Small Talk, Big Results

Veteran Barbie designer Carol Spencer showed off pictures of her favorite ensembles, such as the glitzy evening gown and blue boa worn by Silver Serenade Barbie, as she chatted recently with some of the venerable doll’s most ardent collectors.

Hundreds of Barbie admirers peppered Spencer with questions during a celebration of her 35th anniversary as a designer of the world’s most popular toy.

“What has been the most popular Barbie?� a fan named ceejae asked. Spencer replied: “The most popular was Totally Hair Barbie. I happened to be the designer for that, and I was just overwhelmed when she sold and sold and sold!�

What made the exchange notable was that ceejae and other fans were meeting Spencer not at Mattel Inc.’s El Segundo headquarters but online in a chat room. Although the conversation was halting and a bit slow, the get-together gave the toy maker access to many far-flung members of its collector audience, which generates about one-third of all Barbie doll sales.

“The collector business is growing,� said David Haddad, general manager of Mattel Media and senior vice president of Barbie Collectibles. “We see chat as playing an important role in establishing a one-on-one connection with our collectors.�

Once considered a four-letter word in conference rooms across the nation, chat is increasingly being used by companies to generate buzz about products, promote collaboration among employees and perform market research.

“Businesses are starting to look at chat as a new way to interact with customers,� said Dean Cruse, vice president of marketing for chat software maker ichat. “They’re also using it to turn their Web site from a static site to an interactive community.�

Indeed, about two-thirds of firms experienced increased traffic to their Web sites after using chat, according to a 1997 study of 50 businesses by Cambridge, Mass.-based Forrester Research.

Social chat has been a popular draw on the Internet for years.

Now, software makers, which expect “ultimately the size [of the] social chat market to be limited,� are eager to claim a piece of the largely untapped market for business chat, Cruse said.

“About 20% of homes in the country are Web-enabled, but 85% of businesses are. People come to work and they’re connected, and it’s more convenient for them to be able to interact online.�

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The market for chat software exploded last year with the introduction of programs designed for corporate use and a decision by Oracle Corp. and IBM’s Lotus division to bundle chat software into their popular business applications.

For example, 1-800-Flowers is turning to chat to help its 2,000 member florists communicate with one another and with consumers.

Chat will be available to florists as part of a secure network, dubbed Bloomlink, that runs on the firm’s Web site. 1-800-Flowers is currently connecting its members to the network, which will link them to a chat room and enable them to talk with colleagues.

“This is part of us attempting to revolutionize our industry,� said Norman Dee, the company’s director of network services. “We want to build an online community of florists.�

Because it doesn’t require them to leave their shops or spend money on traveling, chat also allows florists to attend online seminars conducted by 1-800-Flowers, Dee said.

Starting this month, consumers can pose questions to company employees at the https://www.1800flowers.com Web site.

To reach a representative, consumers will click on a link to a chat room and type in their questions. If they’re ready to select flowers, they can exit the chat room and place the order from the company’s Web site.

1-800-Flowers bought chat software with the capacity for 1,000 computers from Commack, N.Y.-based eShare Technologies, which charges between $10 and $90 per computer, depending on the number involved.

eShare claims about 30% of the fledgling market for business chat, while ichat holds 50% to 60%, said Paul Hagen, an analyst with Forrester.

Since it is bringing all its members online at once, 1-800-Flowers has not grappled with the technical headaches that plagued other companies when they attempted to install chat on user networks based on different software.

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Incompatible technology is a critical issue, said Jennifer Stone Gonzalez, author of “The 21st Century Intranet.� For real-time chat to take off in the corporate market, she added, the industry must establish common standards for chat software and beef up bandwidth availability.

Another business using chat, Mail Boxes Etc., plans to use e- Share’s technology for a distance learning program. Chat also provides an “open forum� in which the San Diego-based company’s 3,500 franchises can communicate informally from a secure area on its Web site at https://www.mbe.com, said Webmaster Donn Hopkins.

