Can South African Banks regain their Corporate Reputations after the Economic Crisis?

The financial crisis of 2008 spawned not just a deep recession but a structurally different business environment globally. This restructured economic order, requires some new thinking, particularly for retail banks.

Many retail banks responded instinctively to the recession, without giving any thought to the aftermath of their actions, and there is a growing perception they have violated their social contract with their customers.

In the heady days of courtship, when banks are acquiring customers, they make promises of service and understanding to clients. They position themselves as suitable partners for the long term, especially when it came to buying the major assets in peoples’ lives, houses and cars. Customers commit themselves to the relationship by signing up for twenty year bonds.

Up until mid 2008 it was rational to assume that a customer who didn’t pay back a loan was unwilling to, or incapable of doing so in the very short term, through poor planning. It was also perfectly reasonable for a bank to divorce a client that wasn’t committed to the mutually beneficial aspects of the relationship.

When the crisis loomed, many people were retrenched and entrepreneurs, who had been successfully trading for years, suddenly hit a brick wall, where money just stopped coming in regardless of what they did.

Banks responded in a pre-crisis manner, based on the  economic assumptions that non payers were the bad guys. They came down harshly on offenders, foreclosing, handing over to debt collection agencies who are used to dealing with recalcitrant bad guys, harassed and heckled already devastated clients, who’s only fault was not to have foreseen a recession when even the economists didn’t see it coming. Their way of helping customers was to offer quick sells of customer’s homes before handing them over to the courts. They reported gleefully of moving more inventory through the system.

What they effectively did was to kick their customers while they were down. They should have looked at this as a relationship-building opportunity and demonstrated that customer loyalty was not misplaced. Instead they alienated a captive audience, who though might they have been unhappy, were unlikely to have migrated in droves away from their respective banks.

Had the banks taken a long term view on their client relationships and their financial position, they could have operationalised a single view of customer strategy and considered the customer as the complex entity he or she really is. This would have enabled them to rationalise their exposure to the customer’s risk and facilitated the renegotiation of the terms of their relationships so that the customer would retain their lifetime value to the bank, instead of squeezing them for the present value in a recession.

Take for example, a regularly paying bondholder who has been with the bank for ten years, he hits a problem in the global recession. Judging by his history and paying behaviour, he is likely to get back on his feet in the next twelve months. His house is still worth more than the bond, mitigating the risk that the bank will not be able to recoup its money in future. Surely it makes sense to arrange for a 12 month payment holiday and raise his interest rates by 2%, for the rest of the bond period, thus retaining his Life Time Value to the bank, rather than selling his house off at auction at 50% of its value, alienating the customer, even when he has been rehabilitated and incurring the cost of acquiring an unknown customer from another bank which has similarly disenfranchised their relationship?

Many banks do not understand their customer’s footprint across their financial institutions. In fact some banks are set up on the Owner-Entrepreneur model, because in good times this facilitates the accountability and entrepreneurial behaviour that agile companies need to succeed.

In the past this was a risky practise because it meant that the bank would miss out of cross and up-sell opportunities. Today the risk is much higher. Many banks who noticed a change in consumer behaviour when the economy turned, panicked. They exacerbated the problem at every client interface, by freezing overdrafts and making them due immediately, or by freezing access bonds, so that the customers who could have made payments on most of the accounts or were at risk of falling marginally short on payments, for example meeting 90% of their commitments to the bank, were tipped into the emotional and financial abyss of bankruptcy. Where they could have had the car repossessed and saved the house, they lost everything.

The banks did not consider that the inventory that they were “flushing” through their system, was the life and heart of their customer, their home, they place where they loved and celebrated, brought up children and created a lifetime of memories. Customers are not going to be so quick to forgive banks, the cost of acquisition and creating loyalty amongst customers has just escalated through the roof.

The breadth and depth of today’s reputational challenge is a consequence not just of the retail bank’s instinctive responses to the speed, severity and unexpectedness of recent economic events but also of underlying shifts in the reputation environment that have been under way for some time. Those changes include the growing importance of Web-based participatory media.

The Modern Internet and the era of Social Media are promoting wider, faster scrutiny of banks and rendering traditional public-relations tools less effective in addressing reputational challenges.

It will be action—not spin—that builds strong reputations in the future. Doing so effectively means stepping up both the sophistication and the internal coordination of reputation efforts. Some companies, for example, not only use cutting-edge attitudinal-segmentation techniques to understand the concerns of stakeholders better but also mobilise cross-functional teams to gather intelligence and respond quickly to far-flung reputational threats.

One key is to cut through organisational barriers that impede such efforts through committed senior leadership who have an opportunity in today’s charged environment to differentiate their companies by demonstrating real statesmanship. The stakes demand it; an energised and empowered public will expect nothing else.

