Business and the Net: can an old dog learn new tricks?

The Web hasn't changed what customers want, just how they get it. This is a tough lesson for many traditional companies, says...

The Web hasn't changed what customers want, just how they get it. This is a tough lesson for many traditional companies, says Andrew Robinson

Everybody knows that traditional offline companies that have brought their businesses online are now clobbering their pure-play online counterparts, true? Certainly, and there's data to back this up. Forrester, for example, reports that 90% of online shoppers prefer buying from traditional brands with online stores.

Other sources suggest that less than 5% of e-commerce site visitors actually make a purchase, while two-thirds of online buyers do not purchase again. One can only assume that traditional offline companies have figured out how to use their assets to create meaningful service advantage. Or have they?

I am in no way signaling that pure-play (online only) companies deliver services that are better than their offline/online counterparts, but I wonder if offline companies that are active online understand how to leverage their natural advantage. For example, a recent experience I had with a leading retailer made me keenly aware of the issue. The sales assistant who helped me was completely unaware his employer had a website when I queried him about items and services I had viewed online. This led me to think about what has changed for customers who use the Web, and just how ready are companies to meet these changes.

Here's what I think customers really want.

1. Awareness - customers want their needs recognised
2. Trial - customers want to see, touch, taste, smell and feel the products they plan to buy
3. Purchase - customers want to buy on their terms, where and how they want
4. Service - customers want answers to their questions
5. Return - customers want to be able to return and receive credit in a convenient way

Reflecting on this made me realise that I do not believe the Internet has changed what customers want, but it certainly has changed how customers get what they want. For example, Webnoize reports that 40% of college students listen to music on the Internet before they buy it.

I thought it would interesting to test my theory that what customers want has not really changed, but how they get it has, by examining some recent experiences.

The retail experience

It was a cold day at the office so I decided to buy a jumper. I entered the Gap website, found a jumper I liked and saw that it was on sale. Given that I wanted to purchase the item at the shop, I saved it to my 'wish list' - a nice feature to save items of interest. Later that day, I visited my local Gap store, which had a kiosk, complete with PC, for shoppers. Having signed in at the kiosk, I tried to download my wish list. After about five minutes - during which time no-one even acknowledged my presence - I became increasingly frustrated that it would not download. Finally, I left the kiosk and asked a sales assistant for help. He informed me there was no wish list feature on the kiosk and that, consequently, I would not be able to show him the jumper I had selected online. I assumed the kiosk was not networked and so there was no possibility of getting information stored from my visit to at the office. I asked the assistant to help me find the jumper. He did, in fact, manage to locate it, but the jumper was not on sale in the shop and, of course, I couldn't show that it was on sale online. In the end, I didn't buy the jumper and returned to my office to send an email to Gap about my experience. I have not yet received a reply. So, how did the Gap fare on the evaluation criteria?

Awareness: learned about the sale price, found product and saved preferences
Trial: couldn't view wish list or get sale price in Gap store
Purchase: couldn't buy through the kiosk (it now has my account info)
Service: no one noticed me when I logged on in the store; Gap did not respond to email
Returns: Gap provides for in-store and through-the-mail returns
Overall: No linkage between online and offline stores

Banking experience: 1

When I recently moved back to London, having lived in the US for the past seven years, I fully expected that my bank, Citibank, would make sorting out my banking situation easy. I had two objectives: to add electronic bill payment services to my account and liquidate a number of US investments.

First, I logged on to get the information I required. I found information on electronic bill payment services, as well as advice on liquidating my certificates deposit (CD), but I was not going to be able to complete these changes online. I searched for a way to send an email requesting more information, but there was no facility for email. Next up - phoning in to get information. Having finally reached a customer service representative, I learned I would have to complete lengthy forms, which included closing my existing account and opening a new account, to receive electronic bill payment services. Furthermore, if I wanted to liquidate my CD, I would have to physically go into a branch to complete the transaction. Needless to say, I was extremely frustrated. When I did go to the branch to liquidate my CD, I also closed my account and, except for a credit card, no longer have a relationship with Citibank. In summary:

Awareness: found information about electronic bill payment services
Trial: couldn't convert existing account to new service without filling in lengthy form
Purchase: couldn't liquidate CD without physically going into the branch
Service: couldn't send email to
Overall: as if the business never considered how the channels fit together

Banking experience: 2

I also have an account with Charles Schwab and went through a similar process to get information, but with a very different outcome. After finding everything I needed to know online, I called the account representative who converted my account immediately, providing me with electronic payment services. There were no forms to fill out and the service was available the next day. I learned my CD would mature three months later, at which time I would receive an email providing instructions on how to handle the CD - liquidate or rollover - both of which I can execute electronically. I have since consolidated my funds into Schwab. So how did Schwab fare?

Awareness: found information about electronic bill payment services
Trial: converted account with phone call; liquidated my CD electronically
Service: email received to proactively notify me of my CD maturation
Overall: as if the processes were designed around the customer experience

So, what elements should traditional offline companies consider when delivering services through new channels, regardless of whether those channels take the form of the Web, mobile phones or interactive TV? Here are four principles to consider when designing the way services are delivered to customers:

1. Live a day in your customers' lives - design processes around these experiences

Gateway is a tremendous example of a company that has designed its channels to be complementary. Today, Gateway Country stores account for close to 30% of its revenues and 50% of profits. What is even more amazing is that when a customer buys a computer in a Gateway Country store, the sales rep orders the PC over the same Internet storefront as a consumer at home. So why does this work? Gateway uses its Country stores to deliver other value-added services, such as training and education, while providing very experienced sales staff to assist with product configuration and purchasing decisions.

2. Integrate your channels in logical ways

Companies such as Mary Kay are instructive: it has created an online presence that enhances the value to its consumers. Its online presence, made of personal portals for all 500,000 Avon Ladies, provides product information and delivery status. Its approach has added significant value, not only to consumers, but also to the Avon saleswomen.

3. Sense what your customers do on your website and respond when they come into the store or telephone your customer care call centre

Schwab has excelled in this is an area. Schwab understands that not all transactions can be conducted online, but it provides the information and tools to educate the customer to a degree in which the transactions are simple. In fact, when you call into a Schwab call centre, they can track exactly where you are, what you are seeing and respond in a very targeted manner. My experience around electronic bill payment constitutes one such example.

4. Respond at Internet speed, even if you don't have all the answers

As my Gap experience shows, customers are going to increasingly interact with companies in non-conventional ways. Email, chat, voice chat, short messaging system and such will become elements of communication to your customers - and companies must be prepared.

Andrew Robinson is managing partner of e-business consultancy Diamond Cluster

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