August 14, 2003, 12:00 AM

eBay finds dramatic return in live chat to help customers

For every $100 that eBay spends on live chat applications, $135 falls to the bottom line, Lorna Borenstein, vice president and general manager of eBay Inc., told eTail conference this week.


Live chat has attracted a lot of interest among online retailers, but few--even those who have implemented live chat--have been able to put a value on it. Until Tuesday, when Lorna Borenstein, vice president and general manager of eBay Inc., talked to eTail 2003 East about eBay’s experience with live chat. The bottom line: For every $100 that eBay spends on live chat applications, $135 falls to the bottom line, Borenstein said.

As anyone who has used knows, the site is unlike any other. It is wide-ranging, its use is not intuitive and newcomers aren’t necessarily able to figure out right off the bat how to proceed. A year ago, eBay tested live chat to help users in three categories: visitors, inactive registrants and active users. Live chat boosted activity in all three groups, Borenstein said, converting visitors to registered users, re-activating the inactives and increasing the activity of active users.

EBay then expanded its live chat capacity 15-fold. “There are others ways of increasing activation but this will account for a majority of our activation program spending,” Borenstein said.

One of the keys to a successful implementation, she said, was to have the live chat customer service center staffed by eBay personnel, rather than outsourcing it to a third party. That gets back again to eBay’s uniqueness in the marketplace. “It was very helpful to have eBay customer support as opposed to third party vendors providing it who have the IT technology, but not the institutional knowledge,” she said.

EBay is a fan of another kind of chat as well--chat rooms, Borenstein said. “Chat rooms are a tremendously important way to communicate with your customers,” she said. The benefit is that customers talk about their experiences or something they want to do and it gets other excited, she said. “Any way you can get chat rooms on your site, so it; it helps the wildfire spread,” she said.

Chat rooms help motivate customers and may inspire them to take certain actions, but sometimes offering peace of mind helps as well, Borenstein said. For instance, eBay offers warranties on products, important to some because of the used or remaindered nature of much the eBay merchandise. “We assumed warranties would be used only for big tickets items,” she said. “We found a huge demand for warranties on $40 items even though we were charging $7 for the warranty. We still don’t understand it. But we don’t have to, all we have to do is respect it.”

Warranties and chat are all part of the fabric that makes up eBay, she said. “We throw a lot of spaghetti against the wall and some of its sticks and some of it doesn’t,” she said. “We like to try new things.”


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