Great expectations

Attention online merchants: Your customers’ patience for technical foul-ups getting in the way of their purchases is wearing dangerously thin.

The reason: As e-commerce site experiences continue to improve, customer expectations improve right along with them.

The good news is that online shopping-cart-abandonment rates have decreased dramatically in 2007, to 52% on average from 60% in 2006, according to MarketingSherpa’s latest E-commerce Benchmark Guide.

One reason for this pleasant drop in abandonment rates is that marketers have increasingly taken control of closing the deal, MarketingSherpa finds. “In the past, carts were more a function of the tech team than of marketing,” said the report. “Marketing and merchandising got the shopper all the way to the cart and then tech took over. However, over the past two years, we’ve seen a surge in marketers tweaking cart design.”

The bad news is that online shopping still has some glitches, and customers are less and less inclined to put up with it. Nine out of 10 consumers have experienced problems completing transactions online, according to a recent survey conducted by Harris Interactive on behalf of Tealeaf Technology.

Forty-two percent of those who experienced problems when conducting transactions have switched to a competitor or abandoned the transaction entirely, according to the survey. And 52% of those who received bad customer service from a merchant after experiencing problems with their sites have stopped doing business with the company altogether.

The stakes are rising, too: Forrester Research estimates 2007 online retail sales at $157.4 billion and projects the number to grow to $271.6 billion, or 9% of retail sales, by 2011.

“We’re in a perfect storm, as users’ dependency on e-commerce grows and their patience for bad online experiences wears thin,” says Rebecca Ward, CEO of Tealeaf.

The simple answer to the so-called perfect storm is, of course, making it as easy as possible for customers to finish their transactions online. Don’t distract them and don’t get in their way, say the experts.

Fair enough. But what are some of the concrete steps a merchant can take to lower abandoned-shopping-cart rates and close more sales?

For one thing, don’t force shoppers to log in to buy something, says Larry Kavanagh, CEO of e-commerce design firm DMinSite. Make sure people can shop using “guest checkout.”

“The IT folks will look at this idea and say: ‘What a waste. The only thing you’re not asking a customer for is a password,’” says Kavanagh. This is true indeed. A checkout process requiring people to log in does require only one more piece of information than allowing them to checkout as guests.

But for whatever reason, when a guest-checkout function is added to an e-commerce site, conversion-to-sale rates go up — dramatically.

“The magic of guest checkout is the psychological aspect,” says Kavanagh. “Even though they still have to enter their name, address and all their other information, psychologically, it still makes a big difference to them to think that they’re not having to register.” It’s not unusual to see a 20% to 30% increase in conversion-to-sale rates simply by adding a guest-checkout feature, he says.

Graeme Grant, chief operating officer for e-commerce technology provider Allurent, adds: “Absolutely, you’ve got to add ‘check out as a guest.’ We find that is the most important way people want to check out.”

For example, when Ulla Popken recently added guest checkout to its Website, the women’s apparel merchant experienced an online sales increase of nearly 25% in less than a week, according to Kavanagh.

Clear the path

Another step multichannel merchants can take to increase conversion rates at checkout is to eliminate distractions, says Kavanagh.

“Removing any link that allows someone to go somewhere other than the next step in checkout is going to increase your checkout percentage,” he says. You might think you’re helping them if you provide an FAQ link or a link to go back to the category, “but all you’re doing is distracting folks,” he says. “You want them to be narrowly focused on just what it is you’re trying to accomplish, which is the checkout.”

According to Grant, in the drive to accomplish fairly common goals — such as collect registrations, sell gift cards, offer multiple ship-to options — the core goal of the checkout process often gets buried.

When you try to cover all those different options, “the user’s core [objective], which is: ‘I don’t want to register; I want to give you my credit card and I want to go,’ gets very hard because there are so many elements junking up that core path,” says Grant.

But what about cross-selling and upselling during checkout? Is that a mistake?

“First, get your checkout as clean and as high converting as you possibly can” by removing any and all distractions, says Kavanagh. He adds that several analytics packages make it possible to see where online transactions are breaking down so you can take steps to shore up the process.

“Today’s best practices are actually pretty simple,” he says. Through the free Google Analytics or any of the other more expensive analytics packages, “you can look at what people call a shopping cart funnel. You can keep track of what people do from the time they hit ‘proceed to checkout’ until they actually complete an order.”

