As new technologies go, digital TV is remarkable for the speed of its adoption. Well on the way to passing the million household mark, its acceptance by consumers has been rapid. Much of this is down to the free ride it is getting from the installed base of television sets and telephone lines, which reach 98 per cent of homes.
What makes digital even more significant is that it brings with it the opportunity for interactivity. It is just over a month now since the first truly interactive TV was aired on Sky Digital, but the pace of usage is set to accelerate.
With Open and Telewest now offering genuinely interactive services, the way consumers access information and make purchases could change forever. OnMail and OnRequest are also bringing e-mail and pay-per-view to non-satellite and cable homes. The resulting convergence of technologies could eventually turn the UK into a nation of TV addicts. After all, in the US, people spend 15.6 hours watching TV and 7.1 hours online in a week. Bring the two together and that might add up to a whole day in front of the box.
The potential of interactive digital TV (iDTV) is highly dependent on viewers’ experience of the services. As Ian Sewell, business development director of MGt – a digital commerce service provider which can access every Sky Digital set-top box – told an electronic customer relationship management conference recently: “There are very exaggerated expectations. Customers expect immediate service, individualisation, information, and integration. That expectation has a huge impact on service providers’ return on investment.”
Against the background of the technological revolution which iDTV represents, many companies are planning to go to air with old-fashioned business processes and infrastructures. For some, it is their first foray into direct customer trading, which is why many of the services being offered are highly limited. Woolworths’ first sales offer on Open consisted of only 200 CDs, for example.
Early experience suggests that, like the Internet, iDTV is complementary to, rather than a substitute for, other channels. “Consumers are using the graphical richness of TV to look at products, such as a holiday in the Caribbean, but then they go to other channels to do business. The lesson is that organisations have to be able to handle all of that,” says Sewell.
This will require ensuring that a call centre facility is in place to take calls resulting from on-screen viewing. Fulfilment and logistics will then need to be applied to the delivery of any products or services ordered. As mail order specialists already know, these are complex issues.
Yet many of the organisations expecting to thrive and populate the new interactive channels are likely to be new ventures. “You need to integrate elements of the supply chain in a much bigger way than has been seen before. That is a major process requirement for dot-coms, particularly for things such as exception handling or what to do if you can’t fulfill an order,” explains Sewell.
Consequently, many of these service providers will look to third parties which have the right experience to support their back end. Mike Havard, director of Outsourcing Insight, a management consultancy specialising in outsourced call centre issues, says: “Outsourcing is a good way to get supporting infrastructure in place.”
He notes that even for call centre specialists with experience of direct response television, iDTV is new territory. The volume of traffic which will result from interactive ads is not yet known, nor how many hits on an interactive e-commerce site will then generate a call to customer services. But there will undoubtedly be extreme peaks and troughs of activity, which usually pushes companies towards outsourcing.
Havard points out, however, that “only a few forward-thinking call centres are going for it. When I talk to service providers in the medium and large bracket, they will give you a visionary account of becoming Web-enabled. But on interactive TV they are blank.”
Anybody familiar with the call centre sector will recognise the pattern. But this does not mean new suppliers and processes will not step in to fill the void. Already, companies are beginning to understand that their experience of trading on the Internet can create a model for the new channel.
E-district.net owns and operates an Internet entertainment channel called LeisureDistrict.net. It has been specifically designed for migration onto iDTV. The site already offers e-commerce facilities through a link to WH Smith as well as NetStore, which the company owns.
Chief executive Steve Laitman recognises the critical importance of getting the back end right. “This needs to be planned out fully and carefully otherwise you will lose customers. They have high expectations – the Internet is new and should be fast. There needs to be both customer service facilities and fulfilment and payment systems put in place before anything can happen,” he says.
This is not just a matter of applying resources; new processes have to be defined to ensure the right service levels. With NetStore, swift delivery is ensured by only paying suppliers once proof of purchase has been received. There is nothing designed to make partners work more effectively than putting pressure on their bottom line.
First Call is another company which is finding that experience in operating call centres and websites is invaluable when it comes to supporting an iDTV service. It has been on Open since launch as part of the interactive Box Office, and is also operating on Telewest and Cable & Wireless, where it supports ticketing for EMAP’s What’s On site.
Bob Wilmot, director of marketing and e-commerce at First Call Interactive, which sells two million tickets for entertainment events every year, says: “Open is where the bulk of our digital TV turnover comes from. Fortunately, we have a very robust back-end infrastructure.”
The company operates a 200-seat call centre and fulfilment operation near Gatwick ,which deals with all ticket orders. Operators already deal with telephone, e-mail and online orders.
But Wilmot says his company’s success lies not just in having reliable back-end support, but in the operating system for its ticketing operation.
Called BOCS, it is used by 150 venues across the UK, as well as a number of global sites such as Sydney Opera House. “It is live, online and real-time. That is the difference between a ticket and a CD or book. A seat is unique and you can’t sell another one,” he says. Wilmot claims the company has a 100 per cent success rate in its ticketing operations.
The system works so well on iDTV because when a request is made about availability, those tickets are held for the customer for ten minutes to allow a transaction to be completed. During that time, those seats cannot be simultaneously sold to any other enquirer. This is crucial for a company which is operating through multiple channels at the same time.
Browsers and buyers
First Call’s experience supports Sewell’s point about the way in which customers use different channels. “We get a lot more browsers than buyers. The number of people coming in the front door of iDTV and leaving with a ticket is lower because they are just looking around,” says Wilmot.
But if iDTV follows the growth rate of Internet sales, which rose from 0.1 per cent of the company’s volume in April 1999 to 12 per cent April this year, then serious business will follow.
As viewers become more experienced with the technology and conclude transactions to their satisfaction, they are likely to increase their activity in this channel. Combined with the growing penetration of iDTV, this will exacerbate the problems of spikes of demand. The only model which might accurately reflect this is charity telethons, which overwhelm the ability of call centres to handle the traffic.
Damian Bentley, managing director of Area 51, a specialist CRM and e-fulfilment unit operated by FFwd Precision Marketing, believes that while capacity is important, so too is a fully-integrated approach. “There is more to a task than just accepting the call. Proper training is vital to ensure response functions such as outbound fulfilment are geared up. Calls must be handled correctly, of course, but responses must also be fulfilled quickly and efficiently.”
This means new performance levels have to be set, such as ensuring that any literature requested, and preferably also any products ordered, are despatched within 24 hours. Linking all of the elements involved in an end-to-end process is critical, but not something which many organisations have yet achieved.
Before many potential service providers get to this point, they may have to make a tough decision about which of the iDTV platforms to adopt. As Pip Thorne, technical director of new media specialists Technophobia, points out, there are three competing channels, each with their own operating systems.
“We are hoping they will shake down into a common standard. A lot of effort is being put in, particularly by the Digital TV Group, to get a standard such as mpeg. Sky has got its own proprietary system which gives it the ability to adapt and change, but which is not compatible with the others,” he says.
What that means is that the same service has to be created separately for each platform, incurring substantial costs.
With the iDTV media owners demanding up to seven figures for a presence in their channel, the sums involved are substantial. Until common standards emerge, the choice will have to be based on combinations of cost, audience and reach.
“It is quality versus quantity,” says Thorne. He notes that at present, Sky is ahead in already having experience in downloading information at the same time as running interactive ads, which might make it more attractive.
But the others will soon catch up. When they do, the number of consumers wanting quick service and prompt fulfilment will rise sharply. And then clients and suppliers alike will have to look closely at their resource and processes.