The sudden death of the website
This is the extended version of LivePerson CEO Robert LoCascio’s article, which originally appeared in TechCrunch.
You may not know me by name or even my company, LivePerson, but you’ve certainly used my invention. When you’re on a website and a chat window pops up, love it or hate it, I came up with that technology in 1995. Today, more than 18,000 companies around the world — including innovative, big-name brands like T-Mobile, American Express, Citibank, and Nike — use our software to communicate with millions of customers. Unlike most start-up founders who saw the birth of the internet in the mid-1990s, I am still CEO of my company. My longevity in this position has given me a unique perspective on the changes that have occured over the past two decades, and I see a really important one happening right now that will radically transform the internet as we know it.
E-commerce has failed us miserably. If you were at the table in 1995, tinkering with the internet and building websites like I was with a handful of others in NYC, you would have heard great visions for the future. We fundamentally thought all brick-and-mortar stores would disappear, and everything dot-com would dominate. For us, the web was a field of dreams, in which “build it, and they will come and buy” was the prevailing mantra.
But the fact is, today, less than 15 percent of commerce happens through a website or app. Only a handful of brands, like Amazon, eBay, and Netflix, were able to make e-commerce work at any real scale. I have watched companies redesign their websites and apps again and again to no avail. At best, about 5 percent of the consumers that browse a website actually buy anything. There are two giant structural issues that make websites not work: HTML and Google.
The web was intended to bring humanity’s vast trove of content, previously catalogued in our libraries, to mass audiences through a digital user experience called a “website.” In the mid-’90s we even spoke about the web in library terms — “browsing” and “indexing” pages like we did magazines and books. In many ways, the core technology of a website, called HTML (Hypertext Markup Language), was designed to display static content.
But retailers aren’t a libraries, and the library format can’t be applied to online stores either. I know this all too well. Even making a thing like real-time chat work on a website requires some true technology tricks to keep the dynamic connection persistent.
In order to transact commerce, consumers need a way to dynamically answer a series of questions that equip them with information to make purchasing decisions. Today, consumers have to find and read through a bevy of static pages in the hopes of figuring out the answers to their questions. It isn’t effective or efficient. If you went to a library to research a phone, you might get enough information to buy one 5% of the time. If you go to the phone store and speak with a salesperson, who has the answers you need on hand, you’re much more likely to walk away with a new phone. We tend to buy more when we can build trust through a series of questions and answers.
The second problem with the web is Google. When we started building websites in the ’90s, everyone was trying to design their virtual store in a way that would differentiate it from the masses. It was exciting! Some companies used tools like Adobe Flash to animate their pages; others experimented with different layouts and imagery. On one hand, this made websites interesting and unique; on the other, the lack of industry standards made the web hard to navigate — and really hard to “index” into a universal card catalog.
Then Google stepped in around 1998. As Google made it easier for us to sort and find the world’s information, it also began to dictate the rules through its PageRank algorithm, which forced companies to design their websites in a certain way to be indexed at the top of Google’s search results. Like most algorithms, its one-size-fits-all structure ultimately made it flawed for e-commerce: Almost every website looks the same and performs equally bad.
In the offline world, brands try to make their in-store experiences unique, as they are trying to create memorable customer experiences. Online, however, every website — from Gucci to the Gap — offers the same consumer experience: a top nav, a few lines of descriptive text, some images, and a handful of other elements similarly arranged. These are the “rules,” as imposed by Google — and they have sucked the life out unique online experiences.
Google’s rules are so bad, and cripple online commerce so much, that users are sometimes forced back into Google to find content buried deep on a company’s website. In the days before Google, newspapers and TV stations would never grow larger than the telcos, banks, and other brands that advertised with them. Yet Google alone now has double the market cap of all telcos in the US combined. As e-commerce has suffered, Google has become more powerful, and it continues to disintermediate the consumer from the brand by imposing a terrible experience at each stage of the journey.
I am going to make a bold prediction: In 2018, we will see the first major brand shut down its website.
There is also a hidden knock-on effect of bad website design that I’ve discovered from working with some of the most heavily trafficked websites in the world. As much as 90 percent of calls placed to a company’s contact center originate from its website. The journey goes like this: A consumer visits a website looking for answers, either can’t find it or gets confused, and has to call the company instead. This has become a very expensive epidemic; today, about 268 billion calls are fielded by contact centers each year — at a cost of $1.6 trillion.
To put that in perspective, global advertising spend is $500 billion, which means the cost of customer care — these billions and billions of phone calls — is three times more than a company’s marketing expenses. More importantly, they cause another bad consumer experience. How many times have you been put on hold when a company can’t handle the volume of incoming queries? Websites and apps have, in fact, generated more phone calls at higher costs to companies across industries — upending digital’s promise to make our lives easier.
There is something innate to our psychology that makes us want to get questions answered through conversations and instills the confidence in us to spend our money when queries are addressed this way. This is why there’s so much chatter about bots and AI right now. They tap into an inner understanding we have about how things get done in our lives: through conversations. The media focuses too much on bots and AI destroying jobs, when the real story is how they will make our lives easier in the wake of the web’s massive shortfalls.
As I have uncovered these truths about e-commerce, in some ways, they have made me feel a sense of failure, considering my hopes and dreams when I started out in the industry. But I have a lot of hope now that what I call “conversational commerce” — interactions via messaging, voice (Alexa and so on), and bots — will finally deliver on the promise of powering digital commerce at the scale we all dreamt about in the ’90s.
I am going to make a bold prediction based on my work with 18,000 companies and in bringing conversational commerce to life today. In 2018, we will see the first major brand shut down its website. The brand will shift how it connects with consumers to conversations, with a combination of bots and humans, through a messaging front end like SMS or Facebook. We are already working with several large brands to make this a reality.
When the first website ends, the dominoes will fall fast. This will have a positive impact on most companies in transforming how they conduct e-commerce and provide customer care — to the mutual benefit of consumer and brand. For Google, however, this will be devastating.