In November, I discussed how those of us who would be conducting
e-commerce transactions during the 2000 holiday season would need to do a
much better job of providing service than what occurred during the 1999
holiday season. Judging by the positive response I received regarding that
column, many agreed.
It is tough to believe that less than a year ago, it seemed that pure
dot com companies were guaranteed runaway success stories... this applied
to advertising-driven sites as well as e-retailers. You remember the
logic: brick and mortar meant overhead and overhead meant decreased
profits; subsequently companies like Barnes & Noble saw their
valuations drop while Amazon.com saw theirs skyrocket.
Dot Coms Seemed Invincible
There was more to it of course; the media gave a lot of attention to
e-commerce start-ups, thus working for these companies became much sexier
than any other job you opportunity available. Whenever you couple a sexy
company with the potential to rapidly become a millionaire, you're sure to
have the best talent flocking to you. If you combine this with the fact
that dot coms had armies of headhunters working for them (when you have a
seemingly endless flow of investment capital, you can afford to pay
headhunters whatever they want) then you understand why brick and mortars
had an almost impossible job of attracting technical and other types of
workers. So dot coms seemed invincible: they were flush with investment
cash, they had stock prices that consistently headed northward and they
had the ability to sell additional shares at will to raise more capital.
It is incredible how quickly the bubble burst and how many dot coms bit
the dust or are now struggling to stay alive. Some television news
programs have devoted regular segments of their news coverage to the death
of dot com companies and, of course, there are countless Web sites
chronicling layoffs and general problems in the dot com space. The most
popular of these sites is the profanely named www.fuckedcompany.com.
Why The E-toilet Flushed
So what happened? There were people who predicted the dot com bubble
would burst, but why did it burst so violently and could anything have
been done to slow the pace of these companies being flushed down the
e-toilet? Before we proceed, let's make sure not to lump all dot coms in
the same basket; among all the new economy companies, perhaps the two
biggest categories are advertising-driven and e-commerce sites.
I really thought advertising-driven dot coms would do well forever. My
logic was as follows: as more new dot com companies started, more
advertising would be needed to sustain these companies, and as long as the
VC (venture capital) money poured in, there would be no stop to the
success of new advertising-driven business models, which in turn would
spend a portion of their ad dollars on Web-based advertising. Well, I was
wrong. When VC money dries up, many start-ups' marketing budgets get cut
and the circle breaks. Of course, this applies to today's market. I still
believe that the Internet will be the biggest form of advertising within
the decade. Why? Most every magazine (including this one), all newspapers,
television and radio make the majority of their profits from advertising.
As more eyeballs and eardrums are drawn to the net, it is only logical
that the broad reach of this medium will eclipse any other.
But what about the e-commerce companies? They are having a tough time
as well. It is my belief that many of these companies would still be
around, and others would be doing considerably better, if they simply went
about their business differently. A great deal of these sites took
tremendous amounts of money and devoted these funds to advertising and Web
site design figuring that it was all they needed to do. In hindsight, this
was a huge gamble. They figured live customer help wasn't needed; after
all, their customers would be shopping on the Web, so why would they ever
want to speak to a human being? These customers could just use self-help
Web-based systems...perhaps a FAQ section was all that was needed.
Anything more, like being able to (heaven-forbid) contact a live,
breathing being would be sacrilegious and would defeat the whole purpose
of using the Internet, right? They couldn't have been more wrong.
They thought interaction centers were a thing of the past and all that
was needed was a flashy Web site and the thrill and convenience of
e-commerce would guarantee the success of their site. Who needs to call
and speak to a live person on the Web? They were wrong again!
While these companies were delivering lackluster service to their
customers, and turning them off in the process, the dot com world was
exploding with competition as the barrier to entry was minimal and venture
capital flowed like Niagara Falls. But, alas, overpopulation of e-retail
companies is not unlike species overpopulation in nature -- too many
animals are forced to compete for limited food and shelter. In the e-tail
world, an overpopulation of companies is forced to fight for the same
customers. Survival of the fittest is not just a law of nature, it now
also applies to dot com companies. The healthiest companies will emerge --
battered and bruised, but alive.
There is no truer test of a company's ability to survive than a slowing
economy. Rising fuel prices, a near record number of annual interest rate
increases, the bursting of the dot com bubble and the deflation of the
NASDAQ are factors contributing to this downturn, which were all, of
course, compounded with election uncertainty. At this time more than any
other in the last few years, people are less likely to take their wallets
out until they get a sense that the future is more certain.
But, in the wake of tremendous tech turmoil on Wall Street, it seems
that those brick-and-mortars (you remember, the companies that were doomed
just over a year ago) certainly look like they will do very well as
commerce moves to the Internet. These companies have the added advantage
of integrating e-commerce into their existing channels. Sure, many don't
have the best technical people (but I can tell you from experience in the
Northeast that there is infinitely more Web talent to choose from today
than just six months ago), but they have something overlooked just a few
years ago: solid management skills and a good sense of their own company
identity honed over years of doing business the traditional way. Beyond
that, these more traditional companies have an understanding of their
customers and business plans that are built to last.
