July 29, 2004, 12:00 AM

Talk, Talk

(Page 2 of 3)

Lands’ End didn’t disclose what it paid for its chat and co-browse features, but retailers will find that cost varies considerably depending on how much capacity and functionality they want to buy, and how they use it. Many are attracted by the potential cost savings to be had in handling queries via live chat vs. handling them by phone.

H.A. Schade, vice president of products at CRM technology provider Kana Inc., cites industry estimates placing web self-service CRM at a cost of pennies per customer session, an e-mail about a dollar and phone call resolution at $25, depending on the complexity of the phone interaction, how long resolution takes and how many people on the marketer’s side get involved in resolving the query. Schade says text chat falls in at less than phone resolution, depending on a variety of factors. For online marketers looking to ration the approach and put it where it generates the greatest return, emerging best practices suggest live chat is used most effectively when it’s offered after the customer has tried self-service, typically in connection with higher-value transactions, he says.

Schade says that a knowledge base with complete information about the company, its products and its policies should be the foundation of any CRM strategy. Given that, “Offering chat after someone already has been offered a way to serve themselves online will be more successful approach for the retailer,” he says. “You’re more likely to have success from a cost-effective customer service standpoint than by offering chat to everybody.”

Schade says the effectiveness of text chat is generally measured in terms of improved customer service, but that’s not the only metric. Some multi-channel Kana customers, seeking to encourage greater use of the online channel, are offering text chat more often and to a broader group than they otherwise would. “They are using it as a way to drive adoption of the online channel, so they are also seeing improvement in online adoption rates, and increased cross-sell and upsell opportunities,” he says.

Similarly, at CRM technology and services provider Talisma Inc., director of product management and strategic alliances Daniel Sears says chat is most cost-effective when it’s used strategically. Talisma, which provides a software suite that integrates knowledge-based text chat, co-browse, phone and e-mail communication management capacity, has seen some retailers boost conversion rates by a factor of three to four times the phone-supported conversion rate when they add live text chat-even more when chat includes co-browsing capacity, he says.

Pre-sale benefits

That lift depends not just on making live chat available, but on using it where and how it delivers the best results. For example, the ability to use chat is beneficial in pre-sale activities, he says. “If customers have a question about the product, e-mail is a non-real-time medium. If customers call, the agent may not be able to help because he isn’t where the customer is on the site,” he says.

Supporting live chat with co-browsing capacity puts the customer and the agent at the same place online, and it can raise conversion rates by a factor of seven to eight times that seen with phone support only, he adds. “A customer can get into text chat; say he wants this bike, these tires, these brakes, this wheel set,” Sears says. “The agent can walk him through a co-browsing session, put it all in the cart, and push it out to the customer. It becomes very powerful because that is very similar to a store experience.”

Proponents argue that fully-integrated solutions blending chat, co-browse, e-mail and phone functionality with a self-adjusting knowledge base in one interface delivers the functionality that allows marketers to strategically resolve different types of customer queries through the appropriate-and most cost-effective-channel. While part of what’s propelled Lands’ End to consistent top-notch performance-sales across channels were $1.6 billion last year, with Internet sales coming in at 30% to 40% of that-has been a willingness and ability to lead with new technology, other retailers not operating on that scale have other concerns.

“This industry is undergoing a real evolution now. Things are changing rapidly and it seems that every six months there is a new product, a better system, a cheaper system,” says Bob Koehler, who as customer service director oversees the web-enabled call center of multi-channel retailer Sierra Trading Post. “Some companies would say otherwise because they’ve been doing this for a number of years, but I think some of these solutions are in their infancy.”

For that reason, Sierra Trading Post recently decided to wait out developments over the next few years. After looking at end-to-end enterprise solutions that fully integrate chat, phone and e-mail with an automated knowledge base in one call center interface, it went in another direction. Satisfied with its existing phone contact management system and not willing to scrap it, Sierra Trading Post instead decided to use the live chat functionality bundled into new e-mail management software it acquired from Cintech LLC., at about a third of the estimated $250,000 to $300,000 cost of other systems he’d investigated, according to Koehler.

“We have automatic call distribution here with good phone switching software that was already paid for. We’d have had to scrap some of that,” he says of the decision to go with Cintech.

Simplifying the approach

Though the phone solution it already had in place was performing to expectations, Sierra Trading Post still needed a better way to mange e-mail query volume that had grown from 8,000 to 12,000 per month over the previous year. The Cintech e-mail management product it chose incorporated up to 50 chat function licenses as part of the package, in contrast to the chat provider Sierra Trading Post had been using. That provider’s license fee was deemed so high by Sierra Trading Post that to save costs, the company already had reduced its original 12 chat licenses to four. The same four IDs were being shared by a larger group of call center agents who traded off on a regular schedule.

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