June 1999

Get Ready For Enterprisewide Changes When E-Commerce And Call Centers Integrate: Part Two

BY BRUCE TALLEY, HEWLETT-PACKARD CUSTOMER CONTACT SOFTWARE

When the film "You've Got Mail" played in theaters in the fall of 1998, audiences knew that when the characters played by Meg Ryan and Tom Hanks logged on, something good was about to happen. Viewers were primed for a recorded message from an ISP, as they knew this was a signal of an emotional connection about to be made because in today's world, so much of life is conducted on the Internet, it has become a place of great possibility.

Most businesses recognize this possibility and have turned to e-commerce to generate revenues. But senior-level executives in any company venturing online may want to take a lesson from the movie. After investing themselves online, the characters eventually got what they wanted. But the moral of the story is that they had to make some fundamental changes in how their lives were organized in order to realize their success.

You've Got Change!
Businesses also must make some profound changes, because generating revenues online   through e-commerce  is a whole new ballgame. For example, the challenge of managing relationships with customers changes dramatically when the connection with the customer is developed and maintained online.

Again, let's take a look at the film: The neighborhood bookstore's loyal customers who appeared to value its history and personal touch had no trouble switching to a giant chain once they experienced the coffee bar and paid the cheaper prices. Unfortunately, this kind of customer whimsy is not a Hollywood story  it is happening all over the net, where customers can switch brands at the click of a mouse for the price, service or selection on a competing Web site.

Studies show that reducing customer defections by just five percent per year can more than double a company's profits over five years  and that it costs seven times as much to secure a new customer as to retain an existing one. Understanding the means of keeping online customers, therefore, is one of the biggest challenges of e-commerce.

Remember the loyal customers who commiserated about losing their cherished bookstore? They also told their friends about the amazing bargains to be found down the street. Good word of mouth has always been a marketer's dream. When shoppers buy online, their experience with your company can reach everyone in their online address book within seconds.

In the offline business environment, companies spend 30 percent of their resources providing a good customer experience and 70 percent on marketing. According to Amazon.com CEO Jeff Bezos, the reach of the Net is so wide that these priorities need to be reversed online  70 percent of a company's resources should be spent on delivering a strong and positive customer experience.

Amir Aghdaei, a call center manager for Hewlett-Packard, agrees. "Better service is no longer just a nice thing to do. It's mandatory."

Better service is also more efficient. According to a Forrester Research Inc. study of financial institutions, one live phone call can cost $1.44 per inquiry, but the average cost to service a customer online is a mere four cents.

Respond To Changing Customer Behavior
Now that customers have Web sites on which they can learn about and buy a company's products and services, they want different things from a company. Some customers who may have called with questions in the past now get answers at their own convenience online. Other customers who may never have called before are motivated to do so once a Web site generates interest and they want to follow-up with a human contact.

The way customers buy is changing, as well. One online business furniture.com reports that shoppers who peruse their cyber-showroom take 20 percent longer once they call to place their order, but the orders are, on average, 50 percent larger.

For help desk call centers, the increase in online customer contact has resulted in efficiency gains because now many technical questions can be answered online. Customers often prefer to help themselves on a Web site rather than place a call to a call center. But when customers do call into an integrated call center, help desk staff can link to the customer's online history through a computer-telephony integration framework to understand what kind of assistance will best serve the customer.

For call centers that do telemarketing, when the call center and e-commerce are integrated, outbound telemarketing campaigns can be designed to invite the potential customer to visit the Web site. Equally important, the data provided by online telemarketing activities can be used to target sales.

Two examples of the integration process at work can be found at Sprint Communications and at Hewlett-Packard. At Sprint, a database of questions and answers is activated whenever a customer calls for help, providing the customer service representative with an answer that has been proven in the past  so she knows it will address the current problem. Then the caller's question is added to the database, which is also used by Sprint employees who respond to e-mail questions. Sprint also uses the database as a rich resource of ideas for developing online services. At a Hewlett-Packard call center, corporate customers are tracked whether they e-mail or call. The program identifies them if they contact HP again, and routes them to the agent who can provide the best service. HP credits the system with an estimated $180 million in incremental sales.

Reorganize To Act Faster And Stay Lean!
There is no question that integrating the call center and e-commerce is fundamental to online business. The question is how to make the integration successful. The right technology is imperative, of course we will look at this later on  but just as important is the realization on the part of a company's leaders that venturing online means a major organizational shift.

At the core of the transition into e-commerce is the need to act faster and stay lean. Executives will need to act faster because the nature of product design, development, launch and market uptake will be shortened by e-commerce. And lean, because shorter design and launch times mean that research and planning cycles which offer security to many executives  will be replaced by action. Although many executives have built their careers on their ability to plan and forecast, experts now predict that creating a plan before making a move will no longer be part of the strategy for success. This may seem risky to some, but business online moves so rapidly that the costs of not taking action can be graver than the possibility of a limited failure.

The level of organizational change required to operate in this faster, leaner world will start to become evident as companies integrate their call centers and e-commerce. For the call center/e-commerce integration to be successful, companies also will need to coordinate other departments, because everything linked to sales will be affected by online and call center activities. Departments that are responsible for everything from finance and inventory to distribution and marketing must coordinate in order to do their jobs in real-time.

