Aligning IT Strategies to Business Strategies: A Case Study of Avon Incorporated

Aligning IT Strategies to Business Strategies: A Case Study of Avon Incorporated

Abstract

Most entities do not acknowledge the impact of business-IT alignment on the corporate value of IT. Given that the effect of business-IT alignment is often difficult to quantify, several managements are skeptical of the idea that digital strategies are vital in attaining organizational goals. In 2015, Avon sought the services of OptiMonk solutions to boost its underperforming website. The company’s site was victim to the e-commerce trend of having more visitors than purchasers. Subsequently, OptiMonk’s software offered practical solutions to the problem and enabled Avon to generate more sales in 2017 compared to previous years. In review, Avon’s case is a perfect illustration of aligning IT and business strategies.

Aligning IT Strategies to Business Strategies: A Case Study of Avon Incorporated

Avon Incorporated is a multi-level marketing entity with a specialty in beauty, personal care, and household items. The firm enjoys considerable success with billions of annual sales. The corporation’s primary business strategy is direct-selling since it employs representatives to market and distribute its commodities. Currently, Avon is the second-largest direct-selling company in the world, with 6.4 million representatives. Like most direct sales enterprises, Avon engages in online retailing as well. Although e-commerce enables easier access to millions of consumers, the development also presents a fair share of challenges. As Goyal (2017) observes, 98% of visitors leave e-commerce platforms, including Avon’s, without making purchases even though a lot of time, energy, and money are invested in attracting them. The primary reason for this occurrence is that most of the visitors are not ready to buy anything while others are only collecting information for future decision-making (Hess, Matt, Benlian, & Wiesbock, 2016). For this reason, online platforms have to find ways to enhance their purchase rates. Avon’s IT strategy concerning this issue will be the subject of this report since it conformed with the company’s business objective of increasing sales.

Alignment of IT Strategies with Business Objectives

Avon united business and IT strategies by utilizing onsite retargeting to enhance its marketing efforts and to boost sales. The onsite retargeting approach helps to monitor the behavior of visitors on an e-commerce platform and, subsequently, communicate to them a suitable `secondary offer` that might convert them into customers or subscribers (Bughin & Zeebroeck, 2017). Essentially, a secondary offer is a pop-up message that educates a potential buyer on new prospects (Bughin & Zeebroeck, 2017). When implementing onsite targeting in its platform, Avon acquired the services of an online provider called Optimonk in 2015. Avon’s primary goal was conveying a desirable deal at the right time to its online visitors.

The IT strategy entailed the implementation of three Optimonk campaigns. The first one was building a newsletter list to capture the email addresses of customers that were surveying the site for future purchases. In enhancing the success of this venture, Avon offered special gifts to individuals who provided their details. The second campaign was reducing the cart abandonment rate. In this case, Avon devised a cart monitoring system that conveys timed and well-curated messages to potential customers. The content of the messages would vary as per the value of the cart, such that customers would receive lucrative offers depending on what they intend to purchase (Goyal, 2017). The third campaign was the provision of seasonal offers, whereby Avon sought to use the software to delight its visitors so that they would turn into returning customers. Overall, the three operations helped Avon attain a sales increase of 150% in 2017 compared to the previous years. In such a way, the firm achieved its business goals.

Benefits of the Alignment

• The newsletter list campaign enabled Avon to attain thousands of new subscribers.
• Cart abandonment rate declined by 16.5% compared to the preceding period before the introduction of OptiMonk (Coughlan & Goldman, 2017).
• Avon had a sales increase of 150% in 2017 compared to the previous years (Coughlan & Goldman, 2017). This growth is attributable to personalized messages, ever-renewing traffic, and seasonal campaigns.

Challenges of Implementing the Alignment

Online visitors have varied needs similar to those of offline buyers. Therefore, Avon’s main problem was identifying such needs so that it could treat its visitors equally and assist them in making purchase decisions (Coughlan &Goldman, 2017). The company’s online platform received thousands of visitors daily, which made it hard to track the behavior of each of them (Coughlan & Goldman, 2017). Besides, the company faced the following problems when implementing OptiMonk’s software:

• Getting the visitors that were surveying the site to subscribe to the newsletter.
• Reducing the cart abandonment rate for those that had already selected some products.
• Popularizing seasonal offers: it was important for the company to draw attention to its campaigns.

Most Important Argument for the Alignment

The business-IT strategy was not crucial since Avon’s website was not operating effectively. As stated before, 98% of visitors leave e-commerce platforms, including Avon’s, without making purchases even though a lot of time, energy, and money are invested in attracting them (Goyal, 2017). Furthermore, although online visitors have similar needs to offline buyers, the company had no way of identifying them so that it could treat its clients equally and offer them support when making purchase decisions. Avon’s website was not generating a substantial amount of sales. As a result, there was a need for the formulation and implementation of a digital strategy that would help boost revenues.

Rationale for the Senior Management

Most executives do not acknowledge the impact of business-IT alignment on the business value of IT since one cannot quantify such an influence. Past researchers, especially before the millennium, argued that IT does not have significant impacts on business worth due to four main reasons; wrong measurements of inputs and outputs, lags arising from learning and adjustments, redistribution and dissipation of profits, and mismanagement of IT (Pollard, Turban, & Wood, 2018). Moreover, other scholars have dismissed IT as ubiquitous, claiming that it hardly matters as per the overall business strategy (Westerman, 2018). However, new evidence is emerging, suggesting that IT is not only an automation tool but also a dependable approach to organizational change and productivity gains. Although the rewards afforded by digital strategies may be challenging to quantify in some cases, technological investments enhance the business worth and help companies to achieve their goals (Emerald Publishing Limited, 2019). Avon’s case is a perfect example of this phenomenon since the additional value is not only evident but also measurable. As mentioned initially, the company attained a sales increase of 150% in 2017 compared to the previous years after incorporating the OptiMonk software in its online platform. With such a figure, the management has a justifiable reason to support business-IT alignment.

Avon’s case is proof of the value of Business-IT alignment. As a multi-level marketing entity, Avon’s primary goal is to increase its sales. However, the firm’s online platform was lagging since it did not generate substantial revenues. Seemingly, the problem is attributable to the overall e-commerce trend, where a majority of visitors to online platforms hardly make any purchases. When solving the issue, Avon’s digital strategy was employing the services of OptiMonk, an online software provider. Subsequently, the OptiMonk’s system helped increase sales, minimize cart abandonment rates, and grow the number of subscribers. Consequently, the technique enabled the company to attain its business goals. The contribution of the IT technique is desirable and should appeal to all managements that are skeptical of the advantages of business-IT alignment.