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The Value-added Activity Begins after the Customer hits 'Submit Order'

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October 1, 1999 *2,400 subscribers* Volume 1, Issue 09
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ECnow.com 1999 trend #02: "Companies will begin to recognize that the value-added activity begins after the customer hits 'submit order' and that "Customer service will become the point of differentiation"


Trend Prediction: Product Delivery and After-Sale Service becoming Key Differentiators

Mitchell Levy
Publisher, ECMgt.com

As we enter the last business quarter of the 20th century, ECnow.com's number two top trend prediction for 1999 is on target. This prediction is that "companies will begin to recognize that the value-added activity begins after the customer hits 'submit order' and that "customer service will become the point of differentiation."

In 1995-96, creating a site on the Internet was cool. Just having a presence (e.g. brochureware) was considered leading edge. In 1997-98, generating sales was considered the Holy Grail. The 1998 Christmas season which generated $3.1b in retail sales for November and December validated the Internet as a viable commercial vehicle. The Holy Grail for 1999-2000 is the 1-to-1 relationship in both sales and service, with existing customers.

The 1999 holiday season is expected to be at least double that of 1998. While Dataquest Inc., a unit of Gartner Group, Inc. forecasts retails sales of $12.2 billion for the 1999 holiday season, Jupiter Communications forecasts online retail sales for the months of November and December to be $6 billion. The Jupiter estimates project that 10 million online users will begin shopping in 1999 and many will make their first online purchases during the holiday season. This is the time that the online retailer needs to make a good impression. According to one of ECMgt.com's readers (M.K., Baldwin, New York, USA), "You have one 1st chance to keep a customer loyal. If the fulfillment systems are not in place, your customers will be disappointed and will not return. A quirky website may be overlooked but slow incompetent delivery is inexcusable."

ECnow.com believes it's a matter of touch-points. A company has a certain number of opportunities to interact with its customers and each interaction (e.g. touch-point) has to be a positive or at least a neutral experience. A negative touch-point could cause a company to lose a customer for life. In the simplest form, a company has 5 touch points:

  1. Generating demand
  2. Sharing product characteristics
  3. Conducting the transaction
  4. Fulfilling the order
  5. After-the-sale customer service

Any number of these touch-points can be serviced internally or outsourced (see last month's article on outsourcing http://ecmgt.com/v1.08/eye.e-trends.htm) as long as the company owns and manages the entire experience.

According to a recently released study of 1,019 Internet users in the United States who go online for personal use conducted by the Mercer Management Consulting Group, the Internet "should lead to significant profits, but only for those companies able to create and maintain strong relationships with their customers." The study found that: "Hybrid 'click and mortar' business designs, which combine elements of traditional and online businesses, may play a significant role in the future." The key elements here are the infrastructure touch-points for fulfillment and customer service.

Some retailers have delayed their e-commerce efforts until they feel they can provide the same quality service and fulfillment in the online world that they provide in the physical world. This is a smart decision, although it's important not to wait too long before getting online. If your company doesn't have a significant effort to incorporate the Internet into your existing business operation, you should. If you don’t, be prepared to see your business dissipate.

Some companies that don't have the fulfillment infrastructure in place are moving to vendors for help. Their choices include traditional fulfillment companies, like UPS, or new e-commerce entrants, like Webvan.com or shipper.com, or software companies, like Yantra. "Companies come to Yantra because Fulfillment is a critical element of customer retention. If you make a mistake in order status, shipping, handling or returns, it leads to customer dissatisfaction" said Devdutt Yellurkar, President and CEO of Yantra. Other notable Yantra customers include:

  • Toysmart.com
  • MotherNature.com
  • iVillage.com
  • Petstore.com
  • Sciquest.com

Yantra's E-Commerce Backend Infrastructure appears to scale from relatively simple transaction volumes of small web merchants to large-scale transactions of NetMarket makers like Sciquest.com with over 1,000,000 SKUs with over 3,000 suppliers.

