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Special
eCommerce Edition Includes:
eRetail
Growth Places New Premium on Customer Care and Loyalty
The
Internet has had a dramatic affect on the retail business market. The promise of reaching a seemingly unlimited, global customer
base, at any hour of any day appeared to be cyber-dream-come-true only
last year. The road to eCommerce success, however, has matured into a steep
climb. eCustomers are becoming more Web-savvy, entering the online
transaction armed with vast amounts of competitive data, and demanding
access to excellent customer service – at all points of the
transaction process. While research studies continue to underscore the critical nature
of improved customer service to retaining the online customer, this
group remains largely dissatisfied with their online experiences. How to keep online customers satisfied, allowing eCommerce
businesses to build a loyal customer base, is at the heart of the
eRetail challenge.
Online Retail
Lowers Customer Loyalty
A
study of online retailing conducted by Affininet.com, a joint venture of
Bristol Group of Canada and Amarach Consulting of Ireland, concluded
that “getting customers online leads to declining loyalty and
declining referrals, with the longer term prospect of declining
profits.” The study goes on to state that while customers are equally
satisfied with both online and offline offerings, they are
"closer" to the offline company, and are more willing to
recommend them to friends and over 20 percent more likely to remain a
customer with the brick & mortar retailer in two years.
What
is the cause of this difference. The Bristol study claims “…when in comes to Internet access
in a business context (i.e., looking for information or products), the
nature of the interaction is basically one of information exchange: it
loses much of the subtlety of the interpersonal interaction that takes
place at the checkout counter.” Without the “personal touch” that
accompanies an offline transaction, customers have shown no inclination
to remain loyal to a particular online retailer. The traditional drivers
of eCommerce – price, speed-of-delivery, convenience – foster little
or no loyalty in and of themselves.
This
development is shocking and can have far-reaching effects when
considering that repeat business can account for nearly 60% of a
company’s total business. And, with the explosion of eCommerce revenue– estimated to
reach $178 billion worldwide by 2003 - – the affects to any eCommerce success are substantial.
As consumers
increasingly turn to the Internet to business, companies must deploy
eBusiness strategies that keep their customers coming back. The worth of
retaining customers to a company’s bottom line is not new to the
Internet:
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The
average company loses half its customers over a five-year period
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Reducing
defections 5% can boost profits from 25% to 85%
-
Companies
typically spend five times more on customer acquisition than on
retention
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65%
to 85% of customers who defect were satisfied with their former
supplier
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Totally
satisfied customers are six times more likely to re-purchase than
satisfied customers
Critical tasks
facing business in this new century are to adopt technology and
processes that build customer loyalty, and advocacy.
Building Online
Relationships Key to Building Loyalty
Before
the Internet and integrated customer relationship management (CRM)
systems, company dealings with a customer were largely a segmented
operation, divvying up the customer relationship among different
departments. Typically, a
company logged “transactional” information – time/date of
purchase, amount, name, address, etc. – about a customer at the
initiation of a purchase. Customers were viewed as little more than the
sum of their transactions: X placed so many orders, received so many
shipments, signed a contract for so many years, logged so many calls,
etc.
Customer
support was a one-to-many relationship where a representative at a call
center might field inquiries to an 800 number armed only with product
information and a basic history of a customer’s transactions. Customer
satisfaction surveys were inconsistent, untimely and labor-intensive,
relying on phone-call campaigns or direct mailings.
The
Internet has rendered this model virtually obsolete. Customers can now
connect with companies through a variety of portals, including the Web,
email, phone and in-person. All these contact methods are available at
all stages of the relationship, giving consumers access to detailed
information about their transaction – in real-time, such as online
tracking of shipping status, product and help inquiries logged directly
through the Web, and online orders placed.
The
fact remains, however, that customers continue to rate online service
lower than what they receive from brick & mortar businesses.
The GartnerGroup found in an August, 2000 study, that of the top
50 consumer e-Tail sites, not one was rated as “good” or
“excellent for online customer service. Carol Ferrara, research
director of GartnerGroup, claimed “most retail call centers treat
customers like strangers.” Service representatives who take service
calls rarely have access to information the customer has entered in
online, a fact that is frustrating many online customers.
Study
after study reveals that customer support – and building a 1-to-1
relationship with online customers – is a key part of successful
online commerce. GartnerGroup
again predicts that deploying the right customer satisfaction tools is
an important step in improving online customer satisfaction and loyalty.
Assuring Customer Satisfaction
Maintaining
online customer loyalty starts with ascertaining customer satisfaction
throughout the transaction process. Your online customers enter
the transaction cycle through your website, often driven there by
traditional marketing efforts, such as direct mail or advertising.
This complete process involves many points of interaction, some which
break across cyber walls: this process could include:
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Browsing
the website
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Completing
or abandoning the order process
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Accessing
special promotion URL’s
-
Receiving/not
receiving the order
-
Contacting
customer service
At
each point along this transaction trail, customers can become
dissatisfied and stop the transaction, as well as the hope of any future
transactions. By inviting feedback at these key transaction points
you can not only measure and track the effectiveness of your online
processes, you can identify the changes that will provide the greatest
benefit to your customers.
