Electronic business has reasserted the primacy of the customer focus. It has underlined a change in the balance of power from company or product to client. In retailing, customers are lured with propositions that even months before would have seemed ridiculous: a leading mobile phone retailer will give cash back on handsets if the price falls up to three months after purchase, and no-one needs reminding of the dramatic appearance of the free Internet service provider (ISP). Similarly rapid and profound developments are taking place in the business-to-business space, whether that be the collapse of the "four walls" organisation in the shape of supply chains integrated more tightly than ever before, as say in the automotive sector, or large retailers clubbing together to source common products from small suppliers.
At the heart of building customer relationships online is the ability to act on data. On one level there is nothing new in this. Supermarkets with loyalty card schemes have for years been gathering vast quantities of data about customer spending habits in order to reflect it back to them in more personalised offers and enticements. But where e-business is different is that it is nothing without the ability to analyse and use this kind of information. In fact the loyalty card provides a good case in point. Generally speaking, supermarkets are still unable to convert their enormous customer databases into detailed commercial knowledge. The exploitation of loyalty cards lies in the future. The difference with the Web scenario is that an online store is worthless without the ability to put back in front of customers what they bought last week, and is missing a trick if it cannot make offers and suggestions on the back of that. High street supermarkets on the other hand, do clearly continue to function well for all their clumsy attempts at data analytics.
Customisation as a way of life
Putting the case more positively, e-business is the opportunity to take customer relationships to another level. It is not just about surprising the customer for loyalty's sake with a personalised proposition, it is about making customisation a way of life. "Because your every move on a Web site generates click stream data, you leave a detailed trail of everything you did before arriving at a buying decision - unlike a conventional across-the-counter purchase where placing an order is usually the only recorded event," says Ian Maclachlan, managing director of Accurate Business Solutions. "But this rich source of information about customer behaviour is a major analytical challenge."
It is a challenge that many are realising they must face with some urgency. The alternative is to face a bleak future. Take the automotive industry. Customised car production so that individual orders can be fulfilled all the way down the assembly line was unthinkable just a few short years ago. Now it is possible because so much can be known, and devolved without loss of controlled, across the multiple relationships in the supply chain.
At the mercy of technology
Customer relationships online are at the mercy of technology, and technology alone. The point is that unlike being in a shop or even on the telephone, on the Web there is no human contact to iron out technical glitches that might threaten service. Glitches extend beyond just lumpy Web sites too. Any trouble the customer has in finding the item they want to buy is often down to poor HTML programming, and hiccups with fulfilment usually arise because systems are not integrated properly.
These kind of problems are damaging customer relationships. According to a recent report, 28 per cent of all attempted online purchases failed due to technical problems, difficulties in finding products, and logistical and delivery problems after the sale. "The first online purchase experience is the moment of truth for consumers and retailers," says Winning the Online Consumer: Insights into Online Consumer Behaviour, by The Boston Consulting Group (BCG). "It is the beginning of a brand connection... the frustrations and failures that are commonplace in these early days of electronic retailing could be the kiss of death for the brands of Internet retailers."
From mass marketing to dealing with one
Atadeeperlevel, thepushtowards increased personalisation takes the logic of customer service one step further. Before, the emphasis was on understanding mass audiences to get the feel of a one-to-one relationship: now segmentation multiplies until the audience is literally reduced to one. Phil Hulme, a consultant specialising in customer management issues with KPMG Consulting explains how this dynamic of customer relationships differs online. The relationship becomes more direct and immediate with business discovering the ability to receive immediate feedback from customers."Monologue becomes dialogue," he says. "However, this also means that customer expectations for speed and responsiveness go up and businesses who don't rise to the challenge soon disappoint." This represents a major change for organisations working to the doctrine of mass sales and marketing campaigns. With the Internet, consumer tolerance for broadcasted communications falls. "The art of predicting the product service that will appeal to the most people is reducing," Hulme says. "In its place comes the art of understanding a complexity of needs and designing mass customisable solutions to meet them." He cites the US credit card company, Capital One, as a firm moving in the right direction. "The call centres anticipate the needs of incoming callers, and reroute the calls accordingly. They get it right 60 to 70 per cent of the time, and up to 15 per cent of incoming service queries turn into additional sales," he says.
But just when companies were beginning to get to grips with the Web and its impact, a new challenge looms on the horizon. M-commerce is the name of the new game, played out not on the PC but on the wireless mobile phone, and advocates believe it will revolutionise customer relationships again. To date, most services are at the trial stage, but the savvy are pushing ahead. UK based aproperty4u (AP4U) for example, has recently announced the first property search engine in Britain to incorporate Wap technology. "Wap technology is bringing the Internet, mobile phones and people together in one great leap," says Mark Brown, AP4U's managing director. "Using a mobile to access the Internet will, in ten years time, be as usual as owning an ordinary mobile phone is today." The point about moving today is that it steals a march on competitors. The warning then is clear. M-commerce is likely to initiate a new wave of customer driven demands that will change online relationships again. As the saying goes, we live in exciting times.
