Over the past few years, Art Technology Group
ATG's platform handles the key elements of the customer value chain for e-commerce. First, Demand Creation provides tools for email- and Web-based campaigns, search-engine optimization, and ad-word buys. Next, the Customer Conversion software automates cross-sell/up-sell opportunities, provides guided navigation, and lets customers chat with customer service agents. Lastly, ATG's Customer Care software handles service resolution, order administration, and discussion forums.
With the eStara purchase, ATG increases its customer care segment of its business with click-to-call, click-to-chat, and call-tracking capabilities. For example, if a prospective online customer needs help, he or she can request an immediate call or chat with a customer-care specialist.
The value proposition has been strong. Apparently, eStara's solution helps increase online sales conversions by 50% and reduces shopping-cart abandonment rates by 10% to 45%. It's enough to attract top-notch customers such as DaimlerChrysler
Admittedly, eStara's price tag isn't cheap. Depending on conditions, the deal could reach $48.3 million. Then again, revenues are ramping. In 2005, the company grew its revenues by 64% to $7.4 million, and in the first six months of 2006, eStara has already posted revenues of $6.5 million and profits of $1.3 million.
eStara's on-demand model is another advantage, since it's easier for new customers to implement and earns recurring revenue from its subscribers. This is particularly attractive for companies like ATG, which can have volatile revenue rates because of the high up-front prices of their software licenses.
ATG does face strong competition from companies such as RightNow
Piece by piece, ATG is making an interesting transformation. If you're willing to tolerate short-term swings in the stock price, it's worth considering as a long-term holding.
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Fool contributor Tom Taulli does not own shares of companies mentioned in this article.