May 8, 2002, 12:00 AM

CRM systems save on costs, but real purpose is driving sales, Jupiter says

“Revenue defense” is a reason to invest in CRM. 80% of online shoppers won’t buy online again from sites that deliver poor customer service. And many tell their friends about their experience, Jupiter says.


Internet retailers and others have been investing in CRM systems to save on service costs. But according to new research from Jupiter Media Metrix, they should start thinking of CRM in terms of “revenue defense” and invest accordingly or lose out in an increasingly competitive online marketplace. “Poor service is a major factor in customer churn,” says Jupiter analyst David Daniels. “Moreover, the repercussions of poor service can transcend a specific customer interaction. Consumers view the business not solely as a domain name, but as a multichannel brand."

That makes familiar offline companies and brands that are now dominating online particularly vulnerable to the effects of poor online customer service. 53% of those polled in Jupiter`s consumer survey said they are less likely to buy from a company again offline if they have a dissatisfying experience with the company’s online store. That figure is even higher, 80%, for customers who would not buy online again from a company with which they`d had a poor online experience.

Jupiter also cites the potential “viral” effect of each customer lost to poor online customer service. Online shoppers are strongly influenced by the reports of other shoppers. 66% of respondents to the most recent Jupiter consumer survey said word of mouth was a top reason to visit a site new to them; that’s up from 57% in a 1999 survey. High-spending consumers also are more likely to tell others about bad experiences with customer service, with 64% of the survey respondents saying they’d tell friends, family and co-workers about a poor customer service encounter.

“While reducing costs has been the primary driver of CRM implementations, companies must realize that advancing the quality of customers’ experience is the core tactic to reaping retention-driven revenue increases,” Daniels says. “Advancing customer revenue and profitability is the ultimate goal of any CRM endeavor.”


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