October 2, 2001, 12:00 AM

Gateway does it, Dell does it, and now even IBM does it: Selling direct to consumer

(Page 2 of 2)

All the web reps hold college degrees and undergo extensive training, not only in the products and services that IBM offers, but also in Internet etiquette.

But IBM isn’t just waiting for customers to contact a call center before taking action. It recently began piloting active intervention on the web site. “We try to identify someone who is close to a purchase decision,” Horgan says. “When someone has been on a page for some period of time, it’s an indication that that person might need help.” Until now, IBM has relied on the “call me” and “text chat” buttons for someone who needs help. But managers realized that not all people would ask for help when they need it so IBM began testing actively intervening when its system detected that a shopper was stalled. “It’s evolutionary right now,” Horgan says. “We haven’t found anything bad about it. It’s something that will grow as we get reps who understand how to use it.”

Don’t call us

IBM also is allowing customers to answer questions or solve problems themselves on the web. “Customers call us at every stage of the sales cycle,” Horgan says. “There’s a lot of information gathering at the beginning. Now they often get that through self-serve on the web site.” In fact, he reports, 39% of customers go to the web site seeking information before they call a sales rep.

The web information has created better informed customers, he says. Closing a sale with a telephone rep previously took seven calls. It now take three. “The reps can be more focused on solving customers’ problems,” Horgan says. “They sell 20% more products a year since the web has been introduced.”

IBM is marketing its new web site through a $20 million campaign that involves online ads, print ads, TV commercials, direct response TV and targeted e-mails. Every week it sends targeted e-mails to a subset of 1 million e-mail addresses. It pitches products to the segmented list based on purchase history, preferences that the customer has recorded and information that reps have gleaned in interactions with the customer. “We look at our data base and make sure the information is relevant to the customer,” Horgan says.

IBM has reaped dramatic benefits from this initiative, Horgan says. For one thing, it has sold $8.6 billion through its web initiative in the past year, 61% growth over the previous year. Web sales now account for 11% of IBM’s revenue. In the first quarter, ibm.com’s sales hit $2.6 billion. “The momentum is continuing,” Horgan says.

In addition, the company achieved those sales with a 40% reduction in expense over what a comparable amount of sales would have cost without the web, Horgan says. The web drives sales costs down by 80%, he says. IBM experienced 99 million web-based self-serve transactions in 2000, which saved the company $1.5 billion. “We’re promoting self-service front and center,” Horgan says. “The reps are referring the customers to the self-service ability. They’re making downloads and fixes themselves.”

Furthermore, customer satisfaction remains high-an indication that many customers perceive web-based self-service as a plus. IBM’s surveys show 90%+ satisfaction with the buying and servicing experience, Horgan reports.

For the future, IBM plans to take its web approach global, developing sites and support centers in 31 languages. It also plans to stay on top of web developments and make sure that its offerings on the web keep up with customer expectations. “We need to continue this journey,” Horgan says.


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