E-Business -- Web Marketing's New Wave

Dec. 21, 2004
Manufacturers build online communities and organize sales and marketing forces around them.

Supply-chain woes? Feeling hopeless about sales in emerging markets? Depressed about the lack of qualified candidates to fill open positions? If your world feels as if it's out of control, Prozac.com wants to hear from you. Log on and you can use the site's Zung assessment tool to see if your signs of despondency indicate depression. Or you can write a poem, tell a story, share your experience, and submit it to the site. Your contribution may end up in the community section that includes 37 anecdotes hand-picked by marketers at Eli Lilly & Co. from contributions by people suffering from depression. There is artwork from members of the Prozac community as well. Manufacturers such as Eli Lilly are entering a new phase of Web marketing. Last spring the Indianapolis-based pharmaceutical maker relaunched two of its most popular drug Web sites -- Prozac.com and LillyDiabetes.com. In June Emerson Electric Co. introduced the second version of testdriveplantweb.com, its award-winning Web site that lets users design an automated virtual plant. And the following month Toyota Motor Corp.'s Prius hybrid car bowed to U.S. audiences with a campaign anchored to a Web microsite. Old-economy stalwarts are investing big bucks and plenty of executive hours to reinvent themselves to compete in the new economy. Identifying e-commerce as a critical priority in 1999, a group of 30 Eli Lilly executives huddled in Chicago for three days to create e-Lilly, the corporation's e-commerce initiative. They also emerged with a new way of looking at the customer. Other recent e-marketing initiatives have been launched by Emerson Electric, St. Louis, which has spent $50 million to develop Internet strategies, and Textron Inc., Providence, R.I., which has invested $100 million in Safeguard Scientifics Inc., an Internet holding company with a network of 250 Web-related technology firms. From these multimillion-dollar investments and executive powwows flow new marketing models. Topping the corporate priority list are better, faster ways to determine the needs and desires of customers. Even e-mail complaints are being turned into useful market research. Text-mining software categorizes e-mail messages, including gripes. Online feedback is combined with similar data from the sales force, call centers, and other parts of the company as well as public records such as mortgage information and driving history that are available cheaply on the Web. A detailed customer profile emerges through these efforts. When fed to analysis software, these customer portraits begin to establish buying patterns, which can translate into tailored products that persuade shoppers to open their pocketbooks. A down side to this information explosion: Some companies have learned that asking for or revealing too much personal information about a customer can boomerang. (See "Privacy Issues," Page 32.) A fine line exists between knowing enough about a customer to boost sales, and knowing too much. Marketers are swiftly learning where to tread. Experimentation starts with the product Web site where companies are providing entertaining, informative, even passion-provoking content designed to attract a community of interested individuals. Targeting customer retention A closer look at Prozac and the patients who are prescribed the drug shows why one manufacturer is using a Web community to build stronger ties to consumers. Lilly launched Prozac in 1988. In 10 years it has been prescribed to more than 38 million people in over 100 countries. The market is huge. In the U.S. alone some 19 million people suffer from clinical depression, according to the National Institute of Mental Health, which also reports that 80% of depressed people can be helped with treatment. The problem is that people forget to take their pills. Or they never fill prescriptions. Of all the prescriptions written for Prozac only 79% are filled. A month later only 63% of those who filled their prescriptions are still taking the drug, and seven months later, the average prescribed length of treatment, only 21% remain on Prozac. Traditionally, Lilly has focused on acquiring new customers; approximately 66% of its marketing budget has been devoted to capturing prospects, while the rest goes to customer retention. In a shift, the company is putting more emphasis on retention, and at the heart of its strategy beats Prozac.com, which Lilly hopes will boost patient compliance and increase revenue. If 10% of patients visit the site and, as a result, even a small number stay on the drug a little longer, several million dollars in additional revenue will be generated. To keep patients on Prozac and encourage them to spend time on the product's Web site, Lilly uses several tactics, many developed from what it learned running its first site for the drug. The company launched the original Prozac.com in late 1998 as a way of providing information about depression and the drug it manufactures to address the condition. Similar to other early Web sites, Prozac.com was like a billboard on a highway. It provided information, but failed to accommodate people who wanted to communicate with others about their troubles. "Brochurewear," is how Brian Wagner, team leader of global e-commerce for Prozac.com, describes it. "Now we're taking a whole different approach -- connecting with the consumer audience," he explains. Lilly has turned to other media to entice consumers, including a television campaign that promoted the site and suggested viewers ask their doctors about Prozac. The Web site also received attention at the Welcome Back Awards that Lilly sponsors to honor individuals who are sources of inspiration and models of achievement in the struggle against depression. It also is testing banner advertising on Web sites such as Healtheon/WebMD Corp.'s WebMD and Medscape Inc.'s Medscape. To hold on to viewers who visit the site, Lilly invites individuals to register by providing