Most business owners think of e-commerce in the most common use case—augmenting or replacing brick and mortar with online retailing. Canadian companies like Shopify and Tulip Retail are betting big and jockeying to be the trusted provider that guides brick and mortar establishments into the modern omni-channel marketplace.
In 2012, Parliament’s Standing Committee on Science, Information and Technology commissioned a study to look at the adoption of e-commerce technologies by Canadian businesses. The study found that our small to medium enterprises lagged behind those in the U.S. by a significant margin. The most commonly cited challenge behind moving business online was the complexity and cost of integrating modern point-of-order and point-of-processing technologies with aging inventory and fullfillment systems. It’s a fair concern—having worked on these integrations, I know firsthand what a nightmare it can be to drive a square peg through a pinhole.
E-commerce is much bigger than selling physical (or digital) goods online, though. The broad definition of electronic commerce used in the information, communications, and technology (ICT) community qualifies nearly anything that leverages a web-based technology to facilitate transactions as “electronic commerce.”
Products are really just services you can touch
A service is usually thought of as something that humans do for other humans to fulfill a want or need. A product is something that a consumer buys which is used to then fulfill a want or need for themselves or someone else. The product is the power drill; the service is the contractor who comes with their own drill.
In technology, the distinction between product and service has been eroding for several years. Software and infrastructure were mostly considered products, but now are also being delivered as services. This erosion in how we differentiate between products and services is similar to the erosion between features and benefits that afflicts many marketers.
When buying the power drill, is it the features of the drill that really matter? Speed, torque, number of gears—they’re all dimensions that when added together suggest what kind of outcome (benefit) a customer can create with the drill. The features don’t really matter beyond this description of a future benefit. When viewed through this lens, a product begins to look like a service with an extra step.
Like products, services can also be transacted through e-commerce. In many ways, growing businesses that provide services can more easily adopt e-commerce than those that provide products. Unlike their product-based counterparts, service organizations tend not to have rigid inventory and fulfillment systems.
The natural comment many service-based business owners have about e-commerce is: I don’t do business based on volume, I do business based on time. What I have is working fine. Why should I add more complexity to my business? It’s reasonable question. Here’s the answer:
Purchase friction has a direct impact on sales and retention—though the effect on your business is difficult to quantify unless you routinely collect customer feedback. As a service business, your purpose is to simplify or fulfill a customer want or need. Customers touch your brand and your organization beyond the delivery cycle of your services—order taking and billing are important touchpoints, as they directly impact how easy it is to do business with you.
If paying you is a headache, you’ll eventually start to lose customers to competitors who better manage these touchpoints. If you’re skeptical, poll 10 random people nearby. I’d wager you’ll find at least one who has changed phone or cable providers due to a poor billing experience.
Improving customer experience through e-commerce
Life is more complex today than it was 20 years ago, just as it will be more complex in 20 years than today. Many people are actively looking to simplify their lives, and the market is responding to this want by creating new ventures oriented around doing just that. Web-based businesses are springing up around everything from taking out the trash (TrashDay.co) to hailing a cab (Uber) to doing your own taxes (TurboTax).
These new businesses all have two key things in common: they’re designed to improve a sub-par experience and payment is so seamless it’s almost unnoticeable.
When analyzing a customer experience touchpoint, there are five critical dimensions that should always be evaluated: speed, simplicity, convenience, consistency and certainty.
How do your customers currently pay for your services? How would the experience your customers have while paying stack up against these five critical dimensions?
Mailing a cheque or money order: This one almost always fails in speed, consistency and certainty. It takes a few days for the cheque to arrive and a few more for it to clear (which it might not, unless it’s certified).
Over the phone: Paying by credit card over the phone often fails in consistency. Language barriers and accents cause frustration. Humans also just have bad days and get cranky sometimes (customers and reps alike—it takes two to tango, after all).
In person: Cash, debit, credit—they all involve the customer travelling to you. More often than not, also waiting in a line with all the other humans who dropped by to give you money. This experience frequently suffers failures in speed (waiting in line), convenience (making a special trip) and consistency (language and mood).
Barter: A failure of simplicity and certainty, almost every time. And likely why our distant ancestors dreamed up the notion of currency in the first place. Moving on…
E-commerce: A properly-designed e-commerce touchpoint performs well against all of the above dimensions. Paying online rarely takes more than a few minutes, satisfying speed. Entering credit card information into a secure web page or app screen is easy to do, satisfying simplicity. Not having to leave the home or office to pay satisfies convenience. Human interaction during the process of paying is low and almost always the same as the time before. This satisfies consistency. On-screen confirmations and automatically emailed receipts satisfy certainty.
Ready to get started?
There are a number of secure, well-designed, well-supported, affordable tools available that will simplify getting started with e-commerce. When envisioning how it could work for your business, ask yourself these questions:
How would my customers place orders? If you’re selling heavily commoditized, standardized service packages at low(ish) cost, an online storefront is likely the best solution. Take a look at Shopify (shopify.ca) or WordPress with WooCommerce (wordpress.org and woocommerce.com). WordPress is just as or more secure than other open-source content management system when you follow best practices on security and use a reputable managed hosting service for your website.
If your services are heavily customized or expensive, your order taking process might not change all that much. But, maybe you’d benefit from a platform to help you streamline deal closing and better manage your contracts. Take a look at Adobe Document Cloud (acrobat.adobe.com).
How would I bill my customers? If you decide on an online storefront, this is built in (customers have to pay before the order can be placed). WooCommerce has optional extensions available for recurring billing and managing free trials. If contracts and a multi-step sales process are the norm for your business, there are other options available. The most common is to email your customers a PDF invoice, but let’s face it—this isn’t any more advanced than printing a paper invoice and dropping it in the post box. It doesn’t do anything to streamline operations or improve customer experience.
The real billing magic happens when you source a tool that emails customers an invoice you create, but also offers online payment options and integrates with your accounting software (or replaces it). Check out Freshbooks (freshbooks.com) and Wave Accounting (waveapps.com). Or PayPal—these days, it’s not just for buying trinkets on eBay.
How would my customers pay the bill? Most invoicing tools have built-in payment options. The invoicing tool emails your customer the bill, and the message includes a link for them to click in order to pay it online. Freshbooks, Wave Apps and PayPal all take this approach.
Also look at Square (square.ca) and Shopify Payments (shopify.ca/payments). These tools were originally build for online retailing, but can be configured to work for service businesses with a little outside the box thinking.
How (and how often) does the money get to my bank account? If you want your own merchant account for payment processing, there are a number of good ones readily available. Gateways like Stripe (stripe.com), Braintree (braintreepayments.com) and Beanstream (beanstream.com) take an aggregated approach to merchant accounts, which helps bring down the cost of their services. When evaluating these providers, pay close attention to the processing fees and the deposit schedule (usually a rolling two-day or rolling five-day).
It’s incredibly important to make change about your customers, not about you. Before getting started, solicit as much customer feedback as possible. What are their pain points? Avoid making changes that will improve your business if these same changes will make the experience for your customers worse. A great way to make sure you’re on the right track is to test changes with a trusted group of customers before rolling them out to everyone else.
This article originally appeared in the November issue of Direct Marketing Magazine.