The proliferation of Web-based platforms, has given individuals and organisations new tools they use to subject banks to greater and faster scrutiny. This communication revolution also means that certain issues (such as poor customer service) can be picked up by “citizen journalists” or bloggers and generate outrage on a much larger scale.

As a result, what formerly were operational risks resulting from failed or inadequate processes, people, or systems now often manifest themselves as reputational risks whose costs far exceed those of the original missteps.

In this dispersed and multifaceted environment, companies must collect information about reputational threats across the organization, analyse that information in sophisticated ways, and address problems by taking action to mitigate them. This requires significant collaboration, coordination, commitment and an ability to act quickly.

Many retail banks are structured around centralised corporate-affairs departments that can’t monitor or examine diverse reputational threats with sufficient sophistication. Moreover, traditional PR spin can’t deal with many concerns, which must often be addressed by changing business operations and conducting two-way conversations. Managers of business units have a better position for spotting potential challenges but often fail to recognise their reputational significance. Internal communication about them may be inhibited by the absence of consistent methodologies for tracking and quantifying reputational risk. Accountability for managing problems is often blurred.

As a result, responses to reputational issues can be short term, ad hoc, and defensive—a poor combination today given the intensity of public concern. And therein lies a problem that companies must solve quickly: even as reputational challenges boost the importance of good PR, companies will struggle if they rely on PR alone, with little insight into the root causes of or the facts behind their reputational problems.

A logical starting point for companies seeking to raise their game is to put in place an effective early-warning system to make executives aware of reputational problems quickly. Most companies are quite good at tracking press mentions, and many are beginning to monitor the multitude of Web-based voices whose power is beginning to rival the mainstream media’s. However, doing these things effectively, while an important prerequisite for stepping up engagement with stakeholders, isn’t the toughest task facing organisations.

Far more of a challenge is preparing to meet serious reputational threats, whose potential frequency and cost have risen dramatically given the greater likelihood that customers will lash out in an atmosphere that’s become less hospitable to business. These threats might take a variety of forms: issues related to a company’s business behaviours, like those that financial companies have recently committed based on old economy assumptions.

To prepare for and respond to these threats, we suggest that retail banks should emphasise these priorities.

• First, they need to assemble enough facts to gain a rich understanding of their customer base as it manifests itself across the entire organisation, not only their product preferences but also the psychographic profiles of segments of customers including propensity for risk, social media adoption and behaviours etc.

• Secondly, they must conduct a two way dialogue with their customer (segments).

Underlying these priorities is a willingness to participate in the public debate more actively than many banks have in the past. Instead of allowing single-issue interest groups to control the conversation, companies should insist on a more complete dialogue that raises awareness of the difficult trade-offs they face.

Banks are still the heart of the South African economy. They pump the funds on which productive human enterprise depends. Banks must perform this role well, with all the diligence we would expect of any expert or custodian of an essential task.

They must refocus on those fundamentals that are unchanged by the financial crisis — their core purpose, customer needs, and capabilities — while recognising that profound market changes have occurred and will affect how these capabilities need to be delivered. Those leaders whose banks can respond to the times and enhance their capabilities will be to­morrow’s winners.

Kate Elphick Digital Bridges

10 Considerations for starting a web-based business in South Africa

I am often approached by people with fabulous ideas for on-line businesses in South Africa. Many of the ideas are great and the demand should be phenomenal because they solve the structural problems in both our Macro and Micro economy, but South Africa is a capricious mistress when creating successful online businesses.

As with offline businesses, perhaps more so, you need to develop a strategy for the business. Setting up an online business goes beyond the idea and the development of an online application. You need to do some research; understand the technology opportunities, realise the investment implications, consider your revenue models, target markets, marketing, sales channels, creating competitive advantage, operations, scoping and application development etc.

Here is a check list for Innovators and Entrepreneurs when thinking about starting an on-line business in South Africa.

1. Understand the technology opportunities

Technologies are emerging every day, social media opportunities abound, mobile apps are prolific and any of these could contribute to the success or otherwise of your business. The use of technology may be determined by age, wealth levels, education or even the life-stage of your audience.

2. Investment

The cost of setting up an on-line business are minimal, for several thousand Rand a web developer can build you a website, a payment gateway will cost you some more, but the biggest cost in on-line businesses in South Africa is the cost of customer acquisition and service.

It’s easy in the US when you have ninety million Internet users to attain critical mass, why you could sell gold fish furniture on line and make a fortune.

3. Revenue Models

 There are countless revenue models to choose from in South Africa, including the subscription model (which rarely works in SA), eCommerce, Advertising, Application Reseller, Data Aggregation and many more.

The revenue model depends on a variety of factors from your audience, your network, your product, geography etc.

