By Hannah Hellebush

It happens often; a new product or idea is immediately heralded as the next big thing and although there’s a lot of buzz surrounding it, the actual “innovation” turns out to be a dud.

Even the savviest among us aren’t immune to the hype circling “the next big thing.”  Steve Jobs thought the Segway, a personal transportation device, was about to become a revolutionary innovation in 2001, placing it in the same category of ‘cool’ as personal computers. Nine years later it’s clear that Segways have not become the preferred mode of transportation for the 21^st Century. The opinion of mall cop squadrons aside, it is safe to say Segways have not lived up to their initial billing.

In the customer service world, there has been a similar level of excitement around Web chat as a new service channel with considerable cost-savings and customer experience enhancement potential.  In addition, many members we talk to tell us they are investing in chat in an effort to “keep up with the Joneses” (i.e., competitors are doing it, so we need to as well).  But despite all of the enthusiasm about this new channel, CCC members who implemented chat often tell us they have difficulty realizing a healthy ROI.  Across our conversations with members, we’ve identified a few of the major impediments to a successful chat implementation. 

The first obstacle is customer receptivity.  Chat generally doesn’t strike confidence in the hearts of customers. CCC data shows that only 38% of customers are confident that their issue will be resolved in chat, the lowest of all channels assessed in our survey (including phone, Web, and e-mail).  Not surprisingly, only 4% of customers list chat as their preferred channel to resolve an issue. 

Why are customers generally down on chat?  There are two reasons:

1. Chat Can’t Address Complex Issues: There are limits to the types of questions that can be answered through chat – due to legality or complexity.  In fact, 38% of customers who couldn’t resolve their issue in Web chat say it was because the issue was too complex.
2. Reps Use Scripted Responses: A further 36% of customers say their issue was unresolved in Web chat because they felt the rep’s responses were scripted.  In a rush to handle multiple chats at once, reps often rely on scripts that don’t quite answer the customer’s question.  

Aside from the dubious customer experience benefits of chat, many companies make the business case for the technology based on assumed cost savings that never materialize.  We’ve seen, more often than not, that companies struggle to get to the level of concurrent chats necessary to make chat a cheaper channel than phone.  While theoretically reps can handle multiple chat conversations at once, most companies have discovered that reps should handle no more than 2-3 chats concurrently (the average is 2.5). Handling more than 3 chats noticeably increases response time and degrades the chat quality.

When frustrated customers leave chat and pick up the phone, not only are they now in a disloyal state (our data shows that customers who channel switch are 10% more likely to be disloyal), but the company is likely seeing its costs double (i.e., the chat rep and the phone rep are simultaneously trying to resolve the customer’s issue).

Despite these drawbacks, chat is not without some merit as a service tool.  We have seen some enterprising companies leverage this technology in unique ways that help to circumvent some of the obstacles described above.  One such organization is EarthLink, a member that uses chat for both proactive sales and service outreach (CCC members, check out Earthlink’s best practice chat strategies for both sales and service).  The company has developed highly refined algorithms based on customer clickstream patterns to help identify those Web visitors who are most likely to either purchase products or services or are demonstrating behavior that suggests they may “bail out” of the Web self-service channel.  When used in this way, chat can actually help to drive revenues or prevent calls.

Now, what to do with that Segway?

Let us know what you think. Have you seen Web chat used well?

Related posts:

1. Channel Choice: More Detrimental Than You Think
2. Putting E-mail in my Delete Box
3. Sifting Through the Noise in Customer Data
4. How to Become More Customer Centric on a Shoestring Budget
5. Are You A Low-Effort Service Organization?