December 26, 2000, 9:55 AM

Web chat is the latest boom in e-service. But what does it do for your bottom line?

The way Jeff Macklin sees it, customer queries are the driving beat at The Boston-based e-retailer’s ability to answer them-in real time-is a strength Macklin intends to leverage in setting his 20-person shop apart from mega-hit Web stores like CDNow and Amazon. Fast answers, he’s learned, mean sales.

Yet isn’t trying to run a superstore. Its traffic-123,000 visitors in September, according to PC Data Online-hardly comes close to CDNow’s 6.5 million, let alone Amazon’s 12.2 million. Macklin, the site’s chief operating officer, calls an interactive music community drawn together by his staff’s encyclopedic knowledge. The questions, like the site’s customers, come from all over the map, such as: “Who’s that woman singing with Barry White on the software CD I just downloaded?” The customer who recently asked that didn’t have to wait for an e-mail reply from one of the retailer’s four music editors and two customer service agents. He not only got his answer (Edie Brickell) via real time chat with a service rep, but browsed the contents of a new CD containing the song and listened to a clip through a pop-up audio window. By the time the customer logged off’s HelpLive, he’d ordered a copy of Brickell’s Picture Perfect Morning.

“You’d be hard-pressed to get that kind of service out of CDNow,” says Macklin. “This is all about getting the impulse buy, and HelpLive gets us closer. We can hold the customer’s hand.”

Many times, the hand-holding leads straight to the bottom line. Macklin says 1% of his customers turn to HelpLive each month, and about 40% of them ask questions about music (slightly more inquire about order status). But half who tap HelpLive to ask music questions go on to make a purchase, and that’s the glittering promise of an interactive customer service technology like Web chat. It gives retailers access to customers on the verge of buying, creating an opportunity to
reverse a couple of less-than-stellar statistics about Internet retailing: a browse-to-buy ratio hovering between 2 and 4% and a shopping cart abandonment rate stuck at two-thirds. EBags, a Web retailer with a home-grown Web chat system, says live help cut its abandonment rate by a quarter.

Experience like that is causing a boom in the market for Web chat software and services, with spending set to soar from $438 million in 1998 to $2.2 billion by 2003, according to International Data Corp. in Framingham, Mass. Analysts estimate that only 5% of e-retailers currently offer Web chat, but they expect the technology to reach near-saturation, spreading to 90% within five years. got in on the ground floor of this rush, beta testing software created by Sitebridge Corp. soon after its launch in 1998. All Macklin needed was another server to ensure he could handle the volume. And because the system is browser-enabled, his staff of techie music lovers faced a small learning curve.

Today, the story behind Web chat is a demand curve. EGain, a Sunnyvale, Calif., customer service software firm that acquired Sitebridge in May, has signed up nearly 130 new clients this year. Another Web chat player, FaceTime Communications of Foster City, Calif., has doubled its customer ranks to 60 since August.

With holiday sales expected to triple last year’s levels, Web retailers have scrambled not only to deck their sites with the latest techno trappings, but to convert an influx of Internet newcomers into buyers by making them more comfortable purchasing online. That’s led retailers like Lands’ End and Bluefly to roll out new interactive shopping features on their sites just in time for Christmas. The improvements at, created by Webline Communications, include online help as well as a feature that allows two customers to link their browsers and shop together. Lands’ End, which has an exclusive on the latter feature until after the first of the year, is heralding the improvements in a national TV advertising campaign that promises: “Shopping online has never been so friendly.”

Who needs it?

But is Web chat customer critical-a make-or-break proposition for e-retailers? That depends on what you’re selling. “Some people expect their merchandise or answers to their questions very quickly, while others understand there’s a delay for very specialized goods,” says Richard Berkman, a partner at net.Genesis, an e-commerce market research firm in Cambridge, Mass. “If it’s a CD or a game or some new software, I want service immediately so I can acquire what I’m looking to get. You only get one shot on the Web.”

Though Web chat may not be every retailer’s magic bullet, it does provide human interaction during the sale-something that more than 90% of online shoppers say they want, according to Jupiter Communications. But pressure is high to handle that interaction well. Other findings show that current levels of customer service on the Web are hardly having the desired effect. BizRate, for example, found that shoppers who didn’t contact a site’s customer support were 23% more likely to become repeat buyers than customers who sought help with their questions and problems. Price draws people in, says BizRate research director Valeri Tompkins, but a poor job of handling fulfillment drives them out.

Web chat software is a link in the customer service chain stretching from self-service fundamentals like frequently asked questions to e-mail-handling systems to call centers accessed by toll-free numbers. E-commerce was founded on a premise of computer users helping themselves, but many people either never get that far or don’t find the answers they need in lists of FAQs.

“What’s happening is that e-commerce sites have realized self-service is not a panacea,” says David Hsieh, cofounder and vice president of marketing at FaceTime. E-mail and toll-free phone calls, while working for certain customers and situations, involve waiting for a reply or logging off to make the call, giving consumers time to think twice about buying online. Enter interactive chat software.

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