It is also important to understand that while there have been some notable exceptions, most online businesses experience a very slow flat start, picking up incrementally until they reach a tipping point at which stage growth becomes exponential. This may take a number of years. Until you reach this growth phase, your investment will be bigger than your revenue, and so you had better be sure that you have alternative personal revenue streams

4. Target Markets

This includes market research into the current Internet psychographics and demographics in South Africa which are incredibly dynamic. Three years ago I started an on-line business for the township market. I threw everything at it and … nothing. All of a sudden, this year, after it is was all but forgotten, my market is sophisticated enough and has sufficient access to the web to start using it.

Business to Business markets react differently to Business to Consumer markets, niche audiences react differently to large generic audiences. How big are your target markets, where will you reach them, how networked are they, what does their risk profile look like?

5. Marketing

 Your biggest investment in an on-line business is marketing. The investment may take the form of money, resources, people or time. You need to decide how you are going to create awareness, educate audiences, drive them to your site, persuade them to buy etc.

In the past we used to say that “Content is King”, today we believe that “Search is King”. Unless your audience can find you online you are dead in the water. You need to ensure that customers reach your application when they are looking for what you have to offer.

In order to keep people coming back to your online business, it is often a good idea to provide them with value beyond their expectations. One way to do this is to create “communities of common interest” where you let users network with each other around subjects that are relevant to your industry. If you sell travel online, let them talk to each other about destinations they have visited.

Once again in South Africa, you are unlikely to get audience of a sufficient size to make these communities of interest self sustainable and dynamic enough to maintain your customers’ attention. You will need to manually manage these communities in order to ensure that there are sufficient members and that there is enough activity to keep it interesting. We often recommend the use of an Avatar whose job is to act as a “digital host” to your customers, creating blogs, starting discussion forums, and posting interesting articles etc.

6. Sales Channels

Sometimes, if you are lucky, the web is your only sales channel, but usually, when creating robust on-line businesses, you have to cross over into the real world. Sales channels can include online, high end strategic business development, direct face to face sales, partnership with complimentary services, channelling through organisational Intranets or sales through industry bodies, to name a few.

7. Creating Competitive Advantage

Strong branding is the key to online business success. Audiences must understand and relate to your value proposition. They must be willing and able to endorse you through their own (social or business) networks. They may need to interact directly with personality which is the brand through commenting, sharing, blogging etc.

8. Operations

Operational management goes beyond ensuring that the site is up and running, but could include product creation, storage and distribution networks or contract management etc. If your fulfilment doesn’t work in the real world, your online business is doomed to failure.

The modern web (web 2.0) requires that sites are dynamic, constantly evolving, changing and improving to meet customer requirements and to feature in the relevant search results. Content management is one of the most important ongoing operational considerations and a key factor in online business success.

9. Scoping

People adopt and use technologies if they find them useful, easy to use and they make them look good. Considerable energy must be expended in identifying how and exactly why people are doing business online with you. User Requirement Specification and Functional Specifications must be drawn up in order to ensure that you don’t alienate customers as soon as they start interacting with your application.

10. Development

I have deliberately left development to last. Development is like housekeeping, it is a hygiene factor. It will not make your site, but could very easily break your business. Choose your technology and your developer with care. I prefer to use local developers who are within “throttle range” so that I can actively monitor progress. I also like to have them on an SLA and a monthly retainer for the constant and inevitable improvements.

In conclusion, South Africa is ripe for Digital Entrepreneurs, we desperately need access to products and services which enable us to overcome infrastructure problems and to take advantage of the opportunities that the geographically and (almost) sociographically unfettered modern Internet provides.

It is not difficult to start a successful online business in South Africa, it is hard work which requires a lot of strategic thinking and investment, but it is well worth your while.

Kate Elphick – Digital Bridges

The Power of Avatars

With the modern Internet, content has taken on a whole new dimension. In the middle of a global financial meltdown, marketers are moving to digital channels because it offers highly targeted, trackable reach to specific audiences at great prices. Throw in the increasingly influential viral impact of social networking and you’ve got a communication channel that can save the company advertising spend in hard times.

But getting noticed is becoming an increasingly tough business and can only be achieved through dedication and great content.

In the 21st century content is consumed at such speed that enough is never enough. Even if your brand has great content that is sought after by readers, Internet users and twitterers, to keep feeding the beast can become an insurmountable challenge. While the user-generated content (UGC) phenomenon can lift the content pressure, in South Africa, we don’t have enough web users to make a niche site viable or sustainable in terms of good UGC.

In today’s social networking and user commentary environment, brands really need to live their image. Information can be consumed over multiple devices, and if you offer people information that actually adds value to their lives, they will be more receptive to your message, and therefore your brand.

