Path Four: Proactive Pursuit
The possibility of finding out what customers think as they are thinking it is a revolutionary development. But nothing is more radical in the realm of customer service than what Bill Strauss is attempting to do. Strauss, CEO of Proflowers.com, an online florist based in San Diego, isn't satisfied with improving customer service to the nth degree. He wants to eliminate the need for it altogether.
Strauss is a former vice-president of customer support and operations at Intuit, the financial-software company known for its efforts to make software so intuitive that "customer support" is superfluous. The five years that Strauss spent at Intuit in San Diego burned a zero-tolerance attitude into his psyche, he says. Now he's trying to translate what he learned there into improving the customer-service performance of Proflowers, which Strauss joined during its start-up in 1998.
Before Strauss had sold a single daisy, he scrutinized the workings of the company's customer service. After they placed an order, customers most often called simply to check on the order's status: Have the flowers been delivered? From the start, he had Proflowers gear up so it could send three automated E-mail messages as an integral part of every transaction. The first message is now standard fare at many Web sites: the minute customers place an order, they receive a confirmation by E-mail. When a delivery truck picks up the order from Proflowers, that information goes back to the company's Web site, which spins out a second E-mail update. But it's the third message that's the charm. The customer gets a message saying that the flowers were delivered, for instance, at 11 a.m., signed for by Casey Jones. The third E-mail all by itself "limits the number of calls we get. It's proactive," says Strauss. "It's one thing to just do a good job handling the calls that come in, but that's just reactive."
Strauss is a passionate advocate of proactive customer service, but he's hardly alone among CEOs who speak in those terms. Some use the buzzword tier zero, a fiercely proactive strategy. "If we can understand why customers are contacting us," says Strauss, "we can try to modify our Web site, marketing efforts, and ordering process so that we don't give them a reason to call us."
A case in point: the cost of roses goes up dramatically right before Valentine's Day, which forces Proflowers to pass the price increase along to its customers. Strauss could easily envision hundreds of customers calling to complain about the price hike. But Proflowers nipped the calls in the bud, as it were, two years ago. The solution? Each January the company sends out an E-mail notification to existing customers, alerting them to the price increase and, of course, inviting them to preorder at a lower price. Proflowers even tries its best to protect time-challenged customers from themselves. "For instance," Strauss says, "if customers write a gift message saying 'Happy Valentine's Day,' but the delivery date is after Valentine's Day, we call to confirm that all is OK."
Proactive pursuit may be a lovely theory (it's even alliterative), but is it really a brilliant, cost-effective tool? Strauss has some impressive results to point to. In its fiscal year ending June 30, 2000, his company had sales of $27 million, and the overwhelming majority of those transactions were completed online without phone assistance. Telephone orders represented a scant 10% of sales. Roughly two out of five customers who ordered on the Web requested help either by E-mail or by telephone. That's a big improvement over 1998, when the figure was more like four out of five. And although the company's contact-to-order ratio (see "Buzzwords to Watch," below) is considered good in the E-commerce world, Strauss vows to improve it. For now, though, his 30 customer-service reps sit tight by their computers and phones. Tier zero? Not yet.
Costly Lessons
Despite the many examples of companies that report shining success in applying cutting-edge customer- service concepts to get a competitive advantage, there's a bleak side to that brave new world. You could summarize that other side with two words: Lids and Garden.com.
Lids Corp., a retail chain that specializes in sports caps, began with a single kiosk in a mall in 1992. By last year, it was operating 388 stores in 47 states and was generating sales of $125 million. A cap is a cap, but Lids invested in a level of customer service virtually unheard of in retailing, particularly among independent stores.
After launching its Web site, in late 1999, the chain installed kiosks equipped with high-speed Internet access in 55 of its stores and beefed up its customer-support team at its headquarters. Customers could reach Lids personnel by calling an 800 number or using a Web chat feature about 12 hours a day. To strengthen the link with its mostly teenage customers, Lids created its own prepaid cash card, which allowed them to order over the Web without a credit card. "Everything we do is to make it simple for the customer to get the hat," Lids CEO Nancy Babine Kucinski said in an interview in December.
The customer-care center at Lids was a drain on profits, notes CEO Nancy Babine Kucinski, but it was "very effective."
There were signs that the customer-service initiatives were paying off. During the 2000 holiday season Lids' Web-based sales tripled, greatly helped by orders placed in the store kiosks, Kucinski said at the time. And yet the company apparently lost control of its spending. The rapid expansion of stores no doubt had strained its capital reserves, as had the money it poured into customer service. In early January, Lids filed for Chapter 11 bankruptcy protection from its creditors.