Beyond analytics packages, there is another source of information on why online transactions break down that not nearly enough merchants take advantage of: the customers themselves.

“If you’re looking at your analytics and you’re baffled about why you’re losing people, you’ve got the name, address, city, state, zip, and phone number on a bunch of folks who abandoned,” says Kavanagh. “Call ’em up and ask them what’s going on.”

He warns, however, that before calling someone who abandoned a shopping cart, the merchant should check order-history records and make sure the customer didn’t simply make the purchase through another channel.

“I’ve seen many times on business-to-business sites where customers have hit that final page of checkout, and then they actually print it out, transfer it to a P.O. and fax it in,” says Kavanagh.

Once a multichannel merchant has got an analytics package in place and is sure the checkout process is as clean as possible, try adding maybe a cross-sell and see what happens. “You will probably lose some people because of it,” Kavanagh says. “The questions is: Do you gain enough in the increased average order size to make up for what you’re losing?”

Embrace abandoned-cart e-mails


Another fairly straightforward area where online merchants can take steps to close more sales but aren’t, is abandoned-shopping cart e-mails. And no, they won’t freak people out if they’re done right, says Kavanagh. He recommends a three-part series. The first should be an e-mail that goes out within a day that looks to be from a Web administrator.

The e-mail should note that the customer abandoned the cart and ask if there was some sort of technical problem, offer a technical-assistance phone number if there was, and a link to the cart to complete the purchases if there wasn’t.

“The No. 1 reason people abandon carts before they checkout is they get distracted by something,” says Kavanagh. “E-commerce shopping mostly occurs between 9 a.m. and 5 p.m. on weekdays. You know how it is; you’re shopping and then suddenly an I.M. [instant message] appears or your boss comes up behind you, and you get distracted before you make the purchase. This is why abandoned-shopping-cart e-mails are so fundamental.”

The second abandoned-shopping-cart e-mail could be a simple reminder saying: “Did you forget something?” with the contents of the abandoned cart displayed. The third abandoned-shopping-cart e-mail Kavanagh recommends is a play on the old “this might be the last catalog you get from us” cover.

“The abandoned-cart e-mail twist on this strategy, however, should say something like: ‘From time to time we delete shopping carts; if this is something you want, please come back and buy it within the next couple of days or call this number and finish,’” says Kavanagh. “Of course, you don’t really delete carts,” he adds.

One reason more companies don’t send abandoned-cart e-mails is the difficulty in figuring out who should send them. For example, if the merchant determines the e-mail service provider should send them, then there is the challenge of delivering cart data to the vendor.

Kavanagh says that whoever sends order confirmation e-mails — likely the e-commerce platform provider — should also send the abandoned-cart messages. “Whatever utility you’re using to send confirmation e-mails, just filter into that your abandoned-cart data and let that create your series,” he says.

According to Allurent’s Grant, another reason people abandon carts is sticker shock, which can be avoided simply by letting them know the price before they get there.

“It’s not as common as it used to be, but it is just terrible that people can’t really see the full price until they get to the cart,” he says. “Often, the only reason they went to the cart in the first place was to find out the price. Now, some people will say you would have lost that customer anyway, but I don’t agree. I think there’s value in setting expectations. It always helps you convert more.”

He adds that customers should be able to see the contents of the cart right up until they hit “submit order,” and be given the opportunity to change those contents.

“If you aren’t able to edit your cart at the point of submission, which is the first time you’ve found out how much it’s going to cost, that’s a problem,” he says.

Usability testing is also imperative, says Grant. How often? “Every time you make a change,” he says. “It’s not that hard to go down to a Starbucks, offer a $5 gift card and get 20 people. It doesn’t have to be major. And it doesn’t have to be demographically or statistically significant to get a sense of whether it’s going to work.”

He adds that it is also imperative to use some sort of analytics package to see where the checkout process breaks down.