information such as name, address, telephone number, or e-mail address. Lilly builds on that information by inviting viewers to participate in online surveys. These may reveal more than traditional research about buyer preferences. People interviewed online tend to be more open than those polled over the phone or in person, according to market research firm Greenfield Online Inc., Wilton, Conn. Lilly's "permission-based" marketing approach lets users check a box if they want to receive more information on Prozac such as e-mailed newsletters or even reminders to take their pill. Studies have shown that permission-based marketing yields better results -- a response rate as high as 25% -- than traditional direct mail, which generates a response rate of 2%, estimates David McFarlane, COO of Xchange Inc., Boston, which sells customer profiling software. Prozac.com also keeps consumers coming back by providing them a service. So-called "cookie" technology, whereby a Web site attaches a piece of data to a visitor's computer browser, helps the Prozac site recognize repeat viewers and their preferences. Other manufacturers draw visitors with entertainment, education, or ways to save money. At Prozac.com the Zung self-assessment tool allows visitors to assess their mood, and if they have been given medicine for depression it lets them track their progress. When an individual takes the test Lilly offers to store that person's score. The visitor can return regularly and retake the test and see if the score has changed. The community section is where people share their experiences with depression -- and Prozac. "It helps people to connect, and feel that they're not alone," Wagner insists. Simulation game Other approaches are used by Emerson Electric, which lures visitors to one of its product Web sites with software that is both entertaining and packed with ways to save money. When Emerson's Fisher-Rosemount Systems Div. wanted a new way to sell its PlantWeb digital architecture, a product that ranges in cost from $25,000 to $25 million, it developed a PlantWeb site, www.testdriveplantweb.com, with a program that enables users to build a virtual oil refinery, a chemical plant, or a pulp and paper plant. Loosely modeled on the popular computer game Sim City that lets users set up their own metropolis, testdriveplantweb.com shows the builder of a virtual factory how much can be saved by installing the Fisher-Rosemount digital architecture. To promote PlantWeb and the test-drive Web site, Emerson turned to tried-and-true tactics. It hired a sales force of 50, named them "PlantWeb champs," and trained them on the Internet technology. Emerson also created an off-line advertising and direct-marketing campaign that works by first making contact with prospects -- people it calls technical evangelists. To spark them to action, Emerson brought out brilliantly colored print ads that had few words but displayed strong images that served as metaphors for old and new such as a weather vane and a weather satellite. In trade journals where Emerson ran its campaign, the ads stood out amid the word-heavy promotions surrounding them. During the advertising campaign, Emerson recorded names and contact information of people who logged on to the testdriveplantweb.com site. As soon as Emerson marketers noticed someone playing on the Web site, they sent direct mail to higher-level executives in the same organization. The idea was to intrigue the technical evangelist's supervisor -- the one who would probably make the decision to purchase the product. "Ideally, they would meet in the hallway -- the technical evangelist, who is really excited about testdriveplantweb.com, and his boss who has questions about how the actual product technology would work," explains Charles A. Peters, the Emerson executive vice president responsible for e-business and integrated marketing. It can take months for a company to purchase a multimillion-dollar automation package, so Emerson reminds prospects at both levels about PlantWeb through regular promotional materials such as invitations to seminars. Since testdriveplantweb.com debuted 18 months ago, Emerson has counted 65,000 unique visitors to the site. This has translated into 850 installations of the PlantWeb product. Mining sales leads Toyota Motor USA also turns prospects into customers thanks to hot leads from the Internet. Since Toyota started using the technology five years ago, the Web has become the largest source of leads for new-car sales. In 1998 Toyota began collecting e-mail addresses from prospects interested in its hybrid Prius vehicle at auto shows, Earth Day celebrations, and other venues. By the summer of 2000 it had a list of 40,000 people -- a Prius community of sorts. Two weeks before Toyota offered the car for sale to the general public, it sent an e-mail message to all 40,000 inviting them to purchase the car. Potential buyers were told to log on to the Web site prius.toyota.com and fill out an order form with name, address, phone number, and other contact information. Based on their zip codes, prospects were provided the location of a nearby dealer where they could buy the car. Financial transactions take place at the dealership. Two weeks after the offer was made, some 1,800 people had placed orders for the car. Toyota's product managers have extended the Prius community beyond the original list of 40,000. Chat rooms have sprung up on the Internet to discuss the vehicle, and Prius product managers monitor these independent discussion sites and offer answers to questions. They also try to correct misinformation. "Chat rooms can be an interesting laboratory," offers Steve Sturm, vice president of marketing at Toyota Motor USA. "We learn what colors consumers don't like, what new features they want," he says. Lilly for one refuses to participate in online chats. Just as its Prozac patients are searching for control over their lives, the pharmaceutical manufacturer wants some measure of authority over what is said about its products.

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