What makes producing attractive digital content such an issue is the perceived conflict between digital and real worlds. Great digital content relies on being present and understanding real world communities.

If you want great content for your target audience, you need to understand that audience, you need an authentic presence in that community and you need to know how to speak to them in their language. If you have an authentic presence within a community you will know instinctively how to service it properly.

We recommend the use of an avatar who becomes the specialist and the thought leader for the community, in other words the personality of the brand. This avatar should be represented across the major social networking platforms such as Facebook, Twitter etc. so that it participates in the audience’s social networking environment.

Most importantly, the avatar needs to be managed by a dedicated employee or team, who are empowered to solve problems if they arise. This avatar then becomes the accessible face of your brand.

When we develop avatars for clients, we go through an exercise of determining what the ideal personality would be to service their customers, should she be a sassy sexy blond who services writers, or a conservative accountant who supports decision makers in the financial sector? Then we build the profile from there adding demographics and psychographics to the character and creating a content architecture, which is a framework of the main themes that the avatar will address in order to deliver on its business objectives.

Here is an example, if the main aim of the avatar is to position the company as “An Employer of Choice” then the avatar could be a fictitious senior HR manager, who is attractive, warm and friendly and approachable and who blogs and tweets etc. about employee engagement and what her company is doing for its employees. She will be creating content that the readers can comment on, and if she is skilful, she can start a very meaningful conversation to the company’s benefit, with the kind of employees they wish to attract.

Generally we recommend that the avatar be a cartoon character. Audiences are not stupid and they will immediately recognise a fake blog that is being run by the marketing team. However, if the avatar is a cartoon character the audience will understand that you are not trying to trick them, but rather making a concerted effort to engage them.

Avatars represent a serious and strategic business opportunity for companies to interact and relate to their audiences in a way they never have before.

Kate Elphick

Creating Productive Work Environments using Enterprise 2.0

Intranets are not known for their dynamism, employees do not gleefully consult them when they get into work, but all that is set to change with the advent of the Interactive Intranet

An Intranet is a private computer network that uses Internet technologies to share any part of an organisation’s information or operational systems with its employees. In the past Intranets were created as a form of hierarchical communication between the organisation and its employees, but with the advances in the web, modern Intranets are becoming dynamic communication systems for organisations and their employees to engage and collaborate with each other. This has important implications for the business.

The Employee Value Proposition (EVP) is a term used to denote the balance of the rewards and benefits that are received by employees in return for their performance at the workplace. Personal job satisfaction is increasingly becoming a major factor where financial factors were key motivators in the past. EVP is critical to attracting, retaining and engaging the right people. This is where the power of the modern web comes in, in creating Interactive Intranets that foster job satisfaction and productivity.

Frederick Herzberg’s two-factor theory of intrinsic/extrinsic motivation distinguishes between: Motivators; (e.g. challenging work, recognition, responsibility) which give positive satisfaction, and Hygiene factors; (e.g. status, job security, salary and fringe benefits) that do not motivate if present, but, if absent, result in demotivation.

The factors that motivate people can change over their lifetime, but “respect for me as a person” is one of the top motivating factors at any stage of life. Interactive Intranets enable employees to profile themselves and build their personal brands within the organisation. Knowledge Workers, are motivated if they feel they are seen and heard and recognised for making a contribution. They require ongoing accurate informative feedback for performance management.

When organisations recognise that the Intranet is the strategic backbone to their business, then they can use individual employee profiling, linked to their performance metrics to manage, recognise and communicate with knowledge workers more effectively.

