Getting Personal

One thing the Internet didn’t do away with is the demand for customer service. Even though some early e-retailing visionaries saw a brave, new world where customers didn’t need to talk to retailers, that hasn’t happened. And so the challenge to online retailers has been how to fill customer service needs at an acceptable cost. Offering live telephone support is an expensive step backward from the lower operating costs that were part of the web’s promise. And in most cases, pure self-service doesn’t work.

Now a small but growing number of retailers are turning to live chat for customer service. “Live chat is right for the times because consumers still want that assurance of live communication,” says Jim Okamura, retail analyst with consultants J.C. Williams Group. “But it’s only starting to become really effective, so it has a lot of upside potential.”

Taking care of business

Forrester Research Inc. projects steady growth in consumer use of live chat in customer service. In 2003, 30% of online buyers turned to live chat for customer service, up from 19% in 2001, Forrester reports. Acceptance of live chat will grow “as online chatting teens grow up,” Forrester says, to 59% of online buyers in 2007.

“Live chat takes care of business,” says Scott Shulman, director of e-commerce at athletic shoe retailer K-Swiss Inc.’s K-Swiss.com. Although K-Swiss also offers self-service customer service options as well as easy access to telephone customer service agents, it offers live chat as a way of filling the gap between the two. With lower operating costs compared to using telephone call center agents, live chat enables K-Swiss to provide personalized service around the clock. “It makes our site more personal because customers can have their questions answered 24 hours a day, 365 days a year,” he says.

The measures of the overall market use of live chat customer service may be small, but some retailers who have begun making live chat a prominent part of their customer service strategy say it has grown in popularity with customers. Although K-Swiss.com makes its 800 number easily available through a customer service link that appears on every page, the more prominently placed live chat button on each page is increasing as customers’ first choice for customer service. “Why not? All they have to do is click and get an instant answer,” Shulman says.

Double duty

Simply making the live chat option more noticeable than an 800 number will cause more consumers to naturally move toward live chat, experts say. “If you make the 800 number too available, the tendency of today’s consumers is to use it, but having a live chat button on every page instead will encourage customers to use that,” says Jim Tisdel, president and CEO of InterSight Technologies Inc., which provides K-Swiss’s live chat system as a hosted application. InterSight operates K-Swiss’s live chat from its own call center in Canada, where it uses customer service agents trained in the K-Swiss product line.

Most retailers put live chat to work first as a selling tool, deploying it at crucial times, for example, when a shopper takes an excessive amount of time in checkout and appears to need help making a decision before abandoning a shopping cart. Now more are giving live chat double duty: as both a selling and customer service tool.

That’s what Joel Skretvedt, director of Internet marketing and operations at Techno Brands Inc.’s Techno-Scout.com, hopes to accomplish at his high-tech-oriented consumer site. “We started on the sales side with live chat, but now we want to see if it’s good for a combination of customer service,
upsells and cross-sells,” he says.

Serving and selling

TechnoScout customers in a live chat customer service session are greeted by customer service reps trained to respond with coordinated responses intended to both help and sell. “We’ll offer to send them a manual for their product, but also offer them complementary products,” Skretvedt says.

There’s a further way that live chat can be both a customer service and a sales tool, experts say. By using the live chat tool as part of InterSight’s customer analytics system, K-Swiss builds customer profiles based on shopping behavior, clickstream history and conversations recorded in past customer service live chat sessions and telephone calls, Tisdel says. “Then when the customer comes back, the system’s business rules proactively engage her with an appropriate offer in a live chat session,” he says. The offer might be a coupon for a product in which the customer has previously expressed an interest, or an offer for free shipping to satisfy a concern expressed about delivery costs, he adds.

In addition, K-Swiss has used live chat as part of the customer analytics system to turn customer service communications into a merchandising research tool. “For example, K-Swiss learned that many of its customers had a high demand for children’s apparel, which they now offer on their site,” Tisdel says.

Despite live chat’s multiple abilities to help serve customers, it’s still misused or underutilized by many retailers. “Some web sites have a live chat service that says ‘We’ll be right with you,’ but that makes customers wait too long,” says Elizabeth Harrel, analyst with Forrester Research. “That can be worse than not having live chat at all.”

Estimates vary widely as to the costs related to live chat and other forms of customer service, though several vendors estimate the cost of an average live chat session at about $1, compared to estimates of average telephone customer service calls ranging from $6 to $20. Costs vary widely partly because of the diversity in customer service needs related to different types of products, experts say.

Moreover, Harrel figures that live chat costs nearly as much as, or about 90% of, telephone customer service calls. While live chat will provide savings in the cost of telephone lines, they tend to require higher salaries, she says.

Others put the cost of live chat far below telephone reps, mainly because live chat agents are trained to handle multiple chat sessions simultaneously. “A live chat rep can usually do a minimum of three sessions at a time, but I’ve seen them do eight,” says Tisdel of InterSight. “But even if they do only two at a time, that cuts the cost in half.” He figures an average live chat session costs $3-$5, compared to $10 or more for an average customer service telephone call.

