First-of-Its-Kind Study by eGain Finds Major Deficiencies in Customer Service Offered by North American Enterprises

Market Wire, March, 2008

In a new market study, eGain Communications Corporation (OTCBB: EGAN), a leading provider of multichannel customer service and knowledge management software for in-house or on-demand SaaS deployment, found that North American enterprises are significantly under-performing in customer service. Companies benchmarked included 120 leading businesses in the U.S. and Canada with over $250 million in annual revenue across the financial services, communications, retail, consumer electronics, insurance, and travel sectors.

Conducted during 2007-2008, eGain's "2008 State of Customer Service" research makes a comprehensive assessment of the state of customer service. In the study, eGain evaluates the "customer service IQ" of companies with "SQ," a new metric that uses a multidimensional framework to measure the customer service competence of companies. The following dimensions were evaluated as part of the research:

--  Choice of communication channels: The choice of interaction channels
    offered is important as consumers and business customers continue to adopt
    new channels such as chat and web collaboration to complement traditional
    ones like the phone. This is measured by the Choice Quotient(TM)

--  Email customer service: Email is second only to the phone in
    interaction volume. The study measures email responsiveness as well as the
    quality of responses with the Email Quotient(TM).

--  Web self-service: While web self-service usage has continued to
    increase, many industry studies show that customer satisfaction with self-
    service is not where it needs to be. Inability to find information through
    web self-service and to seamlessly escalate to agent-assisted service
    continues to be significant barriers to self-service adoption. Self-Service
    Quotient(TM) measures the range of information access options in web self-
    service, ease of escalation, and responsiveness to escalated requests.

--  Multichannel consistency: Customers are increasingly using multiple
    channels to communicate with businesses and, often, to complete a single
    transaction. They expect consistency of answers and service processes
    across channels, which is measured by the Multichannel Quotient(TM) metric.

--  Multi-agent consistency: Customers often contact multiple agents to
    get answers to questions or resolve issues. They expect consistency of
    answers and service processes across agents, which is measured by the Multi-
    agent Quotient(TM) metric.
    

These dimensional metrics or sub-quotients were then abstracted to an overall Service Quotient (SQ), on a scale of 0.0 to 10.0, for each of the companies that were assessed as well as for each industry sector and the overall market. The sub-quotient and SQ scores were then categorized as "poor," "below average," "above average," or "exceptional."**

"Automation and consolidation of channels are the top issues for customer interactions and a critical requirement for business differentiation through customer service," said Johan Jacobs, Research Director at Gartner. "Bringing in and supporting new channels with minimal cost is the "number one" priority for the next five years. By focusing on designing around the customer, services and channels can be managed through a customer interaction hub (CIH) approach in order to present a unified customer experience across all the channels."

"Companies continue to struggle with satisfying consumers across channels -- particularly online. Current problems primarily exist because of companies' silo approach toward managing customer interactions," said Zach McGeary, lead analyst at JupiterResearch. "Consumers' propensity to re-contact after inquiry resolution failure cannot be ignored or reactively handled. Service organizations must consistently unify measurement, technology, and process across all touch points."

Cross-industry findings:

--  SQ for the overall market was 4.1 out of 10.0 with 68 percent of the
    companies in the "poor" or "below average" performance categories.
--  Only 2 percent of the enterprises received "exceptional" SQ scores.
--  A stunning 60 percent of the companies received a "poor" or "below
    average" score in the Multichannel Quotient and 46 percent received a
    "poor" or "below average" rating in the Multi-agent Quotient.
--  28 percent did not respond to email inquiries. Although 50 percent
    responded within 24 hours, the quantity of "poor" responses went up from 14
    percent to 20 percent, compared to previous research conducted in 2004.
    

Other findings:

--  Service Quotient (SQ): The consumer electronics sector performed the
    best, albeit with a "below average" score of 4.6 out of 10.0, while the
    travel sector performed the worst with a score of 3.6.
--  Choice Quotient: The consumer electronics sector came in first again
    with a score of 2.4 out of 4.0, and the financial services sector came in
    last with a score of 1.6.
--  Email Quotient: The insurance, communications, and consumer
    electronics sectors performed the best, all with a score of 1.5. The
    financial services sector performed the worst with a score of 1.0.
--  Self-service Quotient: The consumer electronics sector came in first
    with a score of 2.1, while the insurance and financial services sectors
    were both last with scores of 1.3.
--  Multichannel Quotient: The financial services sector posted the best
    performance with a score of 1.9, whereas the retail sector scored a
    shocking 0.9 out of 4.0 with 60 percent of the companies receiving a "poor"
    rating.
--  Multi-agent Quotient: The financial services sector posted the top
    performance with a score of 2.2, and the travel sector came in last with
    1.5.