META Trend: In 2002, customer interaction management strategies will require e-channel integration with CRM service applications and customer interaction center workflow infrastructure. Through 2003, customer self-service knowledgebases will challenge organizations with new maintenance processes and integration with agent-facing applications. By 2004, companies seeking customer service superiority will add cross-channel knowledgebases and escalation capabilities.

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With increasing scrutiny of IT investments, especially customer relationship management (CRM) applications, companies are beginning to perform more complete ROI evaluations before proceeding with procurement of new customer interaction technologies. This renewed focus on CRM ROI is concurrent with companies’ concentration on technologies that will help them control, if not lower, the cost of servicing customers - especially e-service technologies, such as self-service knowledgebases, virtual agents, e-mail autoresponse, live chat, and live co-browsing. However, these two goals - demonstrating ROI and reducing cost of service - are often at odds when the tools being considered are live Web interaction tools, due to live interaction channel limitations and second-order effects that can increase overall interaction volumes (see WCS Delta 1034).

Through 2004/05, we believe reducing cost of service will be the primary value driver for companies considering e-service technologies, followed by technology provisioning of customer-segment-specific treatments that are specifically designed to improve customer satisfaction and lifetime customer value. As a result, vendors of e-service technologies (see Figure 1) will increasingly be required to prove ROI as part of the sales process, rather than rely on case studies or offers of free post-implementation ROI assessments. Through 2005, end users will be bombarded with a wide variety of vendor-specific e-service ROI models. Therefore, they should be prepared with clear ROI goals that are part of their project requirements, and incorporate these ROI goals into demonstration scripts provided to shortlisted vendors.

Typical live Web interaction technologies include chat, instant messaging (IM), video, voice (both voice over IP [VoIP] and initiation of PSTN callback), co-browsing, application sharing, and remote control. However, chat and co-browsing dominate the customer service implementations of live Web interaction tools due to the maturity and simplicity of the technologies relative to other live interaction technologies.

Text Chat. Once a darling of the “eCRM” craze, online chat is experiencing sluggish growth due to an inability to satisfy inflated expectations among early adopters as well as the increase in service costs often experienced when it is rolled out to all customers, for any inquiry. Text chat has a poor capacity to convey information and has no capacity to detect or convey human factors (e.g., emotions, buying mood, satisfaction) without advanced text analysis. However, it can be successfully used to answer low-complexity service questions that are too unique to be addressed through self-service, and can also address questions that are required to convert a live customer interaction to a sale, taking advantage of a consumer’s impulse to buy. Chat will continue to experience low growth through 2003/04. By 2005/06, it will primarily be deployed only as a complementary service to other live interaction tools, especially co-browsing.

Co-Browsing. Co-browsing tools enable one individual (typically a service agent) to control the Web browser of another individual (usually a customer). Typically, co-browsing is used with customers in three situations: guiding customers through generally available Web content, such as product information; assisting customers with an online transaction, such as enrollments or orders; and pushing unique content to the customer’s computer through the browser, such as multimedia demonstrations. Co-browsing is most effective when combined with another service channel that can be used to conduct a dialog between parties, especially voice. Co-browsing, combined with voice, has been demonstrated to increase online conversion rates (sales, enrollments) by as much as 25% through real-time exploitation of an online customer’s desire to transact - similar to an in-store retail sales assistant approaching a customer who is browsing store merchandise. Through 2003/04, we expect co-browsing to experience strong growth, particularly in retail and financial services markets, due to the potential for reduced transaction abandonment rates.

Voice. Despite strong hype about VoIP for use in communicating with customers, the inability to achieve an acceptable quality of service, due to the continued dominance of low-capacity dialup Internet connections, has prevented VoIP from achieving any real market presence as a customer interaction channel. The increase in second home telephone lines dedicated to Internet access, as well as the growing use of broadband in the home, has freed up the primary telephone line in many homes. As a result, demand for voice communication via a traditional phone line while remaining connected to a supplier’s Web site is increasing. Although integration with telephony queues is required to implement such a Web callback function, early adopters are reporting strong increases in online conversion rates when PSTN telephony conversations are synchronized with co-browsing sessions. By 2004, we expect every major telephony queue vendor to integrate Web callback functionality into their products.

Instant Messaging. The strong use of IM by consumers has made it a viable channel for customer communications that suppliers can expect to be installed on a customer’s computer. However, companies should avoid using IM as yet another text chat tool, instead focusing on the presence and location management features of IM. For example, investment brokers are finding that IM is a valuable channel for communicating with high-value investment clients because, through IM, they can communicate urgent opportunities when they see that the client is online. In customer service, a more useful role for IM is enabling Level 1 agents to quickly locate Level 2 and Level 3 support personnel, using presence (status) indicators of IM and escalate customer inquiries in real time. Through 2003/04, we expect customer interaction centers to experiment with IM as an agent tool. By 2005, we expect virtual agent technologies to be extended to instant messaging, enabling escalation from virtual service personnel to real service personnel through IM. Through 2003/04, organizations should proceed with caution when using IM for customer interactions and consider piloting the technology only in support organizations that service high-value customers.

Application Sharing. Similar to Web co-browsing, application sharing tools enable a service agent to use a software application on the customer’s computer, primarily for software support. Software vendors can also share their applications with customers as a means of enabling customers to try software before purchasing. However, the most popular form of application sharing is sharing an electronic whiteboard with a customer. Shared whiteboards are primarily used in customer service to support more technical and engineering service processes. Through 2005/06, we believe application sharing and shared whiteboards will have only a niche role in customer interactions, eventually supplanted by various Web services (2007).

Remote Control. Remote control tools - tools that enable a remote party to take physical control of a user’s computer - have traditionally been used by IT help desks and computer manufacturers. However, remote control software is becoming very inexpensive, especially with the inclusion of remote control services in Windows XP. Through 2003/04, we expect e-service vendors to add basic remote control capabilities to their offerings, to enable software and hardware vendors to resolve problems on customers’ computers as an alternative to more expensive remote service management applications, such as Motive and SupportSoft.

Business Impact: Real-time escalation of customer inquiries from Web self-service to live interaction can increase sales conversion rates and improve online customer enrollment rates.

Bottom Line: Companies should not consider live Web interaction tools to reduce customer service costs. Rather, they should evaluate opportunities to use escalation to live interaction to assist high-value customers and improve conversion rates for high-value transactions.

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