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To Serve Man

Browser-based customer service applications help companies respond to consumer inquiries, answer basic questions, and keep track of complaints. But the software is no silver bullet.
Gary M. Stern, eCFO
April 15, 2001

Like all software vendors, execs at Oracle Corp. are not exactly wallflowers when it comes to extolling the virtues of the company's products. This industry tendency toward puffery may explain a press release promoting the Ebusiness Network, a how-to Web site on E-commerce that Oracle co-sponsors. In a bit of bumpf promoting a show on that network, Oracle proclaimed that, with E-business intelligence programs, "you can kiss your CRM problems goodbye."

Hardly. And it's not as if Oracle doesn't have a right to crow about its E-CRM offerings. With the May launch of E-Business Suite 11i, an integrated E-commerce package that includes customer-relationship modules, the business application and database specialist has vaulted into the top tier of CRM and E-CRM software vendors. That elite group includes market leader Siebel Systems, as well as ERP heavyweights SAP AG and PeopleSoft. Oracle's CRM programs for its Ebusiness Suite have proved so popular, in fact, that sales of the applications shot up 54 percent in calendar year 2000.

Of course, now is a real good time to be selling E-CRM software. Outside of remote hosting, E-CRM is about the hottest topic in E-commerce these days. Originally, customer-relationship programs were designed to capture information about shoppers and to help sales personnel manage leads and service requests. But the latest crop of browser-based CRM applications go much further. Using E-CRM programs, E-tailers can respond to customer inquiries (both traditional and Net-based messages), answer basic questions about products and policies, and track complaints and communications. According to industry follower IDC, the E-CRM software market will top $11 billion in sales by 2003.

But despite vendor claims, no E-CRM software — or suite of programs — eliminates every E-business problem. As executives at some online businesses have discovered, relying too heavily on E-CRM software can cause almost as many headaches as it solves.

Case in point: Some companies employ E-CRM programs to generate E-mail responses to consumer complaints. The thinking: Getting back to the customer quickly demonstrates genuine commitment to service. The flaw in the thinking: Many consumers are put off by generic E-mail responses, viewing them as the new-economy equivalent of form letters. "CRM software isn't a silver bullet or a panacea," acknowledges Terry Nelson, E-commerce marketing manager at Lands' End, a direct seller of apparel and luggage, in Dodgeville, Wisconsin. "It's one tool in our toolbox that helps us understand our customer better."

Indeed, industry experts say online merchants who view E-CRM applications as the ultimate in customer care are asking for trouble. "Because the Net must be incorporated into business rather than added on, E-CRM should be part of CRM and E-commerce initiatives," notes Beth Herzog, financial services analyst at UK-based market researcher Datamonitor. "To think of it as an entity unto itself detracts from its real purpose."

Therein lies the rub. Many corporate users of E-CRM software don't bother to tie the software into their CRM operations, such as call centers and fax-back procedures. The quick-fix approach can be a disaster, says Philip Tamminga, a partner in the customer-relationship management group at consultancy Accenture. "The implementation of E-CRM programs is complex," Tamminga argues. "Introducing the software requires massive, if not transformational, change for a company."

Customer Nine Will Not Return
If you're scoring at home, E-CRM software is 1) not a panacea, and 2) difficult to implement. So why bother?

For starters, a recent survey by Indiana University and professional service organization KPMG revealed that product information is the most important factor for online customers over age 25. If E-tailing is to move beyond the novelty stage, Net merchants must keep their customers informed.

They can't do much worse. According to Datamonitor, virtual retailers lost a staggering $6.1 billion in 1999 because of poor customer service. And compared with traditional retailers, online sellers are flat-out lousy at getting window-shoppers to do a little forking over. The numbers tell the tale. At land-based stores, about 40 percent of prospective customers end up making a purchase. By comparison, only about 3 percent of online shoppers actually buy something.

Some industry watchers believe E-CRM programs will help improve that figure. Future releases of the software promise to go beyond merely providing information on a customer's previous buying habits. Explains Erin Kinikin, a CRM analyst at consultancy Giga Information Group: "The programs will suggest the best answer, best offer, best piece of information to meet a customer's needs."

At the very least, E-CRM applications should provide E-tailers with a clearer picture of what online shoppers are looking for. "Companies that implement E-CRM know what the customer wants," insists Tamminga. "They know the attributes of a customer, how to treat him or her, and how to tailor their offerings."

Executives at Lands' End know about tailoring. Until a few years ago, the $1.3 billion-in-revenues retailer sold mostly through catalogs. Because of customer intelligence wrung from E-CRM software, the company now operates several channels, including a mail-order business, specialized children's catalogs, and a Web site. Says Nelson: "E-CRM is changing the way we think about interactions with customers."


So much so that data derived from E-CRM programs convinced company managers to launch three new customer-oriented features. Two of them help shoppers visualize how clothes will look on them before they buy. The other, Personal Shopper, is based on new technology called conjoint analysis. It doles out customized advice to customers on what shoes to buy, what shirt looks good with chinos, and so on. Since its launch in October, Personal Shopper has been a huge hit, one of the most visited pages on the Lands' End site. "E-CRM software helps us to understand how customers interact at every channel," notes Nelson, "and to figure out the best way to communicate with them one-on-one."

