Posted: 03/2001

VOIP SEES UPS AND DOWNS AS A CUSTOMER MANAGEMENT TOOL
By Becky Bracken

VOICE OVER IP, SPECIFICALLY IN THE form of click-to-talk technology integrated into websites, has been considered an important tool for e-commerce providers to reach out to online consumers and provide immediate answers to questions and concerns.

However, a recently released report from Jupiter Research Inc. (http://www.jup.com/) casts a shadow over the outlook for click-to-talk customer service interfaces as a viable customer relationship management tool for online retailers. The online buyers surveyed in the report cited lackluster interest and experience with VoIP, and indicated they rarely used or would consider using such features.

But those within the VoIP community that employ the technology say the report may be giving only part of the story. While VoIP proponents admit the technology is certainly in its infancy, they add that, if used correctly, VoIP can be a powerful and cost-effective communication tool.

The report, titled "Customers Put PC Calls on Hold," released Dec. 20, 2000, states: "Customers and sites that have embraced VoIP have been disappointed with the results; the majority of the 18 percent of consumers who have tried VoIP technology are unsatisfied. While latency and poor quality will constrain adoption among consumers, enterprises should explore implementing this technology in the contact center to reduce telecom expenses."

David Daniels, lead analyst and author of the Jupiter report, says that online retailers have misinterpreted customer desire for the option to have an available phone number for voice interaction with the merchant and instead provide the VoIP function to their sites.

While this particular research indicates that VoIP features are not particularly effective customer service tools, VoIP technology can be implemented with great results as a means of reducing telecommunications charges by running voice calls on an IP network.

"What we've seen is that a lot of sites and a lot of online customer service solutions were introducing voice over IP as a solution to that customer expectation," Daniels says. "So we had the belief going into this that perhaps that technology is still a little bit ahead of where consumers are at today. And, where consumers have indicated a preference for voice, what they're really talking about is the traditional telephone and not some type of newer technology. So that's really what led us down the path to do the research."

The Jupiter Consumer survey of online buyers for the report found that only 18 percent have used VoIP technology. Of that 18 percent, 72 percent were not satisfied with the quality.

"Since the technology is still immature, it could do more harm than good," Daniels says. "In our report we found, of the people that used [VoIP], the majority of them were not satisfied with the quality. What we've seen--as customers have indicated--is a preference to interact with companies over the telephone. In our surveys that we've done, we've seen that about 65 percent of the consumers expect to interact via the telephone for customer service."

When online buyers were asked how they would contact a website when it has been unresponsive to an e-mail inquiry, "just one percent of respondents said they would make a VoIP call if the company offered that option," the report says.

Aurica Yen, an analyst with the Yankee Group's Consumer Market Convergence Planning Service, says that customers just have a hard time warming up to the technology.

"I think it's a total mind shift, pushing down your instincts to pick up a phone and dial a few numbers vs. booting up your PC and using that to contact somebody," Yen says. "It's hard to get a consumer to understand that or to really find a value in that."

But, she adds, the numbers taken from her research indicate a growing penetration in the marketplace.

"To give credit, what we've noticed in our past survey this year, there's 11 percent penetration now of U.S. households that have used it at least once or twice. That definitely is showing that industry's credibility. Penetration last year was 4 percent for Internet telephony, so 7 percent growth is almost triple growth over a year," Yen says. "This stuff may end up a niche type of product, but it will find more adoption in the consumer space because there is a cost savings there."

MANY SOLUTIONS

One explanation for customers choosing not to use VoIP could be a lack of the computer equipment necessary to make a VoIP call. But according to the Jupiter survey, "Web veterans with multimedia PCs said that they haven't attempted to communicate in this manner."

Steve Kowarsky, executive vice president and VP of sales of CosmoCom Inc. (http://www.cosmocom.com/), a VoIP vendor and provider of new generation call center platforms, says that VoIP should be just one means of customer interaction with an e-tailer in an entire communications arsenal.

He says savvy Internet users comfortable with the technology who select a VoIP option on a site will understand what to expect from the experience and be less prone to be disappointed with the quality. While he says he doesn't want to fault Jupiter's findings, Kowarsky adds there is a constituency of online shoppers that are very comfortable with VoIP. There are other customers that prefer e-mail and still others interested only in telephone communication. A retailer that provides a variety of communication offerings will better serve its customers, he adds.

The technology is still so new that only certain types of customers are going to take advantage and be satisfied with this type of feature. E-mail is still the preferred method of communication for most online shoppers, and many don't have the interest in taking advantage of VoIP.

"I think customers are confused by it [VoIP]," Daniels says. "E-mail has really captured the fancy of customers online. It's a proven technology that everybody recognizes and knows."

SATISFACTION GUARANTEED

Much customer dissatisfaction with VoIP, according to Daniels, can be attributed to a lack of integration of a company's communications systems and customer information with the VoIP solution. The best scenario would be if a hit on a click-to-talk button also popped up a customer's records on the call center representative's screen. If a customer has already engaged in an e-mail dialogue with an online retailer, there will understandably be a certain level of frustration if it is necessary to restate the problem, inquiry or customer history with the merchant when a connection is made using click-to-talk.

Some vendors or service providers now offer click-to-talk on an ASP basis, providing the VoIP infrastructure and technology, and allowing other companies to place a click-to-talk button on their sites. In that case, the click-to-talk capability is not integrated into other back-office systems, such as customer records. Daniels says, "Their pricing is less, and it's usually on a transaction basis. However, that channel isn't integrated with any of the other service technologies that a company might have. So those solutions are definitely more affordable, but certainly not as comprehensive."

