InformationWeek: The Business Value of Technology

December 4, 2000

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Live Internet Service Set To Capture Customer Attention

Faster browsers and better software all help to provide immediate and improved service

By Charles Waltner

More on live customer service:

sidebar:Internet Telephony On Hold For Web Sites Companies Go Beyond CRM To Pamper Online Customers (10/16/00) Internet Week: CUSTOMER SERVICE TOOLS (9/25/00)

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nce laden with problems, live customer service on the Web is starting to capture the attention of E-businesses. Applications such as live text chat, co-browsing, and page pushing are all helping businesses retain and serve their customers.

In the past, businesses frowned upon these customer-service options because users didn't always have the right equipment or services to take advantage of them. But companies have found that Web surfers are diligent about upgrading their browsers. And 56-Kbps modems or even faster cable modem and digital subscriber line services now give users the speed they need to run the applications frustration-free.

Early adopters of these products report impressive anecdotal and statistical evidence that the software has matured enough to help businesses fight shopping-cart abandonment and the other symptoms of customer dissatisfaction. Perhaps even more important, the tools can help Web retailers compete with brick-and-mortar stores. They let E-merchants help customers when they want help the most: immediately.

For example, The Wedding List adopted a live chat application from LivePerson Inc. to help answer extensive questions from shoppers looking for gifts. "Our category is extremely customer-care intensive," says Daphne Murray, director of communications for the New York seller of wedding gifts. The company employs a host of consultants to help couples develop a registry.

The Wedding List turned to LivePerson to replicate a quality in-store sales experience in which salespeople actively answer customer questions. Very few couples actually registered online before The Wedding List started using LivePerson; most sales came from individual gift buyers, Murray says. Now, 85% of the couples use the chat feature. And, The Wedding List saw a 120% increase in sales when it moved LivePerson's icon to the front page of the site in June.

LivePerson hosts the application remotely for The Wedding List. LivePerson supports more than 800 customers over a network of high-speed server clusters, and it uses Java messaging service among other technologies to help manage the flow of chat sessions.

The Wedding List is just one of an increasing number of companies that are discovering the effectiveness of live Internet customer-service products, which include live text chat, also known as instant messaging, collaborative browsing, Internet telephony, page pushes, forms sharing, and file pushes.

Live chat is now the most prominent of these tools. Most of the others work in combination with text chat. All of them let E-retailers offer service options for customers, says Barrett Ladd, an analyst with Gomez Inc., a consumer market research firm for Internet retailers. And that's important, considering Web retailers place customer service as their No. 1 concern this holiday season and are starting to look to live chat for help, according to the recent Gomez report "Keeping the Grinch at Bay."

Although E-mail and toll-free telephone lines are the most common ways Internet retailers talk with customers, Gomez says online text chat has risen dramatically in 2000. Nearly 33% of survey respondents say they would offer online chat as an option for customer communication this holiday season, up from single-digit levels last year. No E-commerce retailers out of 62 surveyed plan to deploy Internet telephony this holiday season (see story, p. 176).

But it's important to note that retailer adoption of chat and other live features doesn't mean their customers are actually using the services, Ladd says. "Retailers are just trying to give their customers more options beyond E-mail and the phone," he adds.

Sites are getting the swing of E-mail management, as it's being made much easier by a wave of second-generation versions. That's why live tools are the logical next step. Online merchants, at least the good ones, have whittled E-mail responses down to less than a day, but E-mail remains limited as a real-time communications tool.

Not surprisingly, some of the leading E-mail management vendors, such as Avaya (recently spun-off from Lucent), Echopass, eGain Communications, Kana Communications, and Servicesoft, are integrating these newer, real-time live chat applications with other E-mail management apps. The rest of the market is made up of a dozen or more software products focused just on these real-time online applications. Some only do live chat and most live chats have some capabilities such as co-browser or page pushes. Vendors of these tools include Brightware, Cisco Systems, and LivePerson. A few focus more on Internet telephony, including Lipstream and WebTelecom, among others.

Service costs vary. LivePerson charges a flat $2000 setup fee and $350 a month per customer representative using the tool. FaceTime charges about $1,000 a month per customer service agent. The license for the server version for eGain's suite of interactive service products starts around $21,000 (Windows NT) for five seats; the hosted version is about $6,000 a month for five seats.

Besides boosting customer service, the new live Web-service applications also help divert traffic away from expensive-to-run phone-based customer service centers, saving companies crucial operational money.

Suretrade Inc., a Lincoln, R.I., online brokerage, is a case in point. "We felt at that time we had a good handle on E-mail, and it was time to expand," says Jeff Misenti, director of Internet application development for the company. About 30% to 40% of Suretrade's fairly tech-savvy customer base still only have one phone line at home, which means they're required to disconnect from the Web in order to call into the service center. And as Suretrade's business grew, phone response times also grew to "unacceptable" 10-to 20-minute durations, Misenti says.

Suretrade turned to live chat to battle this problem and keep people online, Misenti says. Live chat also helps lower the barrier for customers to make stock purchases and other transactions or just find help conveniently and quickly, he adds.

Suretrade uses the live chat tools from eGain Communications, which Misenti says was the only product available, except for a much more expensive LivePerson application, when his company went shopping in May 1999. The chat tool has taken much of the pressure off Suretrade's telephone lines and has far exceeded company expectations, Misenti says. Each rep can handle three to five conversations in the same time as one phone call. Agents also can use co-browsing to help guide customers having a hard time navigating the site. Another result: LivePerson reduced its toll-free phone traffic by 25%.