To
illustrate the power of a comprehensive online customer feedback in a
successful eCommerce strategy, we will examine the solutions provided by
CustomerSat, a leading provider of Web-based customer satisfaction
solutions, reviewing the key aspects required of a truly comprehensive
feedback program:
-
Consistently
solicit customer feedback at all interaction points.
-
Use
Real-time notifications to allow fast, meaningful action
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Analyze
and quantify customer value
-
Incorporate
feedback into customer records, made available across the company.
Consistently
solicit customer feedback at all interaction points.
CustomerSat
solutions allow automatic processes to invite feedback at these
different transaction points. WEBConnect
can be deployed at key points of the Website to track customer
satisfaction as they use your website, and CRMConnect is used to
automate the feedback process through fulfillment and customer service.
Each
of these relies on a powerful, flexible, fully-hosted system that
involves the following methods to guarantee high customers response
rates:
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Personalized Customer Communications
– Customer data -- name, service case number, product ordered,
etc. -- is used to personalize every communication,
from the email invitation to the online survey, to increase
response rates.
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Customized questionnaire design
– Building an easy-to-use, focused survey that reflects the look
and feel of the sponsoring company also improves response rates. CustomerSat’s experienced Client Service experts offer
assistance with this process.
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Targeted Confirmation Messages:
CustomerSat’s solutions have the ability to personalize the
confirmation message with offers or information specific to the data
provided by the customer, adding a personalized, 1-to-1 contact.
Real-time
Notifications Allow Fast, Meaningful Action:
Time is of the essence.
Retaining dissatisfied customers means acting fast to resolve their
issues. By placing
Real-time alerts on key satisfaction questions (i.e. Did you receive
your online order? Or, How satisfied were you with the online
transaction process?), automatic email alerts are sent to the proper
company representative when a customer rates the question as less than
acceptable. Addressing a dissatisfied customer immediately will often
quell the problem and also lets customers know their opinions and issues
are important.
Analyze
Feedback Across the Enterprise
To keep dissatisfied
customers from “clicking away” to a competitor, their input must be
compiled, analyzed and acted upon immediately. CustomerSat’s solutions
provide feedback in real time, automatically
and continuously updated to be as current as the last respondent. Data
is available 24/7 on dynamic, password-protected Web pages, and viewable
through reporting tools that can “slice and dice” using a variety of
variables such as region, product line or any other relevant
information. Management can
establish access parameters for sub-users, allowing targeted analysis
appropriate to different job functions. This way the CEO can have full
access to overall satisfaction trends, while an individual service rep
can view results that relate only to them.
This instant access to immediate analysis allows management to
identify problem areas and institute strategic and tactical changes to
fix key problems.
Incorporate
Feedback into Customer Records:
All
information gathered but not implemented is a waste of resources.
Ironically, this occurs far more than one might think. According to a
survey of 50 Fortune 1,000 companies by Forrester Research, less than
half used any customer data collected from the Web and email in their
other sales, marketing or customer service applications. Incorporating
customer feedback into the customer record is a vital step ensuring that
your customer feels “special” every step of the way. This way,
feedback can be deployed throughout the enterprise and dynamically
available to all company representatives. The next time the customer
calls, the company representative will then have access to the
customer’s complete history – from the first survey to the last
transaction.
Summary
In
the Internet age technological advances have empowered customers and
raised their expectations as never before.
As this technology leads to a declining customer loyalty
for online retailers, it brings forward the opportunity to take the
necessary steps to implement customer care solutions that will benefit
not only the eRetailer – but the customer.
Traditional
Internet drivers such as low cost, fast delivery and easy access to
product information have become the “standard” in eCommerce and play
only a small role in customer loyalty. Leading-edge eCommerce retailers
are leveraging the power of the Internet, through the use of integrated
CRM systems and robust professionally-designed online customer feedback
programs, with the more personal and emotional customer ties created
through techniques poached from traditional “brick-and-mortar”
operations. In the brick-and-mortar world, customer transactions have
always been more than just a click of a mouse.
By deploying a comprehensive customer feedback program,
eRetailers take a vital step in building and retaining a loyal customer
base that will drive eBusiness success.
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Measuring
ROI of Online Customer Research
Customer
research has traditionally been cost-justified by increases in customer
loyalty. Well-designed customer research enables managers to respond
swiftly to customer concerns and opportunities, thus increasing customer
satisfaction, retention, and advocacy – in short, loyalty. The rise in online business has raised the value of loyalty,
since customers can switch suppliers with increasing ease – a
company’s competitors are only a click away. The mantra of the 80’s and 90’s was that attracting a new
customer cost five times more than retaining an existing one. In the 2000’s, with new, higher costs of customer capture, we
believe the cost differential and savings are more likely to be a factor
of ten. Customer research today is even more important and readily
cost-justified than in the past.
