Few companies understand the power of the Web better than Dell Computer. It began selling products online in July 1996. It now gets 2 million Web visits per week and does 30% of its business via the Web. That's $18 million worth of hardware, software, and accessories per day. Dell's Premier Pages -- customized sites for thousands of business accounts -- are reinventing how Dell sells products to corporate customers. So when Michael Dell and his colleagues declare that three words hold the key to their company's future, and that these words will determine who wins and who loses in the next round of Web competition, it pays to ask a simple question: What are those three words?
Visit Dell's headquarters in Round Rock, Texas, outside of Austin, and you can't miss them. Nearly every bulletin board in every office has a sign that reads "The Customer Experience: Own It." Hanging above a set of cubicles -- home to employees who sell computers to government accounts -- is a gift-wrapped box labeled "the 'Customer Experience.' " That label serves as a reminder that at Dell, bonuses and profit sharing are tied to what those three words signify. Thousands of employees wear a laminated photo ID around their neck that spells out the Dell mission: "To be the most successful computer company in the world at delivering the best customer experience in markets we serve."
The customer experience. Building a great company on the Web isn't about "aggregating eyeballs," "increasing stickiness," or embracing any of the other slogans that masquerade as strategy. It's about rethinking the most basic relationship in business: the one between you and your customers. How well do you meet their needs? How smoothly do you solve their problems? How quickly do you anticipate what they'll want next? The real promise of the Web is a once-and-for-all transfer of power: Consumers and business customers will get what they want -- when and how they want it, and even at the price they want. Jerry Gregoire, 47, chief information officer at Dell, puts it this way: "The customer experience is the next competitive battleground."
What is the customer experience? "It's the sum total of the interactions that a customer has with a company's products, people, and processes," says Richard Owen, 34, vice president of Dell online worldwide. "It goes from the moment when customers see an ad to the moment when they accept delivery of a product -- and beyond. Sure, we want people to think that our computers are great. But what matters is the totality of customers' experiences with us: talking with our call-center representatives, visiting our Web site, buying a PC, owning a PC. The customer experience reflects all of those interactions."
Dell doesn't claim to have discovered all of the elements that create a definitive customer experience. Indeed, 16 months ago, the company formed the Customer Experience Council, a group that is scrutinizing every aspect of how Dell interacts with customers. A handful of other Net companies are operating on the cutting edge. At Furniture.com Inc., a Web retailer based in Framingham, Massachusetts, delivering a great customer experience means addressing the limitations that come with buying furniture at a store. At Biztravel.com Inc., a great customer experience means offering only those features that are of value to frequent business travelers. At Gap Inc. Direct, the Web arm of the popular clothing retailer, delivering a great experience means translating the value of the Gap brand from the physical world to the virtual world.
What follows is a summary of the best practices developed by these four customer-experience innovators. Together, they form a lesson plan for the next stage of Web-based competition. "Online, you don't differentiate yourself by what you sell," argues Jeffrey F. Rayport, a professor at Harvard Business School and the executive director of Marketspace Center, the e-commerce division of Monitor Co., based in Cambridge, Massachusetts. "You have to differentiate yourself by how you sell -- by the experiences that you create around finding, trying, and purchasing. In the actual world, providing a bad experience is damaging. But people will keep going to the same supermarket, because it's on the way home. On the Web, a bad customer experience can be fatal."
Furniture.com -- Even Better than the Real Thing
It's awfully convenient to buy books from Amazon.com. But surfing the Web still can't compare with spending a lazy Sunday afternoon browsing in a bookstore. It's often cheaper to buy music at CDNow. But if you want to see the new hip-hop styles, or the latest developments in body piercing, nothing beats a late-night trip to Tower Records. There is still something satisfying about shopping for products that you want in retail environments that you enjoy.
Then there's buying furniture. Is there any big-ticket consumer item that is less fun to buy? The $178 billion furniture industry is infamous for its disregard of customers and for its slow-as-molasses cycle times. "This has been a manufacturing-driven industry rather than a customer-driven industry," says Andrew Brooks, 36, a McKinsey alum who recently left a position as chief operating officer of Channel One Network. "It's strange, really. You almost never buy furniture for an 'unhappy' reason. You buy furniture because you have a new child, or you've bought a house, or you've landed a new job. And yet customers almost never have anything but horror stories about the experience."
"Putting the customer at the center isn't something that this industry usually does," adds Carl Prindle, 31, executive producer at Furniture.com. "There are so many frustrations: the length of time that you have to wait, the fact that you may have to go to five or six stores to find the style you want."
