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E-commerce customers chatty with sites that talk

Several start-ups and established companies are tackling the emerging Internet telephony market with a new twist: They're offering a service that allows e-commerce sites to speak with customers.

    Several start-ups and established companies are tackling the emerging Internet telephony market with a new twist: They're offering a service that allows e-commerce sites to speak with customers.

    With good customer service becoming vital for selling online, Net telephony companies hope to capitalize on that need by offering businesses the phone services and software to provide customer support over the Web.

    Their goal is to offer online buyers the ability to click on a button on a Web site to call a customer service representative over the Net. Once connected, the representative can talk to a customer and access the same Web page with which a caller is having trouble. They can then browse the site simultaneously, solving order problems and even filling out forms together.

    "Having a personalized shopping or business experience is very important, and it's necessary for the Web to evolve," said Tom Jenkins, director of consulting at consulting firm TeleChoice.

    By routing calls across the public Net, costs for the transmission are greatly reduced compared to the traditional phone network, which requires a dedicated connection between the two calling parties.

    To offer the service, established Net telephony players such as Net2Phone and VocalTec--along with younger firms eFusion, EchoPass and E-talk--are becoming application service providers (ASPs), a budding industry that lets businesses rent software, rather than owning it.

    They are targeting young Web companies and small and midsize businesses, arguing that it would be cheaper for them to rent the service than to buy the equipment and manage it themselves.

    With the new ASP model, the Net telephony companies are competing against traditional telecommunications providers such as AT&T and MCI WorldCom. They are also competing against phone equipment makers such as Nortel Networks and Lucent Technologies, which sell the products to businesses and the traditional telecommunications companies.

    Analysts said providing software rentals over the Web is still in its embryonic stage, but there is huge potential for online customer support for all Web sites, from e-commerce to banking.

    The Net telephony companies are counting on customer service over the Web to take off. eFusion, a 4-year-old firm that spun out of Intel, has historically sold customer service equipment to businesses, but it switched to the Web rental business model this January. Likewise, Teknekron InfoSwitch in January renamed itself E-talk and created a new ASP division.

    Customer service company ASP middlemen try to simplify the marketSento recently created a spinoff dubbed EchoPass, an ASP targeted at the online customer support market. Net2Phone's e-commerce division will launch its own Web customer support service next month. Similarly, Israel-based VocalTec recently created an ASP division and will introduce its North American service during the summer.

    The Internet phone and customer service companies, which are offering similar sets of products, can route calls over a private Internet-based network to ensure good voice quality. Online buyers can either converse with customer service agents through microphones on their computers or by instant text messaging.

    "We're marrying Web sites and call centers together," said Jeff Gaus, eFusion's vice president of marketing.

    Net2Phone, for example, offers free software dubbed Click2Talk that lets an online buyer click on a button on a Web site, which sends a phone call from the PC to the site's 1-800 toll-free customer service number.

    In May, the company will offer additional features, such as the ability for a customer service representative and a customer to collaborate and view the same Web pages and fill out online forms together.

    Gaus believes better online customer support will lower the number of Web surfers who are hesitant to abandon their shopping carts and buy online because they have immediate questions that can't be answered.

    Andrei Jezierski, a VocalTec vice president, believes cost savings will help drive the ASP model. The Net phone companies will charge per-minute fees for the customer service calls, but because the calls are over the Internet, the costs are well below what businesses pay for 1-800 phone calls, he said.

    Another ASP start-up, Telera, is taking a different tact. While it offers online customer service similar to its rivals, the company's goal is to tie the Web to businesses' phone services. For example, Telera's service will let employees retrieve their daily schedules or other corporate information through the phone, said Bob Thronson, vice president of business marketing. Or an auction site can call a potential buyer, warning that the person has been outbid on an item.

    Thronson said Telera's technology can also personalize calls for each customer. If a frequent shopper calls, Telera's technology can recognize that it's an important call and can send it immediately to a customer service agent, he said.

    Dataquest analyst Drew Kraus said the market is just emerging. But he believes the ASP model can thrive and expects traditional carriers to partner with the new firms. EchoPass, for example, has received an investment from US West.

    "The traditional carriers have been abysmal in marketing and have no idea how to sell to this market," Kraus said. "These smaller companies are more focused and more aggressive in marketing."