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Feature Article
July 2000


Building An Effective Web-Based CRM Infrastructure


Traditional customer relationship management (CRM) can be widely defined as a range of activities undertaken by a company related to developing and retaining customers by establishing and maintaining customer satisfaction.

It is apparent that companies need to implement an effective CRM strategy in order to survive and thrive. Which solution they implement depends on the organization's culture and overall strategy. Regardless of the type of solution selected, companies need to look at CRM on a lifecycle basis, which encompasses customer acquisition through retention.

Telemarketing carried out by untrained, overaggressive representatives who call customers at dinnertime is not CRM. (This can upset the hard-won relationship the company has built with the customer.) Also, to maximize customer comfort and satisfaction, companies must allow customers to interface with them from any touch point, such as Web, IVR, phone and even in-person meetings. However, over-use of technology can backfire and is potentially devastating since customers simply may not be comfortable using interfaces such as the Web.

What then is the key to CRM success? An appropriate combination of technology and people. Remember, CRM is not a product or service. It is an overall business strategy that enables companies to effectively manage relationships with their customers.

The primary goal of CRM is to build a single, integrated, corporate-wide view of the customer, enabling the company to maximize the customer's experience. By integrating front- and back-office systems to include records of all customer contact, purchases, requests for information and technical support, the corporation can present a single face to the customer and, therefore, provide better service.

While companies universally recognize the importance of CRM, few have achieved the goal mentioned above: a single, integrated, corporatewide view of the customer. One reason why is that information may be housed in disparate databases and the associated cost of building an integrated system is very high. Another reason is the rapid pace of technological change. What might be state-of-the-art today may not be tomorrow.

Why the sudden fascination with CRM? After all, hasn't the idea of developing and maintaining close relationships with customers been around since the days of the village marketplace? Technology in the form of large databases and the immediacy of acquiring data on customers from sources including the Internet, coupled with global e-commerce, has turned a compelling concept into a competitive necessity.

Today, the cost to acquire a new customer is substantially more than the cost to market to existing customers via the Web. In fact, studies have shown a dollar spent on advertising during the holiday season in 1998 yielded $5 in return while a dollar spent on customer service yielded $60 in return.

Customer's Perspective Of Web-based CRM
The benefits of Web-based CRM must be viewed from two perspectives: the customer's and the company's. From the customer's perspective, the Web CRM solution must help in a number of key areas, including:

  • Buying product,
  • Solving problems,
  • Getting answers to questions from a variety of sources, such as e-mail, fax and live agents,
  • Providing competitive price and product comparisons,
  • Offering cross-promotional items,
  • Informing and educating about new or improved products and
  • Removing all fears or uncertainties surrounding the purchase.

These needs, in turn, can be placed in six broad categories: ease of doing business, single point of service, competitive pricing, trust, choice and personalized solutions.

Ease of doing business can be all-encompassing, but requires a new business process because of the new e-commerce paradigm. The information the customer needs must be portrayed in a way that's easy to find and understand. The Web site must be fast and easy to navigate as well as available 7x24. Registration or log-in requirements must be consistent with existing authentication schemes and apply at every juncture of the support relationship. The CRM or customer service portion of the Web site must always have fresh and relevant content and clearly set forth the company's value proposition.

An effective Web-based CRM infrastructure must mimic the customer expectations of a physical call center. It must provide a single point from which the customer can receive assistance on everything related to their accounts , such as statement review, service, delivery, billing, invoicing, returns, etc. This single point, which can appear as a button on the screen, is a true value to the customer. If it is present, the customer will know that it is beneficial to do business with the company. For example, Web-based CRM solutions linked to the appropriate database can aid the customer's purchase decision by providing information for side-by-side price and product comparisons.

Information that is up-to-date and easily accessible will make the decision process and the overall experience positive, all the way to receiving the order. Additional features such as customized configuration pricing, loyalty and affinity rewards can be easily offered based on the "single-face" view.

Trust is a main component of any business interaction on the Web. Whether is is real or perceived, customers are not only entitled to privacy, but must believe that the support solution ensures it. All connections to the support center, whether by telephone or Web, must be secure, private and confidential, thereby guaranteeing that information will only be used for appropriate purposes.

