From...

May 14, 1999
Web posted at: 1:42 p.m. EDT (1742 GMT)

by Michelle V. Rafter

(IDG) -- When online stores hustle for new customers, they pull out all the stops, pouring millions into portal deals, sponsorships and banner ads. The lucky ones dip into IPO riches to bankroll TV commercials and hire expensive Web designers.

But what do the same online merchants do to hang on to customers they've already got? At many sites, frightfully little.

Online retailers, including some of the biggest in the business, still come up short in the customer-service department. Online help desks are poorly organized, hard to find, or both. Lists of frequently asked questions skimp on information.

According to Shop.org, a retail consortium, online computer products and software sellers average 48 hours to respond to e-mail. Not good, especially considering that they receive 1.1 questions for every product they sell. In its customer-service study, Jupiter Communications found 42 percent of top-ranked Web sites either didn't accept e-mail from customers, never replied to it or took longer than five days to answer inquiries.

A handful of forward-thinking online merchants are investing in customer-support e-mail management systems or handing off the job to outsourcers. Others are building chat rooms where customers can get one-on-one help in real time from support staff. A few sites have begun offering support via instant messages, chat windows where service reps lead customers on guided tours of a site or Internet-telephony-based call-back services.

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One early adopter is eBay, which two-and-a-half years ago got an average of 200 e-mails a week from buyers and sellers. Today, eBay receives 40,000 to 75,000 customer e-mails a week. To deal with the load, eBay built up a customer-support staff of 200, including about 60 independent contractors scattered across 27 states. The company invested in e-mail-management software from Kana Communications that lets support staff dip into a central database for scripted and semiscripted replies. The company also installed a public message board to enable customers to post questions to service reps and see answers within minutes.

Officials at eBay won't say how much they spend on support technology, but the company confirms it has improved support staff productivity more than 50 percent. "It's also scaled back head-count increases," says Keith Antognini, eBay's director of customer support.

Faster e-mail turnaround and searchable FAQs translate into happier customers. And satisfied customers return to eBay.

Other examples abound. Egghead.com found that software from Novato, Calif.-based Brightware paid for itself in four months. The software automatically answers 40 percent of the 10,000 inbound e-mail support questions Egghead gets a week, doubling the support staff's productivity.

Similarly, after i-Escrow installed e-mail-management software from eGain Communications of Sunnyvale, Calif., the auction-escrow company's service reps could answer 90 percent of e-mail within a day. At the same time, staff productivity improved so much that the company cut estimates for the number of new reps it needed by 55 percent.

Some sites have seen even more dramatic results. The average time it took Buy.com customer-support reps to answer e-mail dropped to seconds from 18 hours or more, after the discount merchandiser installed technology from Business Evolution of Princeton, N.J. Shoppers can pose questions on the Web and get answers immediately via instant message, e-mail or telephone.

If companies don't respond to e-mail, "the consumer will view that as a precursor of what a relationship with that company would be," says Ken Orton, former president of online travel agency Preview Travel, now chief strategist at Cognitiative, a San Francisco-based consulting firm. "They write it off as a company they don't want to do business with. If you drill down into the look-to-book ratio and why many shoppers don't buy, a whole lot of lost sales are occurring because companies aren't responding."

Novice online retailers creating their entire businesses from scratch have demonstrated they don't have a clue how to run a customer-service department, analysts say. At the same time, online shopping is becoming increasingly popular, leading e-mail volumes on some popular e-commerce sites to double and triple in a matter of weeks.

At Beyond.com, the recent Melissa and Chernobyl computer-virus scares quadrupled customer-support e-mail volumes virtually overnight, dragging out response times to 24 hours from 12. "We were flooded," says Jim Lussier, VP of operations and corporate strategy at the Sunnyvale, Calif., company. "We find if e-mail turnaround time goes up, customer satisfaction goes down."

Established retailers and catalog companies that have ventured online are figuring out how to best update existing customer-support call centers so they can handle e-mail and Web queries.

Retailers face a mind-numbing array of choices. Dumping their previous product lines, chat vendors are zeroing in on the retail market. So are customer-support service bureaus that for years acted as direct marketers' customer-service departments. These outsourcers are fashioning themselves as cyber call centers capable of handling customer inquiries via phone, e-mail or Web.

