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Christmas Gift Guide
Tech Industry

No customer service looks expensive for Net firms

E-commerce companies may want to pay more attention to satisfying existing customers and worry less about acquiring new ones, a study shows.

E-commerce companies may want to pay more attention to satisfying existing customers and worry less about acquiring new ones, a study shows.

Online stores that lack Internet-based customer service lost $1.6 billion last year and could double that to $3.2 billion by the end of the year, according to a report released today by research firm Datamonitor.

Many e-commerce executives have said that they hope to use this holiday shopping season as a springboard to build long-term business by turning new customers into loyal ones. But with many firms still fixed on acquiring a larger market share--by spending lavishly on advertising and marketing campaigns--not enough resources are going into customer service, according to the report.

Companies such as Lands' End and 1-800-Flowers.com provide instant messaging, allowing customer service representatives to chat with online shoppers in real time.

But less than 1 percent of all e-commerce Web sites currently offer live assistance, the report said. Of the sales lost when shoppers abandoned their electronic carts, about 10 percent could have been avoided if the site offered better customer service.

"Because growth in e-commerce is coming at the expense of other sales channels, revenues lost online translate to a loss of market share offline," Datamonitor analyst Leonard Chang said in a statement.

New York-based Datamonitor projects that by 2003, 40 percent of all online companies will provide multimedia customer service.