June 1999

Managing Customer Relationships For E-Commerce Businesses

BY ROBERT GRIGGS, ELIANCE CORPORATION

The Internet has opened up new ways of doing business for companies of all kinds. As more people become regular Internet users and electronic commerce businesses like Amazon.com are taking off, more traditional businesses are understanding that the Web is an excellent place to market and sell goods and services. According to a 1998 Jupiter/NFO Consumer Survey, more than 247 million people are expected to become Internet users by 2002. The better news is that in most cases, these users are not simply browsing  they are making purchases.

It is clear that businesses are thinking about going online, but are not sure what they need to do to get there. As a customer service professional, you can add value to your clients' businesses by understanding what it takes to establish an e-commerce presence. In fact, effectively managing your customer relationships is probably the single most important part of making a business successful. Especially on the Internet, where competition is only a click away, winning over a customer's attention is what will eventually drive sales. Because of this, companies are increasingly shifting their attention from attracting new customers to retaining and expanding a profitable customer base. This practice has been termed customer relationship management (CRM) and it is one of the most critical factors in running a successful business online.

Unlike a brick and mortar setting, in which customers experience face-to-face contact with the individuals accepting their payments, electronic commerce does not offer customers that sense of intimacy. That is why on the Web it is even more critical to let your customers know they are a priority and that you are there to serve them. Getting customers to buy for the first time is only half the battle you need to retain these relationships. Enter CRM.

The Importance Of Customer Relationship Management In E-Commerce
According to a survey of global companies conducted by Andersen Consulting and the Economist Intelligence Unit, CRM is moving to the center of corporate strategy. While only 18 percent of business organizations surveyed are currently focused on customer type, that figure is expected to rise to 50 percent by 2002. Senior executives in North America, Europe and Asia have found that retaining profitable customers is more important than attracting new ones.

In e-commerce, generally the only interaction a consumer will have with the merchant's business is online. If the experience is not positive, chances are the consumer will not go back to that Web site on the next shopping trip. As a result, from the consumer's very first point of contact with a merchant Web site to the point where he or she interacts with a customer service agent, the level of service provided must be top-notch. The Web site needs to be engaging and must facilitate intuitive navigation and easy purchasing.

There are many ways online merchants can improve their customer service offerings. Because business is being conducted over the Web, the best option is to provide a service that enables the customer to receive immediate service through the Web. There are a number of products and services available today that support interaction via e-mail, phone, fax, text chat and, in the near future, voice-over Internet protocol (VoIP). In most cases, some or all of these different capabilities can be integrated. For example, in our call center, if there is no phone call in the customer service queue, an e-mail inquiry will pop-up and the service agent can respond accordingly. More time-savers in the call center are pre-set responses and customized templates, which enable agents to quickly respond to inquiries.

This kind of integration is sensible because it gives customers choices and reduces the amount of time they need wait for resolution. One study from Jupiter Communications found that 42 percent of the Web sites surveyed either never responded to customer inquiries, took more than five days to reply or didn't offer e-mail responses to reported problems.

Training Customer Service Agents In Today's Advanced Call Center
To be effective, call centers wishing to take advantage of this new technology must train their agents to operate the different services. It is a good idea to cross-train the agents so that they understand the different functions and can support all types of interactions. Every client's expectations are different, especially when you compare an online business to a traditional business. Agents should be aware of the client's needs and have a good understanding of each client's product or service so they are knowledgeable when answering specific customer queries.

Now that it's clear why e-commerce businesses require such a high level of customer service, let's look at how a traditional business can get on the Web.

Getting Started In E-Commerce
While creating a basic Web site is simple and inexpensive, creating an e-commerce site can cost a merchant $50,000 or more. There are several critical steps that must be taken and several technologies and infrastructures that need to be built to make an e-commerce site successful. Keep in mind, a merchant need not do all of this in-house. There are companies that offer some or all of the services required on an outsourced basis. With that said, following is an overview of the critical functions required to e-commerce-enable your business:

• Creating and hosting a Web site  As indicated earlier, the Web site needs to be engaging, easy to navigate and provide an easy way to make a purchase. The "front end," or user interface, is the first thing the consumer sees when shopping. It must therefore be presented in a way that encourages exploration. Once you have a solid Web site built, it is time to open your doors in cyberspace. It is important to choose a company to host your Web site that will enable your site to grow and accept the increasing volume of visitors. If you do not have enough bandwidth, you will be turning away potential customers even before they hit your front door.
  
  
• Data collection Once your customer has entered your Web site and made the decision to purchase something, you will need to collect key information from your customer to facilitate the purchase. This may be as simple as an online order form or it may be a bit more complex, involving shopping carts and application programming interfaces (APIs) to collect and deliver data.
  
