Suppose you walk into a store looking for information about a product you’re thinking of buying, and there is no one to answer questions. Instead, there’s a neat model of the product with some flashing strobe lights and a printed placard with a few lines of information that don’t answer your question. In tiny type, the placard says people are available to answer questions if you drive to another store. Would you actually drive across town or just walk up the street to a competing store?

It may seem silly to even suggest that a business would treat potential customers so cavalierly, but tens of thousands of customers get that sort of brush-off every single day when they try to buy products on the Internet. In the mad dash to get Web sites up and running, many on-line businesses have given short shrift to one of the most basic values of any business: taking care of the customer. Those businesses are paying the price: They are losing customers.

“Customer service is absolutely critical,” says Cormac Foster, an analyst at Jupiter Communications, which specializes in Internet research. “No one can expect to be the price leader all the time and stay afloat. To maintain viable profit margins, businesses have to differentiate on service. Those businesses that don’t provide competitive service will ultimately fail.”

Experts say customer service has become more important in recent years, simply because customers can now demand it. Customers have gained leverage over the companies they buy from because, via the Internet, they can take their business elsewhere just by clicking a mouse button—and companies know that all too well. Customers also can complain far more publicly about service problems at gripe Web sites or in chat rooms. Meanwhile, customers no longer just compare a company with its immediate competitors; they have begun to compare service among all companies in all industries. [For more on this “convergence” phenomenon, see Digital Strategy.]

Yet on-line customer service is getting worse, as companies have fallen way behind in answering a deluge of e-mail inquiries from customers, according to a recent study by Jupiter. In the third quarter of 1999, Jupiter tried to contact 125 sites in a variety of industries and found that 46% took more than five days to respond, never responded, or didn’t have an e-mail address listed on their sites. A year earlier, that figure was 38%.

When Context tested on-line customer service at the 25 biggest U.S. companies, the results were similarly abysmal. More than half never responded or didn’t have an e-mail address. Even when companies did respond, they generally asked if they could call us back with an answer or sent us phone numbers so that we could call them. (True, some of these companies, such as Ford Motor and Philip Morris, don’t sell products directly to customers on-line, but they’re still dealing with customers who have become accustomed to answering questions and solving problems on-line.)

“For too many companies, customer support is an afterthought when creating an e-commerce strategy,” says Ronni Marshak, co-author of the book Customers.com, and senior vice president at Patricia Seybold Group, a technology-consulting firm. “They are busy figuring out the merchandising, marketing, advertising, and technology of making a site happen, and they don’t go the distance to think carefully about what happens when the people do come and shop and then have questions.”

A major reason is that companies generally view customer service as a cost of doing business. In fact, good service not only keeps customers coming back but can be used as a means to collect valuable information that can contribute to product development, marketing, and building a brand name.

“Customer service is everything,” says John Grace, executive director of Interbrand, a brand-consulting firm. “Customer service and support is what is going to define brands on the Internet.”

What constitutes good on-line service? “The basic needs—fast, timely, courteous, and accurate service—still hold true,” says Marshak of the Seybold Group. In addition, “service needs to be media-specific. For example, if I walk into a store with a question, don’t send me the answer in e-mail. If I e-mail you, don’t write back to tell me to call.”

That seems to be one of the most common mistakes that companies make. Even those companies that are good at returning e-mails promptly still fall back on their well-oiled call center operations. When Context sent an e-mail to IBM’s “AskIBM” service about a laptop modem, we received a personalized message, signed by a customer service representative—asking us to call the IBM PC Helpcenter.

Companies also do a bad job at integrating their on-line service with their physical stores. There are plenty of on-line customers who sometimes want to deal with a person, especially when they need to return an item. Despite the convenience of ordering on-line, it’s often easier to drive to a local store to make a return than it is to pack up an item and take it to the post office. Yet, that possibility didn’t occur to Wal-Mart Stores when it set up its shopping site on the Web. “We really didn’t have anyone who brought that issue to the forefront then,” says Melissa Berryhill, a Wal-Mart spokeswoman. Because on-line customers ask for the option, Berryhill says Wal-Mart may change its approach when it launches the next generation of wal-mart.com in 2000.

Sears.com is doing better, but not much. In response to an e-mail, a customer-service rep called to tell us that local Sears stores decide whether to take back an item ordered on-line.

Most companies also miss an easy opportunity to give customers on-line access to the information that service reps have on account histories, pending transactions, billing information, and so forth. Although providing that information is reasonably straightforward, Chase Manhattan credit-card customers can’t check their account activity over the Web even though they can do so by phone. A Chase representative said the bank is finalizing plans to make the information available on-line.

