July 1999

Rethinking E-Commerce Service

BY MICHAEL BETTUA, SILKNET SOFTWARE

To grow beyond the start-up phase, e-commerce sites need to be re-evaluated for their utility in delivering customer service. Those who have established a plan to launch an e-commerce site need to understand how to tap into Internet technology to manage customer relationships in ways that weren't possible offline. Here's how to do that.

As e-commerce goes mainstream, Web retailers are facing a challenge that few anticipated: from unanswered e-mail to goods that don?t get delivered, Web shoppers are complaining that e-commerce sites fall short when it comes to customer service.

A report from research firm Jupiter Communications shows just how bad the situation is. Some 42 percent of 125 major Web sites surveyed in August 1998 never responded to customer inquiries, took more than 5 days to reply or simply didn’t have a system in place to respond to problems by e-mail. When Jupiter repeated the survey in January 1999, news went from bad to worse. Last August, 23 percent of sites did not respond to e-mail at all. In January, that number grew to 26 percent. Last August, 3 percent of sites took 5 days or more to respond. By January, that number had grown to 15 percent.

Analysts and industry watchers warn that failure to deliver effective online customer service — or e-service — could have dire consequences for commerce players. They say that while Internet sales are expected to soar in the next few years — IDC Research estimates that the percent of Internet users buying goods and services on the Web will grow from 26 percent in December 1997 to 40 percent in December 2002 — commerce sites can’t meet that goal unless they figure out how to deliver superior online customer service, and how to exploit the sales opportunities it can offer.

Sites that fail to do so could go out of business. But for sites that do it right, online customer service offers an opportunity to retain customers and increase sales beyond what was possible offline.

More Than Just FAQs
In the age of the Internet, customer service means more than just answering questions. Companies that maintain e-commerce sites need to make it easy for customers to inquire about merchandise, check the status of their orders, file complaints or send compliments — all without having to pick up the phone. This approach is more convenient for Web-savvy customers who are used to doing business online, and it’s more cost-effective for the companies that deliver it. Analysts estimate that a straightforward request handled on the phone costs a company between $25 and $30. By comparison, resolving the same problem through a Web-based self-service application costs between $2 and $3.

To realize those savings, companies need to do more than simply automate the process. To succeed, they need to fundamentally rethink what it means to deliver customer service, conceptualizing the process not as a support service, but as online customer relationship management. While traditional customer service is time-consuming and expensive to deliver, online customer relationship management is faster and cheaper and offers opportunities to increase sales. By tapping into what customers tell them about their preferences and the company’s products, smart companies are transforming their customer service operations from labor-intensive, expensive post-sales operations to strategic initiatives on which future profits depend.

Customer relationship management begins with rethinking customer service and conceptualizing it as part of the larger sales process. Instead of seeing each request for service as a single interaction, smart companies view each customer relationship as an ongoing process, through which they can glean valuable information to keep the customer coming back. That process includes the following steps:

• Initial Point Of Interest. When, why and from where do customers make initial contact with your company? Pay attention to how they contact you, what they ask and what they tell you about themselves. It’s all valuable information you can leverage to create future sales opportunities.
• Shopping And Buying. What do they ask you about your products and prices? What do they tell you about your products and how they compare to those of your competitors? Pay attention to what they buy and why. You can use the information to engage them in future interactions.
• Service And Support. What kinds of post-sale support do they seek? Do they call for help in assembling your product? Do they suggest ways to improve a current offering? Do they have a compliment or a complaint? Make sure you listen, respond fast and resolve the situation to the customer’s satisfaction.
• Marketing. Based on what you know about what they buy and when and how they make use of your company’s products and services, can you offer new products, services and upgrades based their particular needs? Unlike mass marketing, targeted marketing efforts are highly effective in generating new sales.
• Follow-on Purchases. Keep a record of what they buy and when. Your goal is to keep them coming back for the long haul. Make sure you keep track of each interaction with your company, in a single database. That way, no matter who the customer interacts with, you’ll have a single view of that customer.

The Real Cost Of Shoddy Service
We’ll explore exactly what smart customer relationship management includes, but first let’s look at how shoddy service can wipe out Web players and stall the growth of e-commerce.

The Web is just emerging as a viable sales channel. Even if worldwide Internet sales reach $3.2 trillion in 2003, as Forrester Research predicts they will, that figure represents just under 5 percent of all global sales. With the numbers so small, each time a commerce site business fails to respond to a customer request, not only is the merchant likely to lose a Web shopper, but the experience also perpetuates the notion that the Web is not a reliable method of doing business with that company.

Analysts say that part of the reason customer dissatisfaction with commerce sites is increasing is that in the last six months to a year, many new, first-time shoppers are coming online. Unlike e-commerce pioneers who saw the Internet as an emerging medium and were willing to put up with spotty customer service, mainstream shoppers expect the same level of service they’re used to receiving from mail-order merchants or other consumer channels.

Doing It The Right Way
To meet the growing demands of Web shoppers, businesses with commerce sites need to develop e-service strategies that include the following components:

• Self-service. Commerce sites need to include some standard self-service features that help customers help themselves without having to place a call or send an e-mail message. Doing so saves customers time and enhances their perceptions about the merchant they’re doing business with. And it saves the merchant time and money. Commerce sites should offer customers an immediate, intuitive way to: Update personal information such as name and address; change their passwords; Cancel or change an order; find out when an order shipped.
• E-mail Response Management. Commerce sites should offer shoppers an easy way to ask free-form questions over e-mail and receive fast, personalized replies. Keep in mind that to be effective, e-mail response systems must be integrated with data from other customer interactions. That way, the company has a single view of all interactions with that customer, regardless of where they originated or who responded to the query.
• Knowledge Manager. As Web merchants interact with Web shoppers, they will rapidly acquire vast amounts of information about everything from the most commonly asked questions about products, to how well the site is designed. To make use of that knowledge, e-commerce business sites need to develop a shared multimedia resource to capture, publish and distribute that knowledge within the extended enterprise.
• Interaction Management Center. Just because customers prefer the convenience of e-service, don’t deny them the opportunity to pick up the phone and call you. Like the e-mail response system, to be effective, data from your call management system needs to be integrated with information gathered through other customer care channels. That way, when a customer service rep speaks to a customer, he or she will have an instant record of all interactions that have taken place with that customer.
• Extant Workflow. Commerce applications are, by definition, systems that extend beyond the boundaries of the traditional organization, incorporating suppliers, resellers and shipping partners. To succeed, they need to effectively connect all parties in a way that is transparent to customers. That way, you can solve the problem without having to direct the request elsewhere.
• Personalization. To reap the benefits of online customer relationship management, commerce sites need to provide personalized service, based on a customer’s past actions and behavior. Personalization services help you better understand and respond to each customer’s needs, behavior and intentions, ensuring that each customer gets exactly what he or she needs — when it’s needed. This increases customer efficiency in interacting with your enterprise and creates enthusiasm for transacting with you. And it enables Web merchants to make relevant recommendations for those products and services a customer is most likely interested in.

Michael Bettua is director of marketing communications at Silknet Software. He is responsible for driving Silknet’s value proposition, corporate positioning and messaging. In addition, Mr. Bettua is responsible for the conception, planning and launch of marketing campaigns to support Silknet’s major product offerings, eService, eCommerce and eBusiness System.