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Using the Web to Cut Costs

Many executives from small and medium-sized businesses (SMBs) still face challenges when trying to justify Web site costs.

Many executives from small and medium-sized businesses (SMBs) still face challenges when trying to justify Web site costs. While they recognize the ubiquity of the Web and its importance, they have difficulty freeing up funds to invest in Internet initiatives. No doubt, these troubles are tied to the lingering effect of the dot-com implosion and the current confusion about the Internet’s ultimate effect on business, as well as the uncertain economy. As big companies plow ahead with Web initiatives and bolster their competitive advantage, savvy executives are looking for foolproof ways to improve their businesses using the Web. Given the current environment, straightforward cost-cutting messages may be the best approach to justify expenditures. Here are four strategies for using the Web to reduce operating expenses.

When used appropriately, a corporate Web site and the Internet can be powerful cost cutting tools. Though by no means a silver bullet, SMBs can use the Web to effectively streamline operations, serve customers better, and improve their competitive position in the marketplace. Here are four ways to use the Web to cut operational costs.

1. Cut mail and printing costs
Make your Web site an information tool to be used by clients, prospects, employees, and partners. Provide a company overview, product literature, catalogs, and other information about your business. By directing potential customers who are seeking product information to your Web site, you can eliminate the need to print and mail costly brochures or catalogs. Further, making changes to your online information is much more cost-effective than altering print materials. Customers will appreciate the convenience of being able to access this data immediately.

2. Use e-mail Instead of postal mail whenever possible
E-mail and other online promotional tactics are cost effective and flexible. Traditional direct mail campaigns can cost anywhere from $1 to $5 per recipient and take several months to complete. A targeted e-mail campaign can be launched in as little as two weeks for a fraction of the cost. E-mail marketing allows you to easily test multiple versions of messages for different segments of your customer base without having to incur additional printing costs.
E-mail can also be used to nurture customer relationships by notifying constituents about new product announcements and service offerings. A byproduct of regular online communications efforts – such as a newsletter – is viral marketing, when individuals communicate your message to colleagues using e-mail. Customer surveying efforts, the backbone of every customer satisfaction program, can almost always be executed more cost-effectively online than offline.

3. Web-enable customer service
The Web can serve as a platform for various levels of customer self-support. For example, effective Web sites allow customers to find answers to common questions without having to initiate direct contact with your business. When done effectively, this can improve the quality of your service while holding down staffing levels. For example, you can post and regularly update a series of frequently asked service and support questions, based on the most common requests to your customer support department. Customers can go online to get answers immediately, reducing the number of calls to your service line.

4. Collaborate online to reduce communication and travel costs
Online collaboration can significantly reduce the need for travel, phone calls, faxes, and overnight mail. Interactively sharing designs, documents, and presentations reduces the time and operational costs of partner and supplier communications. Jim Champy, author of ‘Reengineering the Corporation,’ notes, "There’s an opportunity for a whole new level of business-performance improvements in the collaborative redesign of processes, using the Internet as the great enabler."
Intranets and extranets, along with collaboration software, provide the platform to realize these benefits. Once strictly the domain of Fortune 500 companies, these tools are being used more frequently by SMBs. Ryan Bernard, author of The Corporate Intranet, notes, "All the things that the major corporations were doing two or three years ago are trickling down to the small-business realm. The larger corporations were the proving ground."
Inc. magazine reinforced this trend when it reported, "Intranets and extranets are fast becoming small-business tools whereby companies can communicate more effectively with employees, increase productivity, and even drive company strategies." Inc. highlighted the 22-person, $7 million company Eminent, which specializes in coordinating trials for heart and blood-vessel devices such as stents. The company launched an extranet that allows doctors nationwide to collaborate on protocols electronically. The system sliced the approval process from two months to two weeks. Eminent spent $50,000 to launch its private Web site and estimates the organization saved 10X that amount by eliminating shipping, storage, two administrative salaries.

The Internet is no longer regarded as silver bullet for solving all business problems. Rather, leading research espouses the importance of the Internet as a complementary, but critical, component of all businesses. Many small and mid-sized business executives are struggling to get resources to fund Web-based initiatives given uncertain market conditions. Highlighting cost-savings opportunities tied to Internet programs may be the best way to get online projects completed and improve your organization’s ability to compete.

Scott Stephens ([email protected]) is the president of Pixel Bridge Inc., a consulting firm specializing in helping small and mid-sized businesses use the Internet to improve marketing, sales, and operations.

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