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November 2000


Can The Internet Bring Back The Village Market? 
Part II


[ Go Right To Part I ]

In Part I of this article, we examined the benefits and intimacy of the old village market and also some of the shortcomings brought about by the fact that it was limiting in its localness. We also traced briefly the effects of urbanization brought about by the Industrial Revolution. Sure, it led to greater choices and lower prices, but at a price of blandness and loss of community. The members of our panel of experts (Al Baker, director, Customer Interaction and CRM Solutions, Siemens Information and Communication Networks, Inc.; Eli Borodow, CEO, [email protected], Inc.; Tom Hennings, president and CEO, OrderFusion, Inc.; Beatriz Infante, president and CEO, Aspect Communications; and Anthony Lye, president and CEO, ePeople Inc.) were asked if they thought the Internet can be seen as analogous to the old village market, how it is changing business and social patterns, and also how it is causing companies to change their business models.

In this installment, our panel of experts will look at personalization and the creation of communities using the Internet, and they will also have a chance to look slightly into the future at what new products and services they see being developed in the next few years.

EL: In the past few years, the Internet has made possible the creation of new levels of personalization in customer/business interactions and led to new expectations of service from customers. How will companies have to change to keep up with these new expectations?

Eli Borodow: A 'call' is just a request for service and it can come in many forms: phone, fax, voice mail, e-mail, voice-over Web, chat sessions or Web-callback requests. The challenge that companies have to meet is how to deliver consistent service across all media -- and to be responsive to customers who access the contact center through multiple media. Customers are not sympathetic when a customer service agent can't access details of the Web transactions or faxes that have been exchanged -- nor can we expect them to be.

Beatriz Infante: Companies must have customer loyalty and retention strategies in place for all channels of customer transactions, including the Web:

  • Efficient order fulfillment,
  • Great product performance,
  • Post-sale service and support,
  • Superior service that generates trust, adds value and builds brand loyalty,
  • Know customers in 'bricks' environment just the way 'clicks' do.

Businesses can't expect to be successful clicks-and-mortars just because they are successful bricks-and-mortars. They need to build online brand loyalty. The only way is to build trust by providing personalized services and information.

Keep in mind that to recoup the company's initial customer acquisition cost customers must stay with the company for at least two to three years.

Al Baker: I'm a firm believer that businesses must now completely rethink their business models to realign their operations with a focus on customer relationships. This involves expanding the responsibility for customer relationships beyond the contact center by proliferating a relationship management philosophy, revamping processes and implementing supporting technology throughout the enterprise.

Tom Hennings: Customers expect suppliers to keep their promises. They always have. In the past, it's always been acceptable to get back to the customer with an answer on pricing, availability, configuration, product information, etc., within a few hours or even days. But the response time of a browser is measured in seconds. Once a supplier goes online with its products, customers will assume that the answer given online is correct. Therefore, the online system is now making promises that people used to make after thoughtful consideration. Unless suppliers keep the promises their online systems are making, suppliers will lose market share and brand loyalty overnight.

Anthony Lye: First and foremost, companies need to realize that customers will not accept unavailable or inaccessible information. Such things as past customer interactions, transaction histories and order status should be at companies' fingertips and, ideally, made available directly to the customer. Customers have come to realize and expect that all pertinent information is available in connected information systems because they see so many companies where that has proven true. If your systems aren't up to modern standards, customers will not tolerate it. More often than not, customer service revolves around access to information, whether it's a simple issue status query or a complex problem requiring extensive data gathering and research. Those companies that have the most efficient customer/business information ex-change systems will be the winners.

EL: How can companies benefit from the creation of new communities (e.g., worldwide suppliers, more competitive prices, etc.)?

Anthony Lye: Going back to the concept that the companies that have the most efficient customer/business information exchange systems will be the winners, a powerful, related concept is that any given company doesn't need to produce or own all of the information related to the business. In fact, a significant amount of value can be added by companies that do a good job of aggregating the right set of knowledge and resources from disparate sources. For a simple example, take order tracking and observe how effective the links are to various shippers' package-tracking pages. Used in the context of a customer's product order, the immediate availability of shipping status is incredibly effective. New communities, especially those that represent highly specialized resources and information, should be viewed as components to be leveraged in the context of a company's business.

