Keep an Eye on the Back End, CRM
ActivMedia projects that by 2005, sales of consumable items over the Internet will approach $119 billion. The entire e-retail market is projected to be more than $2 trillion. In the aftermath of last year's holiday shopping season, companies are assessing the lessons learned and preparing for the 2000 season.
Some practical suggestions include:
E-tailers need to work harder at integrating online customer care channels with telephone, mail-order and brick-and-mortar retail channels. Multichannel retailers must present a consistent level of service across channels and maintain a consistent view of their customers throughout the enterprise. Widely publicized horror stories of consumers who called to check the status of online orders only to discover their merchandise was lost in some fulfillment limbo should inspire more e-tailers to start planning now to avoid such mishaps.
According to the Better Business Bureau, botched orders topped the list of e-tailing complaints by consumers for the 1999 holiday season, with problems in as many as 1 in 20 orders. Many online shoppers have only dipped their toes in the waters with small, light, relatively inexpensive products, such as books or clothing. As confidence in online shopping grows, e-tailers should anticipate an influx of shoppers for bulkier, higher dollar items, such as consumer electronics and sports equipment. Consumers will be closely tracking the shipment of these items and will place a high value on the retailer's ability to deliver reliably and accurately as a prerequisite for repeat sales.
One of the most important factors in maintaining good customer relationships is reliable fulfillment. Retailers need to implement inventory systems capable of performing real-time inventory checking to ensure product availability, with updates on delivery status to provide accurate tracking on a product's position in the delivery pipeline.
Give Distribution the Proper Resources
The process that the customer never sees is the effort a company makes to locate the products, accurately pick and pack them and then ship them. If a company can't manage that process competently, no amount of friendly customer service will help. It's smart to optimize the order processing function to eliminate unnecessary steps and motion. By optimizing the pick stream, one can reduce the opportunity to introduce errors, keep pickers to a minimum and reduce the threat of repetitive stress injuries to workers.
A high-volume outsourcer has made the investment in the technology and processes to achieve these advantages. In addition, a distribution center that services multiple clients can provide a clear advantage in deploying labor to address a company's peaks and valleys of demand. Outsourcers also can offer automated sorting and manifesting to provide significant freight savings. High-speed weight audits can ensure that a package's weight matches the manifest, helping to catch costly mistakes before they reach the customer.
Enrich the Buying Experience
Expect customers to show less tolerance for companies that fail to enrich their buying experience. Customer relationship management systems enable companies to recognize individual customers and convert that recognition into more personalized customer service and add value to each interaction. This goes not just for purchases but for returns as well.
A company that keeps the hassles associated with returning a gift to a minimum and uses the exchange as an opportunity to learn something about a specific customer will be in a better position to continue that relationship and make it profitable.
Focus on Retaining Customers
Retaining customers has been the CRM mantra for the last couple of years, but it goes against the grain of dot-com mania and the challenge start-ups face to establish a market presence. In keeping with the general dot-com market growth trend, last year's emphasis was on gaining market share rather than on profitability. Ultimately, Wall Street will begin to insist on profits from these companies. Two places companies can look to improve margins will be in fulfillment and customer care.
Companies that fail to take the long-term view of their customers will quickly be sorted out. These same companies have an extraordinary opportunity to differentiate themselves by creating a more personalized extension of their enterprises, through more integrated channels that promote repeat business.
Focusing on value-added services such as personalization, product specialization, e-merchandising and information services will be a step in the right direction. Look for more companies next holiday season to advertise features such as live customer service and collaborative shopping technologies as a way to set them apart from the crowd.
Beware of the Disappointed Shopper
The flip side of the e-commerce revolution is the speed with which customer dissatisfaction gets communicated to a wide audience. Unhappy online shoppers have access to a range of outlets to vent their frustrations to the world, including online chat. The effect is incredibly democratizing.
The Internet has shifted the balance of power in favor of consumers, and the companies that haven't felt the sting of a "thiscompanystinks.com" Web site will need to manage customer complaints with a greater degree of skill and responsiveness if they want to keep it that way. The good news is 95 percent of online shoppers surveyed rated online customer services as good or excellent, according to eMarketer. The bad news is it takes nowhere near 5 percent of a customer base to foster an impression of dissatisfaction with service - and the competition is only a click away.
Commit to End-to-End CRM
What e-companies will be in the best position to adopt practices consistent with the goals of acquiring, retaining and maximizing lifetime customer value? The companies that have either developed end-to-end CRM capabilities on their own or partnered with an outsourcer that has mastered the integration of database, customer care and fulfillment.
Nationwide, low unemployment rates challenged customer service and fulfillment companies to hire and retain sufficient seasonal workers at a competitive wage. According to research firm Jupiter Communications, only 10 percent of survey respondents thought their company had adequate resources to cope with the surge in demand if their orders were to double overnight.
Customer intimacy doesn't come easily through a computer screen - a snazzy Web site with an easily remembered address will only get you so far. To deliver on the promise of an e-venture, companies will need to roll up their sleeves for the unglamorous back-end work or find a capable partner willing to do it for them.