The silver lining in the economic downturn and the demise of many dot-coms is that the survivors have been humbled back to reality. Once the venture capital dried up and advertising revenues declined, many formerly high-flying dot-commers were faced with a stark reality: Their only reliable sources of revenue are from customers. And those customers respond to only one thing—good customer service, something few dot-coms considered important.

Herd Them In

Before the dot-com implosion, many e-businesses were treating customers like cattle, a commodity to be herded to the site, cookied, tracked, spammed, and sold. To entice the herds to their sites, dot-coms would simply give away products or services, relying on advertising revenues and venture capital for operating funds. Customer-service horror stories abounded because many dot-coms had little or no customer service infrastructure whatsoever. Many sites didn’t bother to offer toll-free customer service numbers, automatic replies to customer emails, or problem-tracking systems. Some sites had no telephone number or address information at all. Less than one half of most customer emails received even a reply, let alone a complete problem resolution. The “what do you expect for free?” mentality prevailed. It was more important to have a good-looking site, a wad of venture capital, and a huge IPO than to be known as a leader in customer service.

That aberration in time would merely be an interesting footnote in e-business history except for the fact that many brick-and-mortar companies modeled dot-com behavior—including skimping on customer service—when rolling out their e-business sites. Some apparently thought that e-shoppers would settle for little or no customer service for the privilege of shopping in their bathrobes and enjoying lower prices.

Back to Basics

Thankfully, the death of many dot-coms and the economic downturn have e-businesses scrambling to keep customers, market share, and revenues. Many are finally getting around to reading millions of ignored customer email and voicemail messages and coming to the conclusion that the only way to survive is to put the customer first.

At the recent Silicon Summit II, some leaders of the Internet economy were contrite about their companies’ failure to be more customer-centric. When asked what his company’s greatest mistake was during the previous year, Gateway 2000 CEO Ted Waitt

stated that it was “trying to do too many different things and losing sight of the core basics it takes to make our customers happy.” Many other leaders have expressed similar sentiments, reflecting their recognition that e-business is simply business conducted through a different channel. But, like all other channels, the customer, and not technology, is the driving force.

Looking Ahead

One of the benefits of the technological growth spurt from the Internet economy has been the development and refinement of sophisticated business-intelligence tools, including sophisticated clickstream analysis tools, data warehousing techniques, customization and personalization technologies, and sophisticated CRM applications. The dot-coms used these tools primarily to bombard the herd with banner ads, spam, and blatant upselling disguised as personalization. When used to bludgeon consumers, these technologies erode the customer experience. But these technologies also can be used in a customer-friendly way, to improve customer service instead of improving “click through” rates to appease advertisers.

For example, take personalization. Some sites using personalization will track what a site visitor does and then surprise that visitor on his next visit by customizing the content and offering products from the pages he has visited in the past. Many customers may be offended by this “convenience,” since they did not consent to having their behavior monitored. Savvy users of personalization avoid offending their customers by asking the customer whether or not they’d like personalization to occur, getting permission beforehand. If permission is denied, then default pages are shown to the customer. Simply offering customers the choice of opting in or out of Web site personalization can go a long way toward instilling customer confidence.

Another example is data warehousing. Some companies compile extensive data warehouses of customer information from disparate sources, hoping to find some common thread to use for upselling. While attractive in theory, many customers who are leery of the “big brother Internet” are not ready for the customer service representative who appears to know too much about their habits, household, or hygiene. In some cases, these efforts to better understand the customer can backfire. The simple truth is, many customers enjoy anonymous shopping and don’t want to develop a relationship with merchants. Respecting customer privacy can often instill greater confidence than having a customer service representative know the names of a customer’s children and family dog. So while data warehousing can be used to make better purchasing or service-offering decisions for the business as a whole, it may alienate customers when used for upselling.

So what is the real lesson of the dot-com crash? The customer is, and always will be, king. Use e-business technologies to provide superior customer service instead of banner-ad rate justification, and you’ll prosper in this new selling channel.