October 1999

Avoiding Customer Service Armageddon

BY JOHN RAGSDALE, CLARIFY INC.

The Internet is a reliable education and sales tool for customers today. From books to travel to home computers, the Internet provides consumers with the research, comparison shopping tools and the means to purchase most anything. It is now easy, fast and less expensive to shop online. According to the 1998 Ernst & Young Internet Shopping Report, 67 percent of retailers expect their online operations to be profitable within only one year. Customers everywhere are happily purchasing everything online, right?

Not so fast. This industry is on the cusp of a customer service Armageddon. In the midst of all of the Internet anxiety, companies have invested millions of dollars in posting glitzy brochures, interactive shopping tools and simplified purchasing options. But what happens when your customer needs to return an item? Or he or she has a question about shipping prices and wants to speak to a customer service representative? Many companies are simply not prepared to respond effectively to e-mail inquiries, much less the traditional problems of a brick-and-mortar retailer.

While customer loyalty continues to be the number-one concern of Fortune 500 CEOs, companies now have more powerful technology available to help improve customer relationships and deliver creative, competitive service — both online and offline. The technology catalyst making it all happen is enterprise-level customer relationship management software (CRM) and the power of the Internet. The CRM market is growing at a rate of 58 percent annually, from $1.2 billion in 1997 to a projected $11.5 billion in 2002, according to AMR Research Inc., a Boston-based market-research firm.

Traditional Customer Service Meets The Internet
Historically, customer service was delivered via toll-free phone lines or in-person interactions. Customers were satisfied, but they didn’t have many choices and switching to the competition was cumbersome. Today, these methods of service are just two of many possible points of entry for any given interaction. With all of the options the Internet brings, competition is just a click away, and you can no longer rely on just satisfying your customers. Companies must get to know their customers and offer them a wealth of options for communication.

All companies will need to embrace this evolution of online customer service if they want to ensure loyalty in the Internet economy. Even the dot.com companies will need to integrate both the traditional channels and the Internet if they hope to deliver a worthwhile experience for their customers over time. For example, Amazon.com employs hundreds of traditional call center agents equipped with telephone headsets to answer customer questions that cannot be dealt with online. So, while e-mail and the Web are important, do not make the mistake of using these tools at the expense of — or independent from — other customer touch points.

E-mail is one way companies have dramatically changed the way they communicate with customers. It is well known, especially to IT managers, that inquiries are being e-mailed from consumers to corporations in record numbers. Business Intelligence Associates claims the market for chat and e-mail customer service products was less than $100 million in 1998, but will grow to $650 million by 2000. With voice over Internet Protocol (VoIP), customers will soon be able to not only e-mail their inquiries, but will also have the option to talk “live” via an instant conversation on their desktop while also staying online. By 2002, about 50 percent of all Internet shopping sites will use live, text-based chat to augment customer service.

To be effective, however, e-mail must be a seamless part of your integrated front office. For example, your service representatives or sales team should be able to view all customer e-mail interactions on the same screen with the data from phone inquiries and in-person sales calls. E-mail as a CRM tool requires three levels of automation:

Auto-Classify. This ensures that an incoming e-mail is routed to the appropriate call center agent for response. Based on your company rules, you may classify e-mail based on either the customer or the message content. Auto-classify is essential for effectively managing high volumes of e-mail.

Auto-Suggest. This capability saves significant time in both training and responding to e-mail. Once the e-mail is classified and routed, an auto-suggest feature will detect e-mail message content, then provide the agent with a suggested script or response, which can then be edited. The agent may add additional content to make the response more personal or more thorough, add attachments, etc.

Auto-Respond. While this is a powerful feature, it should only be used for simple transactions, such as confirming an online purchase, acknowledging a new support case or sending a requested piece of collateral. Auto-response can reduce costs significantly, but customers have little patience for errors, so you should use this type of e-mail in only the appropriate situations.

Get to Know Your Customer
Who are your customers? What do they want and need? When and how often? These are the questions companies should ask whether they are selling tennis shoes, phone service or health insurance. Knowing your customer by leveraging data from previous interactions can help companies more effectively market their products and services.

Companies already have information on customers in the form of purchase information, service agreements, support history and billing records. By linking all these data into a central source, companies can not only provide vastly better service to their customers, but tap a rich source of customer information. Companies now have the details of how customers prefer their products delivered, what post-purchase accessories they are likely to need, what level of customer support they want now and in the future, how they paid for the products and how they want to be contacted by the company in the future. This information can benefit sales and marketing, as well as other departments of the company.

For example, Ford Motor Company not only uses data from the sales organization to analyze the changing desires of its customer base, but also relies on direct customer input and financial data. By looking at several variables, companies like Ford can determine customer likes and dislikes and then make design changes based on the knowledge. Volvo has even incorporated data collected from its Web site to determine the most popular paint colors. Volvo, which lets consumers select color paint samples and car models online, correlates the number of consumer clicks on specific colors with what is ultimately sold at dealerships. The findings and trends are used to predict paint inventory levels needed at its assembly plants. Volvo has learned that consumers can provide valuable information, regardless of whether or not they ultimately purchase your products online.

Customer Loyalty As A Corporate Driver
To achieve such sophisticated levels of customer knowledge, companies need to deploy a fully integrated front-office solution to manage the customer information throughout the enterprise. The front-office system must be flexible, easy-to-use, Internet-ready and adhere to industry standards. The solution needs to incorporate a traditional call center, the external-facing e-business channel and employee-facing systems. With a true front office, companies can slice and dice the captured information in various ways to seek out customer trends, improve services and products and stay one step ahead of customers’ future wishes.

Know your customer, but better yet, know your customer life cycle. Under-stand what he or she is likely to want over time, not just within a single transaction. Essentially, companies must have access to personal profiles on each customer that have been created and collected by analyzing customer shopping, buying, research patterns and through direct feedback. Personalizing each customer interaction will be critical to creating a new kind of customer loyalty. Several personalization techniques include:

• Using previous purchase data to make an assumption about your customer, and proactively upselling or cross-selling additional items. For example, if a customer has purchased five Italian cookbooks in the last year, a system could be designed to proactively send an e-mail to the customer when new Italian cookbooks are published. Or, better yet, offer complementary items such as gourmet pasta sauces.

• Letting customers identify items of interest, along with specifications about when and how they want to be contacted. For example, American Airlines has a form on its Web site for frequent flyer program members. Members complete the online form with information about travel preferences, such as desired destination sites. The airline then periodically e-mails updated airfares and discount offers when available for the cities specified.

• Personalizing portals for each customer. While MyYahoo! is a great consumer example, portals are ideal for business-to-business users, as well. Nortel Networks, for example, creates portals customized for each corporate customer. A network manager can log in with a customer I.D. and find information about specific enterprise configurations, open support cases, gather information about unique product upgrade plans and more. By simplifying the online experience, users can be more productive, quickly solve problems and make faster decisions.

With this rich bank of information, and the right tools and technology, companies can create specific and targeted marketing programs, and effectively deliver products to customers who will now feel like they are being taken care of instead of just being “spammed.” Once deployed, companies will, in essence, have an ongoing electronic focus group on a daily basis. The bottom line is that companies can have a full view of their customers — past history, current life cycle and future needs — while also offering them a much wider range of communication methods. This attains a new level of customer loyalty in which both the customer and the vendor benefit. By achieving this, the customer service Armageddon will pass you by.

John Ragsdale is senior product marketing manager for Clarify Inc.