IT Report Card: Customer-Facing Applications

The term “omnichannel” was coined nearly 20 years ago. Defined as “the integration of all physical channels (offline) and digital channels (online) to offer a unified customer experience,” one of omnichannel’s first manifestations was in a race between Best Buy and Walmart in 2003. The goal was to provide a uniform and consistent customer experience between both online ecommerce and brick and mortar stores.

Since then, companies have aggressively worked to enhance their websites and ecommerce channels using online chat, call centers, automated returns processes, and more, in an effort to deliver better ecommerce and to integrate ecommerce online functions with brick-and-mortar stores and institutions.

As companies did this, IT played a central role in business process design, application design, and integration.

What have been the results so far, and which areas require improvement?

We’ll look at two key areas: the ecommerce process flow and how companies communicate with their customers.

ECommerce: Strong on Sales, Not So Good on Returns

The end-to-end ecommerce process spans from display of goods and placing of an initial order, through order fulfillment and, if necessary, item returns and refunds. Each of these steps is a company touch point with a customer.

By 2025, worldwide ecommerce sales will approach $7.4 trillion, so companies have an interest in doing ecommerce right -- and they have!

Selling online has been a phenomenal success. IT has played a major role by creating the backend linkage into sales, inventory, fulfillment, and payment systems while marketing has contracted with creative firms to develop attractive and highly functional front-end website storefronts and portals for customers.

We are now at a point where the flow of sales transactions over websites has become so standardized that most customers can intuitively browse goods and consummate purchases. Nevertheless, there are still glitches on the backend of the sales process, for instance, merchandise returns, where companies and their IT departments struggle.

Eight-four percent of online customers say that effortless online item returns processes are important for them, and no wonder, since the need to return an item purchased online happens 15% to 40% of the time as compared to a 5% to 10% return rate for brick-and-mortar retail items.

Despite these figures, companies and corporate IT battle numerous integration issues that make the online item return process unusually complex and often unsuccessful.

On the business side, contracts are formed with third-party logistics and warehouse providers for the processing of returned goods, but the ability to integrate systems and processes with the third parties is often an afterthought. By the time IT gets brought into the conversation, the ink of the contract has dried, and timely system integrations become difficult to achieve.

Customers experience the pain when the lack of integration and coordination between parties’ systems on the returns leg of the sales process fails. They don't see refunds for returns, and they find themselves spending personal time trying to chase a refund down with a retailer.

How can the situation be improved? By doing three things:

Customer Communications: Progress in Chat, Not so Much on Phone

Online ecommerce is a self-service environment. If all goes well, the customer places an order and backend order fulfillment processes do the rest.

But there are times when a customer needs to know more about a product. In these cases, the customer requires support.

Ecommerce sites come with FAQ (frequently asked question) lists, but these lists don't cover every question.

To augment online customer support over the past five years, companies have added live online chat that enables customers to connect via text with the company.

Chat begins with a virtual robot representative that uses AI (artificial intelligence) to answer commonly asked questions from customers. After two or three attempts at communicating, if the customer and virtual representative can't solve the issue, the customer is routed to a real human agent.

Chat works.

IT and the end business have managed to use AI and a virtual robot at the frontend of a chat process to save time, but they also timed the business process to switch over to a human agent before the customer reaches a frustration point.

Where customer communication success abruptly ends is on the phone.

Overly complicated, automated phone trees drive customers crazy as they are forced to navigate through three or four levels of different options, only to get routed to an automated function or a frontline agent who cannot help them.

Customers furnish their personal identifiers and product information upfront in the phone dialog, but as they are passed from function to function or person to person, every function and person re-asks them for this information. Why? Because the downline (and disparate) systems from function to function and person to person aren't integrated.

“If you have a phone tree or other kind of automated phone system, everyone hates it. Trust me,” said marketing consultant Tim Miles. “It does NOT help your customers.”

How can the situation be improved? First, companies should take a hard look at what they’re trying to achieve with the automated phone process.

If the goal is it to discourage customers from calling, it’s working.

But if the goal is to make phone communications with customers effective, phone process flows should be redesigned with simplification in mind, and IT and the end business should collaborate to do this.

The other element of phone process design is system integration.

Many disparate backend systems are legacy systems that aren’t easily integrated. System integration should be revisited. What will it take for systems to pass information between them? Are there APIs (application programming interfaces) that can be added or coded? If not, is it time to rip and replace systems?

Progress and Goals

Significant progress has been achieved on the frontend of the online customer selling process.

Now is the time to complete the circle by getting the backend processes up to speed.

IT (and CIOs) play a vital role in this work, because business and system process flows and integration are the major stumbling blocks -- but CIOs also need help.

First they need to know that their CEOs and boards are committed to making backend sales process improvements and investments.

Second, they need to aggressively insert themselves into early negotiations between the business and third-party partners that service backend sales processes. In this way, system and process integration issues can be identified before contracts are signed.

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