Outstanding Customer Experience, the only Sustainable differentiating advantage in E-commerce
Date: Wednesday , January 04, 2012
The retail industry is witnessing an increased migration of customers from traditional brick and mortar retail to E-commerce (online retail) portals. With these E-commerce companies selling everything from apparel to appliances, it gets confusing for the end customer to make a choice unless there is a clear sustainable differentiating advantage of one retail vendor over the other. There is not much to differentiate on the product front, with almost everyone selling similar merchandise. Price is definitely not a differentiator with price crawlers rushing to announce the lowest price that everyone vows to match. With no product and price differentiation and place being the same for all viz. online, E-commerce companies quickly exhaust 3 out of the 4Ps of Kotler's marketing fundamentals with no real differentiating advantage.
However, an important differentiating advantage that is critical to the long term success of an ecommerce company is the entire 'customer experience' cycle. For brick and mortar companies, it includes the store layout, the friendly and non-pressuring service associates willing to provide the right information and courteous customer service staff for returns and billing issues. Similarly, for an online ecommerce transaction, the ‘customer experience’ cycle starts right from a well-defined and easy to navigate website with self-help pages, clearly articulated and sensible policies, a conspicuous link to virtual customer service staff ready to answer any pre or post purchase questions, explain policies in great detail (again without sales pressure), help with logistics questions in a transparent manner, assist with issues related to refunds, billing, even fraud and account takeover situations. This is even more critical in an online setting because this is the only way to develop trust with customers. In absence of in-person interaction, an online company should make available all online channels of communication such as email, chat and voice for prospects and customers to interact with the company. This customer interaction has to lay emphasis on several factors including the accuracy and tone of responses, the empathy factor in online communication, proper use of language and grammar, first time resolution and other metrics.
Companies are focusing on judging customer experience by asking a simple question to their customers, “Will you buy again or recommend our site to a friend?” This benchmark is called the Net Promoter Score (NPS). It is even more critical than customer satisfaction since an overzealous agent can keep offering free discount coupons indiscriminately to anyone that has even the smallest of issues to satisfy customers, but surveys show such customers don’t always recommend these companies because of their lack of a structured approach to customer experience. Companies need to understand what drives these 'promoters' of their websites, their biggest brand ambassadors and assets. There are well defined ways to calibrate member experiences with negative or positive scores. Once such scores are established, it is possible to predict NPS. Accurate prediction will help prevent negative experiences and enable companies to take corrective action on the go, rather than waiting several days for survey results to come in. This ongoing effort is required for companies to offer a sustainable differentiating advantage to its online customers.
A key question that online companies have to ask is whether they have the bandwidth to take on this complex function so very critical to the survival of their E-commerce business. They need to evaluate whether their in-house teams have the kind of expertise required to deliver this ultimate customer experience. Most successful online companies have decided that the best approach is to focus on their core business and outsource the critical customer experience function to experts that have been doing this for several years. Such outsourcing companies, with a focus on ecommerce customer experience, have seen how consumer behavior gets affected by the different external environmental factors and company specific factors such as policy changes, changes in CRM systems, technical bugs, etc. and know how to respond to such situations in a dynamic manner, sometimes regrouping multiple times a day to respond to emerging trends in customer issues.
Lastly, all customer interaction, whether it is in-person or via email, chat or phone, is done by human beings. It is said that one can 'hear the smile' of a friendly customer service associate. They go through hundreds of interactions in a day, some not so friendly, some even harsh and abusive. It is in this context that a customer service associate has to function and keep their calm. An E-commerce company needs to have an appreciation of this context and understand that associates can only function well when the outsourcing company has built a fun and open transparent work environment where every employee is treated with respect, fairness and integrity. Customer centric companies that have built their businesses on providing winning customer experiences have first focused on building world class work environments that enable its associates to provide the sustainable differentiating advantage of outstanding customer service.
The key word throughout this text has been the use of the word 'sustainable'. Some E-commerce companies have come in with a low price strategy and captured market share in the E-commerce space. Some, on the other hand, have introduced the latest brands more quickly than the others to capture market share. But each of these differentiating advantages lasts only until the competition catches up. They are not sustainable. E-commerce companies have to do some soul searching and decide on their long term goal. Is the goal to be around for a couple years and exit or build a brand that will last a decade or two? If it is the latter, they will have to develop a comprehensive customer experience strategy that will provide the extremely critical 'sustainable' differentiating advantage of outstanding customer experience.
The author is Founder & CEO, Motif, Inc
Founded in 2000, Motif is a boutique Business Process Outsourcing and Knowledge Process Outsourcing service provider with delivery centers in India, Philippines and Costa Rica.Kaushal Mehta has over 21 years of experience in the IT and outsourcing industry. Currently the President of the Ahmedabad chapter of TiE Global, Kaushal spends considerable time mentoring young entrepreneurs and speaks at conferences, seminars and forums held by academic institutions, professional associations and industry trade groups globally.