Governments Ponder the Magic of Marketing

State and local governments are eager to launch a number of electronic commerce initiatives, but are unsure on how to market the services.

by / August 31, 1998
Let's face it. Marketing is an alien concept in the public sector. State and local governments do many things, but finding new markets for upgraded services isn't one of them. Part of the problem is that the government's customer base or "market" is, for the most part, simply "the taxpayer," not the small-business market, the upper middle-class market, or the minority-women's market. Traditional marketing techniques, such as segmentation, don't always apply.

Another problem is that marketing costs money and doesn't always pay back. Remember the Edsel? Ford thought lots of marketing could turn reluctant buyers into eager buyers. It didn't work, and the Edsel has become a symbol of marketing hubris.

Not surprisingly, government agencies aren't comfortable with the idea of spending tax dollars on market research, and rightly so. Should the press get wind of a government agency investing thousands of dollars on an elaborate marketing campaign, complete with advertising, to sell some newfangled, possibly dubious, and definitely high-risk venture, such as an Internet corporate tax-filing service, media types would have a field day. Worse, taxpayers would be up in arms.

Marketing Attempts

In the 1980s, when urban jobs were fleeing to the suburbs in record numbers, cities, as part of their effort to rescue ailing downtown districts, turned to marketing as a way of bolstering their image and economy. A large number of localities tried to master the science of marketing in an attempt to sell their city to potential businesses and tourists. Books were written on how cities should market themselves, and officials attended seminar after seminar. Despite the best of efforts, many of these local-government marketing programs produced more flops than hits.

In 1998, the issue is electronic service delivery and electronic commerce. State and local governments believe services driven by technology can serve many taxpayers and businesses more efficiently than by traditional means and, at the same time, save tax dollars. So far, the results have been mixed.

In Texas, the Public Utility Commission (PUC) thought that, by converting certain public filings into an electronic format, customers would be more than willing to pay for the new "value-added" service. The PUC even made it possible to use credit cards. The only problem was that very little value was added. The process was still the same, only electronic now, and the PUC didn't bother to find out exactly what its customers really wanted. To no one's surprise, the new service did poorly.

Conversely, in Boston and Chicago, both cities took the time to figure out what was needed to boost the compliance rate for parking-ticket fines. In Boston, an easy-to-use voice response system, available around the clock, coupled with a credit-card payment option, did the trick. In Chicago, it meant setting up payment bureaus out in the neighborhoods, away from the congested downtown business district. In both cases, city government turned around people's attitudes using a well-conceived service.

The next level in electronic service that governments hope to reach is Internet commerce. Allow transactions -- both financial and nonfinancial -- to take place on the still-expanding public Internet Protocol network, and the hope is that all sorts of synergies can occur. Tax forms can be filed, bids for services and products can be accepted, permit applications can be processed, all electronically.

Consumers Are the Answer

How do you market these kinds of services to taxpayers? Some experts believe little can occur until there is a national digital-signature infrastructure to bolster trust in the free-wheeling Internet. But an increasing number of success stories in the private sector -- from Amazon Books to Dell Computers -- tell government that the trust is already there; it's just a matter of marketing, if you want to succeed.

Those who know what makes electronic commerce tick, such as Patricia Seybold, president of Patricia Seybold Group, say the answer lies with the customer. According to Seybold, customers are concerned about four things when they shop on the Internet for a product or a service: time, convenience, avoiding aggravation and having peace of mind. By keeping those points in mind when doing business over the Internet, says Seybold, an organization can deliver better results.

The first step toward successful marketing in electronic commerce is to target the service to the right customer. If a government procurement office wants to launch an electronic bidding system, it better target the firms that are computer savvy. Sending announcements to all those Mom and Pop firms on the mailing list that don't know the difference between a modem and a fax won't work.

Second, agencies have to streamline, reengineer or simply change the business process that impacts the customer. When Chicago wanted to improve on its parking-ticket payments, the city not only moved the bureau out into the neighborhoods so that violators could pay their fines more easily, they also moved the arbitrators and judges out as well. Violators who challenged their fines could see someone about the issue in a reasonable period of time.

Third, an electronic commerce service should be designed so that it lets customers help themselves and, by the same token, help customers do their jobs. American Airlines has an interactive travel network for members of its AAdvantage program for frequent flyers. Members can make travel plans as well as gather and manage information on their frequent-flyer accounts. Similarly, the Office of the Comptroller in the Commonwealth of Massachusetts is designing an Internet service for vendors that will allow them to gather information about their accounts with the state government, even adjust payment schedules on certain invoices.

The key to figuring out all the nuances and ambiguities of meeting customer concerns, according to Seybold, is to work from the outside of the service in. Don't even think about what service you're going to provide or how you're going to provide it until you have first figured out who your customer is and what he or she wants. Once that's been established, then start working toward the internal organizational issues that must be addressed in order for the customer to be properly served.

But marketing in cyberspace remains experimental at best and downright risky in many cases. The rules have yet to be written, according to David Strom, a networking and communications consultant and expert on the Internet. "I think it's very hard to make extensions from the traditional merchandise process of the physical world to electronic commerce," he said. "There really isn't anything to translate. Let's say you want to pick your best store location, what does that mean in cyberspace?"

Strom also points out that consumer marketing on the Internet still hasn't panned out. "We're still in the experimental stage here. Look at [online bookseller] Amazon has never made a nickel yet. Let's remind ourselves, they are one of the paragons of e-commerce. They are still in the red and will be for a long time, because they have to continue to invest so much in their systems." Strom cautioned government agencies to remember that, so far, successful electronic commerce has occured mostly with business-to-business transactions and not with selling services to the mass market.

Fortunately, there's a growing number of public-sector officials and experts -- such as William Kilmartin, Todd Sander, Gordon Peterson, Carolyn Purcell and Costis Toregas -- who not only have a clear understanding of electronic commerce, but also how to market it. Invariably, the issue comes down to providing responsive taxpayer services. By listening to constituents' concerns first, rather than what the organizational process dictates, government agencies will find it far easier to market new services. Hopefully, states and localities won't turn electronic commerce into an Edsel.

For more information, contact Patrica Seybold at 617/531-3119 or David Strom at 516/944-3407.

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