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The E-Commerce Arsenal: Multichannel Customer Service Systems, Part I

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Posted April 2, 2001 By Alexis Gutzman     Feedback

The eCRM Guide is proud to offer you a chapter excerpt from columnist Alexis Gutzman's new book The E-Commerce Arsenal: 12 Technologies You Need to Prevail in the Digital Arena! In this first part of Chapter 14, Alexis explains how examining a customer's history can help determine the most effective form of CRM for any e-commerce site.

The E-Commerce ArsenalCustomer service is much more than an overhead expense. It is a strategic advantage for your company. Whether your company is a pure-play dot-com, a bricks-and-clicks store, or something else, you cannot afford to ignore customer service. In fact, I'd argue that your competitors with less selection, higher prices, and better service ultimately will take your market share if you don't give your customers a reason to stay with you.

Customer service is about knowing your customers and serving your customers. Customers don't want you to be the KGB and dig up information they've never given you or that's not directly relevant to their shopping at your site or stores, but they do want you to remember their behavior at your site or stores. Unless you're selling products that people are ashamed to be purchasing, most customers don't want to be anonymous when they return to your site or store.

Knowing your customers is about half of the challenge for most sites and stores. Providing what they want based on what you know about them is the other half. Technology cannot address the biggest part of this challenge for most merchants -- a positive customer service culture can, and that's much less expensive than technology in most cases, as well.

Inbound E-Mail
Companies have been "handling" inbound e-mail from customers for so long that everyone seems to assume that this is one area of the Web where the dust has settled. There's nothing new here, right? Wrong. There are many decisions that merchants need to make when it comes to responding to inbound e-mail. The first question is whether to use an auto-responder to acknowledge that e-mail has been received. The next question is whether to use a natural language processing system to try to respond to customer inquiries without human intervention. The third question is how to create business rules so that mail ends up in the appropriate in-boxes and your own people don't need to spend too much time rerouting mail. Finally, you need to decide the degree to which you're going to track e-mail conversations between your customers and your employees so that you can maintain a history of a customer's complaints.

I would recommend that you use an auto-responder, because sending e-mail to a merchant often feels to customers that they are putting a message in a bottle and casting it out to sea. An instant response gives them some confidence that someone really is on the other end of the communication. However, if you have a five-day backlog of messages to deal with, don't use an auto-responder with a friendly message assuring customers that their query will be handled promptly. Set realistic expectations so that you can meet or exceed them.

The old way of thinking of retail -- from a product-centric perspective -- is dead. Customers don't usually go to a site to find a product but to solve a problem. If you design your site and your customer service system around products and moving products, you will fail to respond to customers' needs for solutions. Smart sites will look at customers both individually and in clusters and recommend appropriate products for their expressed and unexpressed needs.

Customers' expectations are higher than ever. They expect you to know all about them and to use that information to serve them better. Other merchants are reaching into their customers' mailboxes offering targeted relevant offers, displaying compelling ads for products they're in the market for on their home pages, and delivering targeted offers by postal mail to encourage them to visit their stores or their Web sites. Compete, or risk being left behind.

Customer relationship management is a big umbrella. Several of the technologies already discussed in this book are as much about knowing and serving customers as about moving products -- personalization, targeted EDM, and real-time chat, for example. This chapter focuses on the customer service component of CRM.

Customer Service as Differentiator
Surveys consistently show that customer service is the most important factor when it comes to turning a one-time customer into a loyal customer. BizRate's data shows that customers who contact customer service are less likely to return to that site, so it would appear that most sites are missing opportunities to turn one-time customers into customers who will return.

That begs the question: Which is more cost effective, spending money on customer acquisition or spending money on customer service? Because an average customer service phone call (the most expensive way to respond to a customer service inquiry) costs $3.20 and the cost of acquiring a new customer is around $38, it's an easy answer. It's more cost effective to take eleven customer service phone calls than to acquire one new customer, all else being equal. You need to determine your own customer acquisition costs and your own customer service costs in order to see how many customer service contacts a single customer can make before it is more cost effective to replace him.