This kind of personalized selling may be the real benefit of Web-enabled customer-relationship software. Last year, for instance, retailer Williams-Sonoma Inc. rolled out an E-CRM application designed by Kana/Connectify. Shelley Nandkeolyar, vice president of E-commerce at the San Francisco-based merchant, says information gleaned from the software helps the company coordinate its catalog, retail, and E-commerce channels when promoting special campaigns.

In early May, for instance, Williams-Sonoma sent an E-mail to customers flogging a Mother's Day recipe promotion. The E-mail contained a targeted click-through, which included a store location where customers had previously shopped, or directed them to the company's 800 catalog number. Nandkeolyar says a traditional approach — that is, US mail — would have cost Williams-Sonoma about 23 cents for every shopper on the list. The E-mail promotion costs 2 cents per customer.

People Are Alike All Over
Other online operators are also turning to E-CRM software to help rein in customer service budgets. Automating the processing of consumer inquiries reduces the number of calls made to corporate contact centers. "Most E-CRM programs provide a self-service way for customers to ask questions over the Web," explains Giga's Erin Kinikin. "The program then allows the customer to request help via either E-mail, chat, or interactive voice response." By Kinikin's reckoning, around 25 percent of the workload normally handled by a customer-service representative can be taken care of by software.

But digitizing customer care can backfire. Experts say computer-generated responses are limited, often forcing humans to step in, negating much of the cost savings. What's more, a recent survey by industry analysts Meta Group revealed that three-quarters of large corporations polled have not yet fully integrated CRM programs into their E-commerce initiatives. If CRM apps don't talk to Web-based E-CRM software — and many don't — a merchant can end up with a serious blind spot in a customer profile. Say, for example, a shopper takes time to fill out a preference form on a company's site. If that customer later calls the company's toll-free number to place an order and the profile doesn't appear on the screen at the call center ... well, you can kiss that customer goodbye.

In addition, automated replies sometime irritate, rather than placate, customers. Studies show the majority of shoppers expect an E-mail answer to Web inquiries within 24 hours. But surveys show that fewer than half of all inquiries are answered within five days.

Ironically, delays in getting back to shoppers are occasionally caused by the desire to better serve those shoppers. Nelson points out that data culled from Lands' End's E-CRM software must first be analyzed and interpreted. After determining a patron's preferences, representatives at the retailer decide how best to respond to the customer — via E-mail or a phone call. Concedes Nelson: "The software collects information, but it's not the solution."

Software rarely is. In this new age of meta searches, shopbots, and intelligent agents, most shoppers in the virtual universe still crave a little personal attention. A software-generated "Dear Customer" E-mail — no matter how fast the turnaround — hardly qualifies as superior customer service.

This may explain why some old-economy companies are taking a more cautious approach in deploying E-CRM software. At New York-based Colgate-Palmolive Co., company managers have worked nearly five years to re-engineer the company's core business practices around SAP's R/3 ERP system. Given that pace, it's not surprising that Ed Toben, chief information officer at the consumer goods specialist, says the company has no intention of deploying E-CRM software just for the sake of doing it. By Toben's lights, E-CRM has to be part of a total E-commerce strategy. "We've learned that you can't just go to E-CRM," he explains. "You need a strong base first."

You also need a tie-in to other customer-care systems. That's why more and more online merchants are using E-CRM programs to support — not supplant — live customer-service representatives.

Take Diamond Organics Inc., an organic food E-tailer that promises overnight delivery of Black Mission figs, edible flowers, and other organic produce. In August, the Freedom, California-based E-tailer deployed MATRANet Web Touch software on its site. The app, which hooks into the company's call-center operation, helps the E-tailer provide real-time, personal answers to customer questions. When a shopper sends an E-mail inquiry about an order delivery, for instance, a Diamond Organics customer-service operator responds immediately by E-mail or phone. "The software enables customers to write as they're browsing and get answers," notes Jasch Hamilton, CEO at Diamond Organics. "It fulfills the promise of the Web, making selling one-to-one."


The software also tracks customers' buying habits, breaking them down into how much each shopper spends on certain products. "We're selling highly perishable foods and shipping them overnight to consumers," explains Hamilton. "We have to be in contact with customers. There's little room for error."

Hamilton believes Diamond Organics' emphasis on customer service will plump the bottom line. "If someone's online with a question, and we can answer it and deliver to him or her tomorrow," he says, "we retain a customer."

Time Enough at Last?
In fact, a recent study by Accenture makes a direct connection between the deployment of E-CRM software and a jump in revenues. According to the survey, a $1 billion-in-turnover company can expect a $40 million to $50 million spike in sales within 12 months of an E-CRM rollout. Why? Accenture's Tamminga believes companies that implement E-CRM applications have a consolidated view of consumers. "That, in turn, increases customer loyalty and repeat business."

