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APEC OVOP Training Workshop on e-Commerce 20-24 August 2007, Chinese Taipei Customer Care & After-Sale Services Arnold Chao, Ph.D., MBA Partner, e-finity group inc., Canada [email protected] Agenda Introduction A Framework for E-Commerce Services Issues & Opportunities

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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

[email protected]

1


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Agenda

  • Introduction

  • A Framework for E-Commerce Services

  • Issues & Opportunities

  • After Sales Services Strategies

  • Customer Care Strategies

  • Cases

  • Summary


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Introduction

  • Scope

  • Objectives

3


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Scope

Supplier

Intermediary

Customer/Consumer

Focus


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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


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A Framework for E-Commerce Services

6


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A Framework for E-Commerce Services

  • E-commerce Provider – Customer/Consumer

    • Contact

    • Acquisition

    • Conversion

    • Sales

    • Retention

    • Deletion

    • Activation

    • Customer Care

    • After Sales Services/Support


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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


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A Framework for E-Commerce Services

Customer Life Cycle Matrix



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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.


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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%.


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Hi

Cost

Cost of Acquisition

Cost of Retention

Lo

Lo

Hi

Service Level

Issues & Opportunities

  • Economic Issues from Providers’ Perspective


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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



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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?


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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


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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.


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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


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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.



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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


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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


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Customer Wants/Needs (cont’d)

  • A Single Interface to:

    • Account management

    • Marketing & Sales management

    • Sales

    • Customer support

    • Technical Assistance


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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)


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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


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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


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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


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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,…)



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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



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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


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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


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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.



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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


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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


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