World-of-Mouth and eMarketing

The Internet has brought many unique benefits to marketing, one of which being lower costs and greater ability to engage with a global audience. The interactive nature of eMarketing, both in terms of providing instant response and eliciting responses, is a unique quality of the medium. eMarketing refers to digital media such as the Internet, e-mail, wireless media, the management of digital customer data and electronic customer relationship management systems.
It also refers to the placement of media along different stages of the customer engagement cycle through search engine marketing (SEM), search engine optimisation (SEO), banner ads on specific websites, e-mail marketing and Web 2.0 strategies.
Word-of-mouth (WOM) principles play an important role in eMarketing. People no longer need to wait to meet someone in person to discuss a book they’ve read or an event they attended. Today they simply generate content in their social networks letting everyone know their views. For live events, people broadcast themselves via Twitter for real-time content generation not to mention the interaction as others tweet, retweet, comment, like, or post reactions.
The traditional push communication techniques are becoming less effective while still costly. We have transitioned into a media environment meant to be about conversations where the media and its message represent the starting point for the generation of meaning in social media. Digital media has relinquished the control to audience.
If you’re actively using eMarketing, you have a higher chance of being heard, connected and engaged when you’re part of the WOM network. eMarketing should be used to manage reputation and generate awareness. Brands should care about what people are saying and how they are saying it. They must actively listen and participate in order to humanise the relationship through interactions and manage their reputations.
Whether you’re a blogger, a marketer, or an entrepreneur your opinion counts and can be contagious. It’s now possible and easy to circulate your message via the new digital channels like Facebook, LinkedIn, Twitter or YouTube. The key is to facilitate effective word-of-mouth campaign through these communities.
Each time you’re able to influence experts, opinion leaders, or people with authority you’ll instantaneously gain a little more credibility and access to their fan base. Then the collective minds with shared visions will continue to spread your message forming the viral wave pushing all the way.
If you want to attract relevant audience to your branded social network, you must do more than just spam visitors with self-promoting ads. You need to offer compelling value that keeps your audience engaged as well as perpetuating the interaction. The more interactivity a social network platform allows their users to have, the more engaged users will be which often leads to a greater chance of influencing the network effectively. This is why blogs are still amongst the most influential social media because they encourage bloggers to interact with their audience in a simple and easy fashion.
Although eMarketing is complex, it is critical to the future of any organisation

Kate Elphick Digital Bridges

Mitigating the economic downturn by unlocking the power of the web

Web 2.0 offers an unparalleled opportunity for businesses to compete and thrive in a time of mounting economic difficulty – yet incredibly many have little idea of what 2.0 means. Far too often, it is dismissed as a buzzword – but it could hold the key to the survival of many businesses as the slowdown kicks in.

Today businesses are challenged by a global slowdown in the economy, rising inflation, severe talent shortages, cheap imports from the East, the rise of the knowledge worker and a new tech savvy generation Y entering the economic landscape. Also, for the first time, user driven web 2.0 technologies are changing the balance of power between the corporate and its stakeholders, be they consumers, employees or the public.

The last few years have seen the launch and successful rise of creative online businesses offering clients faster and cheaper solutions that they would have previously looked to traditional outlets for. Sector after sector is benefiting from the speed, efficiency and cost-effectiveness of online services, and increasingly, crowd-sourcing and collaboration enabling innovation in new categories and market sectors.

The initial reaction of many big businesses was to batten down the hatches and prepare themselves to ride out this “Facebook craze” which was wasting employees’ time.  Now, the recession looms large in the minds of marketers, the industry is experiencing a noticeable shift in attitudes towards web 2.0 and the new business models it enables.

The “network effect” is becoming ever more important in that for every additional member of a community; the greater the value to each of the community members, and this is fundamentally changing the business models. No longer are communities just “eyeballs” to be advertised to they are now dynamic and demanding sources of revenue.

Businesses are reaching out to online communities to deliver efficient, effective and economical solutions. Perhaps most notable is the range of industries that are embracing such alternatives. All evidence is pointing to web 2.0 being an even more remarkable opportunity than even the most fervent of supporters may have thought.

This is a fascinating time to be in marketing. As we grapple to find ways to do more with less, the smart decision makers are expanding their horizons to include more creative and resourceful solutions to their business challenges. In a broad sense, this means that digital and PR solutions are being implemented to a greater degree than ever before, even replacing some pricey traditional executions. From a sourcing standpoint, marketers are engaging with open-source models, where they’re finding increased return on their investment, as well as global input on their brand.

It will be interesting to see what kinds of businesses are born out of this increased willingness to explore non-traditional models. What other industries will change because necessity, does, in fact, breed creativity?

As businesses continue to adopt these tools, decision-makers looking to leapfrog the competition need to move fast. Web 2.0 tools are being adopted in companies across all industries, and any business which fails to recognise that runs the risk of being left behind.

Consumer Web 2.0 technology is a real force that is changing how business is getting done, and any company looking to improve performance should be taking a closer look at how it can benefit from driving business the Web 2.0 way.

Social media and networking sites provide the platform for companies to collaborate, share information and expertise and market their goods. In fact, all over the web, communities of like-minded firms are supporting each other with advice, swapping internet links and trading together.

The interactivity of Web 2.0 also allows an authentic and direct line of communication between a company and its customers – invaluable any time, but essential in the light of the challenging business environment.

The tools of Web 2.0 – blogging, podcasting, photo and video sharing – have been adopted by millions of consumers because they are simple and powerful communication methods. For that reason, they are ideal for businesses to use in their marketing strategies.

A company that is prepared to engage in an open, honest dialogue, whether it be through a blog or video, with its customers, is being sensible and shrewd. These days very few consumers are prepared to just listen to announcements and one-way broadcasts without being able to give their feedback.

However, there are still far too many companies which have not tapped into the rich potential arising from web 2.0 because they either are not aware of it or feel it is irrelevant or too complicated or they underestimate its power.

