E-Service: 24 Ways to Keep Your Customers -- When the Competition Is Just a Click Awayby Ron Zemke, Tom Connellan
Sixty-three percent of online shopping carts are abandoned before checkout...50 percent of Web shoppers give a site only one chance...That's why 100 percent of companies doing e-business need this book!
The Web has made the concept of "competitive edge" into a virtual anachronism. Location means little, and vendors can routinely beat each other&
Sixty-three percent of online shopping carts are abandoned before checkout...50 percent of Web shoppers give a site only one chance...That's why 100 percent of companies doing e-business need this book!
The Web has made the concept of "competitive edge" into a virtual anachronism. Location means little, and vendors can routinely beat each other's prices and offerings at a moment's notice. So how can an e-business differentiate itself? How can it stop fickle surfers in their tracks and turn them into loyal buyers?
The answer is service, tailored uniquely to the Web. And no one knows more about that crucial subject than service guru Ron Zemke and Tom Connellan, who shared in bringing the world "Knock Your Socks Off Service." Together, they have created a detailed blueprint for companies who want to cash in long-term on the exploding Web market.
Packed with ideas and solutions that readers can implement immediately, E-Service explains how to:
- Manage the customer's psychological experience to strengthen brand image in the marketplace
- Capture the right buyers -- the ones who provide true profit -- and earn their iron-clad trust
- Recover from mistakes, using methods that not only retain at-risk customers but turn them into your best publicists
- Design home pages, order forms, and other visual elements that attract users rather than frustrate them; and more!
- Publication date:
- Product dimensions:
- 6.34(w) x 10.60(h) x 1.21(d)
Read an Excerpt
At 3 o'clock this morning the steamship Portland, from St. Michael's for Seattle passed up the Sound with more than a ton of gold on board and 68 passengers.
The Seattle Post-Intelligencer
July 17, 1897
WITH these words the last great gold rush of North America began. By 1902 large mineral development companies had bought up the most productive individual claims and mines and the Great Klondike gold rush had come to an end. Between end points, fortunes were made and lost, tens of thousands of fortune seekers, miners, gamblers, merchants, prostitutes, developers, opportunists, and scalawags streamed to the rugged wilds of Alaska and the Yukon Territory of Canada, and the last act in the great westward power shift was in full swing.
Seattle was transformed from a sleepy fishing and lumber port lolling in an economic depression to a robust metropolis where wealthy merchants, financiers, and import/export tycoons, proudlyand accuratelydubbed their little town "The Gateway to Alaska and the Orient." The Seattle Exposition of 1909 announced the arrival of the area as a player on the national and world sceneand a new industrial age powered by the energy and resources drawn to the glamour and promise of the place and the day.
It was a heady time that created a permanent prosperity far greater and long-lived than could have been imagined by even those dreamers and adventurers who triumphantly returned from that cold, hard tundra as high-profile gold dust millionaires.
THE GREAT CYBER GOLD RUSH: GIVE ME AN "E"
Today, e-commerce entrepreneurs worldwide are engaged in a gold rush of their own, the product of which and fallout from promises to outstrip the Klondike gold rush of 1897 in outrageous hyperbole and actual productive product.
From the beginning of this cyber stampede, press, pundits, and volunteer commentators of all types have been off to the side watching the wild and wooly action as the e-commerce frontier was explored, tamed, and exploited. These noisy bystanders have been of two minds about the great Internet gold rush. In one grandstand were the gushing, garrulous enthusiasts. These almost Pollyannaish promoters and cheerleaders burbled on about new economy versus old economy companies, paradigm shifts, and "new solution matrices." They saw boundless bounty with acres of gold nuggets in every corner of the virtual tundra.
These Klondike cheerleaders watched dot-coms explode geometrically across industry and category. Start-ups and their landbased competitors kept piling into categories that were either commodities, such as flowers and software, or that operated on the thinnest of margins, such as pet supplies and toys. Each insisted that their site was the most comprehensive flower/software/pet/toy/etc. site on the Internet, and each had an amazingly similar list of reasons why that was the case. There were a myriad of articles and press releases proclaiming yet another "change-the-world-site-that-was-going-to-be-like-no-other" frequently followed by a weird ad crying out for attention.
Predictions of revenue growth in the business-to-consumer (B2C) market soared, and predictions of growth in the business-to-business (B2B) market arched even higherand faster. They delighted in pointing out that the number of people who logged onto the Internet daily was growing at unprecedented rates, at times logarithmically, with the Web reaching as many Americans in its first six years as the telephone did in its first four decades.
There were seemingly solid business reasons for the enthusiasm.