Brooks and Prindle mean to change all that -- by reinventing the customer experience as furniture retailing moves from the physical world to the Web. Today, Brooks is leading a tour through an empty showroom in downtown Worcester, Massachusetts. On January 31, the business that had been housed in this facility vanished as a brick-and-mortar operation. Empire Furniture Showroom, a family-owned company that had occupied the same building since 1947, finished up its clearance sale. In its place, another company emerged: Furniture.com. Along with Empire's old inventory -- dressers, sofas, beds -- went all of the old rules that had governed the furniture business.
Like online merchants in many industries, Furniture.com can offer greater variety than its storefront counterparts. It features more than 50,000 items, compared with the roughly 30,000 items that you'll find at the biggest of the "big box" retailers. But breadth of selection isn't the primary driver of a great furniture-buying experience. Personalization is what counts. A twentysomething looking for the perfect nightstand doesn't much care if a store carries 150 different sofas. A middle-aged couple whose home is decorated with country styles won't spend time evaluating the latest dining-room tables from Scandinavia.
Customers "don't want a football field of furniture," says Brooks, who is now CEO of Furniture.com. "They want a boutique filled exclusively with the stuff they love."
That's why Furniture.com is deploying a range of technologies that can zero in on a shopper's tastes and then offer products that fit those tastes. The most important of these technologies is a throwback: human interaction. Furniture.com employs 20 "design consultants" -- many of them certified interior designers -- who offer advice by phone, email, and live chat. These consultants are not traditional salespeople. Customers can't see them, and they don't get paid by commission (although they are eligible for a bonus that is tied to team sales goals). But like traditional salespeople, they identify potential buyers and then offer to help.
Diane McGowan, 49, is a case in point. She's a design consultant who has been trained to use Furniture.com's live-chat software. She monitors the site, sending out "feelers" to ask users if she can be of assistance. Here's a typical exchange:
"Yes, thanks. I'm looking for a rectangular dining-room table with chairs -- possibly Windsor chairs -- and maybe a hutch."
"Can you tell me what type of wood, and what style, you are looking for?" McGowan types.
"Hmmm. I know I don't like oak very much. I know I like cherry and maybe maple. I prefer dark- to medium-colored woods. But harvest tables are sometimes made of pine, aren't they? I wonder if they can be stained to a more medium color."
"Yes, they can be," McGowan types. "And every manufacturer uses its own stains. On the site, we usually have a thumbnail for a color, which you can click on to get a better idea of how it looks."
Design consultants can send out swatches of fabric, along with handwritten notecards. They can also look at what a customer has placed in the site's shopping cart (with the customer's permission, of course). That way, they can suggest compatible pieces. "Selling furniture online is more challenging than selling books," says Rose Mauriello, 42, vice president of sales and customer care. "But it's easier for us to provide a great experience than it is for a traditional retailer."
How did Furniture.com learn so much about selling furniture online? By analyzing the frustrations associated with buying furniture in physical settings. Brooks and his colleagues spent long hours watching customers shop. One of their conclusions was that consumers were hungry for more information about products. "People don't really know the difference between a $499 sofa and $699 sofa," says Peter Halunen, 32, vice president of merchandising. "People would look at a price tag. Then they'd turn over cushions, looking for the fire-retardant tags that say how a product was made. But that's all manufacturer-oriented information; it doesn't help at all."
So Furniture.com decided to create a "Fact Tag" for every product that it features. "It tells people about the dimensions," says Brooks. "Is the product oversized? Do you need to measure your doorways? What's the surface material or finish? How do you need to care for the fabric? What are the construction methods?" Brooks is so determined to make the furniture-buying experience more transparent that he has begun talking about posting manufacturers' on-time delivery records. In an industry famous for delays, that's heresy. "We want to reward companies that take the customer experience as seriously as we do," he says.
Furniture.com treats the delivery process as another major aspect of the customer experience. Once an order is placed, the design consultants hand it off to the customer-care department, which works with the manufacturer to make sure that it stays on track. Furniture.com sends out regular emails to customers about the status of their order. If there is a shipping delay, a customer-care staffer contacts the buyer in question immediately. "We don't want customers to have to call us to find out what's going on with their order," says Mauriello.
For Furniture.com, the shipping process doesn't end until the furniture is safely situated in the customer's home. The company outsources delivery to a high-end common carrier, such as North American Van Lines. But according to Brooks, customers hold his company, rather than the carrier, responsible for the quality of the delivery experience. "If the delivery guys don't wipe their shoes before they go in, or if they leave a scuff mark on the wall -- well, Furniture.com might as well have done that." That's why the company pays for each carrier's highest level of service. Specially trained staffers from the trucking company deliver, unwrap, assemble, and inspect the furniture, place it where the customer wants it to go, and take away any packaging. On delivery day, the buyer gets a call from the customer-care department -- "just to make sure that everything's okay," says Brooks.