This reticence may be in part explained by existing attitudes to the internet generally. Many businesses are not seeing a measurable return from their websites or online marketing and sales.

There are good reasons for this. Running a website can be a costly, complex business that often requires the support of third parties to build, maintain and market. Many organisations regard their website as a brochure for the organisation and have not contextualised in the business strategy as a whole. Larger businesses to use paid search and display ads supported by a comprehensive Search Engine Optimisation strategy to ensure a good Google rating.

If we put the problems of traditional online marketing alongside the growing importance of the internet as a research and purchasing medium for consumers, it becomes apparent that we desperately need to find a better way to promote ourselves online. This is where Web 2.0 is vital.

To attract customers, it is necessary to participate in online “communities” relevant to your business. That also means engaging in an ongoing, meaningful dialogue with customers on interactive networking sites about products, prices and service.

The social web has changed the landscape of e-commerce forever. Audiences are fragmented and this means customers are harder to reach but they are surfing the web for information about goods in ever-growing numbers before buying. If these trends continue, then any company wishing to succeed has to embrace the interaction encapsulated by Web 2.0 to build strong, trusting relationships with its customers.

Businesses can benefit from the power of social networking precisely because the tools of Web 2.0 are well suited to the personal and conversational marketing style that already works to their benefit offline.

Firms large and small have started to take part in social networks and internet communities but the results are mixed. Some are successfully attracting customers and boosting the bottom line, others are not. Of greater concern is that most have not taken the plunge at all with many approaching the internet in general with apprehension.

These businesses should realise that Web 2.0 offers relevant and powerful tools for them to promote themselves and build an online brand. They should stop hiding – and start using it to their advantage.

Kate Elphick Digital Bridges

Thinking about eMarketing

With the digital population growing, companies can no longer afford to overlook eMarketing. We need to build an online presence, create brand awareness, drive leads and engage with existing and potential consumers. Here are two critical strategic objectives which lend themselves to eMarketing and the ways they can be implemented to create holistic and successful online and offline marketing campaigns.

Create a Digital Footprint

The first step to eMarketing success is establishing an online presence. Website development provides the central hub upon which all future activities are built. It has to be thought through carefully in order to ensure that it is aligned with your offline brand, not only in the iconography, but also in the messaging and user experience. If you sell rustic food, an upmarket corporate style of writing will not contribute to your web presence, even if your look at feel are the same as they are in the real world.

Once your website is place, you need to look at social media, web PR, online advertising, industry blogs and viral marketing to extend your digital footprint beyond your website to drive potential and existing customers back to your site. This should be a dedicated activity.

With a digital presence comes more potential customers and an additional revenue channel. You need to ensure that people can find you by using search engine optimisation (SEO), which will ensure you are better represented on the SERPs (search engine results pages) – increasing your exposure to potential leads and driving traffic to your website.

Using the many avenues for driving online presence presents unique advantages over traditional brand awareness drivers. For example, the upfront costs of a website are considerably lower than those of TV and, with reduced cost and time lag, it’s possible to mould your presence to opportunities and risks in a near real-time fashion as they arise. Furthermore, the economies of scale apply, it costs the same to open a market of 100 000 potential consumers as it would 10 million.

Conversion optimisation makes the most of each unique visitor coming to your website – subtly directing them to meet your marketing objectives. By implementing conversion optimisation, more traffic is turned into viable business leads. This improves the profitability of your web presence and your overall business.

Engaging your audience

There are various channels to drive engagement and build relationships with your consumers. By exploiting one of the two key advantages of online marketing – one-to-one engagement and economies of scale – it becomes possible to meet consumers’ particular needs.

Social media provides a useful channel to spread your marketing. By creating a platform for engagement, you are opening the door to further engagement and this allows for a relationship to be developed. However, all engagements should empower and enrich the relationship rather than directly sell products. A simple measure to establish whether you are on track is to make sure that no more than 10% of the content is focused on sales. This encourages the development of a relationship built on transparent and honest communication.

Provided engagements have clear payoffs to the users’ time investment (financial, social or emotional), users will continue to engage. It’s important to remember that your consumers are as time-starved as you and need to provide value in exchange for their time.

This is fundamentally changing the way we communicate with our consumers. The new focus is on empowering them to communicate on your behalf, therefore increasing the impact of their trust – the perfect opportunity for social media marketing.

eMarketing doesn’t stop at the creation of a digital footprint, driving of leads or the creation of a platform for engagement. One should also consider the possibility of internal business process improvement through integration of certain processes with your web presence. CRM can be perfectly integrated to improve consumer satisfaction through targeted and timely engagements. This reduces the fixed cost overhead of staff and replaces it with the low variable cost of a “per engagement” model which can grow and be shaped as your needs develop.

