Retail TouchPoints: Mystery Shopper Study Shows E-tailers Sacrifice Service For Cost Containment, Efficiencies

Feb 25, 2010

By Debbie Hauss

Through a special arrangement,
presented here for discussion is a summary of a current article from
the Retail TouchPoints website.

Although online sales continued to outpace
brick-and-mortar sales in 2009, online retailers still felt the pinch of
the recent recession during the most recent holiday season. In response,
a number of online retailers chose cost containment over improvements in
customer service in Q4 2009, according to the e-tailing group’s 12th
Annual Mystery Shopping Study

Merchants have made trade-offs on communication
effectiveness and information accessibility to cut costs, the study reports.
Year-over-year it took merchants longer to respond to email communication
(20.69 minutes in Q4 ‘09 vs. 20.15 in Q4 ’08). Email responses were less
likely to offer a personalized salutation (75 percent vs. 82 percent) and
fewer gave correct answers (72 percent vs. 77 percent).

Additionally, call center performance was
less effective in Q4 2009, with longer wait times for customer calls and
some return policies have become more restrictive.

At a time when consumers are demanding more
and better information on a timely basis, loyalty and brand perception
will likely take a hit if retailers continue down the path of cutting costs
at the expense of customer service. "I think consumers will get frustrated
when they don’t get the answers they need," says Lauren Freedman, founder
and president of the e-tailing group. The problem is not automation per
se, but the fact that the retailers are not providing timely responses
and providing correct answers to consumers’ questions, she explains.

Merchants did make some positive progress
during Q4 2009, by improving the speed of deliveries and investing in technologies
that are providing better information during the checkout experience.

For consumers who chose to purchase their
gifts at the last minute in ’09, they were able to receive their packages
quicker (4.05 days in ’09 vs. 4.76 in ’08). Merchants also made it easier
for consumers to check out and reorder. In 2009, 89 percent offered pre-populated
customer information in the shopping cart, 50 percent offered single cart
checkout from multiple merchants under one umbrella brand, and 10 percent
offered the ability to reorder from order history.

More and more retailers are using some form
of social media and/or customer feedback mechanism to interact with customers.
In 2009, 22 percent of merchants surveyed offered post-order targeted email
to review/rate a purchase and 26 percent provide post-order targeted email

The top performers were
chosen as other sites were eliminated for not possessing "must have" criteria
in the following order of importance.

  1. Keyword search
  2. Four or fewer days to receive
  3. Adequately and correctly
    answer email question within 24 hours; providing a specific (rather than
    automated) answer
  4. On-site home page accessibility
    of toll-free phone number 2.0 or higher on a scale of 3.0
  5. CSR product knowledge when
    calling toll-free number 2.0 or higher on a scale of 3.0
  6. Five or fewer clicks to
  7. Email shipping confirmation
  8. Email order confirmation
    sent with order number and customer service information included
  9. Real-time inventory in shopping
    cart or on product page

Questions: Where do e-commerce sites need to continue to invest to
improve the shopping experience? On the other hand, in what areas can
they look to cut expenses?

Please practice The RetailWire Golden Rule when submitting your comments.

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14 Comments on "Retail TouchPoints: Mystery Shopper Study Shows E-tailers Sacrifice Service For Cost Containment, Efficiencies"

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Ryan Mathews
12 years 4 months ago

The key to e-tailing is the same as the key to physical retailing. Customers want to experience responsiveness, convenience and a minimum of red tape. Give them that and you can save a few bucks on bells and whistles.

Doron Levy
Doron Levy
12 years 4 months ago

Online shopping is such a distracting venture. Cutting service or anything to do with what the customer sees is a bad idea. Online retailers should focus on the back end to see where they can save money. 5 or fewer clicks should be more like a maximum of 3 clicks to checkout. My observations indicate that anything over 3 becomes a distraction and shoppers quickly lose interest.

Bob Phibbs
12 years 4 months ago

It’s interesting that online is being subjected to cost containment like the bricks and mortar. This flies in the face of what I’ve been reading about retailers like Sears expanding operations and Macy’s who took over a whole building in SF. It’s not like anyone has to reinvent the world, but be at least as good as Amazon. Anything less and without the resources, you’re kidding yourself about how well you deliver online.

Len Lewis
Len Lewis
12 years 4 months ago

Normally, I’d give you the usual answers like better navigation, quicker customer service, etc, etc…all good answers and things that should be standard issue for e-commerce sites.

But I’d like to bring new technology into the equation. I’d like to see wider use of 3D imaging for merchandise. Online retailing is a show and tell business. I’ve seen it in action–at least the first generation of it–and it should be considered part of customer service.

Dick Seesel
12 years 4 months ago

Ryan is right: The principles that work for bricks & mortar retailing ought to be applied to e-commerce. Start by making sure that your assortment is aligned with your overall strategy and identification of target consumer. Then make sure you are offering a value appropriate to your brand position. Finally, and most important, execute well: Make sure your site is easy and appealing to navigate, have wanted goods in-stock, ship on time and have liberal return policies. None of this is easy, but it’s a winning formula.

Bill Emerson
Bill Emerson
12 years 4 months ago

Customer service on line is no different than it is for 4-wall. The key ingredient is a company culture that starts at the customer’s screen and works backwards through the value chain from a customer’s (not the corporate office’s) point of view. The second key ingredient is also the same as 4-wall–simplicity. If you can streamline the shopping and purchase process to be simple and intuitive, you win friends and return customers. If done correctly, this also lessens the importance of the call center, which is typically used because the buying process is confusing or counter-intuitive. Customers are not (IMHO) looking for layers of technological gee-whiz or fancy (slow-loading) graphics and they are certainly not looking for annoying surveys and add-ons, which are better used in the post-sale follow-up. In other words, keep the marketing department out of the design process and rigorously vet the process with real customers.

