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by Chris Anne Wheeler

Why after investing so much effort in customer service, are you still not achieving high enough levels of customer loyalty?1 Accessing products and services has never been as easy as it is today. Customer convenience has never been so prolific. Yet customers wander from one supplier to the next in an endless search for that elusive quality they call service. You on the other hand, are confounded by your customers' fickleness: What more could you be doing for them?
   Not only are people taking to the Internet in increasing numbers, but many have shed their hesitancy to place online transactions. We are seeing high levels of sales now, despite relatively weaker economic times. Web business managers responding to ActivMedia Research's recent survey have demonstrated their optimism by forecasting a steady growth in online sales through 2003.
   Credit card payment has become standard across the Internet, at long last. Growing at an overall rate of 4% from 2000 to 2001, credit card use with automated processing will jump another 5% by 2002, according to our respondents. While this growth isn't astronomical, it has been consistent over a period of several years, which has propelled credit card automated processing to nearly 30% of websites overall. Use is most common among B-to-C sites; although B-to-B sites accept credit card payment far less frequently, the 7% growth within the past year is impressive, with another 5% anticipated in the coming year. We anticipate that credit card information will be accepted at nearly half of all B-to-C sites in just a few years and that the majority of these sites will be automatically processing payments.
   The average proportion of sales that are paid by credit cards but processed manually is falling at a rate of about 4% a year. By 2005, sites will average processing only approximately 10% of sales through manual card systems. Not only is it faster to automate, but it also offers the consumer an additional level of security.
   And while we turn increasingly to automation, the proportion of site credit card payments by methods other than automated online methods (phone, fax, mail, e-mail, or card number on file) will dwindle. Currently at only about 9%, the proportion of card payments through alternate methods will be negligible by 2005.
   Smart card use has also been spoken of in the future tense, and it is a payment method that is still a long way off. Trickling upward in use, we anticipate that smart cards may account for as much as 2% of payments by 2002, growing perhaps to 4% by 2005. Widespread use and acceptance of smart cards may never take place, although there will be sites that will attempt to accommodate any payment method in order to accommodate any customer.
   Newer online businesses arrive with plans to implement most of the technologies that automate the purchase process - from orders to payment to shipping - right from the initial design. Therefore, invoicing for later payment by mailing an invoice is falling at an increasing rate each year. By 2005, the number of businesses that actually mail an invoice will be negligible, with the exception being on the B-to-B side. Many B-to-B sites may maintain some of the traditional payment practices already in place with longtime customers.
   In the past, consumers were hesitant to place orders online for fear of credit card fraud. Web businesses have had the same fears over the years; however, the actual incidences of real problems with transactions or losses from fraud are relatively low in comparison to what online businesses stand to gain. B-to-C sites have a slightly higher level of problems and fraud than B-to-B, but that is to be expected. B-to-C customers are generally from the public, while B-to-B customers are members of a smaller community and may be authenticated through higher levels of security. In addition, "Pure Play" sites, such as Amazon, Bluefly and others that are online only, have slightly higher levels of problems.
   This may only be a factor in those with both an online and an offline presence taking advantage of secure transaction processing systems already in place. Looking at Web revenues and how they affect problems and losses tells little about the cost of taking preventive measures. Sites with the lowest level of revenue experience problems with 20% of orders: a relatively high number, which indicates that these sites may need to invest in transaction processing systems. However, those businesses at the $1 million level and higher have problems with 15% of orders, indicating that maybe all the investment potential in the world can't alleviate some of the problems incurred in the world of business. Only fraud is reduced slightly by the level of Web business revenue, indicating that investing in secure transaction processing systems may be the way to go across the board, regardless of revenue level.
   Web sites are increasingly accepting online credit card processing, and many have automated the process. Fewer are taking credit card payments by methods that require much human input, such as by fax, e-mail or phone. Taking credit card information manually leaves the consumer far more open to credit card fraud than when a site employs automated processing that encrypts the number before transmission.

Chris Anne Wheeleris ActivMedia's Executive Partner and VP of Information Services where she serves as the account executive for clients worldwide. Visit the ActivMedia website at or call 603.924.9100.