From these engagements deeper customer insight can be gained which can be used to improve the effectiveness of your current and future marketing strategies.

As the online population continues to skyrocket, eMarketing provides the competitive edge necessary to excel in today’s highly competitive environment.

Kate Elphick Digital Bridges

The Importance of Usability Testing

How many times have you tried to download an application or use a newer version of the same software only to give up in frustration when you can’t navigate your way through to what you need? The adoption of technology is predicated on three basic tenants, it must be easy to use, useful and make you look good – simple really. If your application is not user friendly, chances are people will not come back, nor recommend it to their network, and your effort will be wasted.

It is often said that software developers must not write the user manuals because they don’t understand the problems that a user experiences. This is where usability testing comes in. It is an important step in the development of any application that we check to see whether the application is designed to fit the users’ needs.

Application usability is achieved by first understanding the users’ needs, their actual goals, challenges and limitations they face, or the unique or unexpected ways in which they use the application. These needs are determined by collecting data on representative users’ interactions with the application. This data must be objective, based on actual performance, as well as subjective, based on the users’ impressions and preferences. It must include measurements such as task time, errors, learning rate, satisfaction, cognitive load, level of frustration etc.

Once the users’ needs and challenges have been clearly defined, then this information should be incorporated into a specification for the developers to build the application.

An important part of usability is the testing of the system after it has been built. It is often a good idea to collect the data of a fictitious user who would be using the application and to run through the entire process from start to finish, as though you were the user. This illuminates any gaps in logic that may have crept into the application.

Once the user testing has been tested on a fictitious character, then real users need to test the application and criticise it in a controlled environment. Only when you get the thumbs up from real users should you unleash your application on the market.

It is important to remember that your application remains in permanent beta with constant and never ending improvements and as such, usability testing is a constant step in your application development.

Kate Elphick – Digital Bridges

Creating High Performance Organisations Using Interactive Intranets

What makes it possible for some companies to transform into high performance organisations, and achieve great success compared to other companies in the same market? There is no holy grail to high performance organisations, but there are key patterns that drive this performance.

Many businesses express the desire for a transformation into a high performance organisation that is fit and friendly for human life. Yet this transformation remains the exception to the rule. Even in the face of great desire and evidence of the superiority of high performance organisation cultures, why is the progress so slow?

There are several drivers that are required to overcome the inertia and fuel the high performance organisation. The predominant driver of entrenching a high performance culture is to have a demonstrable values shift, which requires crossing a personal transformation threshold where every employee moves from an independent silo approach to an interdependent and inclusive approach.

This can be achieved by translating the core values of an organisation into processes which are entrenched in “the way we do things around here”. One of the fundamental ways of doing this is to create an interactive Intranet that is based on the core values, processes, workflows and content structures of the organisation, and which at the same time, transparently illustrates the end to end business value chain to the employees. Once employees recognise that they are part of a system that they can identify with, they will understand which behaviours are required from them.

Let’s say, for example, that the core values are “quality” and “innovation”. The first step is to identify how we demonstrate quality and innovation. Is it a failure rate of less than one in a thousand, or is it one new product every six months that provides a return on investment that exceeds 35%?

Once we understand the outcomes we can begin to design the processes that will get us to those outcomes. Where are the Quality Assurance check points, how do we innovate in this company? This is built into workflow and incorporated into the interactive Intranet and other technologies that employees use daily. For example an interactive virtual innovation space can be made available to all the employees with a common interest, regardless of their position in the organisational hierarchy. Virtual reward systems could be displayed on the individual employee’s personal profile.

In order to ensure that high performance is further entrenched into the Intranet, a knowledge or content management strategy should also be devised to ensure that there is a single version of the truth and that it is explicit in all processes. We need to ensure that both the documents and the on-line conversations are captured in their original work context for all who need to understand them.

Another important driver of high performance organisations is to leverage powerful communication to energise the system. The executive team must ensure that everyone communicates the same message throughout the organisation.

In a knowledge worker environment, this too can be done through an interactive Intranet, where communication takes the form of blogs and wikis as well as instant messaging between employees.

The advantage of using an interactive Intranet is that employees can ask questions for clarification that can be shared with other employees. This kind of dialogue must be aimed at driving sticky relationships and reducing the misunderstandings that occur in siloed thinking.

The executive team must involve the entire workforce to develop a common understanding and competence of the high performance organisation drivers to create an inclusive culture that is energising and reinforces sustainable competitiveness.

Kate Elphick – Digital Bridges

Systems Theory and The Network Effect – Could the Internet solve the Global Economic Crisis?

