How will the Internet help your business?
Discussion About The Benefits of a Networked Enterprise
It is important that your networked components of business become an extension of your business model and business practices rather than just some adjunct service to a complex revenue event or a small element of your value chain.
Most Important: Recurring Revenues
The most important benefit is getting your loyal customers to perform tasks of rebuying and modified rebuying. Recurring revenues substantially increase profit margins only to those ventures that are ready to accommodate such business activities.
Too many entrepreneurs get stuck chasing too many markets pursuing new customers. And with each new market come new uncontrollable variables, learning curves, and deployment of critical capital resources. The objective is to become more and more efficient in delivering the complete solution for the right customers when they need it.
Tom Siebel helps to support our thinking when he writes that “loyal customers have always been important to an organization’s long-term success. . . . A 5 percent increase in customer retention can increase an organization’s profitability by 25 to 100 percent.” Indeed, these are pretty healthy numbers, which a start-up—or any business organization for that matter—needs to hear.
There is an interesting study conducted by the Kauffman Center for Entrepreneurial Leadership that provides more support for recurring revenues. They analyzed 1,100 entrepreneurial businesses across nine different industries in seventeen countries. All were recipients of Ernst & Young’s prestigious Entrepreneur of the Year (EOY) awards program. The study, which provides insight for achieving and sustaining higher than normal growth and profitability, concluded that entrepreneurs who focused on profitability obtained as much as 67 percent of their sales by selling existing products to existing customers.
How the Internet will help your business: Other Benefits
We now have to accept that the value of a venture is no longer multiples of the top line revenue, but the combined value of the venture’s customers. In fact, we found that the best customer care of the industry becomes the standard by which all others are measured. Besides recurring revenues, there are other ways a networked organization can increase a venture’s bottom line.
Improved Customer Service
Being networked means you are able to offer outstanding service to all your customers, allowing them to easily interact with your venture 24x7x365. Using Web-based self-service applications, customers can receive personalized products and services each time they visit. When all of your systems are integrated, your organization will always be equipped with accurate, timely information necessary to quickly respond to customer needs and queries. This includes product demonstration, simulations, automated order acceptance, new product training, and e-learning.
Increased Customer Satisfaction
By offering improved customer service, you increase customer satisfaction. You will know who your customers are, what they want, and how to respond to and even anticipate their needs. And, with a completely integrated venture, you will deliver your products and services faster and cheaper than ever before. By offering improved customer service, you increase customer satisfaction. You will know who your customers are, what they want, and how to respond to and even anticipate their needs. As a completely integrated venture, you will deliver your products and services faster and cheaper than ever before. And satisfied customers will share their satisfaction to other potential customers, thus facilitating the catalysis sales approach we discuss in previous Articles.
Lower Operating Costs
As a networked enterprise not only are you more efficient, but you realize unprecedented savings as well. Taking full advantage of ICT (i.e., facilitating self-service for your customers, employees, and business partners over the Internet) you will significantly cut costs in every area of your business, including procurement costs, selling costs, reduction in inventories, financial management, human resources, and data processing.
Better Quality Products and Services
Being networked means that you not only lower operating costs, but actually improve the quality of your products and services. With improved customer intelligence you know what your lead users and best customers want. You have access to suppliers around the world that bid for your business, which allows you to pick and choose based on quality, price, and date of delivery. And because your value chain is completely integrated (customers to suppliers and suppliers to customers), your quality of service also improves. You deliver exactly what is needed, when it is needed. You can work online with your suppliers to facilitate supplier-managed inventory, providing products and services faster and cheaper than ever before and even help manage recalls.
Greater Business Efficiency
Your entire networked enterprise becomes more efficient. Your systems are integrated, processes streamlined, and everyone is sharing the same accurate, timely information. You can realize greater business efficiency when you integrate all of your systems to create one comprehensive, connected value chain. You can shorten buying times or accelerate the revenue events, have suppliers deliver parts and inventory on a just-in-time basis. And you can streamline your administrative processes using self-service applications, which is helpful in managing your outsourcing business partners.
Better Business Intelligence
When your supply chain, operations, and customer-facing systems are integrated, it gives you a new, extended enterprise supported by suites of integrated, Internet-enabled applications. With this digital “executive dashboard” you can employ the information generated by these systems in real time, which will help you run your operations and more effectively capture and retain customers. You are now able to deliver insight throughout the organization, supply logistical information in real time to all stakeholders, discover opportunities quickly, better understand business risks, and better align operations with corporate objectives.
Increased Market Coverage
With your Web site on the Internet, you instantly have a global audience. No matter where your headquarters is located, your venture is now accessible to the entire world. Your Web site will enable you to sell more effectively to large marquee companies, to make limited explorations into other markets, and to support global business initiatives.
Fewer Administrative Errors
As part of a networked enterprise, your employees, customers, and suppliers can all perform transactions themselves using Web-based self-service applications. No more data entry clerks. No more lost paperwork. Transactions are now processed quicker, cheaper, and much more accurately. This self-service eliminates intermediaries and delays, significantly reduces administrative errors, accelerates billing and accounting procedures, lowers stakeholder communication costs, and helps deliver critical documents to professional service providers, such as your law firm.
You will be able to operate in a global economy, giving your customers what they want when they want it. Staying ahead of the curve means you are providing personalized products and services at the lowest possible price. You are accessible 24x7x365. You have a 360-degree view of your venture and a comprehensive view of your customers and your space. You have suppliers bidding for your business. You will have the business intelligence to make accurate, timely decisions and the ability to monitor its impact across the enterprise. Your employees are focused on relationship building, improving service, and benefiting the venture. You are more competitive than ever before by improving the relationships with suppliers and partners, promoting the image of your venture and can even speed joint product development programs.