Posted November 8, 2007 3:26 pm by with 11 comments

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A new study from Kronos, Inc. discusses the phenomenon of retail sales shifting from brick and mortar stores to internet retailers. In a nutshell, the study states that internet retailers who expect to capitalize on this shift had better understand customer service.

I disagree with one of the conclusions of the article referenced above–that we are in an age where customer service is valued over the price. This is simply not true. All of my years of experience in e-commerce along with study after study show that customers are primarily interested in the lowest price. In fact, that is far and away the primary reason that internet retail took off in the first place.

So, here is a quick tip for you. If a consultant comes along and tells you that customer service is more important than price, fire them. They do not know what they are talking about.

That being said, price competition is a losers’ game for all but the big players and you need to focus hard on customer service if you are small or medium-sized.

When we talk about customer service at Vitabase, we talk about touchpoints. A touchpoint refers to anything that causes a contact between your company and the customers. Here are some touchpoints and a sampling of the details you have to consider:

1) Phone calls (How the phone is answered, protocol used, on-hold music, how conversations are ended)
2) Email (How soon emails are answered, the tone used to answer them, whether they are signed by a person or generically)
3) Shipment packaging (Box color, packing tape used, how the tape is applied, peanuts or paper for stuffing)
4) Product packaging (quality of printing, design, quality of the packaging itself)
5) After the order situations (how returns are handled, when credit cards are charged, backorders, etc.)

You start to get the idea. The fact is that your customers view your customer service by the way you are handling dozens of “small” details.

The moral of the story is this simple fact–your employees are very important and so is the way you train them. Those low-wage employees in your warehouse or on the phones are making a huge impact on your business. That is the conclusion of this study, and I wholeheartedly agree.

  • Greg you state its an important component. I would almost say it is THE most important factor in todays world. Especially in competitive markets. If your site has crappy customer service, that kind of a rep can spread like wildfire, thus hurting your bottom line.

  • I think both factors shouldn’t be overlooked. Not sure if selling online product would qualify me as an e-tailer (as conversation here centers on traditional products) but one of the most common comments I get from my customers is that level of customer service I provide is beyond their expectations, even though I only provide level of support I would want for myself.

    Not sure if this speaks good for me or bad for my competition but many of my customers purchased after reading other people’s comments and not solely based on price …


  • Brian, study after study shows that price is a more important factor than customer service for most people. That may change in the future, but that is the way it currently is.

    Granted, there is a set of the population that values customer service more, and in our case, we choose to go after that segment rather than the price shoppers. But believing we can sell to anyone with that model is burying our head in the sand.

    If you do decide to focus on customer service, remember that it is a hard thing to quantify–if the best you can come up with to describe your company is something like “outstanding customer service,” you do not really have a differentiating factor (USP).

  • Yes pricing is the most important factor but customer service is almost as important because of the very nature of e commerce.It has a faceless impersonal nature that a lot of people find bewildering; i know that i personally found it very unsettling when i first started purchasing stuff off the internet. The fact that you can’t see, touch, feel the item you want to purchase or ask a real person a bunch of questions made it so for me. Which is why, good customer service reassured me in some way and perhaps encouraged me as well.

  • I’d agree that price will win out over customer service, but I think it depends on the customer. There are certainly people who will gladly pay more for the extra service.

    More though, is that customer service is expected now. I don’t necessarily see it as something that will help you sell your product, but it is something that will keep people from buying again or recommending you to others.

    It’s seems irrelevant to me what you say about your customer service. I won’t buy based on what you say, but I will always be making decisions about how you actually practice customer service. Do a great job and you create a loyal customer who will see past your price. Do a poor job and you lose a customer for life regardless of your price.

  • no matter how electronic the service is, after all there is a human at the other end of phone line or internet connection. Human approach is always number one.

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  • J Nair

    The right combination of price and customer service is what one needs to focus on. Giving things at a lower price will not necessarily draw customers “always”. Again the market segment which seeks out for lower prices, is quite huge. One should try to compensate the costs involved in providing better service by increasing volumes, i.e., by attracting more customers from that market segment. Nobody is looking at rock bottom prices. Every one is looking for a mix of acceptable prices and just a little above average service. A good smile and a thank you from the service person will bring more customers than the price factor.

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