Free agents.

If the Internet's such a great marketing tool, how come so many companies are losing their shirts?

Largely because they've forgotten they need sales agents. Not to worry. Now there's technology that does everything a sales agent does - except collect a paycheck.

Since the marriage of television advertising to the consumer audience in the 1940s, we have arguably not witnessed a more perfect match between medium and market than the union between the Internet and the 21st-century convenience-seeking consumer.

The Internet's geographically boundless networks reach directly, interactively, and inexpensively into millions of homes globally, including the 15 percent of American households currently on-line. And the number of house-holds connected is growing at a staggering 100 percent annual rate. As an added bonus, those consumers plugged into the Net represent the corps d'elite of any target market; they are, by and large, affluent, educated and eager to adapt to any technological change that will make their hectic lives simpler. Given its unique characteristics, its suitability for its market, the Internet - or the World Wide Web - ought to be making its investors millions.

And yet, most Web sites, despite hefty investments in elaborate and flashy Web page design, continue to lose money. Typically, a site will enjoy thousands of "hits," but few, if any, visitors will stay to make purchases. A full 78 percent of insurance providers on the Web report that they are losing money. In fact, almost every company with a Web presence today is losing money on its Internet investment.

What's missing from this seemingly ideal sales and marketing channel? To answer this question, simply consider another: In the physical space, do your conventional marketing materials sell your products and services on their own, without the involvement of any salesperson? If they do, you can probably do well on the Internet right now. But if they do not - and most do not - then in order to transform a corporate Web site into an effective business channel and source of ROI, your company must proactively and aggressively sell on the Internet much as it does in the physical world.

Today, the average corporate Web site consists mainly of "brochureware" - on-line versions of corporate and product brochures, press releases, backgrounders - a virtually endless number of pages through which a potential customer must painstakingly wade before he can even hope to glean something valuable. How likely are those who actually find your Web site to read a bunch of static brochures, identify the products that meet their needs and choose to buy a product on their own?

These sites are missing a key element: salespeople. Good salespeople assess a customer's wants, needs, and means, answer their questions, propose relevant products and packages, listen to feedback, make intelligent incentive offers, and close transactions. And customers will return because of the positive experience they had purchasing the first time around.

Companies on the Internet are represented by computers and not by people. Therefore, computers must recreate the warm, fuzzy sales experience that would occur in the physical space over this electronic medium. Enter artificial intelligence (AI) and the automated sales agent. AI is a technology that enables the automation of human reasoning processes, such as communicating with natural language, making judgments, and solving problems.

The AI applications base decisions and actions on technical components such as frames and rules. Frames are descriptions defining a business concept in terms of related concepts. (e.g., "A fixed period mortgage is a loan that behaves like a conventional fixed rate mortgage for several years and then converts to an A.R.M.") Rules are statements about the concepts defined by frames that support the judgment to be made. (e.g., "A customer who desires interest rate stability and expects to sell within 7 years finds a fixed period mortgage attractive.")

Using these predefined guidelines, the automated sales agents can answer questions from interested consumers, make product or service suggestions based on customer information and manage the overwhelming volume of electronic messages that often follows a successful Web site opening. These automated agents can help service customers and manage sales and marketing activity in a Web "office" almost as if it were a physical location. Most importantly, AI enables intelligent communication with customers, enhancing customer relationships while, at the same time, reducing staff work loads.

Officials at Chase Manhattan Bank Corp., for example, were able to offset a significant number of messages and queries from private capital banking customers using an AI system. The messages range in topic from sales and marketing questions about available products and services ("What kind of CDs do you offer?") to service-oriented requests ("I lost my credit card"). The messages come into the bank via either e-mail or Web forms.

The system then uses a "natural language" technique to analyze the text of the message, extract key content, and identify specific phrases that would help the automated agent answer the query, according to whatever rules Chase has set up. For example, Chase officials decided that no one who has sent a message containing sensitive information, such as an account number or social security number, should be sent an automated response; rather, those messages would be forwarded to a human account representative. Thanks to AI, up to 80 percent of inquiries are handled automatically, with an additional 50 percent reduction in workload for those requiring human assistance.

When a prospective customer visits an AI-enabled Web site, he or she needs little, if any, interaction with a human agent in order to feel like the recipient of very personalized, customized service. When a consumer goes surfing at a mutual fund company's Web site for an investment for his newborn child's future college fund, for example, the automated mutual fund sales agent can ask specific, detailed questions about income, tax bracket, expected duration of investment, among others, and then - much as a human sales agent would - answer questions and offer products appropriate to the customer's needs and specifications.

The inexorable trend toward customization of products and services to a market of one demands intelligence-based systems like AI. Today's average consumer expects 24-hour convenience, multiple-channel delivery, and as close as possible to the exact product he or she wants - when he or she wants it. The enormous potential of the Web as a marketing channel is derived from the number of customers it reaches, the uniquely low cost and high availability of the medium, and its appealing interactivity. And the fact is, people will buy on the Internet - and soon. If you want to be there when they do, you have to start building a business solution now.

That means understanding that implementing an AI solution for your Web site - and turning your home page into a store front - is not just a technological initiative. Adding a Web site as a significant new sales and marketing channel for your business will affect virtually every other area of your organization, and will bring with it unique challenges and cross-departmental issues, such as sales-channel conflict, among others.

Hence, the effort must be an integrated business/IT initiative and it must be fueled by the vision and dedication of the CEO. Not only does he or she have the arduous task of towing the line between business and IT people - who very often have conflicting goals and approaches - but only the CEO can communicate the appropriate enterprisewide business vision and the full potential of this new channel to enhance your organization's bottom line.

With a creative vision and a solid business plan, your company can soon enjoy the benefits of having a profitable new marketing and sales channel: an on-line store, staffed 24-hours a day by consistent, faithful, talented agents - and you'll never have to pay them a dime.

Chuck Williams is president and chief executive of Brightware, Inc., a Novato, CA-based leading commercial supplier of technology and consulting services for software applications that automate sales and marketing on the Internet.