Ralph Jacobson
12 years 4 months ago

No surprises here: retailers of any type often cut back on service to save costs…a losing proposition. There needs to be a balance between making your website respond to what your audience is telling you, and proven design elements that make your site effective. Customers will tell you desires that may simply not only be unpractical, but they will also never actually use the features they say they want. Additionally, continue to check all of your competitor sites for updated functionality. Also, look at sites from industries way outside of retail for ideas that are completely transferable to our business.

Jonathan Marek
12 years 4 months ago

I have a different take. I wonder if much of the etailing world is becoming like the airline industry (or gasoline retailing, for that matter), where consumers are so hyper price sensitive that cost containment and service reduction becomes that norm.

In airlines, this is clearly a consumer-driven phenomenon. No matter what fliers say in surveys, in reality they will almost always choose the lower priced ticket over better service at a slightly higher price. Frankly, that’s how many tend to shop online. Airlines haven’t been able to do much to turn this around…will etailers find a way?

Gene Detroyer
12 years 4 months ago
The history of retailing tells us that cutting back on customer service never pays off. As various retailers have done it in the past, it has led to their competition moving ahead of them or them going out of business altogether. Still, it always seems to be an option that some retailers keep on the table when times get difficult. Unfortunately, it is an option that some retailers still take. One would think that e-tailers would be somewhat more progressive in their thinking. But, it doesn’t appear so. Unfortunately, this is probably more critical in online retailing than in B&M stores. The online shopping experience is so anonymous that customer service must be the very best. And, with the speed of change in technology, there is no going backwards, just forwards. The challenge for most e-tailers, however, will not just to continue to move forward with improvements in the area of customer interaction, but to keep up with the big guys. In today’s technology environment, the life-cycle curves are shorter by large magnitudes versus what… Read more »
Paula Rosenblum
12 years 4 months ago

It’s rare when I need a customer service phone number, but when I need it, finding one is a real Easter Egg hunt.

It’s obvious that eCommerce retailers are trying to keep phone calls to the call center down. I believe this is a potentially disastrous decision, and yes, Amazon, this DOES include you.

Shilpa Rao
12 years 4 months ago
From the retailer’s perspective, there is a lot behind an ecommerce site. The whole operation is quite complex for a retailer right from merchandising, content management, inventory and supply chain. Added to this are the complexities of interacting with multiple vendors. A simple looking website has at least 15-16 components from various vendors. For example, the search service would be provided by one vendor, the image rendering by other, review writing component, payment gateway and many such small components by others. In fact, they often have vendors to manage their customer queries and contact centers. It is just amazing how beautifully it all gels together into an ecommerce site in today’s world. After the dot com bubble burst, retailers realized that they have to build strong back end processes and systems. The excellence in delivery is partly due to retailers’ supply chain efficiencies and partly due to the efficiencies brought in by companies like UPS and Fedex. Retailers need to push their contact center providers harder on SLAs to bring in efficiencies. As for customer… Read more »
Mark Price
Mark Price
12 years 4 months ago

In e-commerce, the connection between customer service and revenue is easier to calculate and more dramatic in impact. E-tailers who cut costs and short the experience of customers, particularly Best Customers, will find themselves in hot water in a direct, calculable way.

Why is this so? Because all transactions online are captured and most customer information can be relatively easily linked to that transaction information. Therefore, it is not difficult to calculate annual and a projected 3-year value, and to determine which customers, after a customer service experience, demonstrate a decline in click/open rates as well as a decrease in sales.

In a cost-sensitive environment, it is critical to maintain or even improve the experience for Best Customers, the small group of customers who represent 50%+ of revenue and an even higher share of profit. Through such approaches as priority 800#s, queuing technology and faster response to email, those high value customers will receive treatment that will improve, not damage their relationships, and the company will experience business growth as a by-product.

Bill Hanifin
12 years 3 months ago

The online retailers I have worked with lately meet the criteria at the end of the article, but I didn’t see one important element of communications–the use of targeted emails driven by data collected from purchases.

The typical environment is be presented with a list of radio buttons from which to choose newsletters and updates. As a customer, I can check all (or none) of these but in either event, will not receive any emails that indicate that the retailer knows that I bought a certain product and might be interested in a companion product. Reminders to reorder based on quantity purchased would make sense also.

Who has more data than an e-tailer after my purchase? Why don’t they use the low-cost data collected to drive relevancy instead of promoting noise?

In my opinion, this should be added to the list of minimum requirements for success.

Gary Edwards, PhD
Gary Edwards, PhD
12 years 3 months ago
According to the recent Empathica Consumer Insights survey we conducted, the majority of consumers feel customer service in the U.S. is getting worse today. While customers are spending less and have decreased their shopping frequency, they still expect the same (if not more) service when they do go out. It’s critical for retailers to respond accordingly, emphasizing great service both in-store and online. As such, marketing is now a multi-channel initiative, with a company’s Operations Department oftentimes dictating how various channels must be used to chase customers and deliver on accessibility and convenience. For example, retailers must not only have a user-friendly and visually appealing online store, but geo-location and eCommerce personalization capabilities are becoming more critical to move a customer into the online checkout process. This can mean letting an online user know whether an item is available in-store and can be picked up locally, or alternatively, what items might appeal to them based on their previous purchases. It will help to customize the eCommerce experience and deliver on the service expectations most desired… Read more »

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