January 6, 2014, 3:01 PM

Up close and personal

E-retailers use technology to better understand customers’ inquiries—and who can best answer them.

Lead Photo

As online sales continue to grow, online retailers are refining their customer service capabilities to handle inquires in ways that are both more cost-effective and also more satisfying for shoppers. Look no further than Kohl's Corp., which saw its online sales grow more than 40% from 2011 to 2012. This spring it will open a 240,000-square-foot facility in Dallas that will focus on its web shoppers' customer service needs. Or look to J.C. Penney Co. Inc., which last year embarked on an initiative to spur web sales that declined significantly under the tenure of its last chief executive. The chain retailer's current CEO, Myron Ullman, cites improving customer service for online shoppers as a key initiative in his JCP.com revitalization plan.

J.C. Penney doesn't yet rank among the top 10 e-retailers for overall customer service, according to StellaService Inc.'s November benchmark report, but it does rank among the top five for e-mail and phone support in the department store category. StellaService, which measures how well major e-retailers handle customer service, in November put apparel catalog retailer L.L. Bean Inc. in the No. 1 spot overall among 99 major retailers, as ranked by Internet Retailer's 2013 Top 500 Guide, in customer service. StellaService says L.L. Bean achieved the No. 1 spot in large part because of its e-mail responsiveness—its agents took an average of 38 minutes to respond to initial e-mails from shoppers. L.L. Bean also had the fastest time for a live agent answering a customer's call, 14 seconds, and 100% issue resolution, meaning the retailer had answers for all the questions StellaService representatives put to them.

L.L. Bean certainly has its customer service basics right, but that's not all a retailer can do. Improved technology, added customer service channels and social media can all help web merchants please more shoppers and do so cost-effectively.

The holidays historically brought customer service headaches to Overstock.com Inc. The mass merchant, which carries more than 1 million SKUs, for years relied on a mix of on-site hardware, vendor-hosted software applications and homegrown technology for its call center operations.

Inefficiencies abounded. For instance, the stitched-together system failed to match callers to agents trained for their specific questions. And during high-volume call periods, Overstock employed a vendor to handle the overflow, which eased pressure on in-house agents but introduced more complexity because the vendor-provided agents used different technologies.

The disparate systems and programs led to problems, including long hold times, says Carter Lee, the retailer's vice president of information systems and technology. And because consumers and agents touched so many different systems, Overstock couldn't easily track call center performance, which meant the e-retailer didn't have some routine operational metrics such as call wait times and issue resolution statistics. The complexity required Overstock to hire a consultant, as well as dedicate three full-time information technology staffers just to keep the call center running.

Simplicity began to emerge in 2005, though, when Overstock switched to a single "cloud-based," or web-hosted, contact center management system from Echopass Corp. (Contact center vendor Genesys Telecommunications Laboratories acquired Echopass in November 2013; the combined company now does business as Genesys-Echopass.) Overstock's move, completed before the holidays that year, took three months and enabled the e-retailer to put those I.T. workers onto other projects and cut ties with the consultant.

The simpler system also enabled Overstock to build upon the technology as its business grew. Overstock manages its two call centers as a single virtual contact center through Echopass. The e-retailer can also now pull customer service reports to see how the centers are performing because the system captures and stores all customer call data, such as how long a customer was on hold and the number of agents who helped her.

Average handle time—that is, the time agents spend with shoppers on the phone—fell by 21%, to 7 minutes from 8 minutes and 54 seconds. Overstock also now needs 30 fewer full-time agents, saving it $930,000 per year, the retailer says. Caller abandonment rates—that is, callers who hang up while on hold—fell 85%, to less than 0.4%, and for the last five years, the National Retail Federation trade group has ranked Overstock.com among the top five retailers for customer service quality.

Overstock estimates the transition from multiple homegrown and provided systems to a single system has saved it nearly $14 million. The Echopass system cost Overstock $5.92 million over the five-year period starting in 2005, representing a cost-savings of $13.91 million over the old system, the retailer says.

One way that Calumet Photographic Inc. marked its 75th anniversary last year was by updating its e-commerce site, CalumetPhoto.com; the new version began rolling out over the summer. While web sales represent a "very small" part of the 31-store chain's business, Calumet's CEO Brian Carroll expects that a new online chat feature will help increase web sales.

That's because the new system, using software custom-built for the e-retailer by a developer, enables the seller of professional-level photography gear's call center agents to see what's in a customer's cart when talking with her through an online chat window. That should help agents make more informed product recommendations, he says. It also should appeal to consumers who don't want to use the phone for customer service. "People are not in the mood for calling these days," Carroll says. "They want to do everything seamlessly on their computers."

While it is too early to tell how Calumet will do—whether, as Carroll expects, online sales increase while customer service becomes cheaper due to fewer phone calls—experience suggests the retailer is on the right path in offering more assistance to online customers. Clients of live chat and online customer provider Vee24, for instance, report that up to 27% of the live chat requests that result in a sale stem from consumers who came to sites with no intention to buy, says CEO James Keller. "Our retail customers are also seeing on average over 20% increases in average order size," he says.

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