* Cisco Systems, always a good exemplar, was able to save hundreds of millions of dollars by generating an increasing percentage of its sales through the Web itself.
* Amazon.com redefined book sellingand set the model for managing high volumes of Web-based transactions.
* Ebay.com and a dozen other B2C and B2B Web auction sites proved that a most ancient form of commerce could become a hi-tech hit.
* AOL handily demonstrated that there's gold in cyber matchmaking.
Certainly, most venture capitalists fell into the enthusiast camp. Amazon.com and Netscape, two early players in the e-commerce space, beginning with a mere $8 million and $5 million, respectively, in venture capital, made millions for the initial investors. Indeed, these early players' successes made those investors, not to mention company founders, seem like farseeing geniuses. Others watched and learned. The rush was on! CarsDirect.com garnered an amazing $280 million in a single round of venture financing. By the time Webvan was IPO ready, it had already pulled in a whopping $429 million in venture capital funding. Life in cyberspace was good! Every new idea seemed a fundable winner and a customer magnet. Sure, most e-ventures weren't generating much profit, but traffic was terrific and investors ebullient. It was a brave new world, with brand new rules.
CYBER DUST IN THE WIND?
All the while, the dour, scowling nabobs of negativity were seated low in the opposite bleachers shaking their heads and repeatedly observing that "there's no there, there." They were appalled by the apostasies of endless sunshine and growth. They relentlessly reminded all within earshot of the frenzied speculation of the Roaring Twenties and delighted in giving lecturettes equating the cyber boom to the Dutch "tulip mania" debacle of 1637.
They pointed repeatedly to the lack of profit that was being generated by many of the highly touted and respected e-commerce companies.
Then, in mid-April 2000, the world changed. The Pollyanna camp got hit with a massive dose of reality. Technology stocks in general and Internet stocks in particular plunged. IPOs were put on hold. Valuations of privately held firms were adjusted downward. "Two guys with a business plan" could no longer command an instant $1 million to $5 million in venture capital money. Talk migrated from deals that would create billions to deals that might create millions.
The curmudgeons responded almost gleefully to the NASDAQ drubbing of April 2000, raising their voices from a dour, "the sky is falling" to a higher decibeled, "we told you so." Further chanting, "the worst is yet to come," they seemed almost relieved that their dark predictions were finally being realized.
Press comparisons to the tulip mania, the Great Depression, and the October 1986 market tumble grew in number and volume. Reminders of the gold rush of auto company start-ups in 1912 and its small percentage of survivors were used with increasing frequency to suggest the worst was yet to come. Every dip in technology stocks and Internet stocks throughout April, May, and June brought questions regarding the long-term viability for this sector of the technology economy.
Flip-flop financial columnists, who had initially cheered high and loud with the best of the e-commerce devotees, started pointing out that many of these dot-com prodigies had never been through a major hit to stocks and had not proved they could weather the test of time and volatility. Stern declarations warned that the likes of General Electric and Wal-Mart were not going to let a bunch of upstarts come in and steal market share from them without a fight. "Lookout!" the omenizers warned, "You're about to learn what real competition looks like." Established firms in the auto and aerospace industries led the way by creating their own industry-wide supplier marketplaces, clearly demonstrating that they weren't about to be undone by a gaggle of clamoring twenty-somethings, waving their undergraduate technology degrees and squawking about the joy of the "new economy" and the morbidity of the "old economy."
The truth of the matter is that neither the Pollyannas nor the curmudgeons are 100 percent right nor 100 percent wrong. The truth of the Klondike is that there will be some consistent e-commerce moneymakers, some really big winners, and a lot who struggle, but never really make it bigand many, many losers.
Andy Crawford, a professor in the University of Michigan's Engineering School who teaches classes in entrepreneurship, uses the Klondike gold rush metaphor to impress upon his students the risk side of new ventures. Andy points out that 200,000 people set off for Klondike. Some 120,000 made it as far as Dawson, Canada. Eighty thousand of those ended up actually looking for gold. The other 40,000 stayed, but decided that it was easier to make money in some other way. Of the 80,000 who actually went looking for gold, perhaps 10,000 found enough saleable ore that they became comparatively richfor four to five years, and of all the thousands of initial adventurers, about 200 made enough money that their modern-day heirs are still comfortable.
So who is going to "make their heirs rich" in the cyber gold rush? Again, the Klondike perspective is instructive.
The most consistent money-makers of the gold rush of 1897 were the merchants who fed, outfitted, and supplied the miners. Mark Twain observed, "When everyone is looking for gold, it's a good time to be in the pick and shovel business." This is turning out to be true of the cyber gold rush as well. The most consistent money-makers are and will be those who supply the minersthe e-commerce adventurers and dot-com millionaire "wannabes," e.g., the Ciscos, Oracles, Foundry Networks, and InterNaps.
