Out of service

When customer service pundit Ron Willingham decided to buy a TV set, he expected the process to be fairly straightforward. As head of Integrity Systems, a Phoenix-based training and development company, and author of a series of nationally renowned books on customer care, Willingham had seen it all — good, bad, and downright abysmal service. But even he was taken aback by what happened to him at the big-box electronics store he visited to purchase his TV. Once he found the product he liked, he says, buying it “took forever to do,” although the TV was a high-end model that the store should have been glad to help him acquire quickly. Unable to handle any of his questions, the customer service rep kept scurrying off the floor to ask other people for help.

When Willingham finally brought the TV home, its remote control refused to work. So he called the store. “The phone rang over and over, but no human being ever answered,” he says. “I called four times and each time it just went into the automated voice system. I had to go to the store, which is all the way across town. I waited 20 minutes for the manager. When he finally showed up, it was obvious I was ruining his day by being there. He walked away, got on his cell phone, and kept talking — while I was waiting! It was unbelievable.”

Willingham’s experience exemplifies an all-too-common situation. Even though more merchandise is now available than ever before in the history of the world, buying it is often an ordeal as shoppers struggle with indifferent, ignorant, or hostile service reps; mystifying interactive voice response menus; e-mail inquiries that vanish into cyberspace; cumbersome returns processes; and orders that rarely materialize on their promised delivery dates. The market research firm Connell Associates, based in Glen Rock, NJ, estimates that although more than 90% of shoppers consider satisfaction with customer service essential to maintaining a healthy relationship with a brand or company, 45% believe that companies do not provide it.

In a recent survey of multichannel retailers’ e-mail responses to customer inquiries, Cambridge, MA-based technology consultancy Forrester Research found that not even one of the 20 companies surveyed scored highly on the test criteria of e-mail value, presentation, and creation of trust on the part of the customer. Research has shown that up to 80% of online shopping carts are abandoned before the transaction is completed, often because the merchant did not provide enough information or assistance to guide the customer to the finish line.


Although customer service appears to be in a state of crisis in all marketing venues, online operations face particular problems. Web technology can lull e-merchants into thinking that as long as the shopper doesn’t complain, he is satisfied with the experience. And that can very well be the case. Providing a plentiful supply of information and self-service options often goes a long way, says Lauren Freedman, president of the E-tailing Group, an online research and consulting firm in Chicago. In a survey of online customer service excellence conducted in 2004, the E-tailing Group ranked as “top performing” those sites that scored highest on criteria such as keyword search, the prominent placement of a toll-free telephone number, six or fewer clicks to checkout, display of customer service hours, e-mail order confirmation, and package delivery in four days or less.

“A lot of it is in messaging,” says Freedman. “People should never ever feel nervous about buying. Place your guarantee near the shopping cart. Be clear about shipping charges. And — this is really critical for the holiday season — post your cut-off dates throughout the site.”

The list of technology-based features that online merchants can implement to improve service is almost endless. For instance, in a detailed report, “Getting Multichannel Retailing Right,” Forrester Research presents an encyclopedic array of must-haves to enhance the customer experience: buy-online-and-pick-up-in-store functionality, high-speed connectivity, standardized customer databases, Web access through point-of-sale systems and kiosks, real-time inventory visibility, channel-specific product management systems, and advanced forecasting and predictive analytics tools.

Armed with this formidable arsenal, an online operation should be virtually snag-proof, except when human intervention is called for — and another Forrester Research study reports that 37% of Web buyers do indeed request customer service while shopping online. Yet the E-tailing Group found that an increasing number of merchants were sending automated responses or referrals to other vendors instead of personally answering customer queries, and that only one-fourth of the 100 sites surveyed offered live help. In retail, labor is the single largest controllable expense, and the one that typically gets the ax when budget cutbacks are necessary.

“Wall Street wants continual sales increases,” says Paula Rosenblum, a retail analyst with Boston-based research firm Aberdeen Group. “There are really only a couple of numbers you can tweak: gross margin and payroll. Once you’ve taken payroll out, you can’t put it back in so easily. But you can put technology in because it’s a capital expense.” Rosenblum, a passionate advocate of CSR training and empowerment, is outspoken about the problem. “Very few retailers are actually walking the walk of customer-centricity. The name of retail has always been, ‘I will do as little as I can to maximize profits and eke out dollars to give you the products you need.’”

