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When the Relationship Really Pays

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Posted October 10, 2001 By Staff     Feedback

The fallout of the Internet economy is beginning to take its toll. For many, it's now or never in terms of creating a profitable business model. Ouch, to the consumer.

by Damian Bazadona

The fallout of the Internet economy is beginning to take its toll. For many, it's now or never in terms of creating a profitable business model. Ouch, to the consumer. You can soon kiss those "market share days" of ridiculously cheap offers, the free shipping and probably the most painful, free content, goodbye. This will be an interesting test for the Internet economy and many of the companies doing business online today.

An advertising-based online model online is proving to be a risky venture and tough to distinguish as a viable business model. Look at the online advertising market. Search engines are shoving "sponsored links" in the search results, pop-up ads and interstitials are jumping up left and right, e-mail ads are pouring out of the flood gates and advertising is quickly making its way into the ordinary content one is reading. The fact is, Web advertising effectiveness in relation to online user behavior has not met the projected expectations and now, with loads of investor money on the line, advertisers are being forced to overcome this discrepancy.

So while many online businesses have either shut down or shifted their business model, what is on the horizon for the Internet economy? Companies deemed as being successful in the eyes of the market two years ago will look much different from companies that will look successful two years from now. Topics of profitability are obviously extremely important components to an organization's health. The market is beginning to overcompensate for the past blunders of the ridiculous projections and valuations of eyeballs by putting extreme pressures on companies to, simply put, make money.

Market share is a good thing. But who will maintain it? For those that have been fighting for the past five years to gain market share, the question really becomes: who will maintain it? The market is now showing that pricing and/or convenience alone does not equate to a sound business strategy online. What does equate with a sound business strategy, and what always has, is a quality product with quality customer service. I don't know about you folks, think this is difficult to find online. You can always find a good deal online or a company that will offer you free shipping, but when something doesn't go according to plan and the wrong package shows up on your doorstep, how do these same companies react? Hidden phone numbers, scrappy online support centers, chat tools that don't ever connect with operators and those annoying forms you are forced to send in order to submit a request. I guess what makes it worse, especially if you work in the new media industry, is that there are some companies that seem impossible to avoid -- ranging from Network Solutions to Yahoo -- that have made an art form of annoying customers. The Internet has addressed many business concerns and enhanced communications, but it has not replaced the power of the human element in customer support and will not do so effectively for some time.

A Brief Comparison

Take one of the biggest online names, I use their site frequently for their wide selection of products, and I especially like their Honor System payment solution. But as with many companies we all work with, the true test of a relationship comes into play when the waters get bumpy. Try to find a phone number on Amazon for customer service. Odds are you won't, considering the fact that their service rep (who I finally contacted after getting the phone number off of 411) couldn't find it either. Now, go to the Barnes & Noble Web site and see if you can find a phone number. You sure can, it's right on the home page and it's unforgettable: 1-800-THE-BOOK. To me, that makes a difference. I would pay an extra couple of dollars for a book or wait another day for delivery to be assured that there will be someone to help me if something goes wrong. Maybe I'm crazy, but I think the general public would do the same as well.

And the Winner Is...

I have been a strong believer that the brick-and-mortar world will eventually move in and dominate the online arena (you can read more at While many of the offline brands have already screwed up online, and some are really only just beginning, the market shakeout has shown us the difference between e-business methodologies and business fundamentals. Customer service is the single most crucial component to the longevity of a successful e-tailer. Besides issues of online security, online purchasing behavior's growth is dependent on the level of customer service that can be provided online.

Article by Damian Bazadona, President of Situation Marketing, an Internet consulting and strategy company. Prior to forming Situation Marketing, Damian served as the Chief Marketing Officer for Cyber-NY Interactive and now serves as an advisor to the company.

Reprinted from Internet Day

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