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E-Service
• On-line Banking
• On-line Publishing
• On-line Advertising
• Changing Face of Service
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Trends in Retail Banking
 Cost reduction thru mergers
 Non-bank competition from stock market
 Consumer wants convenience and confidentiality
 Regulations keep changing
 Technology requires high sunk costs
2
Evolution of Distribution Channel Chain
• Physical branches have high cost structure
• ATM – Did it save money or give competitive advantage?
Branch
ATM
Phone
Center
PC Banking
Internet
WWW
Reduced cost per interaction
• Phone Center – Limited functions and no visual interface
• PC Banking – proprietary client software
• Web – flexibility for banks and consumers
3
Traditional Banks vs. Cyber banks
Traditional banks
Players
- Citigroup, Inc
- Wells Fargo
- Bank of America
Goals
-
Strengths -
Cyber banks
- Net.Bank
- Security First Network Bank
- Telebank
Embrace e-commerce
- Take advantage of new
Increase user reach
opportunity
Lower costs
- Become new leaders in the
Integrate various services
banking and financial industry
Provide better services
-
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Value Creation
Efficiency
Time Single interface
for all banking
transactions.
Distance Small banks can
reach wide range
of customers.
Effectiveness Strategic
Real-time
account
information.
Mobile
customers with
search engines.
24X7 Customer
service.
Get customers
before creating
a physical
presence.
Relationship One-stop shop for Micro marketing Lock-in with
customer financial with web
functionality and
needs.
technologies.
content.
Flexible user
Knowledge
Interaction Use customer
feedback to alter interface.
sharing in onofferings.
line community
On-line decision Use extranets to
Product Automate user
services using
support services. become the
software agents.
financial hub.
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Financial Supply Chain
Services
Stock trade
Gateway
Access
Customers
Insurance
Accounting / Tax
Bank or non-bank company?
Online services
Consumers
Dial-up
Broadband
Small
Business
Wireless
Large
Business
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E-Service
• On-line Banking
• On-line Publishing
• On-line Advertising
• Changing Face of Service
7
On-Line Publishing
Critical Success Factors
Compelling content
Challenges
– Charge customer
– Unique, timely info
– Advertising revenue
– Programming
– Packaging
– Intellectual property
protection
– Services
8
Drivers of on-line publishing
•
•
•
•
9
Control Use of
the Work
Control Web
Server Access
Electronic
Contracts
Digital
Copyright
Protection
Control Document
Access
Copyright
Infringement
10
NTT DoCoMo’s I-Mode Wireless Service
– DoCoMo is a cell phone company with >55 million subscribers
– Launched in Feb99, I-Mode has >15 million subscribers who
exchange 60 million emails, access the net 12 times daily
– 80% subscribers pay for additional content services
E-mail with a cartoon
I-Mode Contents
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Business Model
– Content provider codes content for I-mode and can be on menu
– Content can be free or for a fee (no more than $3/month)
– User fee = Monthly charge, Transmission fee, Contents fee
– DoCoMo receives Monthly charge and Transmission fee
– DoCoMo gets 9% of Contents fee for billing / collection service
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No More Free Content?
• WSJ (574,000 subscribers pay $29 to $59)
• Consumer Reports (550,000 subscribers pay $19-49)
• 555-1212.com has begun charging
• Online magazine Salon.com to charge $30/yr for premium
content only
• RealOne service of RealNetworks has a million subscribers
of news, sports and entertainment video for $9.95/month
• KeepMedia to charge $4.95 for 140 archived magazines*
• Dot-com quest for money is to charge for content, but how to
change customer’s “mind-set”?
* WSJ July 21, 2003
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Promise of Online Content Marketplaces
• Authors offer content, and may also set the price
• RedPaper.com requires a $3 buying account, and
collects 5.25% on each transaction
• 50¢ for each installment of “My Big Fat Single Life” by
Liz Hassel
• Lulu.com features full length books at a higher price,
keeps 20% of royalty set by authors
• Vehicles for accessing public documents easily?
• Critical success factors?