Still, some merchants argue they can't find anything that really works. "We've looked at solutions that are out there and built our own in every case," says Beyond.com's Lussier. "We haven't found anything where the investment justified the return."

But that's changing. Beyond.com recently began working with Silknet of Manchester, N.H., to create a dynamic information database that Lussier likens to an "FAQ on steroids."

Prices for customer support are all over the map, ranging from a few dollars per session for outsourced, text-based chat sessions to several hundred thousand dollars for companywide solutions that connect telephone call centers to Web sites and have links to existing business operations.

"It's expensive to offer one-on-one help to new customers, but it's also the best way to get them to come back," says Greg Sosville, director of online retail and distribution at Mainspring, a Cambridge, Mass.-based consulting firm. "It's not just about having 50 percent lower [customer-service] costs because a rep can handle six customers in 20 minutes instead of four. It's about developing relationships and loyalty to the site and eventually doing cross-selling and upselling."

When it comes to customer service, some top online retailers have figured out how to do it right. Since its bad old days of busy signals and dropped connections, AOL has created a customer-service army – 6,000 employees and contract workers who handle technical questions, as well as inquiries on all aspects of its online service.

But a company doesn't have to be the size of AOL to offer real-time customer service. Debbie Burton knows that.

Burton, a 39-year-old real-estate agent with Fred Sands Platinum Properties in Irvine, Calif., was one of the first in her company to use e-mail, have a Web site and add 360-degree virtual tours of homes listed on her site. Earlier this spring, Burton added yet another feature: a live operator who answers homebuyers' questions from a text-based chat window that pops up on the site.

The operator is an employee of the LiveAssistance division of IBSI, a Chantilly, Va., call-center outsourcer. LiveAssistance hosts chat-based customer service for real-estate brokers and a few other industries at a cost of $2.50 to $4 per session. It's worth every penny, Burton says. Real-estate agents who don't do likewise "will lose business," she says.

Other companies are looking at online support as the best thing for their offline customers. One company taking that approach is Metrocall, a paging company with 5.5 million subscribers. Paging subscribers make 400,000 calls a month to Metrocall's three customer-support call centers. To cut costs, Metrocall late last year signed on as a beta tester of Dr. Bean, chat-based real-time customer-support software from Sideware in Herndon, Va. Now instead of calling in, Metrocall customers can log on to get pre- and post-sales questions answered, says Kevin Hayes, Metrocall's VP of emerging services.

But it's not enough just to provide online service. You have to train staff accustomed to communicating with customers over the phone to use a new medium, Hayes says. "Your company won't be taken seriously if your reps send e-mail with grammatical errors and typos," he adds. To that end, Metrocall is training only a subset of its customer-service staff to handle online support.

As more people shop online, support systems will need to grow. Certainly eBay is finding this out. By March, the message boards that once had worked so well for the online auction house were on the verge of collapsing. Buyers and sellers were posting 200 messages every 20 minutes – questions would scroll off the boards faster than support reps could answer them. So eBay junked the system and is evaluating vendors for a replacement that could include live chat or other real-time interaction.

"The goal is to get to real-time support without a canned answer," says Antognini, eBay's support guru. It's an ambitious undertaking – and one that more online retailers would be wise to pursue.

Service without a smile

The Standard played secret shopper and e-mailed a typical customer-support question – "Do you have [x] in stock?" – to the online customer help desks at the country's top 10 e-commerce sites, according to March traffic figures from Media Metrix. Here's what we found.

COMPANY	RESPONSE TIME AND TYPE OF RESPONSE
Bluemountainarts.com	26 hours; robo-mail that didn't answer the question.
AOL Shopping	34 min.; personalized e-mail that answered the question.
Amazon.com	34 min.; personalized e-mail that answered the question.
eBay	1 hour and 37 minutes; two robo-messages that didn't answer the question.
Download.com (CNET)	8 days, 20 hours; personalized e-mail that didn't answer the question.
Barnesandnoble.com	4 hours, 5 min.; semipersonalized e-mail that answered the question.
ValuPage	2 hours, 24 min.; first autoreply message didn't answer the question; second semipersonalized message answered the question.
CDnow	44 hours, 7 min.; personalized e-mail that answered the question.
Beyond.com	18 hours, 4 min.; personalized e-mail that answered the question.
ColumbiaHouse.com	73 hours, including a weekend; personalized e-mail that answered the question.