E-Commerce: Technology Alone Won't Ensure Success.
By John Tschohl
Sunday, 4th February 2007
Service is a Critical Element

E-commerce has become a phenomenal tool for businesses and consumers throughout the world during the past few years, growing at a staggering rate. Total online spending during 2005 was a whopping $143.2 billion, up 22 percent over 2004, according to comScore Networks, a research firm based in Reston, Virginia. During the first three weeks of January 2006, online non-travel spending was up 33 percent over the same time period in 2005.

While those figures are impressive, e-commerce is not a panacea. Technology alone won't ensure success. So says John Tschohl, founder and president of the Service Quality Institute and author of e-Service and several other books on customer service. "E-service is speed, technology, and price built around service," he says. "You can't rely solely on any of the three; you must combine them in order to be successful."

The appeal of online shopping is its speed and its convenience. Consumers can do their comparative shopping and place orders with companies throughout the world at 2 a.m. while sitting in the den in their pajamas. Businesses find great benefits in marketing their products and services online to consumers and other businesses around the globe—and doing so at costs that are greatly reduced over traditional marketing methods.

"The most successful companies today have many different doors in which a customer can go through to do business," Tschohl says. "The Internet is one of them. It increases speed and reduces costs, but it does not come without pitfalls. One of them is lack of service." 

Tschohl attributes lack of service to the abundance of "techies" involved in online commerce, either as heads of companies or as key personnel. Although there is no doubt they have the skills necessary to take care of the technical side of the business, they often lack the ability to understand and provide what customers want and expect in the way of personal service.

"The personal touch is a critical element in e-service," Tschohl says. "It can mean the difference between success and failure. And yet, most e-commerce companies neglect the human element, turning instead to voice mail and other technologies that help them avoid the very customers they should be doing everything in their power to serve."

Too often, he adds, online businesses offer customers no opportunity to contact the company by phone or in person. When they do include telephone numbers on their web sites, they set up roadblocks to personal interaction with voice mail and endless options. In fact, consumers have become so frustrated that there now exists at least one web site that lists shortcuts for reaching real, live people at more than 100 U.S. companies. That site is paulenglish.com/ivr/.

"If your customers have trouble reaching a real person at your company, they'll take their business elsewhere, as well they should," Tschohl says. "If you are unavailable to them—and to potential customers—it makes no sense for them to do business with you." He recommends that companies with more than 100 employees and $10 million in revenues invest in employees who will respond to customer inquiries and problems 24 hours a day, seven days a week. "It's a good investment that will draw customers to you and will give you a competitive advantage," he says.

Amazon heads Tschohl's list of companies that have effectively built speed, technology, and price around service. Jeff Bezos founded the company in 1995 and had $511,000 in sales that year. In 2005, Amazon's revenues reached more than $8 billion, and Bezos had a net worth of more than $5 billion. "I don't understand why more online companies don't copy Amazon's concept," Tschohl says. "Southwest Airlines is another example of a company that is effectively using the Internet. The majority of its tickets are purchased online, which reduces costs by 90 percent. It is the only airline in the United States that made money in 2005, with revenues of $7.58 billion and profits of $548 million."

Tschohl also cites Commerce Bank on the East Coast as a company that is using a combination of technology and people to make it one of the most successful banks in the United States. More than 42 percent of its customers use online banking, one of the highest rates in the industry. The bank's telephones are manned 24 hours a day, seven days a week by real people. If you want to benchmark your company's telephone service system against the best, give Commerce Bank.

E-service leaders also are brutal in eliminating waste and passing the savings on to customers, Tschohl says, citing Dell Computer as a good example. "One out of six PCs sold worldwide is made by Dell, which aggressively uses the Internet to sell directly to customers. Its net margin is 6 percent versus its competitors' 1 percent."

Businesses that want to realize the same type of success as the companies mentioned here would do well to imitate their strategies, Tschohl says. "The Internet is probably the most powerful tool a small company can use to level the playing field," he says. "It's important to remember, however, that with the Internet, you are just one click away from oblivion."

If you'd like to order a copy of Tschohl's book, e-Service, at a $15 discount, log onto www.customer-service.com and enter code 3311.

John Tschohl is an international service strategist and speaker. Described by Time and Entrepreneur magazines as a customer service guru, he has written several book son customer service, including e-Service; Loyal for Life, The Customer is Boss, Achieving Excellence Through Customer Service, and Ca$hing In: Make More Money, Get a Promotion, Love Your Job. John also has developed more than 26 customer service training programs that have been distributed and presented throughout the world. His bimonthly strategic newsletter is available online at no charge.
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