The Selling of the Intranet

SAN MATEO (05/08/2000) - The traditional company store is making its way to the corporate intranet in the form of reciprocal marketing deals struck between business partners looking to capitalize on access to burgeoning employee buying networks.

A few large companies, including General Motors Corp. and Delta Air Lines Inc., are developing "business-to-employee" strategies that offer discounts on products and services to partners' employees.

By including employees in the marketing mix, companies can command larger volume discounts from suppliers and strengthen retention by offering employee discounts. Taking the company store to the next marketing level is part of a growing trend that offers companies a channel that consists of thousands of highly motivated, qualified customers. Delta Airlines, PepsiCo, Adidas, and Boeing Co. are currently working with Bensussen Deutsch & Associates (BD&A), a merchandise agency, to create marketing links between company employees via the Web in which value-added products and services will be sold.

"Companies are asking for more services added to their employee Web sites," said Jay Deutsch, CEO at BD&A.

Perksatwork.com's Employee Portal gives employees access to discounts of up to 50 percent on products and services. The com-pany is rapidly building up an impressive number of clients that are deploying the site, including Motorola Inc., Eastman Kodak Co., Exxon Mobil Corp., and Anheuser-Busch.

Plans are under way by General Motors to market to the more than 200,000 employees of Delphi Group Inc. (a GM tier-one supplier) as well as other suppliers, through a program a GM source called e-to-e (employee-to-employee) marketing. The program will be rolled out later this year.

Cummins Engine Co., the world's largest independent diesel engine manufacturer, with 25,000 employees in North America, turned to e-business integrator Inforte to deploy Inforte's eWorkPlace E-commerce front end to Cummins' existing enterprise systems, allowing employees to service themselves for things such as employee entertainment and travel discounts from airlines that Cummins contracts with.

Every company has recast their ERP (enterprise resource planning) solutions to allow for customized private portals, making the corporate desktop multifunctional, according to Richard Arns, executive director of the Chicago Research and Planning Group, a national CIO organization.

In some cases, there might be a set of catalogs employees can buy via the company's e-procurement infrastructure. Using the requisition process and linking into the human resources system, an employee could charge purchases to a paycheck, according to Kevin Costello, managing partner for Digital Market Solutions at Arthur Andersen, in Atlanta.

Arthur Andersen LLP and Deloitte & Touche LLP, among others, are telling their clients to start thinking about b-to-e deals not so much as a profit generator, although that does play a role as well, but as an employee-retention strategy.

Especially since last April's dot-com disaster on Wall Street, customer acquisition costs are very high and dot-coms are enviously eyeing the huge base of employees at brick-and-mortar companies, according to Peter Osborne, partner in charge, E-business Practice, at Deloitte & Touche, in San Jose, California.

Deals between companies such as AOL and Wal-Mart benefit both partners in an online co-marketing arrangement. The dot-com gets customers and Wal-Mart gets the cache of being part of the e-business world.

Alan Boehme, CIO of e-business at General Electric Power Systems, in Atlanta, sees more than one business benefit.

"Sure it develops a close relationship with employees, but any time you can market to a segmented group, like employees or even retirees, it's a good channel strategy as well," Boehme said.

Creating quid pro quo relationships is the new stealth direction of marketing because companies have what no market research firm can ever hope to have: demographic information on its employees down to their very eye color.

And while privacy issues are a sensitive topic, offering discounts in exchange for information is often a key to unlocking everything from age and income to the number of children and pets in a household.

And there are acceptable business practices that can garner such information.

"The CEO of a telecom company might offer the employees of Boeing a free month's telephone service as a remuneration for the answer to 10 demographic questions," Deloitte & Touche's Osborne said.

Although not many companies have focused on it in a big way, Arthur Andersen's Costello believes that there is substantial traction when you can lock employees in with a business-to-business-to-employee offering.

"It is very new but a very important [concept] in the New Economy," Costello said.

Business-to-employee

Benefits of joint corporate marketing:

* Larger volume discounts

* Employee retention

* Corporate supplier benefits

* New customers

* Potential reciprocal deals

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