchasers that have progressed to the loyalty stage of this model.

Stage 1: Awareness (Getting the Word Out)

During this first phase, companies try to attract attention from the marketplace by demonstrating how their product offerings are relevant to potential customers. Companies typically use ad banners, affiliate marketing, and email campaigns to create a recognizable brand -- all with the goal of generating traffic to their site. The problem that companies face during this phase involves the high cost of distributing effective marketing and product information. Although it is often a difficult case to present to marketing professionals, managing promotional information directly in XML offers three advantages:

A single promotional XML document can be distributed via multiple distribution channels. Promotional documents stored as XML data can be pushed to a high quality print engine for direct mail, a conversion tool for a plain text email campaign, or an XSLT transformation for HTML output. This method ensures that a consistent message is conveyed regardless of the delivery mechanism.
Using XML allows organizations to create multiple versions of promotional material to more narrowly target customers by using separate transformations for different market segments.
Delivering promotional information in XML to affiliate marketing sites allows partners to apply the appropriate styles through a standard conversion to HTML via XSLT or directly with XSLFO to match the look and free of their website. This division of labor will save time as the content of the marketing material remains the responsibility of the company, but the online formatting is shifted to the affiliate web site owner.

Stage 2: Visitation (Generating Web Traffic)

Once customers visit a site for the first time, they enter the second stage of the online relationship. Moving customers to this visitation stage was once the ultimate goal of e-commerce marketers, many of whom believed that the number of site hits was an appropriate proxy for expected profitability. Painfully, these companies learned that the only way to ensure that customers will return to a site is to create new, pertinent content regularly. Even though most companies now realize that it is not sufficient to direct large numbers of visitors to their e-commerce sites, they still need to invest significant resources to generate site content dynamically and customize navigation tools to encourage repeat visitations. As this is a common problem facing organizations, there are many XML-based applications to help facilitate this process:

Utilizing an XML-based (ICE, RSS, etc.) syndication engine, companies can rapidly aggregate relevant content from providers so that each time customers visit their site there is new information.
Adopting an XML-based content management systems can be used to decrease internal product documentation cycle time. By ensuring that pricing, support, and technical information is current and available via the Internet, companies increase the likelihood that customers will regularly visit their web site.
If XML is published directly, XSLT transformations can be applied to create dynamic navigation tools that provide an intuitive user interface for customers.
Indexing XML-based documents with specialized search engines that support structural searches will provide a level of granularity not commonly available on corporate sites and will encourage customers to return.

Stage 3: Registration (Knowing your Customers)

Once companies have begun to generate significant levels of Internet traffic, their goal should be to tailor their site content to meet the specific needs of each individual customer. However, in order to do this effectively, they must create enough value so that customers will allow direct communication on an ongoing basis. With so many cases of corporate misuse of consumer data, customers are hesitant to disclose even basic demographic facts about themselves. Organizations wanting to compete for online business must understand that customers will rarely register unless it can be demonstrated that the information that they provide will be used to their benefit. Fortunately, using XML offers tangible ways to use customer data to improve their online experience:

Using customer preferences as input parameters, companies can dynamically create personalized XSLT transformations to render customized views of a site for each customer. Format as well as content can be tailored to optimize the effectiveness of the site.
Managing site content as XML documents allows companies to dynamically create customized documents that incorporate customer data such as account balance, shipment status, or responses to support questions.

Stage 4: Transaction (Making the Sale)

Companies that have the ability to customize advertising, pricing, and product bundling for individual customers are more likely to make online sales and lead their customers to the next stage of the online customer relationship. However, often companies do not have the ability to personalize product offerings because their staff does not have access to the relevant information that they need to support the large number of customized products that would exist in the field as a result. To overcome this problem, many companies have adopted an internal XML strategy to manage the technical, sales, and support documentation needed to maintain a more sophisticated and diverse product set. This approach offers two advantages to companies attempting to increasing online sales revenue:

These companies can create a suite of product bundles that are based to customer segment preferences not back office limitations.
Similar to generating personalized content for online customers, XML can be used to help customized advertisements or product bundles that match individual profiles.

Stage 5: Loyalty (Closing the Loop)

The only reliable way to ensure the success of an online enterprise is to provide the highest level of post-sales customer support. While creating customer support strategies involves both online and offline procedures, providing access to support information directly from a company's site is a key component. As with the other stages of the online customer relationship, XML can help organizations implement strategies targeted to retain these repeat customers:

Once customers have purchased items online, XML can play an integral role to ensure that the delivery of the product or service is executed as promised. Tightly integrated supply chain management systems and XML-based web services can help link business partners together in order to provide the high level of service that encourages repeat purchases.
XML provides companies with a mechanism to improve their online customer support by allowing users to directly access enterprise support information such as technical documentation or operations data.

Conclusion

The current economy is driven by the intense demands of the online marketplace more than ever before. In order to compete effectively, companies must do much more than just allow customers to order products online. Fortunately, in recent years most companies have learned that to be successful online that they have to effectively cater to customers in each stage of the online relationship spectrum. Also, they have realized that the intermediate goals of brand recognition, web traffic, registered users, and online sales are not as important as generating customer loyalty. Managers that understand this process and can identify opportunities that can be exploited by leveraging XML technology will have the most success designing and implementing effective online marketing strategies.

In summary, although it is unnecessary to use all of the recommendations discussed in this article, managers should strive to incorporate the following goals when designing an online marketing strategy for their organization:

Consider the role of XML content when planning an enterprise e-commerce strategy.
Track the progression of users through online customer relationship from awareness to loyalty.
Dynamically update site content by integrating e-commerce offerings with automated content management systems.
Personalize site content to encourage registration.
Profile customers by purchasing preferences to maximize e-commerce profits through product bundling and dynamic pricing.