The first generation of voice-over-the-web services wasn't designed to meet the needs of e-businesses, says Ian Halpern, spokesman for eStara Inc. (http://www.estara.com/).

"Many were repackaged consumer-to-consumer solutions characterized by long connection times, unsatisfactory sound quality and spotty reliability," Halpern says. "This experience reflects the past rather than the present or future of web voice."

eStara has developed web voice solutions specifically designed to meet the needs of e-business. The company realized that in order to use web voice as a meaningful part of the customer contact channel, it would have to develop a solution that is easy to use for the customer; offers crisp, clear sound quality; and is extremely easy to integrate into the call center.

"eStara believes it has accomplished this, Halpern says. "We offer a new kind of web voice experience. We believe this is reflected in the adoption of our solution by leading companies like J. Crew Inc. [http://www.jcrew.com/], Allfirst Bank Financial Inc. [http://www.allfirst.com/] and the NHL's Washington Capitals [http://www.washingtoncaps.com/]."

Jordan Katz, director of e-commerce for Net2Phone Inc. (http://www.net2phone.com/), the company responsible for the development of click-to-talk technology, says pure-play e-tailers aren't always good candidates for VoIP contact buttons. First, most large online retailers aren't equipped with large call centers--Amazon.com Inc.  (http://www.amazon.com/) being a prime example--and voice customer service isn't generally a large pure-click's core competency. Therefore, a click-to-talk VoIP feature that uses the phone as a means of customer contact isn't going to add much customer value. He adds that click-to-talk is an ideal fit in the small to medium-sized enterprise (SME) market, where websites function as an extension of a Yellow Pages listing.

Katz uses the example of a local florist. A local florist takes orders in two ways: by walk-in traffic and by telephone. E-mail isn't a viable means of communication for this type of business. But if a local florist's site is equipped with VoIP, that will facilitate communication with the merchant in a way that is comfortable for interaction with customers: the phone.

THE BROADBAND CONNECTION

Another barrier to widespread VoIP functionality and acceptance is the still more than 90 percent of U.S. households that currently connect to the Internet through a dial-up connection, according to the Jupiter report.

"The 22.3 million AOL subscribers in the U.S. amplify this problem, since a complex array of proxy servers lifts these users to the wired world," the report says. "Most problems (with latency and quality) will be eradicated by the adoption of broadband connections, which will surpass 23 million U.S. households in 2004."

The report goes on to say that as broadband becomes available, consumers will be free to use phone lines, killing the need for "experimental vocal technologies," like VoIP.

Yen agrees that a lack of broadband connectivity has slowed the widespread adoption of voice applications.

"What's going to push Internet telephony or these types of new enhanced voice applications will be the deployment of high speed, deployment of broadband, deployment of cable telephony," Yen says. "The thing to think about is, it's not only when the consumers understand these services, it's when they understand the shifting of the communications services industry in general."

Where the report does identify an immediate value in VoIP is within an enterprise for PSTN calls to internal IP backbones, "which will ultimately cut toll charges and blend voice with other media," the report says. "Based on traditional average call-handle times and costs, companies employing VoIP can save $2.20 per service call in addition to savings on call center infrastructure."

"What we point to in this report is that where voice over IP can be best served is within the enterprise," Daniels says. "Meaning [that] once a traditional phone call has been launched and it hits that company's switch, the call can then use VoIP technology to move to [the company's] own internal network. The customer shouldn't even know that's happening. That's all in the background, and it's all completely for the benefit of that organization because it doesn't have to pay longer telecom charges. So rather than paying for a four- or five-minute phone call, that call might be a minute in duration."

But Katz says an even greater benefit to enterprises is in using VoIP for call center interaction with customers abroad. Katz uses the example of the Land's End website, which uses Net2Phone's VoIP technology to provide low-cost telephone charges to international customers. "A customer in India isn't going to pay $10 for a phone call to order a $30 sweater," Katz says.

By allowing customers abroad to make free international calls to order products with VoIP technology, a company won't just be saving money, it will be broadening its customer reach and creating more business.

"This is the best use of VoIP in the near term, because it builds efficiencies by allowing service agents to have one customer-facing application," the Jupiter report says. "The incentive for consumers to experiment with VoIP to replace expensive toll calls by using such sites as Net2Phone.com and PhoneCalls.com is huge, because they offer true savings over conventional phone charges. Should the popularity of these PC-to-phone portals increase, it may lead to greater acceptance of VoIP as a customer service interaction channel."

B2B AND VOIP

At first glance, it would seem that the business-to-business online consumer would be the most likely candidate to take advantage of VoIP voice and data integration. This seems especially likely given the high-speed connections and dedicated phone lines readily available to the business consumer.

"However, corporate firewalls extinguish any VoIP opportunities that business buyers' high-speed connections present," the report says.

But Katz says that Net2Phone's PC-to-Phone software already accommodates most firewalls, and in the near term will be equipped to eliminate any problems associated with firewalls.

And Kowarsky says that within the next "year or two" VoIP technology will evolve and eliminate the firewall barrier altogether.

While VoIP technologies are certainly cost-effective and revolutionary, the report concludes that, as a means of customer relationship management for online retailers, there's still progress to be made. E-mail and telephone interaction will continue to be the primary methods of communication between online merchants and customers. But where VoIP may prove its stripes in the e-commerce arena is as an alternative to high-cost telecommunications charges. As with any revolutionary business technology, there will certainly be a waiting period before the optimum future use of VoIP technology will be determined. But as with any added service merchants offer their customers, there certainly is some value in diversifying and widening the prospects for customers to interact with their businesses.