APEC OVOP Training Workshop on e-Commerce20-24 August 2007, Chinese Taipei Customer Care & After-Sale Services Arnold Chao, Ph.D., MBA Partner, e-finity group inc., Canada firstname.lastname@example.org 1
Agenda • Introduction • A Framework for E-Commerce Services • Issues & Opportunities • After Sales Services Strategies • Customer Care Strategies • Cases • Summary
Introduction • Scope • Objectives 3
Scope Supplier Intermediary Customer/Consumer Focus
Objectives • To review the business issues & opportunities related to customer care & after sales services in relation to e-commerce • To discuss corresponding business strategies being implemented to address the issues
A Framework for E-Commerce Services • E-commerce Provider – Customer/Consumer • Contact • Acquisition • Conversion • Sales • Retention • Deletion • Activation • Customer Care • After Sales Services/Support
A Framework for E-Commerce Services E-commerce Provider – Customer/Consumer • Contact Visitors • Acquisition Potential Customer • Conversion New Customer • Sales Customers • Retention Customers-Profitable • Deletion Customers-Unprofitable • Activation Customers-Inactive • Customer Care Customers • After Sales Services/Support Customers-Profitable
A Framework for E-Commerce Services Customer Life Cycle Matrix
Issues & Opportunities • Customer Care & After Sales Services are becoming increasing more important as: • Sales growth and number of customers continue to increase exponentially but limits will be reached. • Increasing competition for market share • No. of active US web shoppers expected to peak at about 161 million by 2010. • E-commerce providers have to pay increased attention to customer retention.
Issues & Opportunities • A Recent Survey CEO showed top priorities for B2C: • Acquiring new customers - 53 % • Increasing customer loyalty and retention - 49% • Increasing revenue from current customers - 49% • Increasing customer service capabilities - 39%.
Hi Cost Cost of Acquisition Cost of Retention Lo Lo Hi Service Level Issues & Opportunities • Economic Issues from Providers’ Perspective
Issues & Opportunities • From Customers’ Perspective • Meet/exceed needs/wants • Receive an pleasant experience • From Providers’ Perspective • Increase repeat sales • Increase cross sales • Increase sales/customer • Increase overall profitability
After Sales Services Strategies What do customers want/need? • After sale services • Confirmation/Payment • Tracking delivery (Fedex, UPS, Dell, …) • Return/refund • Repair/Recall • Product information • Sales vs Marketing • Technical support How to meet those wants/needs?
After Sales Services Strategies • What one retailer does? • Trigger event 1: Customer first registers on site (but does not buy). • Trigger event 2: Customer first purchases online. • Trigger event 3: Customer does not purchase for an extended period
After Sales Services Strategies • Trigger event 1: Customer first registers on site (but does not buy). • 2 days after registration e-mail sent offering phone assistance and £5 discount off first purchase to encourage trial.
After Sales Services Strategies • Trigger event 2: Customer first purchases online. • Immediate order confirmation • 5 days after purchase e-mail sent with link to online customer satisfaction survey asking about quality of service from driver and picker (e.g. item quality and substitutions). • Two-weeks after first purchase - Direct mail offering tips on how to use service and £5 discount on next purchases intended to encourage re-use of online services. • Generic monthly e-newsletter with online exclusive offers encouraging cross-selling • Bi-weekly alert with personalised offers for customer. • After 2 months - £5 discount for next shop • Quarterly mailing of coupons encouraging repeat sales and cross-sales
After Sales Services Strategies • Trigger event 3: Customer does not purchase for an extended period • Dormancy detected – Reactivation e-mail with survey of how the customer is finding the service (to identify any problems) and a £5 incentive. • A further discount incentive is used in order to encourage continued usage to shop after the first shop after a break.
Customer Wants/Needs • Basic • Security • Privacy • Relevant information • A Pleasant Experience • Personalized/customized services (profile, purchase/behavior pattern, unique requirements …) • Navigational help capability • Effective site and general search capability • FAQ • Non-intrusive cross selling
Customer Wants/Needs (cont’d) • Additional Services • E-mail support • Telephone support • Product tracking • Feedback • Sales/promotions • Innovative New Services • Discussion board • Social networking • Live chat evoked when a shopper abandoned a cart
Customer Wants/Needs (cont’d) • A Single Interface to: • Account management • Marketing & Sales management • Sales • Customer support • Technical Assistance
Channel Integration • Technical Implications • Tightly coupled relationships based on inter-connections • Integration between e-commerce and back-office support systems (Closer integration of CRM, ERP, SCM)
Market Segmentation • Differentiation by: • Profitability • Demographic profile (sex, age, income level, profession, …) • Behavior and Geographic profile • Customer life-cycle (new visitor, returning, frequent visitors, 1st time purchasers, regular purchasers, dormant purchasers, …) • Mode of arrival (direct, search engine, affiliation, social networks, …) • Behavior (immediate leave, random wandering, time/steps-to-reach target, …) • Journey (depending on choices, profile, …) • Purchases (categories, price, frequency, …) • Feedback
Market Segmentation • Co-relation of the above • Click-through rate on a message • Conversion rate to quote • Customize service based on balance among • Cost of service • Profile of wants/needs • Profitability • Customer profile and purchase history • Real-time adjustments
Customer Care – Dell Computer • Background • One of the most successful e-commerce company – 1st company to reach $1 Billion in online sales • Source of profit • B2C 15% • B2B 85% (servers, storage products, network switches & services) • No middlemen • 4 days of inventory & factory direct shipment • Offering customers choice & control (order tracking) • Challenges • Saturated market of online buyers • Not able to reach non-internet buyers • Increasing competition
Customer Care – Dell Computer • Critical Success Factors • Provide Customer with control - order tracking • Customized services • B2C channel • B2B channel/Premium Interface/Value added services • Integrated front and back end (SCM) for faster delivery, elimination of middlemen and minimizing inventory • Product strategies • Customized product hardware & software • Service options • Additional product lines for cross selling (storage, printers, TV,…)
Customer Care – Amazon.com • Background • One of the most successful e-commerce company • Critical Success Factors • Know its customer • Culture of metrics (knows and analyses every move, click, and twitch of the mouse) “Not what do we know but what can we do about them” • More choices & information (look inside, service inside) • Trust • Value added services (wish list, wedding registry, baby registry) • Challenges • Competition traditional • Competition non-traditional
Customer Care – Amazon.com • Personalized interface based on history • New releases • Top sellers • Merchandizing • Recommendations • Information displayed based on preferences and not on intuition • With focus on cross-selling • Affiliate Programs brings additional values
Customer Care - Nikon • Customized Customer Care - Nikon • Background • Manufacturer of high end and professional quality cameras, lenses, and other optical products (Revenue - $5.9 billion) • Sales through specialized dealers • Issues/Opportunities • Trend towards digital cameras with different customer base • Increasing competition in features and pricing and rate of change, and decreasing customer loyalty
Customer Care - Nikon • Customized Customer Care - Nikon • Customer Services strategies • Emphasis on consistency and speed of response • E-mail response to customer questions has gone from 80 to 20 to 5 hours.
Critical Success Factors • Think like customers & Understand customers’ value system • Ease of use • Choice • Control • Trust & security • Optimize over the total value chain • Partnerships • Market place • Affiliates
Critical Success Factors • Presenting & maintaining a single view to customer • Personalization/Customizing for high value customers • Joint developments with the most valuable customers • Monitoring customer satisfaction • Greater integration/interconnection: • B2C - CRM • Other internal systems (e.g. Account, Inventory Control) • SCM - B2B