The E-Business Software Weekly is a series profiling trends and developments in software and applications that support e-business, the Internet, and other electronic communication channels. Look for a new story each week in this space.
Enhancing the Customer Experience
The lights went out at a Northern California shopping mall a few weeks ago. Facing power shortages brought on in part by unseasonably warm weather, regulators were forced to black out a sizable portion of San Jose, leaving the mall's patrons stranded in an eerie mid-day darkness. With overhead lighting extinguished, department store shoppers found it difficult to navigate through the rows of suddenly indistinguishable merchandise. The lack of power shut down elevators and cash registers alike, stranding the unlucky and ending transactions in mid-stream. Not knowing when the electricity would be restored, droves of customers left their shopping baskets brimming with would-have-been purchases and simply returned home.
It was a commercial debacle that, analysts predict, is likely to be visited upon Californians many times before the summer ends. But businesses need not have a California zip code in order to suffer from frustrated consumers, abandoned shopping carts, and lost sales. It happens on the Internet every day.
According to Zona Research, 62% of Internet shoppers have given up at least once while looking for products, while 42% on one or more instances have fled the Web for more traditional channels to make their purchases. The cost: more than $3 billion in lost sales annually, an amount that no doubt has increased since the Zona study was completed two years ago.
Such statistics are astounding, asserts e-business analyst Emily Gellady. "What if they occurred anywhere else in American business? Imagine that 62% of moviegoers stayed home because they couldn't figure out what was playing at the theater. Or that 42% of Wal-Mart shoppers left the store because the shopping carts kept breaking down. You'd see it on the evening news."
On the Internet, all too often, it's simply regarded as business-as-usual. Is it any wonder the e-retail sector is imploding?
The Cost of Lost Customers
"The unfortunate reality is that companies are losing unbelievable amounts of money online," contends Mark Hurst, president of the New York based e-business consultancy Creative Good. "Customers who can't buy, won't buy. Companies spend millions of dollars driving visitors to their sites, but once there, visitors find the sites too hard to use."
E-retailers are hardly alone in failing to satisfy the basic principles of good customer service online. In a survey last year of 150 financial services firms with active Web sites, Celent Communications, an e-business research firm, discovered that 56% either did not accept or did not respond to Web-based customer inquiries. All told, only 23% of surveyed financial services companies provided acceptable email responses, and just 5% contacted potential customers by telephone.
Such poor attention to customer relationships is more than a mere annoyance. Patricia Seybold, author of "The Customer Revolution" and a leader in the customer-empowerment movement, notes that customer-facing corporations at last "are beginning to realize that we're very angry at them. Companies that don't wake up and pay attention to this," she predicts, "are going to be out of business."
Even those companies that survive may find their online financial well-being deeply endangered. Because of the inhospitability of their Web sites, says Mark Hurst,
"companies lose opportunities for sales, customer relationships, and positive word-of-mouth--adding up to staggering amounts of lost revenue." The bottom line: "customers feel intimidated by sites that don't treat them well." And, being intimidated, they quickly depart for more inviting climes--which, on the Internet, can be a simple click away.
The Customer Experience Gap
Hurst knows well whereof he speaks. His company (www.creativegood.com) is one of the Web's leading customer experience consultants, having improved the quality of the Web experience for the customers of such Internet giants as Gateway computers, American Express, Travelocity, Kinkos.com, and Macys.com. Creative Good typically raises its clients' customer-conversion rates by an average of 40% to 150%; recently, they doubled the conversion rate for one e-retail client within a two-month period, immediately boosting the client's online revenue by $11 million.
The consultancy's secret: its single-minded focus on the quality of the customer experience. "The root of the Net's problems, and its solution," says Hurst, "is the customer experience. The Web isn't primarily about technology, or 'usability,' or 'design,' or even 'permission marketing.' The key driver of online successä is the customer experience." The Web's main shortcoming, he asserts, is the difference between what Web sites give their customers and what these customers actually want--a deficiency that Hurst terms "the customer experience gap."
