With vendors merging in order to expand their product suites and with CRM hot enough to attract the attention of ERP providers, might CRM become mired in the same problems associated with ERP — namely, high-cost, complex implementations, and elusive ROI? "There's no doubt that CRM will have elements of the ERP problem," answers Chatham of Forrester Research, "but the real barriers won't involve technology, but corporate behavior."
Peggy Menconi, research director in E-business relationship management at AMR Research Inc., in Boston, agrees. "To some degree, ERP has shown us what not to do, and CRM may be easier to deploy because we've learned from those mistakes. And unlike ERP, every company needs CRM, which means the market is huge and will inspire a lot of innovation."
Clicking with Customers
Another critical factor, of course, is the advent of the Internet. While CRM could certainly play a role at the oldest of old-line firms, it's no coincidence that its rise has paralleled perfectly the rise of E-everything. Indeed, the Web has become so critical to business — Staff Leasing's Harris says that in 12 months, her company went from zero Web contact with customers to handling 25 percent of all queries online — that for many, CRM and E-commerce are almost synonymous.
When drugstore giant CVS/pharmacy bought Soma.com in June 1999 and rechristened it CVS.com, a search for CRM software was an immediate priority. "We spent a long time looking for the right products," says David Zook, strategic alliance manager for the company's online unit, "and our search was made tougher by the fact that our needs kept changing as traffic to the site increased."
Initially, the company simply wanted a tool for "clickstream analysis," capturing data on how customers moved around the site and which pages they visited most frequently. (For more on clickstream analysis, see "Panning for Internet Gold.") But CVS.com soon saw that the site would need to provide personalized customer service, and that achieving higher sales would require a better understanding of a customer's overall experience. "We didn't necessarily need a full, integrated suite of products," Zook says, "but we wanted to be sure that if we used different software packages, they could communicate with each other."
So CVS.com turned to Quadstone Inc., a small predictive-marketing software firm in Boston, to capture, analyze, and suggest changes based on customer data. The payoff was almost immediate. "We had noticed that many customers began to order prescriptions online but didn't complete the process," Zook says. "But we weren't sure why, or what to do about it." The data from Quadstone pinpointed trouble spots in the cumbersome order process (to fulfill prescriptions online, merchants must gather a lot of data about a customer) and helped CVS.com develop new screens that streamlined the process. As a result, completed orders doubled.
"We devote a lot of our efforts to integration," says Mark Smith, Quadstone's president, suggesting that it's the vendor's responsibility. And he says integration will become paramount as "companies try to maintain a single view of customers across channels."
Few companies are there today. Despite its success with CRM, CVS.com, for example, still lacks an understanding of just how its customers regard the Web site in relation to the store. "We know the average Web sale is four times higher than an average in-store purchase," Zook says, "but whether customers use us to augment a trip to the store, or replace it completely, or some combination [of the two], we don't yet know."
Given that 80 percent of the Fortune 500 have yet to tap CRM at all, there are many questions still to be answered, and many connections still to be forged. Great customer service may not, at bottom, be about technology, but odds are it will come to depend on it more and more.
Virgin Gives It Away
With customer "touch points" all the rage, what better way to embrace the trend than to give customers something they can actually touch? In May, Virgin Entertainment Group America began a pilot program in which it gave away 10,000 "Internet appliances" to consumers who met certain demographic criteria, in the hope that customers would use them to order CDs and other merchandise from Virgin's online store. With a carefully selected audience placing orders from a specialized device, the company will be in a perfect position to analyze shopping behavior and preferences. If all goes well, Virgin will extend the program to a virtually limitless number of consumers.
The appliances, and much of the marketing strategy behind them, come from Internet Appliance Network (IAN), a New York-based start-up marketing and media services firm that not only supplies the hardware (a compact PC, dubbed a Webplayer, which comes emblazoned with a client's logo or any other customization that might enhance a marketing message), but also designs the user interface, helps companies identify the most promising recipients, and then monitors how consumers use the machines so that its clients can improve sales and service and build customer loyalty. Virgin customers can use the Webplayers free of charge during the first year, then pay $50 per year after that, all the while enjoying full Internet access.
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