Internet commerce is obviously here to stay, and it's going to provide benefits far beyond those presently in place or yet envisioned. The Net's ruthless savings has greatly reduced friction, created enormous time savings, made customers smarter, and ushered in a whole new era of business opportunity. Just the same, our studies and those of many others suggest there is much to be done before e-promise becomes consistent, customer-pleasing e-performance.
E-commerce and technology stocks will continue to ebb and flow. Those swings are sometimes associated with value and actual productive performance, sometimes not.
But more dot-coms will fail for lack of a solid business model. The prevailing earnings before expenses (EBE) is not a solid business model. The Buy.coms of the world busy acquiring the wrong type of customer will not survive in their present iteration. Many more will fail because they haven't created value for their customers. Most of these dot-coms will have overfocused on the technology and underfocused on the customer needs. The long-term winnersthose firms that are still profitably standing two years from nowwill be those that have done the best job supporting customers and delivering that value in a way that seems effortless to the customer.
NEXT STEP: DIFFERENTIATION
The bloom, to borrow an old phrase, is off the Internet rose. During the dot-com gold rush daze, any HipName.com Web site that could cast a shadow drew lots of visits from lots of visitors. In addition, with any reasonable product, or service, or information offering at all, it made salessometimes one-time-only sales, but sales. Often, that was enoughor seemed to be. After all, the market value of the company behind HipName.com, particularly if it were a retail Web site, was increasing every day. Sooner or later, the company would become so desirable that it would be gobbled up by someone who really wantedneededaccess to the customer base HipName.com claimed as its cyberturf.
The downturn and belt tightening of second quarter 2000 has changed the rules. The future of pure dot-coms as well as the e-commerce ventures of mixed brick and click endeavors depends on economically attracting and profitably retaining customersbecoming profitable, and staying the course for the long-term.
Where and how do you differentiate yourself? Whether you're a B2B or B2C, you've got to find a point of differentiation to separate from the rest of the herd, and you've got to fight for it and maintain it. In the e-world, the competition is a click away and breathing down your neck ready to snap up your customers the moment you drop your guard. In the brick and mortar world, the "mud world" as some would call it, a primary differentiator has always been location, location, location. On the Web everyone has the same location; no place and every place at once.
Product differentiation may work for a few product categoriestemporarily. But unless you're selling rare antiques or custom hand-crafted, design-patented furniture, if you've got it to sell, then anyone else can have it to sell, too. And they will. Even if you manage to be the only online site selling your unbelievably unique merchandise, the incessant entrepreneurial spirit of the Web will surely pull that uniqueness out from under you. Sites like Fogdog.com have "search squads" whose sole purpose in life is to track down hard-to-find items online and purchase them for their own customers for zero profit, thereby creating loyalty and discouraging consumers by dint of ease from finding new sources of products on their own.
How do you differentiate yourself on a book? You can't. It's a commoditya book is a book is a book. How about a unique specialized kind of information? Again, maybe you can have a temporary leg up on the competition, but only for a very short period of time. Then someone else will offer virtually the same information.
It's possible to differentiate yourself for very short periods of time on product offering, but in today's networked and information-rich world it won't be very long before someone has a competing offer that approximates yours. The truth of the matter is that differentiating yourself on the uniqueness of product is tough.
How about Price?
While price is always a consideration for consumers, unless you intend to undersell yourself right out of business, the competition will probably meet or beat what you've got to offer. Our and other people's research makes it clear that customers will dump you if your site is clumsy, your customer service difficult to access, and your delivery methods shoddy and slowregardless of what you charge.
You could make the lowest price in your segment your point of differentiation. But how viable is that as a long-term business model? If all you're doing is acquiring customers based on price, you're probably acquiring a customer base that won't serve you well in the long run. Price-only consumers are end users, not long-term customers; they are infamously fickleand demanding and difficult. How about considering product your break-even point and net advertising your real money-maker? Maybe. But losing money or breaking even on each transaction with the hope of making it up by advertising is an inherently unstable business plan and doesn't seem to bode well for future profitability. There are already a substantial number of dot-coms operating on negative gross margins. A situation that can't last for long. Yes, you can gain share by competing on price alone, but the probability of being able to profitably maintain that share is minuscule.
If location, product, and price are null sum differentiators, and they won't work even in the short, much less the long run, where does that leave the fledgling e-commerce venture of a traditional company or its dot-com competitor? We suggest there is but one surefire e-commerce differentiator for dot-com and brick and click endeavors as well: Service, or perhaps more correctly, e-service.