“Marketers spend so much to get people to their sites,” Grant says. “Once you have them, you just can’t screw that up.”

great expectations

A woman goes online to order a pair of black pumps. She enters “women’s shoes” into the search engine and chooses a site well-known in ladies’ fashion circles. (To protect the guilty, I will not name the company.) Employed at the firm is an operations type who makes a discovery that can save somewhere between 50 cents and $2 on each shoe order. He is able to get this “improvement” approved and it becomes part of the workflow. Back at home, two weeks have passed and the package, a shoebox wrapped in paper, has arrived. You can imagine the customer’s delight when she realizes that the shoes have been shipped directly in the box. No unwieldy cartons to cut open, no messy packing material to deal with! There’s only one problem: The shoes have been crushed in shipment. (The customer in question was my wife.)

Another woman (my mother, this time) orders some videos for my children. A message arrives stating that the order has been shipped. Order status is available with a click of the mouse. The package arrives early. The items are undamaged and are what were ordered. The charges are correct, and the packing slip is clear and concise.

Which scenario best describes your company? The first, the second, or something in between? How do you build an effective customer service organization and measure your success from the customer standpoint?

There are three components to achieving a positive customer experience: expectations, communications, and feedback. Of these, expectations are clearly the most important element, because so much of retailing success hinges on to the extent to which a shopper’s expectations are met. Therefore, you must set customer expectations that are realistic and achievable. You must also communicate clearly with your customers, and you must allow for their feedback and use that information throughout your firm to improve and refine all facets of the customer experience.

Do as you say

First, let’s focus on expectations. Most companies set two types of expectations: explicit ones, such as stating in the catalog that all orders ship within 48 hours, and implicit guarantees, such as the product being in stock and ready for sale.

Regarding the first expectation, I would recommend that you review all the information that your customer sees. Look at your ads, packing slips, Web site content, catalogs, and so on. Then write down every promise made. Now review each one with a critical eye. Ask whether you are capable of fulfilling it. If your catalog guarantees three-day order turn time, can you do it? Can you do it year-round? How about holidays? If not, what steps have you taken to alert the consumer to this?

The following are some explicit expectations that you may have set and that you should reexamine:

Delivery times

It cannot be stressed enough that delivery commitments be kept. If your company promises next-day delivery, does the item reach the customer the next day or is it the next day after you pick the order? If it is the latter, the customer won’t get the merchandise for three or four days. Imagine the late birthday or anniversary gifts or deadlines missed because of your company’s failure to meet this explicit expectation.

Customer service hours

Are they posted? Do you keep them? Do you post your time zone?

Returns handling

The sticking point here is how closely you follow your policy. Compare it with your ability to process returns all year. A slowdown during peak periods will cause the loss of many customers who will perceive you as having violated their trust. A good tactic is a quick-to-credit procedure that will not allow used or spoiled items to be returned. Of course, you must state this explicitly as part of the policy.

Shipping methods

Consider, especially, overnight and three-day carriers. If you say that you use UPS but use a combination of UPS and USPS services, you are going to have problems with military bases, Post Office boxes, and areas within the U.S. that don’t receive deliveries on a timely basis.

Products

Examine them upon receiving and before shipping. Has the vendor presented the item accurately and honestly? Typical buyers work from sample products. Do the items received match the sample in quality and workmanship?

Merchandise packaging

Does your product package look exactly the way you present it to the customer on your site or in your catalog? For example, toy and game vendors provide still shots of products for advertising that may not reflect the actual packaging. Items arrive polybagged as opposed to packed in a five-color folding carton. Book publishers will sometimes substitute paperbacks for hardcovers and credit the difference. Are you still using the same SKU for both? Review all your products and packaging and address any deficiencies.

Color, size, and materials

These are particularly important for clothing merchants. Make sure that everything matches its catalog or online description.

Prices and promotions

Check and confirm that the price charged is correct and that all promotions have been considered and applied. This applies to customer loyalty programs as well. Is the customer aware of them? Are you crediting them correctly?

These are a few examples of explicit expectations to examine for accuracy. A review of all of your customer materials will provide you with many more. Living up to explicit expectations is the first and most difficult step in enhancing service, as well as the one that will affect your customers the most.

Implicit expectations concern mostly issues of common sense and operational competence. You imply, for example, that you have the product in stock at all times; that the correct products will be shipped; that each item will be packed and priced properly; and perhaps most crucial these days, that your operation will remain in business long enough to ship the order.

The best way to approach implicit expectations is to look at your operation from a customer’s standpoint. What should he expect as a matter of course or common sense?