More sophistication

Retailers are getting more sophisticated in their use of live chat reps, dividing them into two separate groups specializing in either sales or customer service, says Robert LoCascio, CEO of Live Person Inc., a provider of live chat technology. He notes that 25 of Live Person’s major customers, including Hewlett-Packard Co., AT&T and eLuxury.com, have rearranged their live chat staffs into two groups and that they’re experiencing positive feedback from customer service

“This a huge shift,” he says. “At one time, it was click to chat. But live chat reps have different personalities and different skill sets, just like reps in a call center. With more skilled customer service reps, they get more effective live chat customer service sessions. They handle issues more effectively than reps more skilled in sales techniques.”

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He adds that while the separation of reps has shown improvements in customers’ rankings of their customer service experience, it’s also helping companies increase sales conversion rates by delegating sales sessions to reps with the strongest selling skills.

In spite of some retailers’ enthusiasm for the technology, live chat is only part of the continuum of customer service, and retailers must design their customer service programs to provide for escalation from one level to the next, says Greg Gianfronte, CEO of RightNow Technologies Inc. A customer who can’t get an answer via a self-service function should find it easy to move up to live chat. And the same if live chat doesn’t work. At K-Swiss, for example, a live chat option appears on every self-help customer service page. And if a live chat session can’t answer a customer’s question, the live chat rep at InterSight will suggest that the customer call a K-Swiss customer service agent, Tisdel says.

Next: virtual live chat

While live chat is still gaining in recognition among retailers as an important tool that offers quickly available personalized service at less cost than telephone calls, there’s already another version of live chat in the works—virtual live chat.

Designed with natural language recognition technology, live chat’s virtual cousin will be designed to provide automated text messages based on keywords in customers’ written questions, Tisdel says. He adds that the virtual system can be programmed to forward questions it can’t answer to a regular live chat session or a telephone sales agent, he says.

Tisdel says InterSight expects to make its first virtual live chat tool available in the first quarter of next year.

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When you can’t afford live chat

Vendors and researchers are touting the benefits of live chat customer service. But some retailers prefer to concentrate more on improving their online self-service customer service as a way to satisfy customers while limiting operating costs. “We’ve given live chat some serious thought, but it’s not economically feasible for us right now,” says M. Karl Leeds, president and CEO of Educators Furniture Inc., which operates the retail web site HomeOfficeandSchool.com.

While keeping an eye on the benefits of live chat, Leeds and other retailers are finding other ways to jazz up their customer service outside of, or in conjunction with, costly telephone call centers. Leeds worked with design firm 10E20 Web Design to deploy a system of online forms customers fill out to request product literature—a constant customer demand when it comes to products like wall storage units and computer workstations.

In the past, customers would try to explain to a telephone rep how they planned to use and expand their purchased products, often stretching calls too long, Leeds says. Now, with the online forms, customers can avoid telephone agent assistance altogether. But if they still need to speak to an agent, the form provides the agent with an organized summary of the customer’s request, saving time. “Our phone calls have gone down substantially and we’ve reduced customer service operating costs,” Leeds says. And more satisfied customers have led to more repeat business, he adds.

Retailers that use online customer self-service effectively should be able to hit a high rate of inquiries handled through self-service, saving on the costs of customer service departments and giving reps more time to answer fewer inquiries. Greg Gianfronte, CEO of RightNow Technologies Inc., says he knows of retailers who get self-service customer service rates as high as 97.5% by using tools and strategies that predict the information customers need. “So only 2.5% of customers have to get to a human to get an answer,” he says.

For example, he says, product research shows that when a customer inquires about a purchased power drill, it’s often because he’s broken the drill and needs a manual. So when he searches on a web site for a replacement manual, a well-designed customer service-oriented result will provide a prepared statement about where to find a repair center as well as how to acquire a manual, Gianfronte says.

Site analytics—another way to trim customer service calls and e-mails

Before implementing a customer service analytics system from web site developer WebSideStory a year ago, retail supply firm ABCDistributing.com had difficulty keeping up with its e-mail and telephone customer service operation. When customers came to a page or link that didn’t function properly, they’d call a telephone rep or send an e-mail. “We were getting 10,000 e-mails a day,” ABC e-marketing analyst Dan Gudema says. “I can’t even say how we handled them.”

With the analytics system, ABC has learned to focus on several key performance indicators. For example, it will monitor and take steps to assure that a customer is never more than four clicks from the information he needs. As a result, the web site is channeling more sales as customers have quickened their customer service visits. ABC now gets only about 1,000 e-mails a day, a tenth of its former amount, and it has removed its customer service telephone number from its site.

Meanwhile, sales have been consistently rising in recent years, Gudema says. “There’s a positive correlation between a person using our web site for customer service, then using it to place another order,” he says.

The revised online customer-service system has led to a 50% reduction in overall call center operating costs, Gudema says.

Gudema attributes the decline to his estimate that individual self-service contacts range in cost from 10 cents to $1.17, compared to costs ranging $9-$10 for e-mail contacts and $20-$33 for telephone calls. He and others say e-mail costs are relatively high because they often require multiple messages to clarify and settle a customer’s concerns.