By reducing shopping cart abandonment and boosting retention, automated customer service solutions can pay for themselves within months
When Office Depot, the Delray Beach, FL-based office supplies giant, added an online channel to its catalog and retail operations two years ago, its goal was to emulate the type of service that a customer might receive from a topnotch salesperson, says Keith Butler, vice president of Office Depot Online. So making sure that customers could find the information they need has been an important component of the site.
At first, the site offered a search engine in which customers would type in a keyword and receive back a list of possible matches. Though it worked, customers needed to understand such concepts as Boolean logic. “It was not user-friendly,” says Butler. So in August, Office Depot implemented Jeeves Answers, an online help function that lets customers ask questions using natural language – in other words, colloquial English. The system analyzes the words in the queries and then directs customers to the relevant information on the site. “You provide a compelling customer experience on the Web by transferring knowledge to the consumer,” Butler says.
Customers appear to agree. Office Depot’s three-year-old Website had sales of $300 million last year, and the company expects that figure to double this year.
As Office Depot’s story illustrates, successfully selling online means paying attention to customer service. In January, Cambridge, MA-based Forrester Research reported that 90% of online shoppers consider good customer service critical when choosing a Web merchant.
At the same time, as the number of visitors to a site grows, handling customer service inquiries manually becomes rather costly. Any company that receives more than about 50 online inquiries or e-mails a day should think about automating, suggests a report by Stamford, CT-based research firm GartnerGroup.
Automating customer service means using technology to enhance the way customers are served, usually by getting them the information they need as quickly as possible, says Bob Chatham, an analyst with Forrester Research. For simple, fairly common questions, “automation” can mean nothing more than offering on your site a list of FAQs and their answers.
Answering questions that vary from shopper to shopper, though, involves a greater use of technology. Automated response solutions (sometimes called recommendation engines) such as Jeeves Answers are one example. So are e-mail management programs that are programmed to route queries to the appropriate departments.
Finally, for more complex products and queries, a company may want to offer users the ability to communicate with a customer service representative in or close to real time via the Internet, through what’s known as Web, text, or live chat.
E-mail management systems
When Charlottesville, VA-based Crutchfield Corp., a cataloger of audio and stereo equipment, began selling online four years ago, e-mails merely trickled in, and employees could handle them in their spare time. Today, however, the $100 million-plus company gets about 15,000 e-mails each month. To handle the swelling volume of inquiries, Crutchfield rolled out an e-mail management system from Mustang.com of Bakersfield, CA, in fall 1998. “We were preparing for Christmas,” recalls Dave Dierolf, Crutchfield’s vice president of information technology.
Such systems route e-mails to reps in departments such as customer service and technical support, based on the address selected from the options within the e-mail template or on keywords in the message field. “It’s similar to a telephone switch that allows people to e-mail to different addresses,” Dierolf says. Once customers submit an e-mail, the system automatically issues a response, letting them know the e-mail has been received and that they can expect an answer within 24 hours. Without the system, it would be practically impossible for Crutchfield, which now gets about 25% of its sales via the Web, to manage the volume of its online inquiries.
E-mail management programs, which include e-Dialog’s QuickReply and ROI Direct.com’s CustomResponse, typically cost between $20,000 and $100,000. Crutchfield’s investment was low enough (in the tens of thousands of dollars) that the company recouped its expenditure within a year. “This was a no-brainer investment,” says Dierolf.
Automated response systems
Jeeves Answers and similar automated response solutions help online marketers in two ways. By providing customers with instant answers to their queries, they reduce phone volume to the call center and keep potential buyers on the site. But they also provide analysis of the types of questions being asked, which can lead to improvements in a Website or product mix. “It’s a wonderful tool for really understanding what customers want,” says Office Depot’s Butler.
For example, many customers were asking Office Depot how they could qualify for free shipping. (The answer: Place an order of more than $50.) So the company provided this information more frequently and prominently throughout the site. As a result, despite a steep jump in online revenue and traffic, Butler says, the number of e-mails has not increased.
But how can a cataloger determine just how well an automated response system works? Two measures are relevant, says Sean Murphy, vice president of corporate marketing with Ask Jeeves, the Emeryville, CA-based provider of the Jeeves Answers system. The first is the “match rate,” or the number of times the software finds a match to the customer’s question. The second is the “pick rate,” or the number of times visitors pick the answer and click to follow up on it. If few people click through, it could mean that the software didn’t provide the information they needed. When a cataloger launches an automatic response solution, its combined match and pick rate should equal at least 70%, Murphy says.
