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You just purchased some cool software for $400. You download it on your system, but unfortunately, it doesn't work. You get some puzzling errors. You check out the FAQs on the site, but it doesn't mention the error. So you e-mail the company. After a week, you get a response. Not exactly a fun experience -- yet it does happen quite often. According to a Jupiter Communications study, 42 percent of the top websites failed to provide acceptable customer service. E-commerce is supposed to be a threat to brick-and-mortar businesses. But the fact remains: Many consumers want the security of knowing there are people behind a website -- especially when they're ready to part with their credit card number.

S.O.S. -- Bring On PeopleSupport

A a start-up based in Los Angeles is keying into this need. PeopleSupport provides e-commerce sites with the necessary tools to provide live sales support 24 hours a day. The company was founded in early 1998 by Lance Rosenzweig and David Nash. Rosenzweig had been chairman and president of Newcastle Group, a manufacturer of packaging products for retailers and food companies that grew to $25 million in sales in five years. He also was the vice president of GE Capital Transportation. Nash was Newcastle's CEO. He was also a regional manager at Jefferson Smurfit, a high-growth industrial company in the 1980s.

"We had much experience in dealing with traditional brick-and-mortar businesses," said Rosenzweig. "However, we both realized the real action was online. We also noticed no one was providing online customer service on an outsourcing basis." For much of 1998, the company spent its resources on hiring, as well as building its technology. "We want the best people working for us," said Rosenzweig, "so we have given equity to all our employees. Also, by being based in L.A., the labor market is not as tight as Silicon Valley. It also helps that we are next door to U.C.L.A."

Live Help On Its Way

PeopleSupport's technology allows for online two-way chat. For example, suppose you visit an online shopping site and have a question about a product you want to purchase. If the site uses PeopleSupport's products, you can click a Live Help button and you will be asked to provide some information -- name, phone, e-mail address, etc. The chat software, a Java applet, then initializes. You can then ask questions in plain English. At first, the customer sees a list of matching FAQs from the database. If the answer is there, the company is notified. In fact, all customer queries are reported in a database.That valuable information helps the compay see trends in customer preferences and buying patterns. If the answer isn't there, then an eRep -- a PeopleSupport employee --will answer the question. The response may be very detailed and include Web pages or files. PeopleSupport eReps undergo extensive training that includes learning the nuances of a company's products and services. PeopleSupport offers two options: dedicated eReps or shared eReps. Dedicated eReps handle acompany's customers exclusively, while shared eReps handle several PeopleSupport clients. It takes about a month to install the PeopleSupport technology.

In terms of costs, dedicated reps are compensated on a per-hour basis, but shared eReps are compensated on a per-minute basis. There is also a commission involved, if there is a discernible increase in sales as result of the PeopleSupport system."We are now selling our product to companies, and the response has been tremendous," said Rosenzweig.

Two-Tiered Strategy

PeopleSupport has a two-tiered strategy for marketing that involves both direct sales to companies and partnerships with Web developers, who can bundle the PeopleSupport technology in their products. One customer is BrainPlay.com, which sells more than 2,000 items, such as software, videos, and toys for children. In the first part of January, Live Help buttons will appear on BrainPlay.com's shopping-cart pages. Strangely enough, there are no other companies that out source person-to-person online customer service like PeopleSupport does. "But we expect this to change soon," said Rosenzweig. There should be enough business for many competitors: The market for online customer service is expected to grow to $17 billion by 2002. So far, PeopleSupport has raised $1.5 million in a private placement. Next year, the company said it expects to raise venture capital. And late rin the year? Rosenzweig said the ultimate goal is to take the company public.

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