But losses mount for the home furnishings e-retailer that went public in October.
More than three years after e-retailers specializing in commodity items, such as Amazon.com, floated the concept of customer service through FAQs, email and other self-help devices, the self-help strategy is taking on water in a big way. About 67% of all online shoppers abandon their cart before checkout, according to Cambridge, Mass.-based Forrester Research.
Such an alarmingly high abandonment rate translates into a lot of lost revenue for e-retailers, especially those selling apparel, cameras and investments, big-ticket items and services that in the physical world typically require some interaction between a sales representative and the consumer.
To reverse this trend, a growing number of e-retailers are deploying live customer support applications-instant messaging, web chat and voice over Internet-that instantly connect shoppers in need of assistance to a live agent through their personal computer. These applications go beyond toll-free call centers, which require consumers with one phone line shopping the web-and it’s probably most-to disconnect from the Internet to place the call. Such a plan also does not guarantee callers immediate access to a live agent during heavy traffic periods.
The extent to which live support can reduce shopping cart abandonment rates can be difficult to measure, since many Internet retailers are reluctant to discuss abandonment rates. But they acknowledge that live support is important because competition is only a click away. “When you have a problem shopping online, you want a live person for help,” says Elizabeth Herrell, a senior industry analyst for Cambridge, Mass.-based Giga Information Group. “There are some consumers that refuse to place an online order without first contacting a live agent.”
FaceTime, a vendor in this market, cites a survey that states 63% of online customers will not buy goods or services over the web unless they have access to a live person.
For e-retailers, the aim of live support technology is to build a stronger relationship with consumers by providing a higher level of service that will persuade them to buy merchandise and return for future purchases.
“There is a large segment that wants personal attention online, because it reflects the value of the individual customer,” explains Christopher Hoffman, director of business solutions services research for Framingham, Mass.-based IDC. “Establishing communication lines that put the customer in direct contact with service representatives over the web can help defeat the urge to abandon a shopping cart because customers have less opportunity to talk themselves out of making the purchase.”
Reducing abandonment rates is key for e-retailers facing stiffer competition and mounting pressure from investors to turn a profit. In response to this, most live support vendors are attacking the market from several angles.
High profile players offering multiple live support applications include San Francisco-based Kana Communications Inc.; Foster City Calif.-based Face Time Communications; Novato, Calif-based Brightware, Inc.; La Jolla, Calif.-based eHelp Corp.; Sunnyvale, Calif.-based eGain Communications and others (see table, page 44).
Of the applications available, web chat is the most popular among e-retailers because it is similar to email, the form of communication with which online shoppers are most familiar and comfortable. Web chat allows a consumer to type real-time messages back and forth with a service agent as though they are having a conversation.
“People are emailing more than ever and chat is like email,” says Mary Mulcahy, director of customer care for San Francisco-based RedEnvelope, an online gift boutique. “It’s interactive, convenient and easy to learn.”
RedEnvelope uses a chat application from FaceTime that has been recently upgraded to measure abandonment rates and talk time with customers. The program tracks the URL of pages where customers request help, the types of questions asked and the time of day help requests are received. Such data encourage e-retailers to redesign problem pages to be more customer-friendly, improve product descriptions and schedule enough staff to cover peak periods. “Having a database that can spot trends can help e-retailers determine when and how it is best to offer customers help,” says Robin Selden, vice president and general manager of the core technology group for FaceTime, which has more than 250 clients.
The local handy man
One solution is to use web chat to answer a customer’s questions not necessarily related to the product. San Francisco-based CornerHardware.com makes building and home improvement experts available on a 24/7 basis through its web chat application as a way to build long-term customer relationships.
The site, which launched last February, staffs two or three experts per shift to field customer inquiries. Service agents that answer shipping and other general questions are available to handle overflow and search for answers to building-related questions in the site’s library. About two-thirds of all customer inquiries to CornerHardware, which outsources its customer service to Boston-based eSupport, come through web chat.
“We want to build long-term relationships, and our repeat visitor ratio is higher than projected,” says CornerHardware Chief Information Officer Ken Hite, who declines to reveal the ratio or volume of inquiries CornerHardware handled. “Repeat shoppers are not always price sensitive. Web chat is an important tool on which to build our customer service model.”
Using web chat to provide superior customer service requires preventing agents from being overwhelmed by inquiries. RedEnvelope limits to four the number of web chats individual service agents can have at one time. “The system allows reps to take up to eight chats, but it is extremely difficult to move among that many conversations and scan windows for answers to questions that will vary widely,” says Mulcahy. “Four chats can be handled efficiently.”
They don’t know retail
Just as the choice of web chat vendors varies, so does pricing. Hosted services are available from as little $250 to $600 a month per agent to enterprise systems running $100,000 and more that include web chat, email management and call center functionality.