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ASPs Help Keep the Customer Satisfied

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Posted September 3, 2002 By Paul Rubens     Feedback

Companies work hard to land new customers and then work even harder to figure out how to keep down costs for servicing those customers. From knowledgebases to live chats to hosted call centers, ASPs have the answer.

The customer is king is the mantra of many businesses. But while providing good customer service may give a business a competitive advantage, it is not generally a core competence or profit-generating activity. Typcially, customer service is an expense item that needs to be managed carefully.

Recognizing this, a small but growing band of ASPs is springing up to provide businesses with customer service systems that help them deliver customer service more effectively.

Sharing Knowledge is Key to Cost Savings
Starting the base level, companies such as Los Angeles-based KnowledgeBase.net provide online self-service knowledgebase systems that their customers' customers use to solve problems and find answers to questions themselves.

KnowledgeBase.net
At a Glance
  • Headquarters: Los Angeles, Calif.
  • Ownership: Privately held
  • Staffing: Would not disclosed
  • Customers: 600
  • Main business activity: Supplier of hosted and on-site knowledge base software.
  • Target market: Small-medium-size enterprises (SME) and large enterprises.

Finances:
  • Revenues: Would not disclosed
  • Net income: Positive, but would not disclose specific numbers

Enabling customers to solve their own problems is dramatically less expensive than providing telephone support, according to James Segil, president and chief operating officer of KnowledgeBase.net. He quotes research figures suggesting that the cost of telephone-based customer support is about $33 per incident, while e-mail-based support costs about $10. Enabling customers to use an online knowledgebase to solve a problem costs less than $1 per response, Segil told ASPnews.

KnowledgeBase.net charges its customers according to the number of articles they have stored in their hosted knowledgebases, regardless of the amount of times those articles are accessed. "The reason we charge on a per-article basis is that in practice articles are never deleted, but new ones are often added, so our revenue from each customers tends only to go up," he told ASPnews.

Since KnowledgeBase.net's customers administer their knowledgebases remotely using a browser and add their own articles to their knowledgebases, Segil says the company has very low overhead and the cost of adding new customers is almost negligible.

Do customers like these systems, or would they prefer to talk to someone and get their problem solved immediately? Self-serve systems certainly offer 24x7 support that may not be available by telephone, and Segil says customers appreciate this.

More objectively, customers seem to use them. "One way to judge what customers think about self-serve systems is simply to look at the usage. If our customers see usage of the knowledgebase go up and the number of support calls go down, their customers must like it."

Live Person Help on the Web

A step up from self-service knowledgebases, New York-based LivePerson provides the technology to enable a customer-service staff to chat online with Web site visitors. Visitors can click on an icon to engage in live chat, perhaps to get more information about a product, or members of the customer-service staff themselves can initiate the chat after the LivePerson software has alerted them that a visitor has been on a particular page for a set amount of time.

LivePerson
At a Glance
  • Headquarters: New York, NY
  • Ownership: Publicly traded
  • Staffing: 35 in New York, 35 in Tel Aviv, Israel
  • Customers: 3,500
  • Main business activity: ASP offering hosted chat services.
  • Target market: Small-medium-size enterprises (SME) and large enterprises.

Finances:

  • Revenues: $1.9 million in Q2 2002
  • Net income: $122,000 in Q2 2002

These two capabilities correspond to the two main benefits that LivePerson can provide, according to Tony Pante, senior vice president of marketing and product development. "About 70 percent of our customers use LivePerson to reduce interaction costs by providing help using chat instead of by telephone, but in the last six months a new set of customers has emerged who want to increase sales in a more proactive way," he told ASPnews. "We have found that Web site visitors who are engaged in chat by sales staff are two to three times more likely to buy than those that are left alone."

LivePerson charges $500 per operator per month for its flagship LivePerson Corporate service, with most customers subscribing for five operators. Large customers such as eBay may subscribe to as many as 40.

Top-Shelf Customer Service

At the top end of customer-service pyramid, customers actually speak to customer service staff. Normally contact is made through a call center, using sophisticated and expensive equipment: A typical call center may cost $15,000 per operator to kit out, according to Brian Mahony, director of marketing at San Jose, Calif-based call center software developer NetCentrex.

NetCentrex
At a Glance
  • Headquarters: San Jose, Calif.
  • Ownership: Privately held
  • Staffing: About 150
  • Customers: About 18
  • Main business activity: Supplier of networking products and network-based applications for VoIP, PSTN and Mobile networks.
  • Target market: Telcos and large ASPs.

Finances:

  • Revenues: Approximately $25 million in 2002 to date
  • Net income: Would not disclosed but reports that it became profitable at start of 2002

The company recently launched its Saga800 virtual call center software in the United States, which ASPs use to offer hosted call center solutions to their customers, as Mahony explains: "Say you already have two call centers. If you subscribe to our software then all the calls will go first to your ASP, which will distribute the calls to whichever call center has a free operator, so the software creates one giant virtual call center. Any staff member can be integrated into the contact center so that calls for a specific person will be routed to their desk, or their mobile phone, or if they are unreachable then on to the contact center."

Home workers with Internet access can also perform call center work using a Web browser to display caller information as if they were in a physical call center. This is particularly useful, Mahony said, when a new product or service leads to increased numbers of calls. Sales staff can simply be assigned to handle call center enquiries for a few weeks and then revert to their normal roles. "Basically, we have taken all the tools that you normally need to buy to equip a call center and offer them in software that is hosted by an ASP," he said.

"Over the next few years, call centers will turn into contact centers that include not just voice but e-mail, chat, click-to-Web, even video conferencing. With our software we can turn a call center into a contact center immediately," Mahony told ASPnews. Most of NetCentrex's customers are telcos, including Deutche Telecom and France Telecom, or ASPs with their own networks or who use a telco network.

Customer Support a Profit Center for Some
ASPs offering customer-service provisioning software seem to have found a money-making niche: LivePerson and KnowledgeBase.net are both making profits, and NetCentrex — while not an ASP itself — is also running profitably.

What's interesting is the diverse routes that these three companies have used to get to the ASP model: LivePerson was set up specifically to deliver its services via the Internet while NetCentrex's Saga800 was originally a licensed product that has been turned into an ASP product after requests from customers for an ASP solution.

KnowledgeBase.net, on the other hand, appears to be moving the other way: Segil said that many customers start out using the ASP version of the product, and when they are satisfied with it they take it in house by buying the licensed version — even though the ASP version is always the latest release, while licensed customers have to pay for version upgrades. The ASP version currently makes up 80 percent of the company's customer base.

But one thing is clear: providing customer service costs money, and by outsourcing the systems needed to provide it satisfactorily and by leveraging the economies of scale that ASPs can provide, businesses can profit — and so can the ASPs that supply them.

Reprinted from ASPnews.com.

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