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“It’s an economical way to discuss the issues of the day,� Hopkins said, “like how to increase profits and how to set up displays differently.�

Chat saves companies money, managers say, by allowing employees who are on the road or in satellite offices to participate in staff meetings and by decreasing consumers’ use of toll-free customer-service numbers.

Merrill Lynch & Co., Citibank and Pristine Capital Management, a White Plains, N.Y., investment firm, use chat to interact with consumers. Pristine used ichat’s software to create a “virtual trading room� where clients can get advice online from financial consultants.

“Before we had something like this, consumers were dealing with e-mail and voicemail. Timeliness is a huge issue here,� ichat’s Cruse said. “This has given [companies] a new way to differentiate themselves.�

About 63% of online users say they won’t buy anything on the Web until there is more human interaction, according to a recent study by Yankelovich Partners of Norwalk, Conn.

Hoping to capitalize on this finding, Egghead Computer purchased chat software from the Palace Inc. of Beaverton, Ore., to provide more “personalized, friendly and easy� service to netizens at its Web site at https://www.egghead.com.

“Egghead realized there’s no one you can ask questions of [online]. There’s no way for them to jump out at you and say, ‘Can I help you?’ � said Mark Jeffrey, vice president of space development for the Palace, which maintains a Web site at https://www.thepalace.com.

Egghead stocks the “shelves� in its online showroom with products consumers can click on. When a consumer selects an item, chat software activates the browser, which puts a frame on the screen where the customer can type questions for Egghead staff during business hours, Jeffrey said.

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Companies without the resources to purchase and maintain the required software can lease chat rooms from online services such as Talk City at https://www.talkcity.com. Firms can also lease chat software through Internet service providers such as WorldCom’s UUNet Technologies unit and AT&T; WorldNet and from Web search company Yahoo Inc.

In an effort to “build a community around the client’s brand and products,� Campbell, Calif.-based Talk City designed a series of chats around Sears, Roebuck & Co.’s popular Craftsman line of tools.

The chats provided Sears with instant feedback in the form of a transcript that is printed out after each session, said Peter Friedman, Talk City’s chief executive. The company charges clients $1,000 or more for information chat sessions.

Mattel ordered a year of chats from Talk City. Famed fashion designer Bob Mackie used the forum in December to introduce his latest collection of Barbie clothes. Officials expect Mattel Chief Executive Jill Barad to participate in a chat this summer.

Two-year-old Talk City, which started marketing its services to businesses last winter, now relies on contracts with corporate clients for more than half its revenue.

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Talk City has also partnered with NFO Research Inc., which helps clients evaluate products and services through the use of focus groups. Chat-based groups are considerably less expensive and time-consuming than traditional focus groups, in which consumers are interviewed in person, Friedman said.

Advertising agency J. Walter Thompson uses Talk City’s focus group services to recommend marketing strategies to clients, Friedman said.

Analysts caution that chat is not for every business.

To use chat successfully, companies must have a brand that “equals� a lifestyle (such as Harley-Davidson, a case in which consumers not only buy its motorcycles but socialize with other bikers) and sufficient traffic on their Web sites, Forrester Research’s Hagen said.

Experts also expect the acceptance curve for corporations and chat to be at least as steep as those for other high-tech communication services such as e-mail.

“There are still companies that are learning to embrace e-mail as a way of corporate communication,� said Forrester analyst Eric Brown. “There’s a transformation that has to happen within a corporation culturally before they can adopt this.�

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In addition, both purveyors and purchasers of chat technology agree that despite chat’s wide-ranging benefits, communicating in real time online often fails to outweigh the benefits of meeting someone in person.

“Nothing is ever going to replace getting into a room and sitting down with people,� said the Palace’s Jeffrey. “I don’t care how cool the technology is.�

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Staff writer Jennifer Oldham can be reached via e-mail at [email protected].