Furniture.com also offers a "Satisfaction Guarantee." Customers who aren't happy with what they've ordered can exchange it -- without paying any restocking or handling charges. "That's a big departure from the old approach," Brooks boasts. "But the customer's goodwill is more important to us than anything else."
Brooks's ultimate goal is to challenge the underlying logic of the furniture-retailing business -- a business that views delivery times of 6 to 12 weeks as normal. Working with several North Carolina-based manufacturers, Furniture.com is gathering data about its customers' preferences -- whether people prefer sleigh beds to canopy beds, for example, or whether they tend to choose cherry over oak. Furniture.com and the manufacturers use this data to make a limited set of products that satisfy a broad range of customer demand. For each of those products, Furniture.com and its partner commit to a delivery time of as little as 3 weeks.
"In the world of e-commerce, 3 weeks is an eternity," says Brooks. "But in the world of furniture, it's a snap of the fingers. Our vision is to collaborate with customers and manufacturers to make this a better experience. This is an industry that has lots of room for improvement."
Biztravel.com -- Which Features Should We Feature?
Members of the development team at Biztravel.com are arguing -- again -- about Web design. Which new features, among the many options under consideration, should they include in the next version of their site? The argument is friendly -- it sounds like the kids on The Brady Bunch debating who gets to ride in the front seat -- but the stakes are high. The company, launched three years ago with blue-chip venture-capital backing (and with such corporate investors as Comcast, Intel, and Rupert Murdoch's News Corp.), has been working to persuade frequent business travelers to leave their human travel agents behind and to rely on the Web. That means offering an online service that streamlines the booking process for airline tickets, hotel reservations, and rental cars. It also means rolling out innovations that traditional travel agents can't match -- and that people in Biztravel.com's target market won't be able to resist.
Biztravel.com unveils a new edition of its site every six weeks. Such upgrades have introduced visitors to a slew of killer apps. One feature, called bizAlert, sends a message to your pager an hour before your flight, complete with gate information and updates on any delays or cancellations. Another feature, called CalendarDirect, downloads an itinerary to your desktop-calendar program or to your PalmPilot. Perhaps most impressive, there's an automated upgrade feature that works with lightning speed to bump you from coach to business class -- and all you have to do is sign up for the service. (According to Biztravel.com, this feature snares upgrades for 85% to 95% of eligible travelers, compared with a 25% to 30% success rate for traditional travel agents.)
"Most travelers don't feel like they're in control," says George Roukas, 43, vice president of product management and customer service. "The rental-car companies and the airlines are always asserting control. We're trying to give some control back to the traveler. We not only listen to what customers ask for; we think about features that they wouldn't know to ask for."
The feature under consideration today addresses a problem that has become increasingly common in a world of crowded skies and delayed flights. It would automatically notify your hotel if your flight was delayed, increasing your chances of holding on to a room reservation -- even if you were going to arrive much later than you had planned. Some members of the development team are unconvinced. "We have to figure out when it makes sense for us to fax the hotel," worries Julian Winter, 41, director of member services. "Do we tell the hotel when your flight is delayed from 11 am to 3 pm? Or do we send a fax only when you'll be delayed past 6 pm?" It's an important question. How well this feature meets the needs of harried hotel staffers will help determine how well it meets the needs of Biztravel.com's customers. Says Winter: "We want to be sure that if a hotel is oversold, and if it's going to 'walk' some folks, it doesn't walk ours."
Lots of Web sites offer lots of whiz-bang features simply because they can. At Biztravel.com, the essence of creating a great customer experience is offering only those features that its customers truly value. "Our customers are road warriors," says Mimi Bloom, 34, director of customer acquisition and retention. "They're smart, they're resourceful, and they're pressed for time. And they have high expectations: If there's one remaining first-class seat and they've got an upgrade credit, they want to be in that seat. So we're forever asking the same question: What kinds of services do people like and need when they travel?"
Bloom and her colleagues gather answers to that question directly from their customers, via telephone contact and email. Programmers make it a point to spend a few minutes each day reading submissions to the site's customer-feedback inbox. Some recent additions to the site, such as a feature that prints out expense-account documents, are a direct outgrowth of those suggestions. Other enhancements -- such as a tool that filters out spelling errors when a user types in the name of a destination -- come from watching people use (and misuse) the site. A final group of features -- what Roukas calls "the sizzlers" -- get created mainly because they're cool, and because they set Biztravel.com even further apart from traditional travel agents.
Once the development team has approved and prioritized a new feature, the coding process begins. Here, too, the customer experience figures into how the company operates. Biztravel.com breaks down big ideas into small chunks defined by functionality. That way, the company can roll out new features more quickly, and its programmers can discover problems and gauge customer reaction -- before they spend months developing a feature that doesn't quite work or that people don't really want.