We stare in abject fascination at the economic world falling apart. It is not unlike when we watched aghast as two passenger planes flew into the twin towers over and over again. This time it is a different building crashing to the ground each time with different metaphorical jumpers, there goes Lehman Bros, now RBS, KPMG next GM?

The world economy looks set to be in a more severe and protracted downswing than anything since World War 2. Analysts are starting to factor the risk of a global depression into their scenario planning and the emerging consensus is that we are in for a long period of global stagnation. This means several years of less than 3% global growth. SA is likely to achieve no more than a 0,6% economic growth this year.

However, this is the first recession that we have faced in the Internet Age.

The Internet has changed the way we do business and the way that we think about communication. It is also one of the most transparent manifestations of Systems Theory and the Network Effect in action. Could this new economy be harnessed to mitigate the effect of the economic Bin Laden?

Systems Theory

Systems theory is an interdisciplinary field of science and the study of the nature of complex systems. It is a framework by which one can analyse and describe any group of objects that work in concert to produce a result.

Macroeconomic Theory

Adam Smith believed that the ideal economy is a self-regulating market system that automatically satisfies the economic needs of the people. He described the market mechanism as an “invisible hand” that leads all individuals, in pursuit of their own self-interests, to produce the greatest benefit for society as a whole, and believed that fiscal policy would ensure economic growth.

Keynes argued that markets were not self correcting and that if the economy was in a crisis of confidence and downward spiral, it was necessary for government to use spending to stimulate the economy. It would pay the money back later. Otherwise a general deficit of effective demand would lead to a very long slump.

A crisis in confidence could send stock markets plummeting, meaning companies go out of business, more redundancies and fewer people with jobs, people would have less money to spend, businesses will have fewer customers, therefore more companies go out of business, sound familiar?.

Milton Friedman, on the other hand, argued that the Great Depression was result of a contraction of the money supply, controlled by the Federal Reserve, and not by the lack of investment as Keynes had argued. Ben Bernanke, current Chairman of the Federal Reserve, generally accepts Friedman’s analysis of the causes of the Great Depression.

So, can we use the Internet to stimulate demand, or is it really up to the central Banks to implement a more expansive monetary policy?

The economic implications of wikis, blogs, social-networking, open-source, open-content, file-sharing, peer-production, etc. is starting to gain attention. What are the implications Web 2.0 has for the principles underlying the economy of the modern Internet?

Mass Collaboration

Tapscott and Williams argue in their book Wikinomics: How Mass Collaboration Changes Everything that the economy of “the new web” depends on mass collaboration. They regard it as important for companies to find ways of how to make profit with the help of Web 2.0. The prospective Internet-based economy that they term “Wikinomics” depends on the principles of openness, peering, sharing, and acting globally.

Organisations can prosper with the help of Web 2.0: Companies can design and assemble products in collaboration with their customers, the traditionally passive buyers of editorial and advertising can take active, participatory roles in value creation.

Tapscott and Williams suggest that modern business strategies are “models where masses of consumers, employees, suppliers, business partners and even competitors co-create value in the absence of direct managerial control.^” They see the outcome as an economic democracy.

Others in the debate agree that value-creation increasingly depends on harnessing open source, user content generation, networking, sharing and peering, but disagree that this will result in an economic democracy, predicting a subtle form and deepening of exploitation, in which Internet-based global outsourcing reduces labour-costs by transferring jobs from workers in wealthy nations to workers in poorer nations.

In such a view, the economic implications of the new web might include on the one hand the emergence of new business-models based on global outsourcing, whereas on the other hand non-commercial online platforms could undermine profit-making and anticipate a co-operative economy.

The Network Effect

In economics and business, a network effect is the effect that one user of a service has on the value of that service to other people.

Mobile phones are an example; the more people own mobiles, the more valuable the phone is to each owner because he can call additional people. This creates a positive externality because a user does not purchase their phone intending to create value for other users, but does so in any case.

Network effects become significant after a certain critical has been achieved. At the point of critical mass, the value obtained from the good or service is greater than or equal to the price paid for the good or service. As the value of the good is determined by the user base, this implies that after a certain number of people have subscribed to the service or purchased the good, that additional people will subscribe to the service or purchase the good due to the positive usefulness : price ratio.

A key business concern, if we are to create macroeconomic growth using the network effect, must then be how to attract users prior to reaching critical mass. One way is to rely on extrinsic motivation, such as payment, free use, or a request for friends to sign up. A more natural strategy is to build a system that has enough value without network effects, at least to early adopters. Then, as the number of users increases, the system becomes even more valuable and is able to attract a wider user base.

It is possible that the dynamics of the new economy could create robust networks, through the complex systems made possible by web 2.0, working in collaboration to create macroeconomic growth in a very different economic order than we have seen in the past, only history will tell.

Kate Elphick – Digital Bridges