SERVICE WILL SEPARATE LEADERS FROM LOSERS
Forrester Research, a leading e-commerce research organization, has boldly predicted the demise of most dot-com retailers by 2001, averring that the key to survival for dot-coms rests on something most of them can't fathomthe quality of their service "Online retailers must strike back at brand confusion and product duplication by distinguishing themselves through customer service," advised Forrester's report. In another study, Forrester announced that 90 percent of all online shoppers consider good customer service to be the critical factor when choosing a Web merchant to give their commerce. In our own research, customers we interviewed and surveyed told us 2:1 that poor service discourages them from making a second trip to a dot-comregardless of product and price.
SERVICE IS THE ONLY DIFFERENTIATORAND A CLEAR OPPORTUNITY
If you can't differentiate on the product offering and can't profitably differentiate on price, the only point of differentiation is service. Service involves factors like ease of doing business, trust, responsiveness, Web site navigability, problem resolution, and all those other elements of good e-business that don't fit quite so neatly into a purely binary world, but that nonetheless, as we will demonstrate, have high value to customers.
No matter where you look, the message comes through loud and clear: Service is key to winning on the Web. Yet, few firms are doing a good job of providing that service. E-Gain reports that 50% of those who had purchased online have stopped doing business with a company due to poor customer service. In December 1999 through January 2000 we sent a team of virtual shoppers out on the Net to visit sites and evaluate e-service. After 755 visits to 385 sites, the results were clear: Service on the Web is woefully wanting. Allowing the most generous standardsites named as "good" or "great" by at least one of our shopperswe still found that only 7% of the sites met this standard. By contrast, 13.3 percent (50 of the 385) were judged "so bad I would warn others way from this site," and 28.8% were rated to be so clumsy, difficult, and uninteresting that "I would probably not shop or revisit this site."
HOW BAD IS E-SERVICE?
Few people abandon their shopping carts at the neighborhood Target or Kroger store. But set them loose in the online world, and they do so with frightening regularity. Depending on the study you look at, between 25 percent and 75 percent of all shopping carts are abandoned online. As one of our focus group participants put it, "It's easy to `drive' to a virtual marketplace, but it's also easy to `drive away' and leave your shopping cart sitting there. You don't even have the embarrassment of people looking at you."
E-mail? Another disaster. Again, while the exact percentage depends on the study du jour, somewhere in the neighborhood of 40 percent of all e-mail queries to companies never get answered. The answers that do come frequently take days longer than the more immediate 1- to 2-hour response time expected by today's customers.
Download times don't fare any better. One respondent in our focus groups captured the download issue fairly succinctly when she said, "Waiting for this (site's) splash page to download is a lot like watching paint dry." Again, the actual numbers vary from report to report, but the estimates of dollars lost when customers give up and leave a site due to the tedium of slow downloads reach into the hundreds of millions.
The truth of the matter is that in a world where user experience dictates brand, customer service is your brand. Doug Sundheim, senior client development manager of Internet consultancy in the New York City office of Luminant Worldwide, notes that "A brand does not, and can not, exist separately from the customer's experience. Companies now operate in a world where products are commodities, pricing wars are a zero sum game, and physical location is irrelevant. Put simply, then, your customer's experience of your service becomes your brand."
The question you need to ask yourself is, "Is the service experienced by our customers creating the brand image we want in the marketplace?" If it is, great. If your brand is as strong as you'd like, great. But if not, then you have your real work ahead of you.
WITHER ONLINE CUSTOMER SERVICE?
The bottom line is that companies have spent millions of dollars attracting customers to their Web sites and seem oblivious to the fact that acquiring customers is not the same thing as keeping customers. Not serving customers well produces hard lessons about customer loyalty and the ripple effects of poor customer care. The lesson is equally clear: Treat customers badly just once online, and not only will they never come back, but through chat rooms and broadcast e-mail they will tell potentially thousands of other consumers about your careless attitude.
The fallout from poor service online is magnified and instantaneous. E-Satisfy.com, an Arlington, Virginia-based research firm formerly known as TARP, reports that dissatisfied online customers tell twice as many people about their experience than do satisfied customers. They are also four times more likely to discuss their experience in an online chat room than satisfied customers. Think about how many people that potentially reaches.
It may seem easy enough to throw up a site and watch the sales roll in, but there are an unbelievable number of ways to fail a customer at your siteall of which have been detailed in countless surveys, research reports, and high-profile press stories: Slow pages, crashed sites, lousy navigation logic, incomprehensible instructions, search engines that require a degree in Boolean algebra, unsecured and confusing order forms, Machiavellian return policies, e-mail that's never answered, and "frequently asked questions" (FAQs) that raise more questions than they answer.