Perhaps the most powerful community for any business is the one that comprises that business's customers. Often this community is more effective at providing customer service to themselves than the company is, and frequently at little or no cost to the company other than acknowledging and supporting the community itself. Additionally, by fostering these communities, companies have a ready base of engaged consumers who are usually anxious to provide their insights and experiences to the company, not to mention being a highly qualified set of prospective buyers for additional products and services. 

Al Baker: In the Internet age, it's all about time savings and information available for comparison shopping. For example, I can find competitive information on goods and services on the Web in two hours that would have taken me two weeks to find using other methods.

Eli Borodow: The customer is the ultimate winner in the evolution towards virtual communities to the degree that technology is now enabling companies to offer their customers the same kind of personalized service that was once only available from smaller niche companies that differentiated themselves based on the quality of their personalized service. By creating the illusion of a virtual community, companies can enter new market segments and pass on the cost-efficiencies associated with larger merchant enterprises -- while at the same time providing the customer with the same level of personal care that used to be the exclusive domain of the smaller merchant. In essence, technology is allowing customers to have their cake and eat it too -- while reducing costs for everyone in the value chain.

Tom Hennings: The earliest companies to benefit from the Internet will be those that produce true commodities. Since most e-marketplaces and trading communities are only capable of allowing the customer to compare price, commodities will rule in the short-term. However, as more processes other than bid-ask are enabled by the Internet, such as collaborative design engineering, sales-assisted configurations, RFP/RFQ workflow and targeted product offerings, companies with much more complex products will be able to take advantage of geographies or customers their field sales force rarely reach. They will also free up time for their human sales channels to focus on strategic selling.

Beatriz Infante:

  • Increased operational efficiency (All links of the value chain are stressed due to the exposure to end customers);
  • Superior and personalized service equates to higher revenues;
  • More control over value chain information;
  • Highly disintermediated value chain.

A key point here is that price does not rule the Web -- trust does. More trust, more customer retention and higher profits.

EL: What new services and technologies do you see developing in the next few years?

Tom Hennings: The greatest area of technology development in the Internet area will focus on brand, loyalty, customer service management and the synchronization of human and electronic sales channels. In the business-to-business world, this means enabling the field sales force and call centers to become much more consultative, while relieving them of easily automated tasks. Currently, most of human interaction in the selling process revolves around four activities: product features, price, availability and order status. All of these activities will be replaced by technology solutions that will allow the sales force to take an active and consultative role while forming solutions and designing contracts specifically tailored to each customer.

Al Baker: Businesses will continue to align their operations to make it easier for customers to do business with them. As such, more applications will be required to run on both circuit-switched and IP-based environments. Businesses will also increase their reliance on third-party companies that have expertise in designing and integrating IP-based and wireless communication solutions into their operations.

Anthony Lye: Better methods of communication and transportation have always enabled more customization and specialization. The town's general store has given way to cities full of specialty shops, reachable by car or by phone, which cater to consumers' specific needs. Businesses that supply a narrow niche can succeed if enough people can reach them to provide a viable customer base. The Internet not only provides a new generation of communication capabilities, it also acts as a vehicle when information is the product.

Thus, in the next few years, we will continue to see customization and specialization. Already, it's possible to find products and services that were once too particular to survive in a strictly local market. Upcoming services and technologies will be those that enable people to locate and connect with people and resources that meet their very specific needs and requests. The Internet allows someone to find the single individual who can best understand their particular situation and address their requirements, irrespective of their location anywhere in the world. Similarly, we will see services and products that help consumers collect, describe and communicate their particular interests and desires, whether it's regarding a technical service they need performed or a hobby for which they're seeking like-minded companions. We'll also see enabling technologies such as products that remove language, cultural, legal and economic barriers to facilitate worldwide interactions.

Beatriz Infante:

  • Mobile commerce;
  • Customer interaction based on intent and locality;
  • Ubiquitous customer interaction through many mobile devices;
  • Seamless, device-independent applications that can connect customers on any device to any resource/information; and
  • On-demand applications that are in-telligent and personalized to customer wants and needs.

The same rules apply: know the customer. More trust, more customer retention and higher profits.