Source: WSJ, “Web Sites Offer Unsung Writers Chance to Sing,” Sept. 8, 2003
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E-Service
• On-line Banking
• On-line Publishing
• On-line Advertising
• Changing Face of Service
15
Traditional Advertising
Web Advertising
• Seller decides on message
•
• Broadcast
•
• Seller to buyer
•
• Static
•
• Mostly one way
•
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Web Ads
Description
Remarks
Banners, rectangular strip
Online staple, but limited effect
Skyscraper, tall and skinny
Hard-to-miss, hard-to-read
Bulky box, big rectangle
Hard-to-ignore
Pop-under ads
Intrusive, lively, annoying?
Interstitial Ad
Full page message between
current & destination pages
Variable size, rich media ad
Superstitial Ad
Buttons, business card size Fixed, non-interfering
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More Online Ads
Description
Remarks
E-mail newsletters
Cheap, effective, clutter
Sponsorship
Control, but credibility?
Banner swap
Reduces costs
Banner exchange
An intermediary is needed
Search engine inclusion
Pay for inclusion / placement
Affiliates
On-line affiliate presence
Catalogs
Custom / dynamic catalogs
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Impressions /
Hits / Visits /
Page Views
Conversion /
Attrition/
Abandonment
/ Retention
Clickthrough /
Acquisition Rate
On-line
Advertising
Effectiveness
Measurement
Stickiness /
Recency
Unique Users
/ Reach
CPM
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On-line Advertising Challenges
• Banner ads less effective than expected (0.1-0.5%)
• $3.2 B in 1st half of ’03, $6.6 B for ’03, 10% of TV ad
• Animation, broadband, search placement may fuel growth!
• Engage customers!, exploit interactivity and measurability!
• Software filters (webwasher.com, internet.junkbuster.com)
Source: WSJ 8/25/03, p.B1
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Problems of “Spyware”
• Spyware quietly installs itself on your computer, often
when you download free staff. It tracks your web surfing,
and shows pop-up ads based on your interests.
• Gator.com claims it has its software running on 35 million
computers. It seeks permission from the user, however
subtly, and does not usually identifies her.
• Its effective, but is it ethical? Some advertisers love it,
others are objecting to these tactics.
Source: WSJ, “New Battleground in Web Privacy War,” Aug. 27, 2003
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E-Service
• On-line Banking
• On-line Publishing
• On-line Advertising
• Changing Face of Service
22
The Service Process Matrix
High
Service Shop
Professional
Service
Interaction &
Customization
Low
Service Factory
Low
Mass Service
Labor Intensity
High
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Attractor’s Grid
High
Service Center
The
Club
Customization
Utility
Low
Low
Mass
Entertainment
Interaction
High
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Sustainable Attractiveness
Ease of Imitation
• Easy
• Some efforts
Examples
Corporate brochure
Software utilities
Search engine
• Costly
Sponsorship
Rare resources
• Impossible
Archive (exclusive features)
Brand / corporate image
Stakeholders
Broad
Specialized
Customized
Influence Filter
Target Refractor
Web Site
Strategies for Attractors
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Heterogeneity:
One size does not
fit all
Intangibility:
No physical
product
Unique
Properties
of Services
Simultaneity:
Errors visible to
customers
Perishability:
No inventory
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• Provide evidence (email confirmation)
• Tangibilize the intangible (quality content, update)
• Sampling in the cyberspace (digital products)
Managing
Intangibility
• Multiplying memories (customer testimonials)
• Customization (personal information)
• Customer as a part-time employee (ordering, tracking)
• Innovation through customer participation (new product)
Managing
Simultaneity
• Service industrialization (more info, search capability)
• Reducing customer errors (alert customer)
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• Service standardization on the web (consistency)
• Electronic eavesdropping (listen to customers!)
Managing
Heterogeneity
• Service quality (on-line feedback)
• Managing supply (integrated channels)
Managing
• Directing demand (airline example)
Perishability
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Key Points
• Service migration to on-line media is real!
• Revenue models are barriers
• Different velocities in different services
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