COMMENTARY--It's easy to blame the technology for poor performance, but sometimes the answer is a lot simpler.
Thanks to technology, companies can cost-effectively reach millions of potential customers though a Web presence, 24x7 (or to be more precise, between 605.6 and 619 million potential customers as of September 2002, depending on which survey you look at).
Orders are effortlessly processed and despatched at anytime. (The consumer e-commerce market was worth $12 billion at the end of 2000, and estimated to reach $200 billion by 2004.)
Sophisticated CRM technologies enable customer preferences to be accurately tracked, maximising sales opportunities from each shopping encounter.
E-mail provides a reliable means of communication, should any problems or clarification be required in the sales or post-sales process.
On the other hand, online customers are harder to acquire, and harder to please. They have higher expectations than their bricks-and-mortar counterparts. The conversion rate from browsing to actually purchasing is generally less than one percent. Loyalty is not strong. Customers can easily compare prices, or the choice on offer, from multiple online stores.
So, once you have a customer, it would seem obvious to any online business that keeping a customer happy would be fairly important.
Personal anecdotal experience suggests that this is not the case. Placing an order is generally trouble-freeâ€"by now any e-business that doesn't have a robust e-commerce system is probably no longer in business. But if something goes wrong halfway through the process, good luck! If you need to get hold of a real person, or you're trying to do something outside of the standard processes, it all falls over. E-mails are not acknowledged, let alone returned. Simple issues can't be resolved. Front-line staff (if you manage to get hold of someone) don't have the authority to make simple decisions. A customer is very quickly no longer happy.
My sister-in-law tried to purchase a CD-ROM online from Dell (in the US). The item was discontinued, but the system didn't send a notification. Next step, e-mailing customer service. No response. Phoning the company was more helpful, but impossible to get a resolution as it was outside the standard processes. After three months and a number of letters (that's by postâ€"e-mail being a futile exercise), still no resolution. So it's an unhappy customer, and most likely a lost customer due to the inability of the company to deal with what started as straightforward customer service issue!
I've had similar experiences, but also the occasionally positive one. In particular Amazon.com, which subscribes to the concept of "customer lifetime value". A recent problem with an order took a couple of e-mails, but was resolved within a few days. I'll recommend Amazon, and I'll continue to purchase from them (though it would help if the value of our Australian dollar improved a little!).
These experiences have been acknowledged a little more eloquently by a study in May 2000 by Datamonitor, which found US online businesses lost more than US$6.1 billion in potential e-commerce sales in 1999 due to lack of customer service at their Web sites. The same report projected that if companies continue to provide poor service levels on their Web sites, they could lose more than US$63 billion in potential revenues in 2004!
Conversely, a mere five percent reduction in customer defections increases company profits from 25 to 85 percent (Harvard University by researchers Fredereich F Reichheld and W Earl Sasser). The average company could have improved its online sales figures by almost 35 percent if it had provided better online customer service for potential customers (Datamonitor). A 10 percent increase in repeat customers translates to a 9.5 percent increase in company value (McKinsey & Co). And we all know that the cost of keeping a customer is considerably cheaper than adding a new one.
So this article isn't really about technology. The technology is here, and it works. It's about recognising that sometimes the best technology isn't a substitute for sound business practice.
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