Eli Borodow: I think that most of the core capabilities we will see deployed in a big way are already here and that the advances we can expect to see in the medium term relate more to architecture than to capabilities. This is where the vacuum is as contact center technology goes mainstream. Every contact center technology vendor has capabilities, some more than others, but overall the feature sets are becoming commoditized. The fact is that many vendors are saddled with outdated architectures and, as a result, the focus on features has become an overused technique to distract purchasers from the really big questions: about stability, realistic up-time, future scalability and extensibility -- and architectural inefficiencies that result in unnecessarily high deployment costs and high costs of ownership. When vendors talk about features and capabilities, customers should ask them whether their platforms can scale down to a single box for smaller scale implementations -- but also scale up to almost infinite levels in a self-healing network architecture with mirrored hot-backup for mission-critical enterprise and ASP deployments. In the next few years I think you're going to see more and more customers asking these sorts of questions.

The importance of these sorts of architectural considerations will take on even greater significance with the rise of application service providers, which many analysts believe will create a 23- billion-dollar industry over the next two years as a result of the compelling advantages the ASP model offers to the smaller enterprise. Architectural considerations and carrier-class reliability will become key determinants of who will win and who will lose in the race to obtain subscribers -- and will therefore refocus much of our industry's attention toward the architectural needs of service providers.

For ASPs, the race is already on to obtain market share -- so what the market really requires is technology that can be rapidly deployed with little or no set-up costs and minimal associated configuration time -- no more than a couple of hours for all relevant technologies, including IVR and skills-based routing of interactions on every medium of communication, including phone, fax, voice mail, e-mail, chat, voice over Web and Web-callback. The alternative is to get bogged down in configuration issues while competitors capture market share. As a result, improvements in provisioning efficiency are inevitable as the ASP paradigm becomes prevalent.

The next ASP-related area of architecture where you can expect to see changes in the market is in the area of partitioned hosting. Platforms that require a separate server for each ASP subscriber of contact center services really don't offer the ASP any efficiencies of scale -- because licenses can't be shared among a common pool of subscribers. Imagine if dial-tone couldn't be shared among city residents and the issue becomes more clear. If everyone in any given city picked up their telephone receivers all at once, more than half wouldn't get dial-tone because it is a shared resource. The cost of dedicated dial-tone would be astronomical. The analogy applies very well to the contact center ASP -- which must dynamically ration resources to achieve economies of scale. In addition, in the one subscriber/one server model, one should also keep in mind that the prospect of running a massive server farm will have little appeal to any experienced service provider. What is required is a shared environment that maintains the privacy of data and reports of each subscriber while providing comprehensive contact center functionality on a common hardware platform.

Of course, once you're in a shared environment, the next logical question that ASPs will ask is: how big can that environment scale to? This will be another hot-button issue.

Another issue related to scalability that will become a 'hot' issue -- no pun intended -- is the ability to add or remove resources from the infrastructure without shutting down. ASP subscribers will not take kindly to service interruptions every time the ASP hits a growth spurt or when parts require service, so dynamic scalability and load balancing are areas that will get an increasing amount of attention.

If an ASP is going to run all of its subscribers on a common infrastructure, the next area of concern is obviously reliability and the availability of 'hot-backup.' Hot-backup means that a process crash (or the crash of a server hosting a process) can't result in dropped interactions (calls or chats, other Web-interactions, etc.) and won't result in lost data about interactions in progress. An ASP can't afford to settle for primitive fail-over schemes that disconnect all calls and all Web interactions in progress whenever any problem arises.

We believe that the market will force our entire industry to address these issues in short order. Some companies will be forward thinking and anticipate customer needs. Others will have to be dragged kicking and screaming into the new reality. We believe that infinitely scalable architectures with self-healing properties and hot-backup protection are the future.

So can the Internet bring back the village market? Of course not. Nor should we want to be limited by a lack of choices that was typical of village markets. But perhaps the Internet can bring back the best aspects of the village market: community and the building of relationships, of becoming neighbors. As we have seen, the Internet can and should be used to facilitate business, to improve both products and business processes, to keep the line open for customer input. It is also a great opportunity to explore, to find out more about the world in which we live, to help reduce the unknown and overcome prejudices through knowledge. It can help make the foreign local, remind us that we have more similarities than differences, and that no matter what our differences, we are all in this together.

[ Go Right To Part I ]
[ Return To The November 2000 Table Of Contents ]

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