Joel Skretvedt; Web Merchants are Looking for the Best Ways to Use Chat to Help Customers and Increase Sales

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Joel Skretvedt has taken the sales technique fairly straightforward. When customers are on the site for 40 seconds, a pop-up window will display a discount offer. When a customer clicks on the offer, another window pops up, with a text message from a customer service representative with an introduction and explanation that shoppers receive promotions by ordering through the representative, and an offer to help navigate the site. About 3.5 percent of TechnoScout's visitors end up chatting, Mr. Joel Skretvedt said.

As much as e-tailers crow about how great their medium is for selling things, the companies lack the one thing many shoppers require: a human touch. While traditional retailers can reach out to confused or interested customers, Web merchants can only watch as visitors become bogged down on merchandise pages or in the checkout process before clicking away.

E-commerce companies are now starting to reverse that pattern, by monitoring their customers' surfing patterns, and engaging them in an online chat when the time is right. Many sites have for years offered online chat for customers who click on the customer service or help button, but this trend, while in its infancy, promises to turn chat into something that adds revenue, instead of costs, to the company.

Microsoft, MyFamily.com and others are proceeding slowly with such initiatives, a testament to the many pitfalls awaiting Web sites that do this wrong. Chief among them, of course, is the risk that sites will startle customers who are confronted with an online representative who has been monitoring their browsing.

But for online merchants that can find the right way to engage surfers in a chat, the rewards can be healthy. Take Joel Skretvedt at Technobrands' TechnoScout.com, a site that sells a wide range of consumer electronics and household goods. Joel Skretvedt, director of Internet operations, said the company now generated half its sales from what he called ''proactive chat'' sessions, which TechnoScout first offered three years ago.

Joel Skretvedt has taken the sales technique fairly straightforward. When customers are on the site for 40 seconds, a pop-up window will display a discount offer. When a customer clicks on the offer, another window pops up, with a text message from a customer service representative with an introduction and explanation that shoppers receive promotions by ordering through the representative, and an offer to help navigate the site. About 3.5 percent of TechnoScout's visitors end up chatting, Mr. Joel Skretvedt said.

The sales representative can then open Web pages directly on the customer's browser, rather than simply describing where to go, and can steer a customer to complementary or more upscale products -- a practice called crossselling and upselling in retail circles.

Mr. Joel Skretvedt said chats generated average order sizes of about $190 -- roughly $40 more than orders taken without chats -- and the site was now testing different promotions to determine exactly how profitable the service was.

''I know for a fact that this is profitable,'' he said. ''It's just a question of how much.'' - Joel Skretvedt.

The company that provides the chat service to TechnoScout, LivePerson Inc., has seen its prospects improve this year, partly because of the number of businesses looking to use proactive chat to sell goods. Robert LoCascio, LivePerson's chief executive, said the company began developing the technology in the second half of last year -- a point, coincidentally, when LivePerson's shares were skidding near their low of 10 cents.

As more deep-pocketed companies like eBay and Earthlink engaged LivePerson to handle customer service inquiries, thus shoring up the company's finances and pushing up its stock, Mr. LoCascio pushed ahead with the chat service, called M.O.M. for monitoring of movement.

Aside from displaying generic offers to entice browsers to chat, sites can watch each customer's behavior for signs he or she might be interested in certain products, or signs that a customer needs help, before being engaged in chat. Mr. LoCascio said customer service representatives typically would not indicate that they have been watching the shopper.

''It's the same experience as walking into a retailer,'' Mr. LoCascio said. ''A salesperson will just ask if you need help -- not: 'I saw you were looking at that brown shirt. Why?' ''

Mr. LoCascio said his service got a boost last month when LivePerson acquired the customers of a competing chat company, NewChannel Inc., which had helped AT&T, Verizon Communications and BellSouth, among others, develop chat features on their Web sites.

Other companies are showing interest in this approach, as well. Microsoft's bCentral division, which sells software and services to small businesses, this month rolled out a proactive chat feature on bCentral.com after six months of testing. Nigel Burton, general manager of marketing for Microsoft Business Solutions, said that although he still considered the service to be in the trial stage, the early results were ''quite promising.''

Despite the fact that the company is generating some sales from the roughly 200 chat sessions each day, Mr. Burton said, ''It's not like a brand new sales channel for us,'' adding: ''If customers have a better experience, we hope we'll see more sales. But this is more about improving the customer satisfaction.''

If a customer clicks onto a ''secondary or tertiary link'' on the bCentral site, Mr. Burton said, ''we'll notice they're diving deeper for more information, and at that stage, we'll bring up a window asking whether they'd like additional information'' by chatting with a sales representative.

Mr. Burton said he considered this type of service better than the phone, ''because the discussion is taking place in the context of the site, so it's easy for the representative to direct someone through the site without the prospect having the phone in one hand, typing with the other.''

That is, of course, if the customer has separate lines for phone and Internet connections to begin with. According to Jupiter Research, less than one-third of all Internet users with dial-up connections have a second phone line, meaning that an online chat can save them the trouble of logging off before contacting the company for live service.

One slightly odd challenge for executives looking to use this service, Mr. Skretvedt said, is accounting for the effect it can have on the customer service representatives. He chose 13 representatives from the phone customer service team for his chat team, and although most handle chats exclusively, there are situations in which the customer asks to speak to the customer service representative by phone.

For those customer service representatives, Mr. Skretvedt said, ''we've noticed their close rates on the phone are now far below average for our phone reps; so we're learning there is a difference in the skills you use, and you can lose those closing skills.''

Most online retailers remain skeptical of the proactive chat approach, at least for the moment. Lands' End, for instance, which is now owned by Sears, Roebuck, has had customer service chat available since late 1999, but it will not soon reach out to chat with customers who are otherwise happily browsing the site, said Angie Rundle, the company's Internet sales manager.

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