Pitney Bowes also designed the project in increments, so that it could pull the plug if goals weren't met along the way. "We had decision points where we would drop the project if it looked like it would not achieve the benefits we wanted," says project manager Dave Thomas. Success also depended on understanding how people worked. "We had salespeople involved in development all along; otherwise, we knew they wouldn't use it," Thomas recalls.
Not All Customers Are Equal
Once they fit the appropriate technology to the business, companies can begin to manage their customer portfolios as seriously as their financial ones. "Companies are discovering that all customers aren't created equal," says Paul Cole, director of Ernst & Young's Customer Connections Solutions practice in Boston, "and they're refining their notions of the customer to [include] economics of the relationship."
This doesn't mean companies should necessarily say sayonara to customers they can't milk. After all, today's poor college student will be tomorrow's salaried manager; keeping that student loyal over the years can translate into more-profitable business later on. (The jargon for this ROI is "lifetime value.") "You don't have to fire your customers, but you become more disciplined about how you serve them," says Cole.
In this sense, CRM can mean offering a broader variety of services and catering a little more to bigger investors. One commonly cited example of this kind of CRM in action is that of Charles Schwab, of San Francisco. For the past 10 years, Schwab has developed increasingly sophisticated technologies for slicing and dicing customer information stored in centralized databases, "so we have a collective memory of who the customer is," says Jamie Moldafsky, senior vice president for retail client services. Schwab's Siebel software not only tracks and sorts customer transactions, it also allows the information to be shared among various departments — from marketing and sales to production and logistics, from finance and billing to technical support. "Once you know the customer, you can come back with the right level of service," says Moldafsky.
Schwab's new Signature Services program, for example, divvies up customers and their perks into entry-level, gold, and platinum categories, depending on how much money they have in their accounts or how often they trade. In an age when switching brokerages is a simple matter of pointing one's browser to a new Web site, Schwab's extra level of service is key to keeping customers loyal, says Moldafsky.
Companies are also using CRM technology to come up with new sources of revenue. Thomas Cook Travel Group of London, for example, wanted to increase its share of each customer's lifetime value by providing a level of service that competitors couldn't match. To this end, it worked with Chordiant and systems integrator MCI Systemhouse to set up an "international rescue service" for travelers. By telephoning Thomas Cook's call center, travelers receive one-stop access to personalized services, including legal and medical services, emergency cash, card and ticket replacement, and so on.
The supporting technology routes calls to specific agents based on who is calling; when they pick up the phone, the agents can respond in the customer's language. All the relevant information about the customer — including profile, preferences, and itinerary — appears on the agent's screen, so customers get everything they need from a single agent, rather than being passed around.
"It's like integrating database technology with intelligent telecommunications to register a caller's nationality and exact position," says Mike Hughes, worldwide operations director for global traveler services. According to divisional CIO Myles Gibson, Thomas Cook expects to see an annual return on its $25 million investment of 12 percent — a return measured by heightened customer satisfaction, increased customer retention, and increased customer lifetime value.
Clearly, any ambitious CRM venture will require a serious investment in planning, time, and money. "The sweet spot is to be efficient and effective while you're gaining customer loyalty," says Ernst & Young's Cole. To this end, he advises, finance managers need to push for a demonstrated payback when people talk in vague terms about making customers happy. "Certainly, CFOs need to activate those things that help the company's growth agenda, but they also have to be the voice of reason," says Cole.
Dreams of payback will evaporate without the intensive participation of senior management and a cultural buy-in from everyone in the company. But a successful CRM project can be the beginning of beautiful friendships — with customers, that is. "The bottom line of our CRM initiative is improved earnings, shortened sales cycles, and increased sales confidence," says Pitney Bowes's Green, "all wrapped around by better customer service and increased satisfaction."
Bronwyn Fryer is a freelance writer based in Santa Cruz, California.
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