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Customer Loyalty is Underwater

by Allen Weiss  |  
January 1, 2001
  |  9,320 views

Are e-tailers developing close relationships with their customers these days? According to a recent report by Digital Idea, customer loyalty is very low and DataMonitor reports that customer service needs significant improvement, with almost 4 times as many online transactions abandoned than are completed

Maybe these e-tailers need Customer Relationship Management (CRM) software to turn things around. Not so, according to a recent study by the Gartner Group, Inc. (IT and ITB). Despite the pronouncements by purveyors of Customer Relationship Management software (CRM) like Oracle (ORCL), E.piphany (EPNY), Siebel Systems (SEBL) and Broadvision (BVSN), "CRM on e-tail sites", according to the Gartner Group, "amounts to little more than lip service".

This isn't surprising to me. In an earlier column ("Is CRM really about relationships") I argued that CRM was not likely to create its promised unbreakable, deep customer relationships, no matter how technologically advanced the software. E-tailers had to share information with and make credible commitments to customers, rather than just using the technology to get more information from them. I doubted they were willing to do this.

In essence, CRM customers require a radically new mind set, rather than just new software.

The Gartner study indicates it may be worse than even I imagined.


According to the press release, "only 10 percent of sites surveyed allow customers to track inquiries through to resolution. Only 6 percent offer a feature asking the retailer to call the customer. Some 24 percent have instant messaging, and only 28 percent will even acknowledge that an e-mail inquiry was received."

No matter how superficial your definition of a customer relationship, these numbers could barely be considered a casual fling.

My own recent experience with Buy.com (BUYX), which E.piphany touts as a CRM customer on its own web site, bears this out. After ordering a Palm Pilot that Buy.com's web site clearly stated was in stock (my receipt confirms this), I found out days later that it had been backordered - a practice that I believe is highly unethical. Attempts just to contact corporate personnel to get a reasoned explanation went unanswered. Sharing information with a customer that may improve the customer's negative point of view was evidently too much. Bye-bye, Buy.com.


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Allen Weiss is the founder and publisher of MarketingProfs.com. He can be reached at amw@marketingprofs.com.

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