Of course, Accenture — and other consultancies — make money off E-CRM advisory services. And despite the industry buzz surrounding E-CRM, few early adopters have thus far reported big increases in revenues. Giga's Kinikin thinks she knows why: "Companies haven't taken the insight and used it to give customers more of what they want: the right offer targeted at an individual customer at the right time."

Time may be the key. Many E-tailers, who are short on the stuff, continue to roll out E-CRM applications as fast as they can. The pell-mell approach makes it nearly impossible to tie the software into other customer-service initiatives or data warehouses, let alone analyze what works, what needs fiddling, and what needs to be chucked.

That spells trouble. On its own, E-CRM software is a pretty skimpy panacea. "When you've entered the Internet," cautions Colgate-Palmolive's Toben, "there has to be something behind the curtain."

A real person would be nice.

Gary M. Stern is a contributing editor at eCFO.

Outsourcing: In Praise of Pops

No doubt some CFOs can remember the old days, back when customer service was a guy in Modesto with a telephone and a mechanical pencil. But over the past decade, customer care has evolved into its own corporate entity, customer-relationship management (CRM), replete with call centers, sales lead software, data warehousing, and so forth. Now, with the relatively recent arrival of the Internet, CRM has morphed into E-CRM.

The morphing is not surprising. Companies now handle customer requests sent over a host of machines, gadgets, and channels. That ever-expanding list includes fax, telephone, US mail, E-mail, chat, voice over Internet, World Wide Web, and the wireless Web.

Covering all the bases can be tough. Indeed, a finance chief can spend months trying to figure out which E-CRM software does what, and why. Even if a company's management narrows the choices to a handful of programs, integrating best-of-breed applications for various customer contact points can drain already scarce IT resources.

To avoid the problem, an increasing number of corporate managers are looking to outsiders to help with E-CRM projects. There's certainly no shortage of choices, that's for sure. Over the past year, a whole slew of CRM specialists have launched E-CRM outsourcing services — iCT ConnectedTouch, iSky, eConvergent, Neteos, InServe, SafeHarbor, Synchrony, and Talisma, among others.

Typically, outsourcers choose offerings from major CRM/E-CRM vendors, then customize the package. Says Tim Kowalski, president of iCT ConnectedTouch: "An outsourced technology provider has determined which technology providers are best at E-CRM solutions, such as E-mail, Web interaction, voice, and contact management."

Tailoring E-CRM programs can get very sophisticated, with outsourcers adding features like interactive voice response and alert notification. "An outsourcer can have them all work together in a seamless, integrated fashion," claims Kowalski. A well-designed system turns data into a 360-degree view of a customer. Example: a shopper calls an 800 number. Instantaneously, a screen pop appears on the call-center agent's monitor. The pop gives a complete lowdown on the caller, including the customer's past communications with the company — E-mail, faxes, and phone calls — as well as payment and delivery preferences.

Generally, E-CRM outsourcers can deploy software within 45 days of signing a contract. A number of outsourcers, including iCT, eConvergent, and Synchrony, also provide remote hosting of E-CRM applications. Before signing anything, though, experts say a CFO should ask to see recommendations from an outsourcer's previous corporate clients — preferably ones that have not gone out of business. —GMS

E-marketplaces: The Parallel

While CRM and E-CRM software has been designed almost exclusively for selling to consumers, some vendors are now venturing into the B2B market. In September, CRM heavyweight E.piphany Inc. rejigged its B2C applications to work in trading-hub environments. Then, in mid December, startup Ardesic Corp. came out with the first E-CRM platform designed specifically for online marketplaces.


The trend will likely continue. Industry analyst Keenan Vision Inc. predicts that 50 percent of E-marketplaces will implement CRM software by 2004. Already, a smattering of B2B specialists and niche exchanges have deployed such programs.

RxMarketplace Inc., a Louisville, Colorado-based B2B Web site for pharmacists, is one of those deployers. The company, which sells supplies to 20,000 independent pharmacists, implemented Oracle's Ebusiness Suite last year. "We understood that our business success would rise or fall on our ability to be successful on personal relationships," notes Karen Garza, vice president of marketing and sales at RxMarketplace.

Since pharmacists are interrupted every 30 seconds by customers, executives at RxMarketplace figured users would not tolerate slow responses from the exchange. In addition, focus groups revealed that druggists prefer speaking to customer reps on the phone rather than obtaining impersonal — if instantaneous — information online. But in the next six months, the site will also offer Web-based responses.

At MapInfo Corp., a B2B demographics software and data specialist, company managers rely on an application from NetGenesis to get a better fix on customers. The program provides statistical breakdowns on which patrons visited online, the paths they traveled to get there, as well as the pages they most frequently visited. Kim Seabury, director of Web operations at Troy, New York-based MapInfo, says the company recently used the program to identify which online visits turned into purchases. Executives at the company, which generates 65 percent of its sales online, used the information to redesign the MapInfo Web site. —GMS




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