Chat for Better Service—But Not Savings

By Elizabeth Bennett Print this article Print

Chat is no longer just for teen-agers and insomniacs. About 17% of corporate Web sites now provide real-time, text-based communication with customer service representatives (CSRs), according to Jupiter Media Metrix. And Gartner Inc. analyst Esteban Kolsky says chat will be a component of 40% of all customer service application deployments by 2003. But those implementing chat may not be immediately the richer for it.

Unlike e-mail, which can cost up to 85% less than a phone call, chat doesn't save much. According to Forrester Research, the average contact-center phone call costs about 75 cents per minute, including labor, technology and telecom services.

"So far, I don't think there's any evidence that chat can beat that figure," says Bob Chatham, a principal analyst at Forrester. Chat still requires the time of a service representative—labor makes up 70% of a contact center's expenses—almost all of the infrastructure, plus additional training.

But vendors and integrators still believe return on investment (ROI) can be a goal—and an immediately achievable one.

"The savings are measured in people time," says Lawrence Byrd, telecom vendor Avaya's customer relationship management evangelist. Byrd and others say that service reps can handle multiple chat windows, increasing productivity. Most analysts and user companies, however, agree that reps generally do not or cannot handle more than one or two concurrent chat conversations.

Vendors also point to administrative savings. Chat conversations are easier and faster to "code" and analyze than phone calls. More-accurate coding supports better analysis, which can improve service and marketing. But having the data is different from using it.

"Our customers would like to mine the data, but they just don't have the resources," says Mark Wollen, director of Web service products for Siebel Systems.

Most companies that are using chat view its impact on customer relations as much more relevant than its possible ROI. Currently, fewer than 3% of contact-center interactions are via chat; a Frost & Sullivan study predicts that that figure will reach 8% by 2007. The numbers are small, but customer reaction is surprisingly positive: One study found that whereas 46% of customers are satisfied with telephone service, 62% are happy with chat.

"We're committed to chat, but we're taking it slowly," says Lee Valenti, director of service center operations for auto insurer Amica Mutual, which added chat to its Web site about six months ago. "You have to think about providing it from a service standpoint."

This article was originally published on 2002-06-17
Senior Writer
Elizabeth has been writing and reporting at Baselinesince its inaugural issue. Most recently, Liz helped Fortune 500 companies with their online strategies as a customer experience analyst at Creative Good. Prior to that, she worked in the organization practice at McKinsey & Co. She holds a B.A. from Vassar College.
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