Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
Many shoppers contact online retailers after making a purchase, putting a premium on service.
At a time when every sale matters, online retailers can’t afford to fall down when it comes to customer service.
Web shoppers, who don’t have the face-to-face interaction with salespeople they have in stores, often contact customer service: 42% of online shoppers said they had contacted a retailer about an online purchase in the previous six months in a late 2007 survey by Jupiter Research, now part of Forrester Research Inc.
And a separate Forrester study last year concluded customer experience quality could result in a swing of $184 million for a large Internet retailer.
If anything, customer service is even more important during a period when consumers are being more careful with their spending, says Forrester analyst Chip Gliedman.
“Gaining and retaining customers is even more critical in tough economic times than in easy ones,” Gliedman wrote in a report this year entitled, “Trends 2009: More Tech Choices For Customer Service Improvement.” He recommends customer service managers take advantage of the greater push to retain existing customers to seek additional investments, while recognizing that management is likely to prefer incremental investments to major multimillion dollar purchases.
Gliedman says there are likely to be better software and service options for companies that choose to operate their own contact centers. At the same time, there are many options, and some important decisions to make, for the sizable minority of online retailers that choose to outsource their contact centers.
He notes there have been several mergers and acquisitions in this arena, and projects that will result in vendors offering new systems that integrate features that previously were offered by separate companies.
There have also been significant partnerships announced between vendors. That will, he says, “increase the ability of customers of these large vendors to easily acquire and implement tools to manage now-mainstream communications channels, such as e-mail and chat, with fewer of the issues that are traditionally encountered when an organization must manage a multivendor solution.”
E-mail and chat have become staples of customer service. In a cross-industry survey in December 2008, 84% of sites offered e-mail as a way to contact customer support, Forrester says. Live chat was offered on 54% of the sites of the 100 largest online retailers in a recent survey by research and consulting firm the E-tailing Group Inc.
But online retailers don’t always live up to expectations. While 41% of consumers expect an e-mail response within six hours, Forrester found that only 36% of retailers surveyed responded that quickly, with 21% taking six to 24 hours, 18% one to two days, 7% two to three days, 4% more than three days and 14% not responding at all.
The E-tailing Group found in its annual mystery shopper survey in late 2008 that only 77% of the major e-retailers it studied answered e-mailed questions correctly. “Retailers say they want to provide great customer service, but then execution is another story,” says Lauren Freedman, president of the E-tailing Group. “Often, the product knowledge is not as strong as it should be.”
The outsourced option
While there are better technology options for retailers managing their own customer service, 34% of online retailers outsource this function, according to a survey of web merchants by trade association Shop.org and Forrester Research. For these retailers, too, there are many features to choose from, and important points of differentiation.
Outsourced providers of customer service no longer just answer the phone, they can respond to e-mails and communicate with consumers in the instant-message format of live chat. For 24-7 INtouch, live chat generated about 2% of revenue two years ago, and this year will account for at least 17%, says Greg Fettes, president and CEO.
Fettes says more online retailers are encouraging consumers to call by making it easier to find a toll-free number. “They’re realizing the value in providing exceptional customer service and giving their customers every opportunity to reach out to contact them,” Fettes says.
A good experience can help make a consumer a customer for life, Fettes says. Creating that kind of experience requires providing customer service agents with the information they need to answer consumers’ questions.
Global Response, a customer service and fulfillment provider, works with retailer clients to create detailed screens so that its agents have ready access to the information they need about products, says Herman Shooster, chairman and founder. The company also handles customer inquiries about rewards programs for such retailers as J.C. Penney and American Eagle Outfitters, making sure reps can answer such frequent questions as “How many points do I have?” and “Why don’t I have more?”
The accent issue
But any retailer considering outsourcing its contact center work will be concerned about price. And the question of price is closely tied to location-in North America or at lower-priced locations offshore.
Price is a major selling point for SupportSave Solutions Inc., a company that provides outsourced customer service from the Philippines, mainly to smaller and midsized companies. “We charge about $5.18 per hour, which is incredibly low by industry standards,” says Chris Johns, CEO. He says competing services based in the Philippines typically charge $9 to $15 per hour. What’s also important, Johns says, is the workers he hires in the Philippines are well-educated, hard-working and speak English with practically no accent.
The low cost makes it profitable even for companies selling relatively low-priced goods to offer telephone service, Johns adds. He says his clients typically generate revenue that is eight to 10 times what they spend on customer service.
The low rates also make it feasible to extend the hours of customer service a retailer offers beyond its own business hours, he says. “Businesses miss out on a lot of revenue opportunities by operating just within their own time zones,” Johns adds.
But Fettes, whose contact centers are all in North America, says he finds more and more clients demanding that agents be based in the U.S. or Canada. “We’re seeing tons of work coming back from offshore,” he says.