  
• Security Merchants need to be able to process online payments, ensuring payments are made and the credit cards used are not fraudulent. There are currently several ways of accomplishing this. One way is to use an address verification system, which matches an address entered by a consumer at the point of sale to the address on the billing statement for the credit card used for the transaction. The current industry standard for securing financial transactions is secure sockets layer (SSL), which encrypts data between a Web browser and a Web server.
  
  
• Fraud prevention. To better protect themselves against fraud, e-commerce merchants must be able to track the purchasing behavior of online consumers and have rapid access to risk management techniques during the verification process of a transaction. Merchants should look for a risk management system that offers a combination of components that review SIC codes, card history, IP address checking and both positive and negative transaction databases to measure the risks of each transaction.
  
  
• �Merchant accounts. While e-commerce vendors may have merchant accounts that enable them to accept credit cards in their physical stores, it is not the same procedure online. They require new merchant accounts to support online transactions.
  
  
• Payment processing.  Just as merchants need to open bank accounts to sell from brick-and-mortar stores, Web merchants must also establish online merchant accounts. This can be accomplished through a bank or e-commerce provider and enables the merchant to process business transactions via a host of payment alternatives, such as credit card, ACH or online checks.
  
  
• Order tracking. When transactions have been completed, merchants need to provide electronic receipts and notifications to online consumers and any other third parties involved in the transactions. This can be performed via e-mail, the Web or regular mail service. Most online merchants prefer to use e-mail.
  
  
• Order fulfillment. Online merchants need access to current information regarding sales and financial performance. Standard business management reports are therefore useful. These can include information such as sales, marketing and accounting figures, as well as site statistics. A program that presents these through a Web browser in a graphical, easy-to-read format is extremely useful for professional management of online businesses.
  
  
• Management information. One of the key elements of CRM is learning as much about your customers as possible. Maintaining customer profiles helps merchants better identify their customers' preferences and purchasing histories.
  
  
• Marketing. Merchants new to the Web need a proactive marketing plan to ensure customers are aware of their online presence. One way to do this is through affiliate management programs. Affiliate programs create links between the merchant's site and the sites of companies selling complementary products or services. This enables online consumers shopping on one of the merchant's affiliates' sites to click through onto the merchant's site; in other words, it is a good way of attracting potential new customers. Online advertising programs and reseller affiliations also are popular.
  
  
• Customer service. As mentioned earlier, one of the most important functions for e-commerce is customer service. Effective customer service will enable you to build lasting one-to-one relationships with consumers and develop site loyalty. To be effective, a customer service center should operate 24/7 via telephone, e-mail or Web-based text chat and should stay current with the latest technology. With voice-over IP (voIP)-enabled CRM software, call center agents are able to view the same screen the consumers are viewing while speaking to them, enabling agents to provide immediate answers and give the interactions a "human touch." Products such as Sitebridge's CustomerNow and eFusion's eBridge are a few providers of this type of software. Most online businesses underestimate the resources needed to provide quality service to their customers.
  

• Global services.  E-commerce is, by definition, a global business. To take advantage of the global marketplace, merchants must provide their clients with online foreign exchange and foreign settlements and ensure their products/services are legally compliant to all the markets in which they sell. These are complex functions and are best implemented by outsourcing to an e-commerce provider.

Conclusion
Understanding electronic commerce is a great opportunity for customer service professionals to enhance their existing client relationships and appear more attractive to new customers. Traditional brick-and-mortar businesses are quickly expanding into this arena, while new, online-only businesses are being created every day. Web businesses do have their own unique needs with regard to customer service and the demands they place on a call center, but the rewards to businesses are tangible today and are expected to grow explosively in the near future.

Finally, it should be stressed that most new merchants are not well-positioned to build the infrastructure to support all the above mentioned start-up activities on their own. Today there are outsourcing companies that provide complete e-commerce back-office systems. Most businesses quickly recognize the value and logic in outsourcing high-volume, resource-intensive back-office functions in order to maximize the focus on selling, marketing and managing their Web presence. For small- to mid-sized businesses in particular, it makes more business sense to retain the services provided by an outsourcer, so that sales and marketing staff can concentrate on promoting their business, driving traffic to their site and increasing revenue.

Robert Griggs is executive vice president of Minneapolis, Minnesota-based Eliance Corporation . Eliance is a provider of e-commerce outsourcing services for small- and mid-sized businesses. Its 200-plus agent call center currently answers 10,000 to 12,000 e-mail messages per day, as well as 20,000 to 30,000 telephone calls per day with an average hold time of 10 seconds. Eliance's experience in providing customer service has been a major part of the company's rapid growth.

