VideoCheryl Currid, president and CEO of Houston-based consulting firm Currid & Co., is a very good airline customer. She spends at least $1,000 per flight on an average of 100 trips annually, and she always rides first-class. On the other hand, she's a terrible credit-card customer. Since she pays her bills down every month, the banks don't make a dime. Still, the card companies beg for her business. "I want to tell the banks, 'If you really knew me, you wouldn't want me for a customer,' " she says.
Knowing the customer — the profitable ones and the not-so-profitable — is the heart of the latest hot business trend. Customer relationship management, or CRM for short, combines a set of business disciplines (finding out who your customers are and what they want) with technology (storing that information in a database, and using specialized software to sort it out). That data can be used to find ways to make more money from customers, or to improve the quality and efficiency of serving them.
Offer special perks to those who spend more with your company, so CRM thinking goes, and "grow" those who spend less. Let's say a flight attendant notices that Currid likes a glass of zinfandel when she takes her first-class seat. The attendant enters that information into a hand-held computer and later uploads it to the corporate data management system. There, Currid's name is sorted into the group of "good" customers who receive extra perks. On Currid's next flight, the flight attendant magically produces the glass of wine, to the traveler's delight.
Likewise, if Currid's credit-card bank knows she's the zero-balance type (classifying her as a low-profit "transactor" instead of a high- profit "revolver"), it can come up with other ways to make money on her — perhaps by interesting her in an IRA, or offering her a deal on a home-improvement loan, or simply charging her an annual service fee.
But CRM isn't just about selling, it's about service. A full-blown enterprise CRM system, made up of various software applications, affects every area that touches the customer. In the marketing department, marketing automation software helps generate and qualify leads. In the sales division, contact management software can record customer and prospect information; so-called opportunity managers track potential sales through the selling cycle. Product configurators help ensure that sales orders are complete and accurately priced, and quote generators prepare formal quotations for customers.
In the customer-support area, call-center software helps employees follow up on purchases or technical support. By combining technical-support "knowledge bases" with the Web, companies can help customers help themselves. And field service applications can be used to dispatch engineers, control parts inventories, and manage repair operations.
Finally, CRM software can be integrated with an ERP (enterprise resource planning) system to enable — in theory, at least — an entire organization to realign itself around its customers.
New Configurations
In Stamford, Connecticut, $4 billion Pitney Bowes is rolling out phase one of a multimillion-dollar CRM system to reverse alarming trends in sales. The office-equipment maker found that misconfigured mailing systems were causing some customers to cancel their orders, resulting in millions of dollars' worth of lost revenue annually and causing turnover in the company's sales force.
Pitney Bowes's CRM system is being assembled with applications from Trilogy Software and Siebel Systems, and with a preexisting Pitney Bowes database. Using Trilogy's SC configuration software on a laptop computer, a salesperson in the field can sit down with a customer and perform a series of "what-if" scenarios (for example, "What if I want a mailing system that can be refilled with postage via modem?"), and deliver an accurate solution and quote based on the customer's preferences. When the customer accepts the order, the salesperson can submit the order to the company's mainframe-based order system.
Plans for the next phase of the rollout will see Pitney Bowes salespeople using Siebel's Sales Enterprise software for opportunity management. The salesperson will be able to call up a profile of the customer account and tap into brochures, data sheets, presentations, and even video clips.
Six months after going online, the sales configuration system has already allowed Pitney Bowes to decrease cancellations by 27 percent and speed up order-processing times by 45 percent. Less tangible but no less important are increased customer loyalty and improved sales opportunity. "No surprises and faster delivery mean more satisfied customers — and that doesn't hurt the bottom line," says Pitney Bowes vice president of finance Steven J. Green, who expects an annual ROI from the system of at least 30 percent.
Other companies are using CRM technology to save money in the costly areas of service and support. Seattle-based aerospace giant Boeing Co. ($56 billion in revenues), for example, has built a knowledge base of 1,800 "solution topics" to computer hardware and software problems. By making the knowledge base available in 1998 — first to help-desk personnel and eventually opening it up to online users within the company — Boeing was able to reduce the cost per call by 20 percent, improve its ability to resolve problems on the first call by 5 percent, and reduce the amount of time customers spend on hold. "The overall process improvement in the customer help center saved Boeing several million dollars in operating costs over the previous years," says Barbara Johnson, who manages Boeing's central service response center in Bellevue, Washington.
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