10 tips for successful customer service online:
1. Differentiate - Ensure that you know what it is that makes your online business better than the rest and then translate this to features.
2. Customer focus - Localise and personalise. What does your site achieve for an individual in 6 seconds and 2 clicks? Alternatively in B2B, according to Business Objects, 74 per cent of customers would like access to operational information such as stock levels online but only 24 per cent of suppliers provide this.
3. Business focus - Develop a cohesive e-business intelligence strategy. According to Business Objects, 89 per cent of organisations think the Internet will have a high level of impact on their business over the next 12 months, yet 70 per cent of organisations have an unclear e-business strategy.
4. Share information - If you can, give it away! Place an extranet at the heart of your e-business strategy, to share information with customers, partners and suppliers via the Internet. Tell customers about their goods, what they cost, and where they are before, during and at the point of fulfillment.
5. Continuous development - Continue to develop new features quickly to respond, stay ahead and stay differentiated. Think about new technology such as Wap and iTV today to be future-proof.
6. Keep it human - The Internet is only a medium and is always limited in its ability to communicate with real people. There's always a worry or two that puts people off clicking the "buy now" button. Try a call me button too.
7. Don't ignore email - Do write back, now.
8. Work on site navigation - Lay the Web site out the way the customer sees the world, not the way your organisation sees itself.
9. Build relationships, don't just start them - Next time they come back, don't ask them if they'd like a tour of the site. Perhaps, ask them how they liked their last purchase.
10. Never go down - Neither site nor stock. Get every bit of fail-over you can lay your hands on.
Who is doing what?
One sector in which the word revolution might be justified as a description of change is in the automotive sector, not only across the supply chain but in terms of relationships with end-purchasers too. At Vauxhall, work with IBM Global Services has resulted in a Web site for direct car sales over the Internet. "When laying the groundwork for its Internet strategy, Vauxhall realised that to deal with customers online, it must provide them with the same information, service and support that it makes available through other channels," explains Paul Confrey, relationship marketing and new media spokesperson at Vauxhall. This was no mean feat, but the expected results are startling. "Research shows that we might expect 40 per cent of serious enquiries from the new site to lead to sales. This demonstrates the power of the Internet as a marketing tool, by enabling Vauxhall to build up an individual relationship with our customers through providing the best possible support and information during each purchase," says Confrey.
There is a mentality which states that online retailing is all about adding value. Clearly this is true, but sometimes less is more - taking features away builds value for customers more so than endlessly adding the new. This is demonstrated in the success of Web store, totalbabyshop.com. "Totalbabyshop.com is one hundred per cent dedicated to selling baby products, and it's this targeted business model that sets us apart," says founder Tony Abis. "Other sites may have hundreds of pages devoted to the art of parenthood, but being a Dad and an Internet user myself, I know I'm far more likely to buy from an easy-to-use, customer friendly Web site such as totalbabyshop.com, than I am to wade through pages and pages of irrelevant information before I get to the products I'm interested in." And Abis continues: "The buzz phrase at the moment seems to be 'value add', for e-commerce companies this should mean good customer service, not pages and pages of editorial, java-powered baby name pickers, interactive picture galleries etc." Less can mean more.
Iron Trades Insurance
A close customer relationship cannot be acheived without rich customer data, a reality that firms not used to having to be so close to clients are finding out as they move online. Take Iron Trades Insurance, a specialist provider of employers liability insurance. "The fast-moving nature of e-commerce and rising customer expectations mean management information must be available extremely quickly," says Peter Cooper, business technology manager at Iron Trades. "As the Web-based insurance quotes we provide are instantaneous, we need instantaneous information, too. The data that's generated by our Web front-end is very important to us - we need to know where our business is coming from, how many people are logging on and taking quotes, how many are accepting or rejecting quotes, the total value of business transacted on a particular day, and so on. It's also extremely valuable for us to build up a profile of the types of people who are using the site which means, for example, knowing their age and gender. We can then find out, say, the proportion of customers who are 21-years-old and driving group 3 cars." This degree of data functionality is provided in this case by SAS software.
Looking after customers should not only be about staying abreast or catching up with competitors. It is a real opportunity to be innovative in terms of customer relationships. An example is LetsBuyIt.com. This business has developed a dynamic pricing model. Members request products and services on the company's site, and then LetsBuyIt.com works to source these products and services at the lowest price. That is pretty smart in itself. But it would be nothing without technology to deliver, in this case Art Technology Group's Dynamo platform. "Fourteen languages, 50 sites, over 50,000 products, several payment and delivery alternatives, and localized prices and taxes all add up to a very complex site," explains Jan-Erik Gustavsson, CTO. "It just wouldn't be feasible to run this type of site without dynamic personalization. In e-business, choosing the wrong technology can be very expensive in the long run. It can put you out of business if your ability to deliver content can't support the marketing plan." The point here is that innovation must not be at the cost of the usual rules of retailing. Everything that applies to the quality of the shopping experience in the High Street applies online, but all the more so because people can't actually see and try products in the same way. So, navigating a virtual store must be made at least as easy as walking down the aisles in a real one.