It's official. The results are in, and e-commerce is a hit. For the first time last year, online purchases made up a significant portion of holiday sales. Leading e-tailers such as Amazon.com are now topping $100 million in annual revenues, and consumers in all age groups are hailing the conveniences of digital shopping. However, another more ominous trend threatens to derail the e-commerce boom. In the midst of all the euphoria, studies of popular Web sites are beginning to show what many cyber-shoppers have already discovered: that a significant number of e-businesses are sorely lacking in basic customer service. This spells trouble for all online merchants, because it's service - the quick and ready responsiveness that today's consumers have come to expect - that will turn first-time e-shoppers into profit-generating, repeat customers.

If you're one of the millions of people contributing to the sudden boom in e-commerce, chances are you've experienced one or more of these problems firsthand. You're clicking merrily along - a visit to Gap.com for your daughter's school clothes, a quick trip to OfficeDepot.com to order office supplies - when suddenly, you have a question. Maybe you want to know a little more about a product you're thinking of buying and you can't find the information on the company's Web site. Or your credit card has just been rejected and you want to know why. Or perhaps your shopping experience went smoothly, but when you received the product, it wasn't quite what you expected.

Since you're already enjoying the convenience of digital shopping, you decide to send your question electronically. So you fire off a detailed e-mail with your name, account number and the nature of your problem, and you wait. And wait. If you're one of the lucky ones, you might get a response telling you that you'll be contacted in 24 hours, or in two to three business days. However, it's even more likely that you'll never get a response at all. According to a recent review of 125 leading Web sites by research firm Jupiter Communications, 42 percent of the sites either never responded to e-mail messages, took more than five days to respond or provided no e-mail address. Since your question is a little more urgent than that, you give up on e-mail and decide to call the company's 800 number, where you wait on hold for 20 minutes. There, you reach an agent who only deals with phone orders and has no view of your e-mail or any record of your Web transaction. Suddenly, your digital shopping adventure isn't quite the hassle-free experience you thought it would be.

One of the biggest frustrations today's e-customers face is the failure of companies to effectively use technology to improve service. How many times have you called a company, entered your account number and waited on hold - only to have an agent finally come on the line and ask for your account number? Rather than speeding the transaction, the technology simply wasted your time and effort. This situation is compounded in the online world, where e-commerce sites are seldom integrated with the company's other communication channels, such as the telephone or fax. That means you can spend half an hour on a site, entering personal information and filling your shopping cart, but if you decide at some point in the transaction to call the company, chances are you'll have to start at the beginning - with your name, phone number and the nature of your question.

Which brings us to another much-hyped promise of the Web - personalization. You've heard a great deal of talk about using the Internet to achieve one-to-one marketing: products and services tailored to your particular needs. And again, some forward-looking companies are blazing trails in this arena. Amazon.com greets you by name when you visit its site, and recommends books based on your past purchases. Lands' End lets shoppers "try before they buy" with an innovative virtual model that displays clothes and acts as a personal shopper.

But these trailblazers are still the exception rather than the rule. Consumers' needs often change much faster than most companies can respond in a Web environment. In a retail store, the salesperson is able to watch you browse, see which items catch your interest and make suggestions based on your feedback. This give and take between the shopper and the clerk happens in real-time. To deliver that kind of service over the Web, e-businesses need to be able to interact with customers in real-time and analyze and respond to changes in customer behavior instantly.

The shortcomings of service on the Web will become even more pronounced to consumers as they adjust to the world of e-commerce. According to Zona Research, of the millions of people who shopped online last holiday season, nearly 60 percent were first-time cyber-customers. As the novelty of the experience wears off, expectations for faster, more responsive service will begin to rise. As innovative companies begin to address those expectations, consumers will be less inclined to do business with others that don't live up to that standard.

The good news is, the technology exists and is being used to make the Web a truly viable environment for business, in some cases providing an even more proactive and efficient process for the shopper. But if you're not already working to improve your service on the Web, you're putting your investment in e-commerce at risk. Because as every cyber-shopper knows, your competitors are just a click away.

Tim Guleri is CEO of Octane Software, Inc. , a developer of customer care solutions for e-businesses. Founded in 1997, Octane is focused on helping its Digital 1000 customers use real-time, interactive customer care to compete in today's high-speed Internet economy. The company's Octane 99 front office suite features patent-pending technologies that enable companies to easily unite new and existing communication channels, such as the Web, e-mail and phone, into a single customer care solution; use real-time business intelligence to personalize interactions; and quickly adapt e-commerce sites to address changing market and customer demands.