Any interactive, live application naturally needs a live body on the other end to talk to customers. But, as Suretrade discovered, live chat doesn't require the one-to-one trade-off of agent to customer like phone calls. Companies report an agent can successfully handle multiple customers at one time. Despite this, Brian Tuller, senior VP of marketing at Brightware Inc., says any interaction with Web customers that requires direct communication with a service representative will prove expensive. The key to live Internet customer service is in designing its use for only the most appropriate, high-value, profitable customers, he says.

Using chat as a general means of communications isn't a panacea to Web sites and could prove a costly mistake. A less-costly option lets customers find answers to their questions without human intervention. For example, many vendors offer self-help applications that let customers search a knowledge base for answers to common questions.

But companies must realize that they can't rely too heavily on non-real-time customer service. When customers require live help, they should be directed to chat, phones, or applications that provide direct-agent response. It's crucial for technology managers to set up a site to make sure the right interaction happens with the right customer.

Many sites test chat applications by first placing them in obscure locations before putting them on prominent pages, which could generate an overwhelming amount of traffic. "You basically want to gear your site so customers are graduated from customer services which require less to more human involvement as their needs increase," Tuller says. "There are lots of customers who use chat, but usually they're not the ones you want to talk to."

But these new chat tools can make it much easier to help any customer. Julie Khalifeh, co-CEO of eBeauty in New York, says her company uses the Cisco Interaction Suite to help beauty service retailers set up Web sites.

When eBeauty creates sites for these customers, it needs information from the shops and it must train the customers on how to use the sites. The Cisco Interaction Suite lets her company chat with customers and walk through various activities virtually side-by-side via co-browsing, application sharing and form sharing. "The bottom line is it helps our customer save time and use our services more effectively to improve their businesses," Khalifeh says.

Live text chat technology isn't without its caveats, though. The speed of response with chat applications can be slow but mainly when the inquiry comes from a slow modem, Ladd says.

One way that companies can make sure they're getting the most out of their chat application is to select the right customer-service agents. They should have good typing skills and be able to quickly express themselves through written words, Ladd says.

Certainly, not all Web sites have been blown away by chat and live Internet service applications. Eddie Bauer Inc. in Redmond, Wash., experimented with a live-chat application from Servicesoft because of all the media hype about how such products could lower shopping-cart abandonment rates at retail sites, says Susan Knight, VP of customer care.

But so far, she hasn't been impressed. Knight believes that chat is slow and cumbersome for customers to use. And, it hasn't yet proven to be a better method than E-mail; her staff is set up to respond to E-mails within five minutes.

About 2% of all online orders at the Eddie Bauer site involve chat (or about 10 chats an hour), though the company only recently moved the chat button to the checkout area of the site from a more obscure location, Knight says. "There hasn't been any overwhelming evidence that it makes customers more satisfied with their experience or that it leads to greater sales," Knight says.

But there are more than a few online retailers that say live service is ready for use. The degree of success of these products can depend significantly on the technical savvy of a company's customers. PC Support, for example, couldn't ask for a more appropriate audience. It specializes in online computer and networking support for small and midsize businesses, as well as consumers.

These folks naturally know a thing or two about computers and are much quicker learners of new technology than the bulk of online consumers. Live chat is more efficient than the telephone, and it has helped the company reduce toll-free number charges, says Dean Hajum, E-support manager of the Burnaby, British Columbia, Canada, company.

Also, because the chat application doesn't strain bandwidth, PC Support hasn't needed to expand its T1 connection to handle traffic from the new communications channel.

Hajum hasn't done a formal study on the costs and benefits of the application, but between the reduction in phone bills and the decreased time each support technician must spend on each customer, the company has fully embraced the application. Now, 70% of all its customer interactions with PC Support's five-person customer-service department are via chat, Hajum says. "Most people who use the chat service find they like it," he says.

Many calls require hours on the telephone as an agent walks customers through troubleshooting computer problems. Instead of tying the customer and the agent to the telephone as a customer tries out the various troubleshooting advice, the chat lets the agent and the customer come and go from the conversation as the situation dictates.

Live chat is also a big bonus to any international customers, who may not have access to toll-free numbers, Hajum adds.

The company uses the Instant Customer application from Facetime Communications Inc. The product includes such features as an auto-response mechanism for high-volume periods, a common feature in other chat products. If an agent then doesn't respond to a chat request within a minute or so, the application will automatically send out a message informing the customer of the situation.

PC Support currently pays about $1,000 a month for five to six concurrent-user licenses. Hajum says Instant Customer also runs into some technical problems with older browsers that don't run Java properly. Facetime designed its product to automatically default to an HTML option for executing the application, but Hajum says that doesn't always work.

Hajum adds that Facetime could also improve its reporting tools. Facetime doesn't have easy access to overview information about things such as agent response times or the total number of chats executed in a given period.

Overall, however, PC Support reports it has had few problems with Instant Customer. Indeed, it has worked well enough to make it the company's primary communications channel with its customers. And that's sending a clear message: Live chat's time may be now.

Photo of Hajum by Larry Goldstein
Photo of Misenti by Jesse Nemerofsky
Photo of Khalifeh by Scott Robinson

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