Another product which is designed to automate interactions between a number of potential customer touch-points is from a company called Delano Technology. An interesting picture of their vision is available here: http://www.delanotech.com/solutions/index.asp. "By automating and managing interactions with our customers, this unique technology gives us the opportunity to generate repeat sales, build trust in the advice we offer and the products we recommend, and most importantly, foster a strong sense of customer loyalty" says Robert Haft, chairman and CEO at Vitamins.com, a Delano Technology customer.

Customer service and interaction both in the pre-sales and post-sales sides are extremely important. According to Dataquest, during 1998 600,000 households experienced problems shopping online. The main problem was the inability to contact the merchant's customer service department via e-mail. According to a recent study released from e-buyersguide.com, only 17% of e-tailers provided "real-time" online customer service. Only 16% of those who contacted an e-retailer with an online question received a response within an hour and 23% received no response at all. This is not a good way to create a positive experience with a customer. "The immediacy and convenience of the Internet works both ways in customer relationship management," said Mary Helen Gillespie, president of e-BuyersGuide.com. "Online merchants who do not respond to customers in "cyber" time risk losing sales. And those who do not respond at all will lose brand equity as well. It’s Business 101: Don’t ignore your customers. Plus, it’s not just bad business, it’s extremely rude even by today’s standards."

In addition to Dell, who is known for good customer service and has written the feature article this month http://ecmgt.com/Oct1999.feature.article.htm, Cisco is also well known for it's good customer service. "Just because people are buying your product doesn't mean they're happy with you. You need to perform customer satisfaction surveys to see what they are thinking" according to Barbara Jones, Director of Customer Service at Cisco. "Part of the culture is to be paranoid, we can't just sit back and say we're number 1. We believe that we are always 2 years away from being put out of business. We need to constantly think about this."

Cisco feels so strongly about customer service that 30% of everyone's bonus is based on achieving a customer satisfaction goal. Yes, that's everyone's bonus; over 20,000 employees. Talk about aligning goals throughout the entire company! In addition to running a corporate survey that goes out to a random set of customers annually, the customer care organization runs a web-based customer survey twice a year. Cisco outsources this task to http://www.researchassociates.com, who helped generate an 18% return rate (900 completed out of 5,000 polled) for the last survey. The survey asks about the customer's experience with the e-commerce tools, the overall customer service experience and the customer's feelings toward the customer service department. Cisco also trains their customer service representatives to ask random questions about how Cisco can make the customer experience better.

To survive in the next couple of years, it will not only be important to be online, but to deliver high-quality service and support to your customers and deliver your product in an efficient manner. Here is a list companies that might be able to help.

Sites worth visiting:

Let me leave you with a couple of my favorite quotes this month:

  • Receiving the first order is easy, getting a second order is next to impossible unless you can deliver to expectation in product and service on the first order. We consider fulfillment and customer service of the highest importance as this ensures our long-term existence. (L.J., Brossard, Quebec, CANADA)
  • Note these differentiators are what make commerce successful, not just e-commerce: faster response to email, faster problem resolution, no hassle returns/exchanges/refunds, easy access to a live person for problem resolution, on time delivery of the right product. (M.P., Scottsdale, Arizona, USA)

I hope you enjoy this eZine.

See you in cyberspace,

Mitchell Levy

President, ECnow.com <http://ecnow.com>
Publisher, ECMgt.com <http://ECMgt.com>
Coordinator, SJSU-PD ECM Certificate Program <http://ecmtraining.com/sjsu>

  • ECnow.com is an e-commerce strategy, e-marketing and training firm. ECnow.com is engaged in strategic e-commerce consulting and Internet marketing activities for US-based and international corporations.
  • ECMgt.com is a monthly e-commerce eZine focusing on strategy, trends and related news.
  • San Jose State University, Professional Development, Electronic Commerce Management (ECM) is a Certificate Program for e-commerce professionals <http://ecmtraining.com/sjsu>.

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