January 2001

BY LARRY WASSERMAN, LIVEPERSON, INC.

"Business as usual" on the Internet these days is not necessarily a good thing. At first glance, it seems ideal. A customer visits a Web site with something specific in mind, finds it, buys it and moves on. This is the best possible scenario. In many other situations, however, the customer has questions. Is a certain model available? Does it come in other colors? Can it be shipped overnight? Unable to have their questions immediately answered, customers often leave shopping sites frustrated, completely abandoning virtual shopping carts. This is a situation that repeats itself every few seconds on the Internet.

May I Help You?
What if there was a button, on the top of the Web page, that said, "Click To Ask A Question," allowing customers to get their queries answered immediately? What if the service representative answering the customer's question had a record of all the customer's previous purchases and company interactions? What if that representative had knowledge about what was selling the best in the buyer's city and what products had the fewest problems? What if that customer felt taken care of by the e-commerce company? What if she came away feeling like she had truly received personalized service?

Real-time interaction is what customers want, especially customers who like to shop. Jupiter Communications reports that online shoppers' desire for live human contact spikes upwards once the purchase price exceeds $100.

Customers need live interaction online when questions or problems arise. In a recent survey we conducted in conjunction with Greenfield Online, we discovered that 28 percent of online shoppers abandon their carts because they cannot get enough information about a product, another 28 percent leave the Web site because of an unclear checkout process, and 13 percent of customers are lost due to the inability to speak with a salesperson.

According to Datamonitor PLC, however, only an estimated three percent of all e-commerce Web sites have live interaction available to customers. Datamonitor also estimates that e-commerce companies could lose more than $6.1 billion in sales this year because they are not sufficiently addressing customer support.

Locking In The Customer Relationship: The Benefits Of Live Interaction
There are three areas where real-time interaction over the Internet is playing out: voice over IP, co-navigation and live chat. Live chat is receiving the most attention at this stage because the technology is readily available, the benefits are significant and customer demand for live chat is surging.

As an application, live chat is similar in look and feel to America Online instant messaging. Via a pop-up window, a customer can communicate back and forth with the live chat operator. The live chat operator can send back or "push" text, images and URLs to the customer.

A Win-Win Proposition
Results from early deployments indicate that live chat has a significant bottom-line impact. A win-win proposition for e-tailers and consumers, the implementation of live interaction on shopping Web sites allows e-tailers to maximize sales opportunities, reduce operating costs and strengthen customer relationships; all while providing the type of customer service that Internet shoppers are seeking.

Live chat also boosts productivity. CSRs are able to maximize the quality of the interaction and the time spent with each customer. Typically, CSRs can handle up to four customers in chat sessions, reducing the cost per interaction when compared to a typical toll-free call. In addition, customizable preformatted responses can help the CSR improve productivity and ensure consistency to frequently asked questions.

Moreover, the lower cost of trans "Live Interaction" continued from previous page mitting information via the Internet or e-mail versus placing a phone call further increases the cost benefits of other customer interaction channels. GartnerGroup estimates that when "Amy" calls you and actually gets through, the interaction costs an average of $5.01. By contrast, if a company were able to handle a "conversation" through a Web chat session, the cost ranges from only $0.25 to $3.50.

There's a lot of lip service being paid to the concept of one-to-one marketing. Everyone wants to do it. Everyone recognizes it's important. But most make the mistake of thinking technology alone is going to deliver the promise. It takes the impact of a live person to build relationships that last.

With live chat, CSRs can interact with customers in real-time. They can market to those customers on a one-to-one basis. They can receive real-time feedback about customer service and technical support efforts. They can review archived call logs to access a customer's call history and gauge customer satisfaction levels.

Deploying A Solution: Choices Facing E-Businesses
The solutions to help provide customers with multichannel support are available. The question then becomes, how does an e-commerce company deploy a solution? What's the best strategy? How does a company get from A to B and do it cost-effectively?

Building in-house is attractive because control and customization are seemingly maximized. But building in-house is expensive, time-prohibitive and perhaps even indulgent, particularly for an e-commerce company that wants to be responsive to its shareholders. Building in-house also requires extensive project management resources.

Application service providers (ASPs) offer an alternative solution that is becoming increasingly attractive to e-commerce providers.

ASPs essentially "rent" applications to an enterprise, usually on a monthly fee basis. ASPs are especially appealing to small and medium-sized companies that want to sidestep the problems and costs associated with managing their own systems. With an ASP, an enterprise can often reduce IT staffing and immediately access proven technology while speeding time-to-market with new applications and maintaining costs.

Increasing numbers of e-commerce companies are turning to ASPs to improve their overall customer service offering. According to IDC, the customer relationship management (CRM) service market will grow from $34.4 billion in 1999 to $125.2 billion in 2004 -- double the growth of the overall IT services market. The CRM market's biggest sector is outsourcing/operations management, which comprised 67 percent of the market in 1999.

ASPs are the ideal providers of customer service technologies for a number of key reasons:

Improved time-to-market. E-commerce providers need to be able to adjust their service offering quickly if they spot an opportunity. ASPs, with their pre-existing relationships with major software providers, can help them move faster.

Flexibility in product and service mix. ASPs are ideally suited to provide a full range of customer service technologies. E-commerce companies should look to providers that can meet their particular needs.

Access to next-generation technologies. ASPs enable e-commerce companies to offer cutting-edge technology at a lower cost. The best essentially offer "applications on tap."

Lower costs. Deploying enterprise systems is expensive. It requires extensive internal project management resources. Set-up and monthly fees for ASPs range in the low thousands versus the million-dollar price tags for enterprise systems.

The Bottom Line
Behind every great e-business, there is a thrilled customer. This customer is loyal; he or she comes back again and again. This customer is profitable. This customer is also very rare in today's e-marketplace.

By ex-tending the length and quality of a customer's visit, live chat technology helps increase conversion rates, average order size and customer retention. Equipped with live chat, a CSR can also turn an abandoned shopping cart into a sales opportunity by essentially instant messaging a customer and asking if help is needed. Only by embracing their customers online can Web site owners expect customer retention and loyalty.

Larry Wasserman is vice president of marketing at LivePerson, an application service provider (ASP) of technology facilitating real-time sales and customer service for companies doing business on the Internet.

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