December 26, 2000, 9:55 AM

A dot-com survival guide

Under increasing pressure to buff up the bottom line, more than a few e-retailers would be delighted to find a little overlooked cash lying around, just waiting to be spotted and picked up. But $20 billion? A report by online retail consultant Creative Good says e-merchants will leave that much on the table this year by offering customer service experiences that aren’t up to snuff.

“Many top e-commerce sites still make it too difficult for customers to find and buy their products,” says Phil Terry, CEO. As measured by the 3-year-old New York-based firm’s own experience with clients such as, Macy’ and, improving the customer shopping experience boosts conversion rates from an industry average of about 2% to 40% or more. It also bumps up the average order size by about 10%, he contends. Do the math, and industrywide e-commerce revenues projected at some $37 billion jump to $57 billion with better customer service-a whopping $20 billion beyond current forecasts.

With venture capital firms getting pickier about floating funds for dot-com retailing, Terry insists the “customer experience fund” represents a significant overlooked source of capital. But before hungry e-retailers help themselves, the “ Survival Guide” says they’ll need to critique and improve everything in their operations that touches the customer, from the home page design to the buying process to fulfillment.

It doesn’t take a rocket scientist to figure out that retailers can create value if they focus on their customers, a point Terry concedes. “Most managers worth their salt know this intuitively, but the implementation is something else,” he says.

And in an online world distracted by whiz-bang technology and to-the-moon stock valuations, he adds, the sometimes ho-hum basics of customer focus may get short shrift. “Unfortunately, the dot-com world has inherited the mindset of the technology world. There’s too much of a premium placed on technology itself rather than on how people interact with and use it. That’s especially the case with a gap between the creeping complexity of these technologies and the increasingly mainstream audience expected to be online,” he says.

It was just such an insight that helped client, for instance, rack up incremental millions in sales last year. It upped its conversion rate by 40%-after it simplified online shopping for a primary audience, the novice consumer.

An inside-out recasting of the customer experience started with how various departments such as information technology and marketing worked together and extended all the way out to sprucing up visuals on the site. But the change that made the most difference in Gateway’s Web sales is from an old idea, free for the asking to any e-retailer.

The secret? “The biggest thing,” says Terry, “is an organization-wide commitment to focus on the customer. Everything else follows from that.”

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