Private investment firm Comvest Partners acquires the financially troubled e-retailer, which filed for Chapter 11 bankruptcy protection in March.
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“For online chat to produce the numbers that vendors are promising, you need to reach certain levels of economies of scale,” Kolsky says. “But it’s hard to reach that.” Although live chat systems may be designed to let a single rep handle six or more sessions simultaneously, he says, “in real life they can usually handle two or three chats at one time.” Consultants META Group Inc. of Stamford, Conn., urges retailers to compare the time it takes a rep to handle a number of chats simultaneously with the number of calls an experienced call center rep can handle.
High tech, high costs
In addition, chats may increase the number of customer service inquiries. Similar to what banks experienced with ATMs, an automated service may be creating additional demand; not every transaction displaces one that would have taken place with a person. Kowal Associates says contacts increase 15-40% with easy-to-use web options.
Kolsky adds that costs can rise sharply in relation to the complexity of a call or chat session - as high as $18 per telephone call and $26 per live chat session for highly technical questions.
Sundance Catalog, however, says live chat provides better customer service because its live chat reps can operate three to five chats at a time, giving customers the impression they’re receiving fast, personal attention. “One thing Sundance tries to do is to not always focus on the cheapest thing; we do what’s best for the customer,” says Tim Taggert, customer call center manager for Sundance. “Live chat capabilities include both.”
To increase customer feedback, InstantService gives online retailers the capability to survey customers following a chat. Typical questions ask customers to compare the live help service to other services. The response has been mostly positive, says Taggert, who has received comments such as: “Love the live customer service!” and “A great service, especially since it’s not always convenient to call.”
Adding live chat for customer service is not a technological challenge, Taggert says. On its web site, Sundance places four lines of HTML code that can be found in the Account Administration side of the InstantService product. A customer who clicks on this link from the Sundance web site enters a chat queue. From the Agent Console, a rep selects the customer from the queue to engage in chat.
InstantService’s product color-codes customers based on how long they’ve been waiting. “We have all the reporting functionality, such as the length of the chats, how long a customer has been waiting and transcripts that tell agents how well they’re doing in answering chats,” Lande says.
That feedback only underscores that live chat demands new skills of customer service reps. For example, live chat reps must have strong writing skills and be aware of certain web-related norms, such as that writing in all capital letters can be interpreted by the customer as a reprimand, says Hicks of Kowal Associates.
Among requirements at Sundance is the ability to type more than 35 words per minute. The company evaluates reps’ grammar in letters to customers or on phone calls to determine which employees are suited to online chat, says Russell Wigren, Sundance’s Internet customer service manager.
To help move chats along quickly, Sundance Catalog provides a bank of 15 chat responses and 20 longer pre-written responses to help reps answer common questions quickly-and with the appropriate tone-for its eight full-time live chat operators. The call center also has 15 call operators who are trained to handle chats if the volume overloads the chat operators, Wigren says. Typical answers include how a seller can get products in the catalog, which requires one of the longer chat answers, as well as such standard ones as, “Please hold on while I research that for you.” But most chats rely on the operators’ communications skills.
TechnoScout says it has no trouble staffing its live chat department. Staff members generally come from among the company’s 100 telephone service center reps. They receive extra training in marketing and product technology and stand to make higher pay plus commissions.
Using live chat and related systems most efficiently requires a multi-step strategy that brings inquiring customers up a ladder of customer-service options. The ideal approach, particularly for cutting operating costs, says Gene Alvarez, analyst and vice president of electronic business strategies at META Group, is to have customers seek answers to their questions first on the retailer’s web site; then in an automated, software-driven “virtual” chat session; next in a live chat session; then in an automated telephone voice-response system; and finally in a telephone conversation with a live customer service rep.
Understanding the variables
Retailers are also still learning how to leverage their new technology to engage customers in increased purchasing activity. Skretvedt, for example, admits that TechnoScout still needs to learn how to maximize its use of the marketing opportunities presented by its live chat. “We haven’t utilized it the way we should,” he says. The company plans to hire a full-time marketing professional to determine such things as how far to drill down into a shopper’s click history to generate sales pitches that can be offered through live chat as well as other more traditional means. “There are so many variables: When’s the best time to make an offer? How much of a discount is too much?” he says.
Nonetheless, TechnoScout is already realizing a strong return on investment, Skretvedt says, noting that he can typically recoup the $2,000 monthly license fee in four days through extra sales.
The LivePerson system has video and voice-over-Internet capabilities, but Skretvedt says these have not proved to generate additional benefits in tests. For one thing, broadband is not widespread enough, even among TechnoScout’s customers. But even site visitors with broadband and computer microphones show little desire for adding voice or video to their live chat sessions.
Voice and video may be overkill, at least for now. But with live chat, the web has created a new reality in customer service, one that can’t be replicated in other channels. And, as TechnoScout’s experience shows, customers are embracing it. “People are just very comfortable using live chat,” Skretvedt says.