The good news, as Creative Good has repeatedly discovered in its work with a wide variety of Internet clients, is that "bridging the customer experience gap can lead directly to higher revenues." Indeed, for a prototypical high-volume e-commerce site, raising the customer-conversion rate by just one-tenth of 1% can add as much as $10 million in incremental revenues--each month.
There is a flip side to this equation, however, and it's not quite as cheerful. As Hurst puts it, "one bad customer experience can cause a customer to abandon a site permanently." With plenty of competitor sites to visit, "customers have little incentive to return to a site that has failed to meet their needs." And what's worse, notes e-business analyst Forrester Research, a customer who has a bad experience on a Web site tells an average of 10 people about it, creating a negative word-of-mouth that can create financial repercussions that extend far beyond the loss of a single customer.
On the other hand, providing a great customer experience on a Web site can generate positive word-of-mouth, media praise, and increased revenue. "If customers achieve their goals on a Web site," says Hurst, "they feel good about their experience and about their own abilities." Moreover, a good customer experience "is likely to lead to future visits by the customer and long-term loyalty for the site, including great word-of-mouth referrals to friends and family. That loyalty can result in the capture of substantial lifetime revenue." Indeed, eMarketer, an Internet marketing consultancy, has discovered that more than 50% of total e-commerce revenue now comes from repeat customers, and at certain sites--like Amazon and Schwab--the figure is even higher.
Navigation and Security
The characteristics of a good customer experience are a mystery to many Web site owners who, lacking a clear standard, often turn to more concrete but ultimately less relevant criteria, like visual attractiveness, depth of information, exploitation of cutting-edge technology, or adherence to emerging Web conventions, in order to measure the quality of their Web sites. This confusion is understandable: the Web is a rapidly changing environment with a limited history and even more limited knowledge base about what works and what doesn't. And while the host of site metrics that are available--numbers of unique visitors, click-through rates, average time on site--may indicate whether or not a particular site is successful, such statistics reveal little about the reasons for a site's success or failure.
But while the details of a good customer experience on the Web may be elusive, the fundamentals should be fairly obvious. After all, shopping on the Internet and shopping at brick-and-mortar stores both involve shopping, and we have more than a century's worth of intelligence about what works and what does not in the latter realm. And, as it happens, what works in the physical world are the same qualities responsible for creating a good customer experience on the Web. According to research by Creative Good and other firms, the four key elements of a good e-commerce customer experience are not terribly surprising: security, navigation, selection, and price.
The third and fourth of these--selection and price--are easy to understand. They were central factors in commercial success long before the emergence of the Internet. In fact, two of the most popular brick-and-mortar retail innovations of recent decades--superstores and category killers like Borders and Home Depot and low-cost comprehensive retailers like Wal-Mart and Target--owe their success directly to their respective focus on selection and price. Likewise, on the Internet, Amazon's and eBay's early prominence was due in large part to their massive selection, while other Internet e-commerce leaders, like Travelocity and the now struggling priceline.com, gained millions of adherents because they made it easy for customers to shop for the lowest price.
While price and selection are not especially complicated variables, navigation and security are generally regarded as much more complex. Perhaps. But are they really that mysterious? Consider what makes it difficult to shop in the brick-and-mortar world. Confusing store layouts, hard-to-find products, even harder-to-find sales clerks, long delays at the checkout counter, convoluted return policies--the unpleasantries of brick-and-mortar commerce are easy to enumerate. Yet it turns out that these same factors underlie the navigation and security concerns that play such an important role in the quality of the customer experience online.
This is what Creative Good's researchers have discovered over the course of scores of engagements: navigation and security are the uniquely online factors that most determine the success of an e-commerce venture. Simply put, "on e-commerce sites, customers want to buy." And while customers ultimately buy for different reasons--some based on price, some based on selection--there are important similarities in what all e-commerce customers want in a Web site. Specifically, say the researchers, they want their e-commerce experience to be "quick and easy."