Talk show

The next leg of the triangle is communications. I believe that this is the area where the wheat gets separated from the chaff. The days when the customer was willing to mail in her order and wait six weeks are pretty much over. At present, much more is expected of you.

There are two types of communications to focus on: active, when you contact the customer to provide information by phone, chat, or e-mail, and passive, when the customer obtains information on his own. An example of the latter would be the FAQ section of a Web site.

A top-tier company will provide a strong stream of active communication focused on providing useful information to the customer in a timely manner and in a simple format. Don’t assume that the average person is technically apt or cares to be. An example of an effective communication stream is as follows:

Confirm the order

Let the customer know that the order has been received. You must provide — by e-mail or phone — the shipping address, billing address, cost, order description, and shipping method. Mail order houses should ask for e-mail addresses.

Confirm shipment

Inform the customer that the order has been shipped. Supply the shipping date, carrier, ship-to address, predicted arrival time, tracking information, a thank-you, and maybe even a coupon for the next order.

Confirm arrival

Tell the customer that the order has arrived at its destination. This can be done only with carriers that provide delivery information, such as FedEx or UPS. This practice is especially impressive if the order is a gift. ProFlowers is one site that has incorporated this customer-centric method.

Handle problems

If there is a problem with fulfilling the order, contact your customers. Don’t wait for them to contact you. By being proactive, you will earn their respect and loyalty.

Passive information can be just as important in winning and retaining your customer. Again, make sure that the information is easy to understand and simple to access. Make the following functions available:

Order process tracking

The ability to track an order in progress seems to be very popular with a considerable portion of customers. But be aware that implementing this feature can be a service disaster if you haven’t taken the preparatory steps described above.

Order shipment tracking

This allows the customer to track the order through the carrier while in shipment — a simple addition that is, again, very popular.

Frequently asked questions

Keep the FAQ section of your Web site up-to-date. As issues arise from customer contacts, track and add them to your FAQ section. An effective FAQ section will reduce live customer contacts.

Triple axel

The third leg of the triangle is feedback. The time and effort invested to achieve the above will be of little value unless you can rate the effectiveness of the steps taken and how the customer is responding. The customer can tell you what site improvements you need, what problems are apparent in the distribution center, or that you are on track and doing a stellar job. The only thing you need do to get this valuable information is ask for it. How do you accomplish this? Read on:

Comment cards

Include a self-addressed, postage-paid comment card with each order. Ask the standard questions about the order, quality, and shipping, but also put in questions that would help other areas of your company like marketing or product research. Update the cards quarterly so that they don’t become stale and rote to your loyal customer base.

Focus groups

Bring in a cross-section of your customers and present new ideas or concepts to them. Ask them what you can do better. Focus groups are a must before you implement any major changes. They relieve you of the ready, fire, aim syndrome.

Third-party assessment

Some companies specialize in providing customer feedback as well as industry information. BizRate focuses on direct customer feedback, and BizMetrics tracks order turn times from receipt to delivery. BizMetrics also can provide industry-wide data.

Customer advisory board

This group should comprise customers who volunteer to provide feedback by phone or e-mail about selected issues. This method is a great way to get a snapshot of your performance as well as try out new ideas.

Customer service reports and feedback

Your customer service department is at the front line of the battle. They have direct daily contact with customers and can provide a plethora of information if you give them the tools to do it. Track all issues, keep a record of them, and react to them. Do not try to edit this information — put it out there so that you can address problems as well as pass along customer praise. Share customer service information with marketing, operations, merchandising, IS, and other areas. The feedback you receive is useless unless put into the hands of the people who can act on it.

Mark De Chambeau is a principal at De Chambeau and Associates Consulting. He was formerly vice president of operations at SmarterKids.com. He may be reached at (508) 878-2727 or mdecham@naisp.com.

Great Expectations

Most customers know what they want-a good product at a good price, with good service thrown in. And as we head into the 21st century, customers will become more insistent on receiving what they want, since they’ll have a lot more choices-retail stores, outlet malls, ever-increasing numbers of Websites, and of course, catalogs.

Because of this increased competition, service and convenience will count more than ever in the next century. If you can’t deliver them, your customers will find someone else that can.

