In its second-largest acquisition, Amazon buys the company for $970 million.
Voice-over-Internet-protocol promises big changes for call centers.
No retailer in the Internet age can claim a more dramatic rise than pure-play Newegg.com, the brash computer products and consumer electronics retailer that surged from 0 to $1.3 billion in five years.
At the core of its success, Newegg’s executives say, is a laser focus on customer service. Its reputation relies on a 140-person customer service department that handles 10,000 customer communications each day through phone calls, e-mails and live chat. “Many businesses praise their customer service, but our department’s accolades speak for themselves,” vice president Howard Tong says, noting Newegg’s 9.63 out of 10 rating by ResellerRatings.com.
With its emphasis on customer service, the retailer is expecting sales to hit $1.6 billion this year. So why has Newegg, with its reputation and revenue growth in play, switched its customer contact center to a newfangled voice-over-Internet Protocol telephone system? Because it raises the level of customer service as well as the efficiency of its customer service department-while reducing costs, Tong says.
“VoIP will enable us to better serve our customers by redirecting each issue to a customer service agent with a specialty, such as returns, verification issues, shipping, claims, etc.,” Tong says, adding, “We estimate a 20-30% increase in call center efficiency, and our long-term communication and networking costs will be significantly lowered.”
Some analysts believe that retailers like Newegg are raising the competitive bar. “If retailers don’t invest in this, they’ll not be able to offer customers the type of service their competitors can offer,” says Seema Lall, an industry analyst specializing in call centers at research and consulting firm Frost & Sullivan.
Moreover, she adds, it makes sense for retailers to implement VoIP while they’re migrating to fully web-enabled enterprise platforms to support multi-channel retailing. “This offers a better and more consistent customer experience across multiple channels,” Lall says.
Under a VoIP system, the switches and other gear that govern the physical routing of calls are gone, replaced by a web server that directs calls to the IP address for each customer service rep’s workstation. This benefits retail operations through lower costs of call transmissions, including free long-distance calls, and, more important, experts say, flexibility and ease of routing communications to particular agents, whether those agents are in one call center or another, or even working from home.
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In addition, VoIP makes it easier to display all of a customer’s communications, whether it be by phone, e-mail, fax or live chat, on an agent’s workstation, experts say, resulting in less time spent per call and more satisfied customers.
Although it’s possible to route particular types of calls along with related communication records and a customer’s buying history to particular agents without using VoIP, VoIP better supports integrated multi-channel information routing, Lall says.
Under conventional systems, routing must be configured to reach one contact center when seeking an agent with a particular skill. But because a VoIP system treats all centers as a single pool of agents all located on the web, a routing process can more quickly identify the proper agent. “With VoIP, you’re centralizing the agent pool, so you don’t have to check each center for a particular agent skill-set,” Lall says.
While VoIP can have its most noticeable impact within customer service departments, it can also be deployed across a retailer’s entire operation, covering communications among headquarters, stores, online operations, warehouses and distribution centers. “We have VoIP for all internal communications, which keeps costs down when communicating globally with our other offices,” Tong says.
Newegg, which has a strong IT department to go with its high-tech image, built its own VoIP system using technology from Avaya Inc. that it acquired from ROI Networks Inc. It implemented the system in about 30 days, or about half the average time for deployments in general, Tong says.
VoIP is also available through hosted applications from companies like Echopass and Qwest, or through outsourced call center services like 24-7 INtouch.
Although Newegg declines to say how much it invested in VoIP-it only notes that it expects a quick return on investment-experts say it can cost $10,000 or more per agent to install an on-premise system. By comparison, Echopass, which uses VoIP technology from Genesys Telecommunications Laboratories Inc., charges about $250 per month per agent, plus an initial set-up fee about $2,000, for its hosted service, says chief marketing officer Bruce Dresser.
24-7 INtouch, which operates a single contact center in Regina, Saskatchewan, is deploying VoIP technology from Nortel Technologies as it rolls out a second center in Winnipeg, Manitoba, says CEO Greg Fettes. “VoIP is critical for contact centers, especially those on a large scale and we’ll be using it to marry our two contact centers,” he says.
VoIP, he adds, will bring 24-7 INtouch two critical capabilities. When a server is down in one center, VoIP will make it faster and more efficient to switch calls to the other center. It will also support more cost-effective load balancing.
24-7 INtouch uses millions of call minutes per month, and under a conventional phone system, it could cost an extra $120,000 per month to transfer backed up calls to another center, Fettes says. With VoIP, he estimates that cost will dwindle to less than $10,000 a month.
One of the drawbacks critics have put on VoIP is its susceptibility to malicious communications or denial of service attacks, under which criminals could blast a VoIP network with e-mail to effectively shut it down. Lall, however, says that while VoIP security needs to be carefully managed, VoIP has matured to the point where it has become reliable.
The greatest overall benefit VoIP offers, experts say, is its ability to support fast and efficient communications without building out traditional phone systems-especially for retailers like Newegg on a growth path and expecting to operate more than one contact center. “We can open call centers in other locations without setting up an entirely new phone system,” Tong says.