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Is the 'Killer App' Killing You?

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Posted September 24, 2003 By Bruce McCracken     Feedback

For many companies, not responding to customers' e-mail inquiries can be deadly. So why are so many businesses still ignoring electronic communications?

There's no arguing that consumer sophistication and expectations have risen dramatically when it comes to online business communication involving both e-mail and the Internet.

However, recent research has revealed that customer service is shockingly shabby, suggesting that many businesses are ignorant and oblivious to these changes in how business is conducted. Approximately a third of businesses fail to acknowledge or respond to customers' e-mail or online queries. Subsequently, e-mail being tagged as "the killer app" may be taking on a new and ominous meaning.

The Cart Becoming the Horse

A July 2003 study by RAND's National Defense Research Institute titled Global Course of the Information Revolution: Recurring Themes and Regional Variations 2003 concluded that major changes involving business and information technology are emerging. The study submits that there is "a redefinition of basic business functions, with new paradigms for products, services, delivery, support, and pricing. These new business models are transforming the business and financial worlds."

Rand projects a paradigm shift with a "much greater focus on the customer,becoming the dominant factor in business today, and on competition [becoming] fundamental to the development and progress of a business enterprise." The study also purports that the speed of business will accelerate. Extending to the global economy, there will be a "customer service approach to developing everything,"

The Roaring Silence

In June 2003, The Customer Respect Group of Bellevue, Wash., an international research and consulting firm that focuses on how corporations treat their customers online, released the results of its 2003 Online Customer Respect Study for the 100 largest U.S. Companies. Among the findings was that 31 percent of all companies do not respond to online customer inquiries.

"By putting an e-mail link or form on the site, the company is basically inviting visitors to communicate. When customers take advantage of that, you would think that they want a response," Thorsten Ganz, vice president of research for The Customer Respect Group, said.

The figures are even more disturbing when you take into account that the survey measured the 100 largest corporations in the U.S., firms that have the resources to enable online consumer communications. "That is where the 31 percent nonresponse rate is very surprising. That is improvement over last year when 37 percent did not respond, but still that is too high," Ganz said.

New York-based JupiterResear (a division of Jupitermedi (which is also the parent company of this site) found a similar nonresponse rate of 28 percent in its report, Jupiter Research Metrics: Customer Relationship Management, June 2003. David Daniels, senior analyst for Jupiter Research, said, "It is killer to make customer feel ignored. It fans the fires of uncertainty, especially when there are companies doing it very well."

There seems to be a misconception by many businesses that online visitors are not really customers, Ganz said. "If you compared this to a storefront, this would be the equivalent of someone asking an employee a question and not getting an answer. No company would find that acceptable."

Two-Day Time Delay

A peek under the hood reveals that customer service via the written word in cyber space goes from awful to ugly and is getting uglier. What makes things worse is that businesses that do choose to respond are measured against customer expectations that are heightened by a minority of enterprises that do it well.

The figure below from The Customer Respect Group study clearly demonstrates that major portions of the largest corporations in America are unable to return a full response around in two days or less.

The last few years have not brought about improvement in email response times as illustrated in the figure below with an observation by Daniels that, "We have seen response getting worse."

The last year has brought about further deterioration. The volume is increasing, yet the pipeline to respond remains inadequate resulting in business falling further behind. As demonstrated by the figure below from Jupiter Research, the percentage of companies responding to an e-mail within six hours has declined from 38 to 26 percent in about a year.

Much of the loss in quick response time is attributed to lack of preparation, according to Daniels. "Concerning e-mail, there has been a broad failure for organizations to invest in the appropriate technology as well as apply the appropriate resource. We tend to see companies putting up e-mail addresses without anything more sophisticated than Outlook or Exchange, or having staff dedicated to looking at those e-mails."

With only a bit more than half of the responses coming in two days or less, the performance of businesses fall far short of customer expectation levels. According to Jupiter Research, only 12 percent of consumers find a response taking two days or more acceptable. In fact, only half will give a company a day to reply.

Don't Get Stepped on by the Stepchild

Rising consumer expectations and falling performance adds up to a very dangerous scenario for businesses. This is not unlike leaving a hatch open on a submerging submarine. Calvin Coolidge once said "America's business is business." By not recognizing customer service channels of e-mail and Web inquiries sufficiently, companies are failing to take care of business.

Daniels adds that too often e-mail and online inquires are treated as almost an afterthought compared to an inbound call center. "Too often there is a bit of a double standard. No company in its right mind would contemplate opening up a call center without the proper technology and resources."

Ganz points out, "A lot has been written about the Internet being a one-to-one marketing tool. If a company does not take advantage of the chance to build a relationship with the customer then they are failing, leaving money on the table, and pushing the customer away."

Daniels adds, "The failure to deliver effective service can impact a brand negatively. We are seeing this more and more." Almost half (49 percent) of consumers said the speed of e-mail response affects how they select which sites they will purchase from. "These are things that consumers remember."

While many trumpet e-mail as the next "killer app," they may be doing so with blinders on, seeing only the value of targeted permission-based outbound e-mail and newsletters. CRM is an on-going circular process of interactions with a two-way flow. By often communicating only what the company wants and showing a reduced regard for the needs of the customer, the image of the business diminishes in the eyes of the consumer. A first-time transaction can then turn to being viewed as a one-night stand instead of a budding long-term relationship.

In part two of our two-part series, we will explore ways to narrow the gap between business response and customer expectations as well strategic considerations in reversing the dangerous trend.

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