Ironically, the products themselves have increasingly become less and less distinctive, making service the only real differentiator, Rosenblum adds. As computer systems became cheaper and widely available in the 1980s, specialty stores found themselves able to expand at a fast clip. But high labor costs made it difficult to provide customer service to match that growth. Once Internet commerce came along, merchants heaved a sigh of relief because now, at last, they could serve customers through technology, without adding headcount.

The flaw in this line of reasoning, though, was that customers wanted the same type of service online that they were used to receiving in brick-and-mortar stores — interaction with a human being. “Self-service is not a proxy for customer service,” says Rosenblum. “Give an employee power, and in the long term you will be profitable. In the online world, customers have lots of choices, so retailers need to do something special. Most of the things they sell have substitutes. There are lots of places to go if you just want to buy a commodity. Customers are very unforgiving.”

To cope with such shoppers, online retailers have accepted, albeit reluctantly, that they must factor both technology and human interaction into the service equation. For most Web-only merchants, success involves finding a comfortable balance between the two, and considerable effort goes into researching, implementing, and maintaining that comfort zone.

Goldspeed.com, the Internet’s largest discount jeweler, found that its “sweet spot” lay where people and machines worked together. A recent research report that Rosenblum prepared for Aberdeen Group describes how Goldspeed turned to exceptional customer service to solve various operational problems. Faced with more than 20,000 SKUs, shipment of 50,000 orders a year, a very high seasonal peak at Christmas, and a varied and complex vendor and drop-shipper network, Goldspeed needed to reduce backorders, increase its fulfillment rate, and find innovative ways to stave off competition.

The solution lay in a combination of sophisticated technology and employee empowerment. Technology took the shape of a hosted end-to-end system (OrderMotion by CommercialWare, a Natick, MA-based software provider) that supplied integrated, real-time order capture, fulfillment, inventory management, payment processing, and report generation; employee training included empowerment and problem solving. Customer service reps were given the knowledge, data, and authority to make decisions on the spot. For example, the CSR could substitute a slightly thicker (and therefore more expensive) ring to satisfy the customer and eliminate a backorder.

These efforts at customer-centricity were not just pleasant experiments — they yielded a quantifiable payoff for Goldspeed. The time required to process and ship an order plummeted from 24 hours to between one and two hours. Backorders declined 50%, and orders from repeat customers surged from 10% of total business to 50%.


Online wholesaler Via Trading Corp. also takes customer-centricity seriously. An asset recovery operation based in Vernon, CA, Via Trading contracts with major retailers (including Rite Aid, Wal-Mart, Federated Department Stores, and J.C. Penney) to take excess, returned, and distressed merchandise and move it into secondary channels such as flea markets, online liquidation venues, and its own 65,000-sq.-ft. warehouse, from which customers can buy pallet loads of overstocks, closeouts, returns, or seconds. Via Trading processes 300-400 wholesale orders a month, with the average order totaling about $2,000. The three-year-old company’s growth has been swift, doubling from $2 million in annual sales in 2003 to $4 million last year. Of the 18 employees on staff, seven are customer service reps.

Jacques Stambouli, who founded the business with his brother Alain, waxes eloquent about Via Trading’s highly personalized service. “Our way of selling is different from that of other wholesalers,” he says. “With them, you know what you’re getting — say, 36 razors. In our case you’re buying $3,000 worth of Rite Aid merchandise, and you haven’t got a clue what it is. All you know is that they’re items that are carried by Rite Aid.”

As a result, Via Trading’s CSRs need to do a lot of explaining, and they receive intense training so that they can communicate the details of the merchandise to customers. Most situations call for extensive human interaction, notes Stambouli. “People who buy wholesale goods online are often small businesses and may need more help than someone who’s ordering from Amazon. Our reps need to be completely tech-savvy and speak to customers at their level. When you’re teaching someone how to use new computer software and they’re tech-savvy, you explain it to them one way. If they’re not, you need to explain it to them a completely different way. Our customer service reps are trained so that they can see what the customer’s understanding of the business and the technology is so that they can handle them at the appropriate level.”