Customer satisfaction must be a strategic goal of your organization. It's typical in a retail establishment for advertising and marketing to be above customer service and operations in the corporate pecking order. (The former are thought to be revenue generators, while the latter are always classified as overhead.) The name of the game has always been to reduce the amount of money that has to be spent on operations and customer service to make that money available to be used by advertising and marketing. The problem with that model is that it assumes that once a company acquires a customer, it doesn't need to spend any more money to keep him. In fact, with communications on the Web being nearly free, the viral consequences of a bad shopping experience can snowball. It has the effect not only of antagonizing the customer (who was acquired, then neglected) but also of having him tell two friends, who in turn tell two friends (and so on and so on), that a site is to be avoided.

Building a Customer-Centric Organization
Making the customer the center of your business is bigger than any one technology, bigger than your Web site, and bigger than offering the right promotion at the right time. Many of the technologies in this book are components of building a customer-centric organization. Providing the right e-mail offers at the right times to customers is one component of a customer-centric organization. Recognizing customers when they come in the door (both the Web site door and the store door) and identifying them by name is another component. Customer-centric organizations try both to bring the right people to the products they're already selling, through appropriate marketing, and to identify the right products for the customers they're already serving, through appropriate merchandising. In neither case is a shoehorn a necessary tool. Many sites get whatever deals they can from their distributors and hawk them on their sites without any idea of whether their existing customer base will want them.

Who runs a customer-centric organization? In a typical product-centered organization, merchandising is frequently steering the ship. Marketing takes direction from merchandising based on what products and promotions merchandising can line up with distributors and manufacturers. Customer service is like the cleanup crew after the party. If customers are dissatisfied with the quality of a product or service, or if the enormous success of a promotion leaves some customers without access to the product or service, then merchandising and marketing celebrate their success, and customer service apologizes and tries to appease customers.

In a customer-centric organization, marketing should be directing merchandising as to what kinds of products and promotions the existing customer base wants. If the existing customer base isn't the optimal customer mix for the company's long-term plans, then marketing should be working with merchandising to determine how to meet the needs of the optimal customer mix. Finally, marketing should work with customer service proactively to anticipate what customer service has to be prepared to deliver. Because customer service is likely sitting on one side of a two-way, real-time chat with customers, and ideally offering personalized recommendations to e-mail, phone, and chat inquiries, customer service representatives need to be part of the planning process for promotions and new product offerings.

What "Multichannel" Really Means
Merchants frequently give lip service to the concept of multichannel support. They offer e-mail support and phone support for their Web orders, and if they have stores, they accept returns there. Multichannel support should actually cover all touch points between a merchant and a customer. These points would include such seemingly obscure ones as:

  • Having an in-store sales clerk know what offers were made by e-mail to customers who are either making a purchase or returning a product, including what offers the customer responded favorably to
  • Putting kiosks in the bricks-and-mortar store so that customers can order products that may be out of stock in that particular store -- to complete an outfit or provide an accessory for a barbecue grill, for example
  • Making coupons available via wireless devices such as phones, PDAs, and pagers when customers "sign-in" at the bricks-and-mortar stores
  • In-store clerks being able to pull up an online customer's shopping history to know what was purchased, either to execute a paperless return or to coordinate an ensemble or to locate an accessory

The Isolated Data Phenomenon
In fact, much of the data that's needed to have customers feel recognized wherever they come into contact with a merchant already exists within an organization. The problem is that the data that exists isn't available via the application to the interface (human or digital) at the time and place at which it's needed. Most of the following data is available from somewhere within the bowels of every organization.

Customer History

  • How long has this customer been shopping from this merchant?
  • What brought her here in the first place? Was she referred by a friend, or did she come in via some cross-marketing promotion; if the latter, what has the company done to cement the three-way relationship?
  • What types of products does the customer typically purchase?
  • What's her average order total?

Marketing History

  • What types of promotions has the customer received from the merchant?
  • Does she typically respond to them?
  • What types of promotions have actually prompted her to make a purchase (e.g., dollars off, free shipping, percentage off a future purchase, sales)?