As for the cost, Murphy says that systems such as Jeeves Answers run from $300,000 on up. The price tag reflects the labor that goes into analyzing the questions a merchant receives and programming the software with the appropriate replies. The fee also includes installation of the system and licensing costs. Other programs include Brightware’s Advice system and ActiveSense from Motive Communications.
Web chat
For catalogers that want to automate online customer service but need to handle back-and-forth dialogues with customers, systems that facilitate live online chats can be effective.
CarParts.com, a Santa Monica, CA-based online distributor of auto parts, worked with Los Angeles-based PeopleSupport to offer customers the ability to chat online, in real time, with a customer service representative. Providing knowledgeable, one-on-one service is critical within CarParts’ market, says Tara Meyer, vice president of customer service. “Purchasing car parts is not like buying a sweater,” she says.
PeopleSupport provides both the technology that enables the chats and the e-reps, who are trained to handle questions about CarParts’ site (though for highly technical questions, customers communicate with CarParts employees). Outsourcing enabled CarParts to get up and running quickly, Meyer says.
To access the service, customers click on a help button, and enter their name and e-mail address, as well as information on the make and model of their car. A screen pops up, and the e-rep and the customer can communicate back and forth to resolve the issue. For CarParts customers who want to actually speak with an agent, an 800-number appears on the screen next to the help button.
CarParts rolled out its chat capability last August. Since then, the company has seen an increase in the percentage of browsers who become buyers, says Meyer, although she declines to provide specific numbers.
Meyer also won’t reveal the cost of its system. But a PeopleSupport spokesperson says that clients pay $2-$5 for each customer interaction with an e-rep; the exact amount depends on whether the rep can use a prepared template to answer the question. Including the licensing fees of the software itself, a typical program costs about $15,000 a month. In addition, clients pay about $10,000 in one-time set-up charges.
Another solutions provider, eGain Communications, offers its suite of products via outsourcing or licensing arrangements. A marketer that uses its eGain Live Web chat solution and has the Sunnyvale, CA-based firm host it pays $2,000 a month plus $195 per seat (concurrent user) a month. If the client buys the software, the cost is about $30,000, plus $900 per seat. Other chat solution providers include Blue Martini and LivePerson.
Customer service will play an increasing role in differentiating one online cataloger from another. “Originally, online merchants were like virtual vending machines,” says Mike Maples, vice president of marketing with Motive Communications, an Austin, TX-based provider of automated customer service solutions. “Now the customers are the negotiators. They want to enjoy a true one-to-one relationship.”
Some online catalogers handle customers’ questions by directing them to an 800-number. But while it’s important to offer buyers and prospects the option of speaking to someone over the phone, that shouldn’t be your sole method of handling online queries. For one thing, many consumers don’t have two telephone lines, and asking them to interrupt an online session to make a phone call will likely result in lost sales. Besides, using the Web to answer customer service questions can be much less expensive than using the call center. According to Forrester Research, it can cost up to $33 (including overhead and staffexpenses) to take a call in a call center, while a Web Q&A interaction can run as low as $1.17.
Automating customer service on the Web can result in lower costs and better service – so long as you do it right. Some tips:
INTEGRATE: Whether a customer’s inquiries come in over the phone, via e-mail, or directly through the Website, all delivery channels should reflect the information. That way, if a customer decides to follow up a response to his e-mail with a phone call to a call center rep, the rep will be better prepared to meet the customer’s needs.
TRAIN: You can’t assume that your call center staff can also handle e-mail. They may lack writing skills, for example, or in-depth product knowledge.
PRIORITIZE: Given limited resources, many companies will want to restrict access to live agents to their better customers. Your system needs to be able to identify them.
TEST: Figure out how the system works before you roll out. This sounds basic, but it’s easy to overlook, says Liz Kislik of customer service consultancy Liz Kislik Associates in Valley Stream, NY. “Customers rarely want to be practiced on.”
BENCHMARK: Study sites that are known for great service, advises Lance Rosenzweig, CEO of PeopleSupport, a Los Angeles-based provider of customer service solutions.