The demand for a quicker, more streamlined way of doing business requires leaders to identify and address inefficiencies and determine how to restructure for the new marketplace. The process of integrating the call center and e-commerce is an excellent starting place for becoming clear  and taking action  on how to make the needed changes throughout the organization.

Here's why: most call centers have been isolated from other functions within an enterprise. Even within the call center itself, various operations were created and run as separate functions. This means that the people in marketing were not always talking to the people in the call center. In fact, despite the valuable customer feedback that passed through the call center, promotional campaigns in most companies were often designed without the call center's input.

But in terms of connecting people who have not worked together in the past, integrating the call center with marketing is only the tip of the iceberg. What about the folks in IS, for example, who are now critical to the process of marketing and sales? In many companies, IS was not even in on the ground floor of the Web site creation, because in the early days (i.e., 18 months ago), e-commerce was an idea that people talked about in marketing. But now IS is at the center of a company's e-commerce success.

According to Tim Sloane, an Internet analyst from Aberdeen Group, "Many organizations have problems getting the Web site team to work closely with IS staff because they are coming from opposite points of view. The IS charter is to guarantee the accuracy of corporate data by protecting it. The Webmaster wants to publish it. Left on their own, they tend to view their opposite as a dangerous adversary."

Once different departments start contributing to the success of e-commerce, they are now playing on the same team  which can lead to a lot of time-consuming confusion. Drue Miller, the first Webmaster at Vivid Studios in San Francisco, has seen the impact of this firsthand. "It used to be you would go into a client, and one group had ownership of the site," she said. "Now, it's not uncommon to find that marketing, sales, human resources and manufacturing all have a stake in the site. Who's got the final sign-off?"

Sloan believes this is where leadership is key, as e-commerce is changing so rapidly. "It's up to a higher level of management to reconcile the two views," he said.

The Online Assembly Line
The "e-engineering" at Ford Motor Company gives a glimpse into the kind of overarching organizational changes most companies will face when they integrate e-commerce with the call center. Ford is using e-commerce to transform the way it builds cars it plans to build them to order rather than to forecast.

In the past, whether Ford customers wanted a Mustang or a mini-van, they walked into a show room and took a vehicle out for a test drive. Now, Ford invites its customers to shop online first, where they can pick the model and price they want. Ford then refers them to the dealers who can meet their needs.

Though this may be helpful to the customer, the real winner here is Ford. It routes this information to marketers and designers to help plan new projects and then brings designers from all over the world together in cyberspace to pursue the new ideas which results in auto components that are designed once and can be used everywhere. If design plans conflict, the software sends out e-mail alerts to the designers. Once Ford puts a system in place to order parts, it will be ready to begin using its new system.

This is just one example of how deeply the impact of e-commerce will be felt. As Ford knows, it isn't just a matter of putting up a Web site. Generating revenue online means that companies will have to reinvent the way they do business  from determining what to produce, distributing goods and working with vendors.

The most important place to rethink the way the business is run, however, has to do with internal challenges. Companies must redesign their systems and hierarchies so that these changes occur as quickly and effortlessly as possible.

Call Center Technology Framework
The first step in creating a customer-centric e-commerce business is to install technology that supports the integration of the call center and e-commerce. Customer interaction software enables call centers to manage customer contact across multiple channels such as voice, fax, the Web and e-mail. This is where the computer and the telephone touch. Embedded in customer interaction software is computer-telephony integration (CTI), which routes customer calls to the appropriate customer service agent and provides split-second "look up" of customer information. Before the phone rings a second time, the customer's call information and background can come together in a screen pop at the agent's desktop. New technology in this space also provides the agent with knowledge and control of the e-commerce Web page the customer is viewing during the conversation.

Customer interaction software is especially important when a customer begins an order on the Web, then requests a live agent to help complete the order over the phone. Without the assistance of a live agent, many customers abandon near-complete orders or shopping carts because they need support or lack confidence that their orders will actually go through or that their credit card numbers will be secure.

With the right customer interaction software framework, a call center representative can process a sale while accessing the customer's online history and thus engage the customer in a conversation about his or her most recent purchase. This richer, more satisfying experience will help to keep the Web site in the customer's list of "favorite places."

To help companies keep information flowing from the call center to finance, distribution, marketing and management, customer interaction software also comes loaded with customizable applications. This flexibility will come in handy when companies are faced with restructuring and tools are needed that can ease a company's internal transitions.

The use of customer interaction software with CTI is on the rise. According to the Aberdeen Group, the market for CTI is growing at over 30 percent per year. This means that anyone looking for CTI will have a number of choices. With so much at stake and so many changes to manage, choosing CTI from a well-known company with a strong track record can be the best way to go  because in today's fast-moving environment, nobody has time for regrets.

Conclusion
The rapidly growing popularity of online commerce is forcing businesses to take another look at customer relationships. The key to maintaining a loyal customer base is in the integration of the call center and e-commerce. A key to successful integration is selecting the right customer interaction software that supports a seamless transition between customer contact channels. To achieve this integration, management will be forced to make courageous and reverberating changes in how the company is structured. E-commerce is ushering in a whole new way of doing business faster than you can click on "You've Got Mail."

Bruce Talley is manager, sales and marketing operations, for Hewlett-Packard Customer Relationship Software. The group offers call center solutions to help customer service managers quickly adapt to new channels, new markets and new customer demands. HP's solutions are installed worldwide in industries ranging from telecommunications and manufacturing to financial services and utilities.