As the economy suffered a recessionary flu, retail was one of the critical patients—so Drugstore.com opted to self-medicate. A spoonful of sugar may not have been the only thing to help that medicine go down: In the third quarter of 2009, while the United States Department of Commerce reported a mere 2 percent increase in overall e-commerce spending, Drugstore.com’s over-the-counter segment saw 17 percent growth.
At the online retailer’s three properties—Beauty.com, VisionDirect.com, and, of course, Drugstore.com itself—products in the health and wellness, pharmacy, and beauty categories range from a $1.50 lipstick to a $200 calorie-management system. To manage its multichannel customer service—with more than a million customer contacts a year through email, phone, and live chat—Drugstore.com enlisted RightNow Technologies in August 2005 for its knowledge base product, and again in 2008 for email incident management. With RightNow’s SmartAssistant technology reading customer inquiries and delivering automated responses before offering to escalate to a live agent, Drugstore.com achieves a deflection rate that approaches 70 percent. The robust self-service capability has helped Drugstore.com reduce phone-handle time by 15 percent and email volume by 30 percent.
Phone and email are valuable channels, but for Drugstore.com, quality service means accessibility, a factor that led to the exploration of live chat. “[We have] to enable the communication methods our customers want,” says Ron Kelly, the retailer’s vice president of customer and pharmacy services. “If they can’t resolve issues themselves, chat’s another way for [them] to get real-time help.” Just prior to the 2008 holiday season, Drugstore.com deployed a test run of its first chat solution on Beauty.com. Positive returns persuaded the company to roll chat out for select products—ones with higher margins or more complexity—on Drugstore.com in November 2008, and then a year later on discount contact-lens site VisionDirect.com.
Chat’s made a big splash on Beauty.com. “We’re trying to replicate, if not expand upon, the beauty-counter experience you’d find in the department store,” Kelly says. In 2009, in an effort to hone its beauty focus, the company created a select team. “We hired people with either an esthetician background or a love of fashion or passion about beauty,” Kelly says. Unlike typical phone or email customer service, agents have deeper, more-involved discussions with customers via chat, often with longer engagement times. “They’re not just asking, ‘Where’s my order?’” Kelly says. Customers share specific needs, and agents fulfill these requests as if in an in-store interaction. “A chat does take longer,” he says, “but it’s for the right reasons.”
Customers seem to like those reasons, too. Approximately 25 percent of chat sessions convert into product orders, compared to the overall site’s 6.4 percent conversion rate. Shopping-cart sizes from chat sessions are 10 percent to 20 percent greater than carts filled during non-chat sessions. According to ForeSee Results’ 2009 Top 100 Online Retail Satisfaction Index, Drugstore.com scored a 77 on a 100-point scale, ranking it above not only Walgreens.com and CVS.com, but also above consumer-centric brands such as BestBuy.com and NeimanMarcus.com.
At a time when customers are making careful purchase decisions, Drugstore.com may have an advantage. People who hold back on a car purchase are less likely to do so when it comes to toothpaste. Instead, consumers trade down or splurge on just one item, which heightens the value of presale engagement—the kind built through chat. “We’d love for our customers to buy the most expensive products we have, but you have to understand your environment,” Kelly says. “At Drugstore.com we don’t just talk about listening to the customer—we actually do it.”
Drugstore.com, by the Numbers
- Phone-handle time has decreased 15 percent;
- Email volume has decreased 30 percent;
- Shopping-cart sizes in sales with chat are 10 percent to 20 percent larger than in those without;
- Chat sessions deliver a conversion rate of approximately 25 percent; the site’s overall conversion rate is just 6.4 percent;
- Third-quarter sales grew 17 percent,compared to 2 percent growth in e-commerce overall; and
- Customer satisfaction scores reached 77, among ForeSee Results’ list of the top 15 online retailers.