Secrets for service success “I don’t have to worry about customer service in the next century,” you might be thinking. “My service is already topflight.” Maybe it is-by today’s standards. But what will customer expectations be in 2001?

l HURRY UP By 2001, diehard catalog buyers might put some of the companies from which they order on their speed dial to save time. Of course, these customers will then expect to get through every time, right away. The point of shopping direct is to get in and get out, so to speak, so catalogers need to ensure that they have enough phone lines and enough telephone service reps (TSRs) to handle expected call demand.

l USE TECHNOLOGY WISELY Many callers hate talking to an answering machine today, and many will still hate talking to machines in 2001. But the good news is that more customers will be used to machines, and that recording systems will become easier and faster to use. Most customers won’t mind using a phone system if it can get them to the correct department or provide the needed information quickly. But your system should make clear what callers need to do to get what they want. Have friends and family “test” your phone system’s voice prompts from time to time to ensure that the instructions can’t lead to confusion.

Not that machines will ever replace manpower in customer service-there’s no substitute for a considerate, credible, competent telephone service rep, whether the customer is a straightforward Yankee, a hurried New Yorker, a laid-back Californian, a genteel Southerner, or as may more often be the case in the next century, someone whose native language isn’t English.

l DELIVER THE GOODS Send merchandise when you say you will, and make sure it arrives on schedule. If there’s a problem, don’t wait for the customer to call you, as you might do currently. Instead have your reps contact the customer-it’ll boost the chances that the next time the customer does call you, it will be to place another order.

Customers in the 21st century are no more likely to embrace backorders than are today’s buyers. But since it’s unlikely that we’ll be able to eliminate backorders altogether, we’ll need to be able to resolve the problems much faster than we do now. Your phone reps should be able to tell customers exactly when they can expect any backordered items and be able to suggest a good substitute if the items can’t get there on time. No doubt by 2001 you’ll have a Website, so you might consider posting inventory information on it, allowing customers to check product availability for themselves.

l ELIMINATE HASSLES Consider sending a prepaid return label with orders, so that customers can just drop off returns at the post office or a local UPS outlet. You might also consider making your shipping and handling charges more realistic-the demanding customers of the 21st century will pay attention to them, even more than do today’s customers. Instead of having shipping and handling fees escalate with order size, why not decrease the percentage of shipping and handling as the order size increases-for instance, charge 10% S&H for orders under $50 but 5% S&H for orders $50 and up. This may persuade buyers to bulk up their orders to get the better rate.

l EDUCATE YOUR BUYERS Customers have become increasingly concerned about privacy-a trend that shows no signs of ebbing. So make sure they can always find out how you obtained their name or to whom you might be renting it. Include in your catalog and on your Website a description of your list rental and exchange policies. And any time a customer asks to be taken off your list, do it immediately. If these service standards sound too difficult or expensive to implement, keep in mind that the alternative may prove even more costly in the long run. What we now consider “high” service standards are going to be the norm as increased competition forces marketers to top one another every way they can.

Getting there If you want to compete on service, you’ll obviously have to hire good people and train them to truly help customers instead of just taking orders. That means giving reps access to all the products and product information-what the items are made of, how to use and take care of them-so that they can answer customer questions. Also, train your reps on the Internet; let them practice ordering from your Website and show them what it’s like to surf the Web so that they’ll understand the queries and concerns of your online customers.

Because the 21st-century customer is going to value his or her time as much as, if not more than, the customer of today, grant your reps a certain degree of authority-and let them know in advance how much authority they have. You don’t want reps putting a buyer on hold to ask their supervisor if it’s okay to bend a certain rule. Give reps the leeway to set wrongs right, whether it’s sending a disgruntled customer a new item, refunding the customer’s shipping charges, or just giving him or her a little “feel better about this” discount.

It’s almost impossible to predict the job market in 2001, but expect it to be even harder to find good help than today. That means you’ll want to retain and promote your best workers. Establish a career path for operations personnel to learn more about the company and work toward different jobs. Create opportunities for reps to move into other parts of operations or even into merchandising, catalog production, or MIS if they have the required skills and knowledge. And offer health benefits and 401(k)s even to part-timers to let reps know that you want them to stay and grow with you.

For years, we’ve thought of the 21st century as a faraway time in which anything would be possible. But 2001 is only two and a half years away. That’s just enough time to make the improvements necessary to compete in what promises to be an increasingly turbulent marketplace.