U.S. e-commerce is expected to reach about $434.2 billion in 2017, and continue to grow at a rate of 14% over the next 4 years. The key to being a part of this growth is having an effective e-commerce strategy in place.
To be effective, an e-commerce strategy should be part of an organization’s overall strategy. This seems obvious enough, but rarely is it the case. Organizational dynamics often get in the way.
Most organizations are made up of a collection of silos (groups, teams, divisions, agencies). These silos tend to develop and execute their own strategies, usually with the best of intentions. But these strategies may have limited regard for the larger organizational strategy.
Often this is caused by a leader or leadership team unable to systematically deploying their strategy across the entire organization.
What’s Wrong with Strategies Made in Silos?
Depending on which silo is responsible for the e-commerce strategy, there are many factors that may hinder the overall organization’s strategy. Consider the following examples of how e-commerce strategies formed in silos are set up to fail:
A consumer goods organization has a stated omni-channel strategy, which incorporates a consistent brand and customer experience. However, the organization’s silos are fighting because each silo is measured on their own P&L. This strategy may require changes across both front-end and back-end processes and systems, which in turn requires strong collaboration and coordination across many silos. More organizational change is necessary.
An organization’s strategy expresses the need to move business to an e-channel to reduce the cost of sales and to meet customer desires. Unfortunately, the organization hasn’t dedicated the necessary resources—people, technology, business processes or change management—to meet this desired state. More resources are necessary.
An organization asks its IT department to drive the e-commerce strategy because they think e-commerce is just about technology. But the organization can’t explain what this e-commerce strategy should accomplish. A clear vision is needed to create the appropriate solution. More input from the business is necessary.
Set Up Your E-Commerce Strategy for Success
The 6 critical attributes an e-commerce (or any) strategy deployment require to be successful are:
- A clearly communicated vision or future state for the organization
- Concise objectives that bring the organization closer to its vision
- Strong top-down leadership that drives the vision while listening to feedback
- Effective communication and collaboration across all silos
- KPIs and incentives that drive the right behaviors
- Systematic follow-up by leadership
If one or more of these attributes is lacking, the silo responsible for the development and execution of the e-commerce strategy likely isn’t focusing on the organization’s key strategic initiatives. Or worse, the strategies may be in conflict.
Elements of a Strong E-Commerce Strategy
Given the risks inherent with silos—conflicting priorities, disjointed organizational strategy development and deployment—where should you start with an e-commerce strategy?
Consider the four guiding principles below. They will not substitute for a well-developed and well–deployed organizational strategy, but I would contend these to be universal e-commerce strategy criteria:
1. Put the customer experience first.
a. Find out what is most important to your customers. Develop your e-commerce strategy like an anthropologist doing work in the field: Ask questions, listen, feel their pain, and learn customers’ objectives.
b. Understand what your competitors, peers and others are doing well, and not so well. Think critically, be introspective, and document the opportunities. A classic SWOT analysis may be useful here.
c. Before you go too far, circle back to your customers for feedback so you can adjust your e-commerce strategy early.
2. Develop the customer experience from the outside in.
a. This approach may be fraught with obstacles depending on the flexibility of your back end systems and business processes. Listen for, “Oh, we can’t do that here because of ___.”
b. Make system or process workarounds invisible to your customer. You might need to be less integrated and efficient in the short run than in your desired future state.
3. Build in the use of analytics upfront.
a. Information is essential for continuous improvement. Develop your system architecture to meet your data needs. Early on, answer the question, “What information will I need to make improvements?” For example, you may want to perform a customer segmentation analysis; what demographic or other customer information is necessary to do that segmentation?
b. Use this information to innovate (see #4).
4. Innovate, innovate, innovate!
a. Keep listening to your customers. Are they telling you they want fewer clicks to complete a transaction? Test a more streamlined check-out process. Do they want more product reviews? Ask power customers to post their thoughts. This should never stop, so build in processes to ensure you are able to listen and respond.
b. Don’t be afraid when something isn’t working. Stop doing it, fail fast, change, and use the lessons learned as a gift. “Failing fast” may be a cultural barrier for your organization to overcome, but it is essential for leadership to create this culture up front and show that they mean it when it happens.
c. Expand on what works well, look for new opportunities to leverage wins, and celebrate your successes.
d. Go back to your e-commerce strategy, make adjustments and share updates with key stakeholders across the silos.
Your success will vary depending on your organization, your position in the organization, and how well collaboration already happens across silos. If you follow the principles above, you should improve your chances to develop an effective e-commerce strategy and, ultimately, deliver the customer experience and outcomes your organization is expecting.