Please don't accuse me of blindly praising all brick-and-mortar
enterprises; many certainly have made numerous mistakes, not the least of
which is entering Web channels late, reluctantly and half-heartedly. These
slow-moving companies will learn the hard way and lift their heads out of
the sand or be forced to close down. The companies that are doing it right
and are embracing the Web and adding the latest technology to satisfy
their customers will have a huge advantage over their dot com
counterparts. They know that shoppers still want personal service, any way
they choose to contact the company. They understand that one of the
communications channels customers still want to choose is walking into a
store and talking face-to-face with a salesperson. They also understand
that by integrating their brick-and-mortar and Internet presence, they
will offer the best of all worlds.
Certainly there is room for pure dot coms as well as dot
com/brick-and-mortar blends (often referred to as clicks-and-bricks or dot
bams). Some people, e.g., technical people, are more inclined to shop
online while others still prefer the hands-on, in-person shopping
experience.
It would be a mistake to think that everything will sell well on the
Web. Through trial and error, there seems to be a general consensus at
this point that some things just don't lend themselves very well to
e-commerce. Pet supplies are one such example (no matter how endearing
your advertising campaign mascot). There are many other items that do seem
to lend themselves to e-commerce: anything commodotized, inexpensive to
ship and expensive enough to justify building a business around. Consumer
electronics, sunglasses and watches are a few categories that come to
mind. Services such as classifieds and long-distance are others.
Of course, there are many other categories of products and services
that will sell very successfully over the Internet, but to be successful,
they should have all (hopefully) learned something from the events of the
past year. First and foremost is the need for every company to allow their
customers to always contact a live person, whether it is through e-mail
with immediate response, chat, IP telephony or some other means. Also, in
many cases, having brick-and-mortar locations will help dot com companies
differentiate themselves. Finally, I would like to propose a new theory on
customer service in this age of the new economy. Almost everyone on the
customer interaction front lines has heard the golden rule that, "It
takes 10 times more money to attract a new customer than it does to keep
an existing one." But this rule was made before the Internet took off
and certainly doesn't take into account Web sites like sucks.com where the
world can complain about any company and the rest of the world can
instantaneously read about it and respond. Consequently, I feel this rule
needs to be brought into the 21st century, where Web sites, chat rooms and
e-mail allow customer opinions to spread more rapidly than ever before. I
would like to call this new rule Tehrani's Law of Customer Service and it
states, "In the Internet era, it takes 100 times more money to
attract a new customer than it does to keep an old one." It is
generally agreed that the next 12 months are going to be more competitive
than the last 12 and there is an ever-growing focus on increasing profits.
It is my sincere wish that companies begin to place more emphasis on
pleasing their customers, and I hope that Tehrani's Law of Customer
Service helps quantify why we all need to provide our customers with the
best customer service in the 21st century.
Sincerely,
Rich Tehrani
Group Publisher
[ Return
To The January 2001 Table Of Contents ]
|
The Interoperating Theater:
ConvergeNET
The interest in IP telephony products and services in the call center
has never been greater, driven by the desire to reduce equipment and
long-distance costs as well as provide Web customers with the ability to
speak with live agents over the Internet.
The market is growing so fast, in fact, that we have received many
requests to bring our INTERNET TELEPHONY Conference & Expo, a show
that has been held annually in San Diego, to the east coast as well. I am
delighted to announce that TMC will launch INTERNET
TELEPHONY Conference & Expo Miami, February 7-9 at the Hotel
Inter-Continental Miami.
As you may know, this Expo will have tracks that are appropriate for
enterprise decision makers, service providers, developers and resellers.
For the first time in TMC's history, we will have an International
& Latin America track, heralding the burgeoning international
communications market while simultaneously taking into account that Miami
has become a hub for the international community.
We expect all the industry players to display their latest products and
services and, as of this writing, the exhibit hall was on track to sell
out by show time. At both of the last INTERNET TELEPHONY Conference &
Expos in San Diego, I was overwhelmed with comments about how far in
advance the show hotel sold out. We expect the Inter-Continental
in Miami to sell out in advance as well. Remember that this is prime
vacation season in Miami, so please plan accordingly and make all your
reservations immediately.
Besides being able to see just about every industry player in the IP
telephony market, TMC's ConvergeNET will be a primary attraction of
this event. Remember that the biggest barrier to IP telephony acceptance
is a lack of interoperability. ConvergeNET is the world's first,
largest and longest running showcase of demonstrable IP telephony
interoperability. Interoperability is crucial to allowing your call center
to mix and match the best products from various manufacturers.
Due to the long lead times of the publishing field, I wrote this column
about two and a half months before this show, so I can only give a listing
of the companies that so far that are committed to demonstrating their
interoperable solutions at the show (many more are expected to join by the
time of the show).
As always, please check our site
for the latest updates to the ConvergeNET and exhibitor lists. The
industry needs your help in ensuring all IP telephony products work
together. Today's manufacturers owe it to all of us. Please
register immediately and register
for the hotel as well and you'll be able to take advantage of numerous
opportunities to save money. I hope to see you at the show.
[ Return
To The January 2001 Table Of Contents ]
|