eService is Job #1

In the pioneering book,, Patricia Seybold says the
formula for success for e-commerce is simple, that is focus “on your
existing customers, figuring out what they want and need and how you can
make life easier for them.”

Sounds great, right? Well, many companies are not doing this.

For example, in a Jupiter Communications survey, of the top 125 eCommerce
sites, 42 percent either did not accept e-mail or never responded to e-mail or took
longer than five days to respond to e-mail. This helps explain why
two-thirds of online transactions are abandoned before completed.

Interestingly enough, customer service may be more important in the online
world than the physical world. After all, in the online world, there is no
face-to-face interaction with customers.

But there are solutions — from a variety of cutting-edge companies.

One of the best companies is eGain,
which plans to offer shares to the public for the first time this week. The
lead underwriter is BancBoston Robertson Stephens and the proposed ticker
symbol is EGAN.

The primary means of online customer service is, of course, e-mail. But, the
volumes of e-mail are usually high and thus are very difficult to handle. It
is usually more cost-effective for companies to outsource such

As for eGain, its software is deployed in two ways, either as a hosted
application service (that is, eGain completely manages the technology) or
as an in-house installation. In fact, eGain is the first company to offer
these two options.

Despite the fact it’s a young company, eGain has a comprehensive suite of
products. Its Email Management System (EMS) helps companies route, track
and respond to high volumes of e-mail.

A company can implement their own
rules that categorize email communications using advance artificial
intelligence technology (known as statistical vector analysis). Once the
data is processed, it is sent to the relevant service rep, along with
suggested responses.

Next, the Collaboration System allows customer service reps to provide live
assistance through the company’s site. The communications are in real-time.

Finally, the eCommerce Bridge integrates EMS with the eCommerce platforms,
as well as call centers and customer databases. That is, a service rep will
be able to get access to all available information on the customer.

So far, the company has added a variety of top-notch customers, like WebTV,
PlanetRx, and RealNetworks.

Here’s a look at the valuation metrics (assuming the IPO is priced at the
top of its range). Keep in mind the company is in its early stages and the
revenues are, as a result, minimal.



pro forma IPO


Shares offered


Price target/actual




Shares out



IPO market cap


less working cap


plus LTD


Enterprise value


1999 Revenues


1999 Losses


Annualized rev.





Revenue multiple


Rev. multiple


The opportunities for eGain are great. According to IDC, the revenues from
such technologies is expected to grow from $42 million in 1998 to $1.6
billion in 2002.

With its IPO, eGain should, well, gain even more in the marketplace, making
this perhaps the hottest IPO of the week.

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