Tough acquisition targets
While there is much that mass-market e-commerce sites can learn from luxury sites, some of the issues facing e-commerce businesses targeting the wealthy are unique. For one thing, experts say, while it's possible to use the Web to build closer relationships with existing well-off customers, it can be hard to use it to attract new ones.
E-business officials at J.P. Morgan Chase learned that the hard way. The well-known private banking company that specialises in handling very wealthy clients was recently forced to give up on its online customer acquisition push, though its Web site, jpmorgan.com, continues.
When Morgan launched its online effort three years ago, said CEO Glenn Smith, of New York-based Morgan Online, the premise was solidâ€"-the Web was hot, and a Web presence was a necessity. And part of the company's Web effort-â€"giving clients access to many of the same Web tools the Morgan investment team usesâ€"-was very popular, so much so that some thought the company might be giving away the store.
But acquiring new clients online proved difficult. Private banking is a high-touch business, Smith said, and requires loads of hand-holding and time spent interacting. "People want to speak with a real human being and deal with someone directly," he said. In other words, the company had trouble signing up new customers online.
So when J.P. Morgan merged with Chase Manhattan Bank at the end of last year and inherited a large customer acquisition team, Smith had to make the tough decision to close that part of his online operation, laying off about 100 people earlier this year.
Smith doesn't look at this as a failure but rather as a fine-tuning of the company's original strategy of catering to high-net-worth individuals. The company's Web site, complete with tools to educate clients, is continually evolving, he said. "But this is a high-touch, high-feel business. It's hard to do that on the Web," he said.