Virtually
every successful business worldwide has some customer satisfaction
measurement and reporting process in place, so managers have had little
trouble cost-justifying customer research, even though Return On
Investment (ROI) may be hard to quantify. If a customer research process enables managers to recognize and
address problems 30 days sooner, or anticipate and deliver on emerging
customer requirements 90 days sooner, ROI takes the form of improved
competitiveness, more retained and potentially new customers, more
satisfied customers who are more willing to serve as references or
advocates, increased market share, and the associated revenue and profit
of all of the above. But how can we measure the ROI?
ROI
for Conventional Customer Research
To
quantify the ROI of online customer research, we first attempt to
quantify factors driving the ROI of conventional customer research
(conducted by phone or postal mail), then adjust those factors for
online research, and finally add in a new ROI factor – 1:1 marketing
– uniquely possible with online customer research. To quantify the ROI
of conventional customer research, we identify four categories of
customers:
- Retained
customers who would otherwise have been lost
- Retained
customers who would not have been lost but who were formerly
dissatisfied and who no longer spread ill-will about the company
- Retained
customers who would not have been lost but who now serve as
advocates and/or references
- New
customers who would not otherwise have been attracted.
For
each of these four categories of customers, we identify which of three
different financial returns apply:
- Additional
short-term revenues (from additional purchases immediately)
- Additional
long-term revenues (from additional purchases over time)
- Enhanced
marketing effectiveness and/or reductions in costs due to greater
customer advocacy (word-of-mouth).
By aggregating
all of the different returns over all of the different customer types,
and comparing the total with the costs of the customer research process,
we can estimate the ROI on the process.
Refining ROI Factors for
Online Research
For
online research, various costs are different from those for conventional
research, raising the ROI of online research relative to conventional:
1.
Data collection costs per respondent are lower, as survey
invitations that pop-up on web sites or that are emailed to respondents
replace the costs of phone interviewers and long-distance phone charges
2.
Respondents key in their responses themselves, eliminated data
entry (this is an especially significant savings for open-ended
questions)
3.
Reminders to non-respondents and thank you/acknowledgment
messages to respondents can be sent automatically via email, rather than
by phone call or postal mail
4.
Charts, tables, statistics, graphs, mean scores, cross-tabs and
sorted verbatim comments can all be generally automatically online,
rather than having to be done off-line by an analyst.
One
simple way to compute Return on Investment is:
Costs
of data collection via the Internet are often as little as one-tenth the
costs of conventional data collection. Other costs of the market research process include research
design and analysis and reporting of results.
These costs are reduced by the Internet as well, although not as
profoundly as data collection costs.
If data collection represents half of total market research costs
and is only one-tenth the cost of conventional data collection, the ROI
of online research is up to five times that of conventional research,
even if the other costs stay the same.
Adding
1:1 Marketing as an ROI Factor for Online Research
Beyond
conventional ROI factors, online research offers the opportunity for a
unique contribution for ROI: 1:1 marketing. This is the ability to
target
online promotions, offers, and incentives to customers based on their
survey responses. Revenues
generated by direct, 1:1 marketing driven by survey responses directly
contribute to the ROI of online research. Such targeted marketing
programs can be singularly intelligent
and effective, because they are based on survey data the customer has
provided. Survey
respondents view targeted promotions immediately upon completing a
survey. Because the online market research also enables
managers to take action to enhance customer loyalty, its ROI should also
exceed that of simple direct marketing campaigns.
For
example, assume that 10,000 customers were contacted via either email
invitations or pop-ups over a 90-day period.
Say the response rate for the research was 30%, and that as each
online respondent completes a survey, the customer is presented with a
highly targeted special offer, incentive or promotion based on the
customer’s survey responses. Say
that the response rate among survey respondents to the special offer is
10%, and that on average, each customer spends $100. Then the total revenue generated over 90 days is $30,000.
If the cost of the research over 90 days is $30,000, the 1:1
marketing component of the online research alone has covered the cost of
the research.
Summary
In
summary, online market research combined with direct, 1:1 marketing
offers higher ROI for market research than either online market research
without 1:1 marketing or conventional market research.
For more information from
CustomerSat call 1-800-372-7772.
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Online
businesses face serious
challenges to ensure success in today’s dynamic market.
Increasingly, studies reveal how improvements in customer service
lie at the heart of eCommerce success.
This time of year, when all retailers conduct the highest
percentage of their annual revenues, and with the predicted expansion in
online sales, the state of online customer service is even more intense.
GartnerGroup
predicts 2000 online sales to be double last year’s, reaching $19.5
billion worldwide. Simultaneously, they estimate that nearly a quarter of Web
shoppers are extremely dissatisfied with their buying experiences.
How a company deals with this holiday web shopper will be vital
to their eCommerce success in 2110.
As an increasing number of studies have shown, improved online
customer satisfaction is at the core of eCommerce success.
Building and maintaining good relations with online customers has
proved to be a challenge for many online companies – both dedicated
e-Retailers to “clicks & mortar” companies.
Here are links to several articles and online resources that will
provide useful, up-to-date material information eRetail and Customer
Service:
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(c)
2008 CustomerSat, Inc.
500 Ellis Street., Mt. View, CA 94043
Mail
to: expert@CustomerSat.com
http://www.CustomerSat.com
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