At Your Service - SelfCare's online strategy - Company Business and Marketing

Industry Standard, The, Dec, 2000 by Eric Young

E-tailers are trying desperately to make customers happy. And a spate of new firms are ready to help.

Shopping online can be a drag. Browsers crash; checkout instructions are indecipherable; products are delayed or never ship.

None of these mishaps fazes John Blaber. As a customer service agent at SelfCare, a company that sells health products on the Web and through catalogs, he's seen it all -- orders that seem to have vaporized, lost merchandise, irate shoppers. "By the time customers get to me, they can be very angry or frustrated," Blaber says. "I'll try to calm them down and walk them through the process."

Blaber usually connects with customers over the phone. But his high-tech arsenal is growing. E-tailers like SelfCare are trying out technologies like e-mail, instant messaging and computer voice communication to personalize and improve customer service. Last year, when the Emeryville, Calif.-based company went online, it provided only one way for shoppers to ask questions or report problems -- by calling an 800 number. Since then, the site has added e-mail and instant messaging to its customer service repertoire.

Improving relations with online customers doesn't come cheaply. Web-based businesses spent an estimated $6.8 billion on customer service in 2000, and that figure could surge to more than $20 billion by 2004, according to AMR Research. A number of customer service firms are cropping up to handle the new demand. [See chart, page 68.] If the bet pays off, customers, e-tailers and the companies that provide customer service and consulting will come out ahead.

The demand for better customer service comes just as e-commerce sites face increasing pressure from investors to more quickly turn a profit. E-tailers recognize the role that good customer relations can play in improving their chances of success. "The mindset has really shifted from customer acquisition to customer retention," says David Hsieh, co-founder of FaceTime Communications, which markets chat technology. "Repeat business is where the money is," says John Kendig, VP of merchandising for SelfCare.

Now that online shopping is no longer a novelty and everyone has a horror story -- Santa delivering toys after Christmas, sites making it easy to buy goods but nearly impossible to return them -- buyers are less accommodating, less willing to overlook glitches. The majority of online purchasers expect sites to provide assistance. A recent study by consumer behavior researchers Yankelovich Partners found that 70 percent of shoppers say that instant online help before they make a purchase is important.

Gina Avila, a San Francisco-based marketing executive, regularly buys online. Despite her impatience with Web site fiascos, Avila says that Kozmo.com, a site that delivers food and videos, won her over a few months ago. Annoyed that the site wasn't working the day she tried it, she called customer service. A patient representative immediately took her order by phone. "Customer service is becoming more and more important to me," she says. "My expectations are pretty high. The online world is so impersonal. To call and get a friendly, educated person on the other end of the line, that's great."

Online retailers know that sluggish responses can be their undoing. Executives at Ashford.com, which sells jewelry, worry that if customers feel they're being ignored, they'll click over to a rival. "Our customers are luxury-goods customers, and they don't expect to be left hanging online interminably," says COO Bill Hensler. Ashford uses e-mail software to answer most customer queries within two hours. The Houston-based company also extended its call-center hours from five days a week to 24 hours a day, every day. "If we miss a phone call, that phone call could be worth several thousands of dollars," says Hensler.

E-tailers looking to improve customer service don't have to go it alone. Firms like Kana Communications and eGain Communications market software that tracks and routes e-mail between customers and service reps. LivePerson, Brigade Solutions and FaceTime provide real-time communications applications such as chat and instant messaging.

Other companies are promoting next-generation technologies. Eyeball.com is rolling out streaming video software that allows a shopper and a customer service rep to interact onscreen in real time. HearMe and Lipstream are major providers of Internet Protocol technology, which enables computers, or computers and telephones, to communicate so that buyers and customer service staff can have real-time conversations.

A few customer service providers take a broader approach. Servistream of San Diego, which launched last June, wants to be a one-stop shop for online retailers. In addition to providing offsite call centers staffed with customer service reps to cover phone lines, Servistream sells technology to manage e-mail, conduct voice-over-IP calls and do collaborative browsing. The latter is a technology that allows a customer service rep to send Web pages to a buyer's browser. So, if you're hesitating between a cashmere shawl in lime green or pale blue, and only the green is visible on the screen, the rep can zap you a picture of the blue to help you decide.