The service formula again tilts toward human interaction, but even more intensely, at Softchoice, a Toronto-based computer hardware and software provider. The company was founded in 1989, at a time when technology was just beginning to alienate customers. But unlike the early dot-coms, which neglected back-end infrastructure in favor of front-end glitz, Softchoice adopted the then-maverick approach that live agents added value to the business.

“We always felt it was important to make sure we had the right number of people to answer our customer calls,” says vp of marketing Nick Foster. “From the beginning, we avoided the technologies that phone companies were providing, in favor of just answering the phone.” Live agents answer all calls, 90% of the time within three rings; if all reps are busy, a bell rings in the call center, and calls in queue go to employees who are cross-trained in various functions.

Long before Web chat came along, the company built an electronic tool that enabled callers to interact with agents using data lines; the result, according to chief information officer/operations director Kevin Wright, is that the Web and the phone work in tandem. “Our abandon rate on calls is 2%, which is pretty low, because we handle 60,000 calls a month,” he says. “We use the Web to augment our call centers. We use a model where customers go online and do their research and get a live quote, but they may subsequently place an order with the call center.”

Softchoice’s CSRs are uniformly trained to handle e-mail, phone calls, and chat; they can also pull reports for customers, help them use the search engine, provide tech support, or process a merchandise return. “We’ve tried to give as much empowerment as possible to the person who answers the phone,” says Foster. “Having a real, live person to talk to is as much of a differentiator as any technology you can offer a customer.”

Not that Softchoice doesn’t believe in technology. On the contrary, its proprietary system is powerful enough to handle a 300,000-SKU operation whose products are replaced every two or three months. “Because of our volume and complexity, our key requirement is a really effective search engine,” says Smith. “Customers should be able to quickly find what they’re looking for. But they should also be able to access a live resource, so putting things like chat on the site makes a lot of sense. There’s tight integration with the call center. With a feature called Live Quote, our agents can build a quote with the customer. At the same time, they can leave the order-entry module and go back to the Website to do searches so they can replicate the customer experience and talk the same language.”

With about 500 employees, more than 30 sales offices in the U.S. and Canada, and thousands of suppliers and distributors, Softchoice can’t make do with an off-the-shelf system, says Foster. “The bottom line is, if you buy a bunch of technologies from a bunch of companies and you compete with people who bought the same technologies, how are you going to differentiate yourself?”

If you were to ask Integrity Systems’ Willingham that question, he’d answer, “Through values and ethics.” Willingham, whose books are detailed psychological analyses of human behavior, is uncompromising in his approach to what he calls “integrity service.” In his view, technology has isolated us from other human beings, with the result that service agents learn “how to work with the technology rather than how to interact with people.” Our deepest value systems and moral choices, not just the socializing techniques we’re taught, ultimately influence the way we treat customers, says Willingham. “We perpetuate our own happiness and unhappiness by the way we serve others.”

F is for failure

There’s no doubt that multichannel merchants fail miserably when it comes to customer service, according to Cambridge, MA-based consulting firm Forrester Research. In a sweeping 18-month survey of 311 customer experience reviews of Websites, phone self-service, kiosks, e-mail, and cross-channel transactions, Forrester found that most experiences failed to pass even 80% of the criteria, which included such factors as ease of navigation, continuity across channels, and the availability of help. Website interactions fared the worst, with only one-tenth of the evaluations crossing the 80% mark.

Recognizing that everything can’t be fixed all at once, the Forrester researchers advise merchants to focus on what their customers require the most, with three initiatives taking priority:

Design experiences that suit the needs of your target customers. Use the principles of scenario design, asking yourself who your users are, what their goals are, and how you can help them achieve those goals.

Plan for a changing channel mix. Your current mix of customer interactions will not remain the same. For example, as technology improves, your customers may move toward phone self-service or kiosks. Make sure your service structure is flexible enough to handle these shifts.

Start with the basics. Be realistic and don’t try to solve all your service problems immediately. Focus on fundamental but important issues such as text legibility, privacy, and swift access to help.

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