These and similar malfunctions, complaints, and service disappointments undercut the best marketing plan and best advertising and send would-be customers clicking away. And yet there are few sites in existence right now that don't manage to screw up the fundamental e-service elements on a regular basis.
Customer loyalty on the Web is even more fleeting than landbased shopping. Those companies who view customer service as an afterthoughtsaving key infrastructure and other back-end investments until the "brand is built"will continue to pay a steep price. As the cost of customer acquisition rises and Internet competition increases, no one can afford to lose e-shoppers after only one visit.
Meeting and managing the service expectations of online shoppers is proving to be no small challenge for e-sellers. It is a devilment often of their own making. Far too many companies' own aggressive and omnipresent advertising messages often suggest that online shopping is a breeze and that Web shoppers will benefit from fast downloads, always be a click away from what they seek, experience hassle-free product ordering, receive delivery close to instantly, and receive first-rate help from live customer service reps at a click. Most of these explicit and implicit promises go unmet. The bad news is that the first time a customer's experience doesn't stand up to the realitythat an explicit or implicit promise is breachedis almost always the last time a Web shopper visits a site.
E-shopper expectations are not just set by advertising and hype. They are also tied to the perception of the Web as an instantaneous medium. Die-hard brick and mortar shoppers accustomed to "shopping till they drop" now can shop around the clock and expect around-the-clock service and instant support on the Websomething they would never have thought to demand of a brick and mortar company.
Some of the solutions to today's stunningly poor e-service are amazingly simple. An Andersen Consulting survey of 500 people found that 95 percent said a guarantee of on-time delivery would increase the likelihood that they would buy from a Web site again A BizRate.com survey of 9,800 consumers found that 89 percent of online buyers say return policies influences their decision to shop with an e-tailer. The "headline" from the Andersen and BizRate examples: Slow down the expenditure on technology and beef-up the straightforward service-oriented solutions your customers are looking for.
FALLOUT FROM POOR E-SERVICE
Those who manage B2C and B2B shopping sites have discovered there's nothing easier for frustrated e-shoppers to do than type in a competitor's URL. Or worse, they simply go back to the brick and mortar world, where they can be assured of getting their hands on a needed product right away rather than risk technology snafus, endless order form requests, late or erroneous product delivery, inconvenient return policies, and absent customer service help.
In an interview with Fast Company magazine, Jeffrey Rayport, a Harvard Business School professor, stressed that while poor customer service in the brick and mortar world can be damaging, in the online world it can be a death knell. "People will keep going to the same supermarket (where they experienced poor service) simply because it's on the way home. On the Web, a bad customer experience can be fatal."
Without well-conceived and adequately funded strategies for handling customer problems online, e-tailers can find their call centers overrun and customer service expenses rising in lockstep when they unveil new products on Web sites or when customers start experiencing problems with existing ones.
A FEW SHINING LIGHTS
Amidst the stories of shoddy online service there are a few shining lights. These are e-businesses that understand how customer retention drives profit and who've built online models that pay as much attention to back-end concerns as they do to the investments needed to draw customers to a site in the first place. These companies understand that e-commerce is about much more than just transferring a product catalog online.
It is about e-service, first and foremost. At Lands' End, the Wisconsin-based clothing retailer, customers who have trouble finding what they want on the company's Web site simply click on a button, type in a phone number, and a salesperson calls them back in no time. The company understands that there is more to e-commerce than pretty pictures and order forms on a Web site. LandsEnd.com "gets it." A few others "get it" as well: Dell.com, Amazon.com, SmarterKids.com, Garden.com, REI.com, Gap.com, and Fogdog.com routinely get rave reviews from market researchers and their own customers for clear and easy-to-navigate sites, customer support, personalized service, return policies, service guarantees, or reliable product delivery.
The infrastructure of the Internet is largely in place. Customer loyalty, not technology, is going to be the factor that separates the winners from the losers. If you're in the competitive ballpark on offering and price, you get to play in the game. But to be a champion you need to differentiate yourself on outstanding service. Service will separate the winners from the losersin fact it's already beginning to happen. The winners understand that, and so should you.
Meet the Author
Ron Zemke (Minneapolis, MN) is president of Performance Research Associates (PRA) and an award-winning author or coauthor of 26 books, including the best-selling Knock Your Socks Off Service series.
Tom Connellan (Orlando, FL) is a senior principal with PRA. His books include the best-selling Inside the Magic Kingdom and Sustaining Knock Your Socks Off Service, which he coauthored with Zemke.
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