Order History

  • How many visits does it take to have the customer place an order?
  • Does she click through a promotion and make the purchase, or does she look around, returning later to make the purchase?
  • What types of purchases has she made?
  • What complementary products has she been offered?
  • What types of products are purchased by others who have purchased what the customer has purchased?

Customer Service History

  • How often has the customer contacted customer service?
  • Were they able to satisfy her concerns?
  • Has she returned anything?
  • Is she a high-maintenance customer?

Traffic History

  • How often does the customer visit the site?
  • Does she come via promotions, via a bookmark, by typing the site name into the browser, via an affiliate link, or some other way?
  • What are her shopping patterns?
  • Does she keep a wish list?
  • Does she fill and abandon a cart regularly?
  • If she abandons the cart, at what point does she do that?

Getting Data Where You Need It
It would be useful for a store clerk or a phone representative or a real-time chat rep to know that the customer has items on her wish list so that she could cross-sell them, or offer them as today's "featured products." Conversely, any of the above-mentioned service people should also know if this customer routinely returns every product she purchases, making her a high-maintenance customer, in which case, trying to sell her more merchandise might not be in the interest of the company. If any of the three service people mentioned above knows that this customer's average order total is twice what she's about to purchase, then trying to cross-sell her makes sense, because the customer is clearly comfortable spending the extra money -- and may, in fact, not be comfortable placing only a small order. As a final example, offering whatever type of promotion has worked in the past may be exactly what this customer needs to close the sale. Only with the information at their disposal can the assorted service people who come across the customer's path offer the most attractive deal to her.

Much of this data and customized offers can and should be part of the business rules of the content-management system (CMS) (see Chapter 12), which will ideally be driven by personalization (see Chapter 8). All of this data should be evaluated when customers are aggregated for purposes of sending out personalized targeted e-mail (see Chapter 6). Customer loyalty, however, still hinges on the personal experiences of shoppers with a merchant's customer service team -- whether that contact comes by phone, by e-mail, in a retail establishment, or via real-time chat (see Chapter 13). Only a multichannel, integrated CRM system can put the information in front of the eyeballs that need it for human contact.

What Is CRM?
CRM is estimated to be a $6.5 billion business by 2003, according to IDC. With that kind of revenue potential, it's no wonder that every company that sells any products even vaguely related to customers touts its solution as a CRM solution. CRM is a suite of software that, at its core, includes an order-management system that tracks and makes available what a customer has purchased, so that phone, e-mail, chat, and store salespeople can answer questions about previous purchases and handle returns. It is crucial software to have, because BizRate reports that 24 percent of customer service contacts take place after an order has been received. CRM also needs transactional capabilities so that sales and service representatives can resolve issues related to orders and returns such as refunding shipping, determining the status of open orders (the same BizRate research shows that 55 percent of customer service contacts take place while waiting for an order to arrive), and handling exchanges. A good CRM system will have all the informational capabilities of a Web site with additional empowerment to change customer and order information for the sales and service reps working on the system.

But there's more to CRM. The software is practically the foundational platform for an online merchant. Your CRM system will provide the basis and the data for your personalization engine, which will feed your targeted EDM campaigns. The data in your CRM system will feed your content management system with a customer's profile and order history. CRM may not be quite as broad as marketers of quasi-CRM solutions claim it is, but it's pretty big, just the same.

CRM versus ERP
Enterprise resource planning (ERP) was the buzzword of the 1990s. It relied on supply-chain management, the idea that companies could save their way into profitability. CRM systems are about demand-chain management, if such a thing can exist. Managing your relationship with your customers, partners, bricks-and-mortar outlets, and salespeople is managing the demand side of the equation. Some CRM systems also claim to be ERP systems, but ERP tends to focus on procurement, manufacturing, and billing to a degree that CRM does not.

Coming Friday, April 6, 2001: Part II of Chapter 14: Multichannel Customer Service Systems . In the second half of her chapter, Alexis discusses how best to select a CRM vendor.

The E-Commerce Arsenal (c) 2001 Alexis D. Gutzman.
All rights reserved.
Published by AMACOM Books
Division of American Management Association
1601 Broadway, New York, NY 10019

The E-Commerce Arsenal is available at and

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