"We like incremental enhancements," says Winter, "because that way, we can tweak things and change direction much more easily in response to customer feedback. Lots of times, when you take big steps, you wind up telling customers that they had better like what you've done for them -- because you've spent so much time and so much money on developing it."
There have been lots of "incremental enhancements" since Biztravel.com was launched, in November 1996. Roukas says that he can't imagine a time when the six-week upgrade cycle would cease." Our list [of new features] never shrinks," he says. "When we page someone who's scrambling to get to the airport, and we let him know that his flight has been canceled, and then he's able to book another flight because he was the first to know about the cancellation -- well, that's the experience that we're going for. That creates a customer for life."
Dell Computer -- Measure What Matters
When it comes to delivering a great customer experience, lots of companies talk a good game. A few companies even play a good game. Dell Computer wants to reinvent the rules of the game -- so it's fanatical about keeping score. "We're a numbers-driven organization," says Jerry Gregoire, the company's CIO. "We're in our comfort zone when we can measure something."
Dell's eight-person Customer Experience Council was formed two years ago in order to focus all 26,000 pairs of eyes in the organization on a single priority. By Dell's reckoning, the company has more than 16 million "customer contacts" per week, whether in the form of emails, phone calls, deliveries, or returns. The challenge: How to monitor and measure the quality of those contacts?
"Every public company tells shareholders how it's doing every quarter," says Paul Bell, 39, senior vice president for Dell's home and small-business group, who is a member of the Customer Experience Council. "But few companies have a set of metrics that measure the customer experience month to month, quarter to quarter." So the company decided to track three major elements of the customer experience: order fulfillment, performance, and service-and-support. Then it picked one metric to represent each element. For order fulfillment, Dell tracks "ship to target": How often does a completely accurate order get to the customer on time? For performance, Dell follows the "initial field-incident rate": How often does something go wrong with a system once it has been delivered? For service-and-support, Dell measures something called "on-time, first-time fix": How often do service people arrive on time, and how often do they fix a problem on the first visit? There are dozens of other metrics that Dell follows -- such as the "initial soft-incident rate," which reflects how often customers merely think that they have a problem -- but when it comes to capturing the customer experience, those three metrics are the ones that count. Dell aimed to improve each metric by at least 15% last year, and it succeeded.
Where does the Web fit in? During 1999, there has been a major emphasis on moving more of the company's tech support to the Web. Shifting to online support not only saves Dell money; it also helps the company generate more revenue. Web-based service frees up phone reps to deliver in-depth consultations. "We used to measure how many calls we could take per hour," says Manish Mehta, 30, senior manager of service-and-support online. "Now we focus on first-time resolves -- solving the problem once and for all -- even if that means talking longer with a customer."
Mehta explains the role of his group by declaring, "We own the customer experience once the machine leaves the factory." Lately, the group has been designing online innovations that enable consumers to solve their own problems. One of the most compelling forms of service is self-service, Mehta argues. That's why Dell hosts a bulletin board where die-hard customers answer questions for other customers at the rate of 400 to 500 per day. The Dell site also features a massive database of FAQs and other documentation, along with a natural-language search engine (called "Ask Dudley") that handles 50,000 inquiries per week. Mehta is now testing an automated-response system to analyze incoming support requests. The system attempts to answer about 30% of those requests on its own, passing along the rest to support technicians (who almost always respond within four hours). So far, the system has had an 86% success rate with questions that it attempts to answer.
If numbers matter at Dell, one number may matter more in the future than any other: each computer's "service-tag number." It's a five-digit alphanumeric code that describes the model, the amount of memory, and the configuration of each machine that Dell sells. Today, customers can visit Dell's Web site, type in their service-tag number, and find out whether their PC is ready for the year 2000 -- or learn how they can upgrade their machine to the latest version of Windows. Eventually, Dell envisions using the service-tag number to track the software that customers have running on their machines (with their permission, of course). That way, if a customer wanted to purchase a flight simulator, for example, Dell could specify how much additional memory would be needed.
"That sort of thing -- helping customers add accessories or software when they're between PC purchases -- is what separates the people who understand the customer experience from the people who don't," explains Gregoire. "That shows the difference between offering a great experience and selling a commodity, and that difference turns into real dollars."
"Our challenge is to instill a companywide commitment to the customer experience," he continues. "It's like the way Disney teaches its people to be aggressively friendly: 'Can I help you find something?' Our metrics give us a read on the experience that we're delivering and on the loyalty that we're creating. We're doing pretty well, but we still feel like the tallest midgets in the forest. We know we can do much better."
Scott Kirsner (firstname.lastname@example.org), a Fast Company contributing editor, is based in Boston.