Customer Service in Dotcoms
MS&E 269 Special Presentation
Feb. 28, 2001
Team “Just kill it!”
Vicki Chin, JC Choi, Ying Mei, Wonhyoung Ryu
Why is Internet Service Important?
% of Users Buying Online
87%
July
66%
2000
70%
N ovem ber
69%
1999
71%
June
71%
74%
N ovem ber
65%
63%
1998
April
0%
45%
10%
20%
Source : Greenfield, 2000
30%
40%
50%
60%
70%
80%
90%
100%
Number of Online Retail Packages is
Expected to Grow Steadily
Average Number of Packages delivered per Day
(millions)
7
6
5
4
2.98M
3
2
2.33M
1
0
1999
2000
6.53M
Online retail package grow th
Traditional channel residential
packages = 2.33M
2001
Source : Forrester Research, 2000
2002
2003
Customer Service is Often Neglected
Reasons Users Enjoy Online Shopping
84%
Convenient
72%
Saves time
64%
Avoid crowds
61%
More time to research
60%
Lower prices
55%
No salespeople
47%
Locate hard-to-find items
35%
Better selection
30%
More product information
26%
Good gift ideas
16%
Eeasier to ship
0%
Source : Greenfield, 2000
10%
20%
30%
40%
50%
60%
70%
80%
90%
What is your worst online experience ?
Company.com
Why?
Dotcom “Service” – Current Situation







Slow speeds
Unfriendly user interfaces
Security and privacy concerns
Broken links
Poor content
Unanswered phone calls and emails
Deliveries – wrong products, long lead time,
high shipping costs, handling damage
Email Response Times Drag On
Email Response Times of Dotcoms by Percentage
50
40
%
30
20
10
0
No
> 3 days
Response
Within 3
days
Within 3
hours
Response Time
Source: “To Bot or Not to Bot?” Business 2.0, March 6, 2001
Online Retailers Are Not On-time
Packages delivered On Time or Early
50%
51%
40%
36%
30%
20%
10%
0%
1999
Source : Anderson Consulting, 2000
2000
Why Do Customer Service Problems
Persist In Dotcoms?

Money
- Short term investment mentality
- No profit and stock euphoria
- Too expensive to implement for small
company
- Too much $$ spent on marketing for small
returns
Why Do Customer Service Problems
Persist In Dotcoms? (cont’d)

Suppliers & Partners
- Too many suppliers
- Weak and small suppliers
- No quality control and feedback
- Bad coordination with delivery service
suppliers (UPS,FedEx, ...)
Why Do Customer Service Problems
Persist In Dotcoms? (cont’d)

Other Reasons
- Customer feedback is hard to get
- ARPANet – Internet originally not designed for
consumers
- Technology maintenance is difficult
- Too wide range of customer
- Intangible quality & no standard developed
Is the Internet a Service or a Product?

What distinguishes the Internet from Brick &
Mortar Companies?
Approach to Quality in Dotcoms
Garvin’s Model
– Is the Internet analogous to manufacturing?
 User-based Approach
– Shift of power from retailer to customer
– Shift from the Manufacturing-based to
User-based Approach

Dimensions of Quality (Garvin’s Model)

Performance
–
–
–
–
–

Speed
Checkout time
Delivery time
Ease of use
User interface
Features
– Content: product info, user reviews
– Product variety
– Personalization
Dimensions of Quality (Garvin’s Model)

Reliability
–
–
–
–

Order fulfillment in time specified
Technical reliability
Security and privacy
Stock availability
Conformance
– QoS on Internet = QoS offline
– Same level of service for users of different
locations
– Standards of Web Design (Cross platform issues)
Dimensions of Quality (Garvin’s Model)

Durability
– Lifespan of a Dotcom’s service
– Consistency of content and site organization

Serviceability
–
–
–
–
Responsiveness to questions (MTTR)
Ability to serve concerns online
Merchandise returns
Warranty
Dimensions of Quality (Garvin’s Model)

Aesthetics
– Site design

Perceived Quality
– Brand name (real world counterpart)
– Word of Mouth
– Media coverage, ad banners
Competing on Quality and Trade-offs

Segmentation Strategy
 Aesthetics vs. Speed
– Boo.com

Customer Feedback vs. Privacy
– Doubleclick.com

Features vs. Cost
– Kozmo.com

Features vs. Reliability
– Cars.com
What are dotcoms doing today to improve
customer service?

CRM software
– ByeByeNow.com

Naturalized language searches
– Developed by Ask.com, Neuromedia.com

Outsource customer service (pros/cons)
– LivePerson.com, eAssist.com

Survey method improvement
 Smarter marketing
– eCrush.com
Customer Relationships in the
Old Economy vs. New Economy
Source : http://zingale.crmproject.com
Recap of what we’ve said





Current situation:
– Customer Service is pathetic!
Why?
– Money, Suppliers & Partners, Feedback, Te
chnology  Quality is often intangible
Defined Quality using Garvin’s Model
Quality Tradeoffs
What Dotcoms are Doing Today
Suggestions for Improvement

Dotcom company changes
– Mindset change
– Hiring experienced management team
– Motivate employees

Technical improvements
– Security
– Speed
– Ease of use

Suppliers & Partners
– Delivery service partnerships
– Suppliers (back-end systems providers)