"No matter how they shop or what their priorities are," emphasizes Creative Good's Hurst, "no one wants their customer experience to be slow or difficult." This conclusion, in fact, applies far beyond the realm of e-retail to other types of sites: "no customers want it to be slow or difficult to send email, or check the weather, or trade stocks."
The quality of the customer experience even affects what might seem at first glance to be a wholly unrelated concern: security. The risks associated with supplying one's credit card online are well-known and highly publicized, if often overstated. Indeed, the Creative Good researchers note, "Web is no less secure than the downtown restaurant," where patrons willingly hand over their credit card to an unknown waiter who usually disappears with the card long enough to record the number for later use or sale if he or she chose.
But "the real difference between the Web and the restaurant," the researchers explain, "is the customer experience. Restaurant customers are in control: the restaurant is a familiar environment, with no undue surprises." The Web, on the other hand, "can be an intimidating, foreign environment to many customers. Each page is a jungle of links, buttons, forms, and blinking graphics. Text is rendered meaningless with baffling jargon. Accusatory error messages can appear at any time. This is hardly the environment in which a new user would feel comfortable giving out a credit card number."
Producing an Exceptional Customer Experience
So how does a Web site proprietor produce the kind of exceptional customer experience that not only allays concerns about navigation and security, but actually goes beyond such satisficing to creating genuine customer delight? The requirements are straightforward: speed, simplicity, and clarity.
Speed is the easiest of these to define and measure, but probably the most often violated. Most basically, Web pages should download quickly--consuming no more than a few seconds, even over an ordinary modem. And the back-end transaction system should promptly process customer-input data and requests as close to instantaneously as possible. For instance, eBay, which handles literally millions of individual bids each day, responds in mere seconds when a user raises his or her offering price. It is a performance standard to which all e-commerce sites should aspire.
Simplicity and clarity are harder to define and measure, but no less consequential. The criterion of simplicity dictates that sites should be invitingly designed, but spare enough that their meaning and content can be comprehended at a glance. Like roadside billboards, Web sites can be quickly passed by, leaving their owners but a few seconds to communicate their messages and offerings to would-be customers. This instant-communication requirement--a pervasive challenge in all forms of sales--is further complicated on the Web because, unlike brick-and-mortar stores, Web sites are flat environments with few of the multi-sensory, three-dimensional cues that physical stores use to attract and hold their customers' attention. In the absence of these environmental cues, Web site customers find it incredibly easy to become disoriented or altogether lost, forcing designers to devote exceptional care to ensuring that their Web site's customers know, in an instant, where they should go and what they should do.
Finally comes the matter of clarity. The demands of speed and simplicity would seem to argue for stripping a company's Web site down to the first-generation paradigm of rows upon rows of unadorned HTML text and little more. Such a site would certainly load quickly, and would be as simple and spare as possible. And yet anyone who has attempted to wade through such dense, text-laden sites well knows how unclear and difficult they can be to navigate. In the same way that brick-and-mortar stores use hanging signs, categorical directories, and other visual elements to guide customers through their stores, Web sites, to be successful, must use appropriate graphics and images both to add clarity, order, and orientation and to create an inviting "sense of place" that makes the site worthy not just of an extended visit, but of frequent returns.
Satisfying these three requirements in an e-commerce site--speed, simplicity, and clarity--is not an easy task. The challenge is demonstrated perhaps most vividly by the fact, as the Creative Good researchers note, "that today most sites do not create a good customer experience. There is room for substantial improvement in every industry online, on practically every Web site." But the prize, says Harvey Thompson, an internationally renowned lecturer on customer experience and author of "The Customer-Centered Enterprise," is one worth any amount of effort: becoming, and remaining, "number one in the eyes of your customers."
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