Firm Boosts Conversion Rate With Live Cyber-CSRs

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Net startup LivePerson Inc. this week announced the closing of $1.6 million in financing for the real-time online customer service it sells to e-businesses. And for the first time, the company has begun talking about the results its virtual CSRs are generating for its e-business clients -- most notably, conversion rates in the range of 25 percent to 35 percent.


LivePerson president/CEO Robert LoCascio touts his company's customer service reps -- who converse with consumers through pop-up boxes attached to cyber-retail sites -- as more than mere employees who answer questions. LivePerson's major selling point is that its CSRs generate sales just like retailers roaming the floors of brick-and-mortar stores.


"I want to see live retailing happening," said LoCascio, who also founded the New York company. LivePerson began offering its services in November.


His timing was impeccable. Forrester Research, Cambridge, MA, expects the online customer service market to explode, in tandem with the larger e-commerce realm, to $658 million by 2002, up from 25 million in 1998. Online research firm NFO Interactive Inc., Greenwich, CT, recently found that roughly half of cyber shoppers say they would spend more money on the Web if they had someone to talk to as they peruse e-commerce sites.


And seemingly every Web commerce chat room, newsletter and conference is filled with analysts, company executives and other pundits who repeatedly declare that firms that fall short of their customers' expectations will slip by the wayside in 1999, the often-dubbed "year of customer service."


Now LoCascio wants to storm into the fore of providing live service reps to companies whose bread and butter come through direct electronic sales. The latest $1.6 million injection comes from investment concern Allen & Co.; Alan Braverman, senior managing director of NationsBanc Montgomery Securities; and Sculley Brothers, a firm led by former Apple Computer Inc. CEO John Sculley.


LivePerson plans to pour the initial stage financing, which now totals $4.6 million, into its sales and marketing efforts. LoCascio said he won't worry about the company's profitability until he feels LivePerson has nailed down leadership in the market. However, he noted the company enjoys "high gross margins," and said he plans to go public within the next two years.


In contrast to a "frequently asked questions" page or some other customer service method in a virtual store, LivePerson's technology lets consumers type in any question that comes to mind. For reasons of "technological inclusion," LoCascio said, conversations with CSRs do not take place through audio.


LivePerson maintains the servers that run the CSR pop-up boxes, precluding the installation of any software or hardware at clients' sites. The company transcribes all the "conversations" between reps and consumers and makes them searchable by keyword. LivePerson also embellishes the pop-up with clients' branding messages.


Depending on how complicated a merchant's products are, sites using the service are seeing between 2 percent and 10 percent of their visitors click over to the LivePerson service. Between one-quarter and one-third of those consumers become buyers, LoCascio said.


Of course, for many merchants, the whole point of marketing online is to cut the costs associated with retailing in the offline world and the high costs of teleservices staff might make some companies leery about the virtual customer service concept. LoCascio claims LivePerson's service is considerably cheaper than using toll-free operators. The firm charges an initial $500 fee, plus a monthly $250 per operator set up on the program.


Clients supply the customer service reps, some of who are freelancers working from home, while others are the same people who reply to the clients' e-mail. Some merchants have put the CSRs on commission, LoCascio said.


The executive wants 15 "premier" e-commerce clients by year-end, with a total of between 350 and 400 clients in the same period. Sites currently using the service include FragranceCounter.com, 1800DayTrade.com and CBS Sportsline's IGoGolf.com.
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