General Electric, whose top-flight GE Answer Center handles 2.1 million calls a year, is a mixed bag on-line. It gives customers on-line access to its product experts and helps customers search through more than 1.5 million previous questions and answers. GE also lets customers request service calls and allows do-it-yourselfers to buy parts and accessories on the Web site. Yet GE responded to an e-mail inquiry by asking us to place a phone call to an 800 number and suggesting we order manuals for $6.50 each—even though they can be downloaded for free on the Web site. In fact, when we tried to find the manuals on-line, the site generally steered us back to GE’s 800 number. The company is looking into fixing the download links, though a GE spokesman says many customers prefer to get a bound copy of a manual rather than getting dozens of loose pages off the Web site.

Personal-computer makers seem to do a good job of providing information to customers. Perhaps that isn’t surprising. Their customers are comfortable using computers to communicate.

The benefits to these companies are clear. During the past two years, Hewlett-Packard has been able to hold steady, at one million a month, the number of customer phone calls it gets, even though total requests for help have exploded. During that same stretch, the number of downloads by customers seeking a piece of software or instruction manual, for example, has jumped to 10 million a month from one million. Although Hewlett-Packard didn’t quantify the savings, Federal Express has said that its on-line inquiries cost it about 5% of the cost of handling a phone call.

“Our philosophy is to provide support where customers want support,” says Kenny Stephens, manager of customer support at Hewlett-Packard. “Companies that aren’t taking advantage of the Internet are missing an opportunity to satisfy their customers.”

(Of course, all is not perfect with this strategy. We recently called HP’s customer support line to find out how to get a piece of printer software we had misplaced. We needed it quickly, so we paid for overnight shipping. No one mentioned that we could download it from the site for free in a few minutes’ time.)

New technologies can greatly enhance companies’ interactions with customers on-line. Services such as Acuity and FaceTime can be set up on corporate Web sites to let customer reps exchange instant e-mail with Web site visitors and even use a technique called browser-sharing, which lets service reps guide customers around the site. Meanwhile, Sky Alland and a BroadVision- Genesys venture are developing an advanced form of call-center integration that lets Web site visitors surf and talk to customer reps at the same time on a single phone line. Yet few big companies have yet taken advantage of the ability to interact more intimately with customers.

The main exceptions are on-line retailers, which know they have to answer customer questions well enough to ensure that people buy something right then rather than wait or move on to another Web site. Answering questions well “is a big piece of the loyalty puzzle, which a lot of the retailers are having a hard time with,” says Chris Kelley, a Forrester Research associate analyst who recently conducted a survey to measure the customer-service experiences of on-line shoppers. “The barriers to switching retailers are gone.” He says retailers have a long way to go and need to be more creative. Only 47% of the customers in the Forrester survey said their on-line shopping experiences exceeded their expectations. Retailers “all need to stay on their toes,” Kelley said.

While companies used to be able to gloss over customer-service problems, confident that customers couldn’t do much to their reputations, that isn’t true anymore. Mark Twain said it wasn’t smart to pick a fight with someone who buys his ink by the barrel. Well, the Internet gives every angry consumer barrels and barrels of ink.

At least half of the Fortune 1000 companies now face complaint sites developed by disgruntled customers. Electronic mud balls also are being lobbed in chat rooms, on message boards, and through a free software tool, called Third Voice, that lets visitors put the equivalent of electronic Post-it Notes on Web sites. New services, such as bitchaboutit.com or ugripe.com, collect complaints from customers and press corporations to respond.

It doesn’t seem to take much to get customers riled enough to launch a “yourcompanysucks.com” site. A Dunkin’ Donuts customer started one when he couldn’t get skim milk for his coffee. Enough angry customers gathered at the site that the company eventually bought it, to quiet things down.

At the same time, companies that get customer service right can win loads of customers and do lots to enhance their brands—Amazon.com being the prime example. The company came from nowhere to become one of the great retailing brands in the world, primarily by taking such good care of customers. The company pioneered “one-click” shopping—a customer stores information such as his credit-card number, then orders something by just clicking on it. Amazon has moved beyond that this year to help customers organize their Christmas lists. Amazon also sends legions of e-mail, acknowledging orders and telling customers when they can expect their goods.

Bill Curry, an Amazon spokesman, says there is no way of knowing exactly how much of an impact customer service has on its revenue (Amazon isn’t profitable yet). “That’s why we look at repeat business. If people have bad experiences, they’re certainly not going to come back.” Fully 72% of its business comes from repeat customers even as it brings in two million new customers each quarter.

The goal is to make sure people “have good vibes and share those vibes with other people,” Curry says.

Even beyond all the things Amazon does to make customers feel good, Amazon has also mastered a category of customer service that Interbrand’s Grace calls “service recovery.” When Amazon does make a mistake—“and every brand does falter at some point,” Grace says—it knows how to patch things up. When a shipment doesn’t arrive on time for the holidays, for example, customers typically get an effusive e-mail and a gift certificate toward a future purchase.

“That’s the role of customer service,” Grace says. “Those dynamics are what ensure loyalty, which ensures success.”