Not all customers have the ability or the capability to take advantage of a specific support method. Customers must have an option regarding which access point they want or need. Access points through Web, IVR, telephone, e-mail, fax, conventional mail and dedicated audiovisual centers must be offered to maximize customer comfort and satisfaction.

The choice of access points offered by the company can be governed by the market makeup of the customer. Many support sites provide either FAQs, e-mail capabilities or a "call me" button. Statistics have show that the younger segment of the online population (people under 40) is more inclined to use self-help and e-mail for support. The older segment of the online customer base (40 and over) are more likely to click on the "call me" button to arrange a specific callback time. Other alternatives such as audio and video offer a more personalized and effective method of communicating support issues. However, if the bulk of the online customer base traditionally connects via a dial-up connection, offering these alternatives can be ineffective.

The process of ordering products and services is typically straightforward and easy. However, by having readily available the single, integrated, corporatewide view of the customer, the process becomes more complex for the company. Customers who are offered the capability to personalize their content in a Web-based CRM solution can simplify the complex process of customer intimacy by letting the company know what information is important to them. Personalized pages based on customer preferences provide the company with the added opportunity to cross-sell during each customer contact and to tailor the "purchasing experience" to the needs of the customer.

Attention to these six categories not only leads to a satisfied and loyal customer - it also keeps the customer from straying to competitors.

Company Perspective
The benefits of CRM from the company's perspective are different than those of the customer. Yet they enable the company to best satisfy customers' needs. Clearly, benefits such as increased revenue, enhanced customer relationships, acquisition of new and more profitable customers and improved customer retention rates are expected by the company and are definable. It is possible to measure the revenue earned and number of customers. But one immeasurable benefit is that an effective Web-based CRM solution can provide a competitive differentiation, particularly when products in a global economy can become commodities overnight.

Without well-designed processes, any discipline will fail to meet its objectives. CRM is no exception. Companies should define their business requirements and objectives and develop CRM processes to meet these requirements. Finally, technology should include the following elements:

Business rules. Business rules are needed to ensure that any transaction with the customer is processed in an efficient manner. For example, if a company wants the most profitable and high-volume customers to be given priority to be moved to the front of the electronic queue, the business rules should clearly define what that criteria is. Based on the complexity of transactions, an organization may require dozens of business rules.

Data warehousing. Managing relationships with customers depends on customer information that is frequently in various disparate databases. Consolidating the relevant information in one place and making sure that the information interrelates is not an easy task. Once this is done, however, data warehousing augments a company's revenue potential and customer service.

The Web. The most important use of the Web from a CRM perspective is self-service so customers can make inquiries about their accounts at any time and from anywhere. The Web should also be used for electronic bill presentment and payment (EBPP) so customers can see what they owe and pay online if appropriate. For revenue enhancement, companies can also provide instant messaging to be used for cross-selling and upselling services based on the profiles of customers using their Web site.

Interactive voice response (IVR). An IVR system is required for customers to perform self-service inquiries via the phone instead of the Web.

Reporting. Good reporting tools are necessary for both customer and internal reports.

Call center technology. Some type of call center technology with PBX or VoIP (Voice over Internet Protocol) integrated with intelligent call routing is an absolute must for an interface with a live customer service representative. It can reduce the number of dropped calls.

Integration framework. A technology framework that allows all applications and databases that contain customer information to be integrated can make a big difference in the speed of implementation.

Defining the success factors of an effective CRM solution is to some degree based on the industry the solution is servicing. As a general rule, the following questions must be answered by the data compiled by the CRM solution:

  • Who are the most profitable customers?
  • What is their lifetime value?
  • Which customers are most likely to leave?
  • Who are the best candidates for cross-selling opportunities?
  • Who should be targeted as new prospects versus those that are potential risks?

Certainly from the customer perspective, a successful CRM solution will be determined by:

  • Multiple points of access,
  • Company providing personalized service,
  • The ability to carry out self-service,
  • Speed,
  • Ease of use/convenience and
  • Round-the-clock availability.

In today's Web economy, it is not a question of whether a Web-based CRM solution is needed. Rather, the question is when and how effectively will it be implemented? Customers are the core of any business. With the competitive environment fueled by the Web, which enables smaller businesses to compete more effectively with larger organizations, any method of differentiation from the competition will help in retaining high-value customer and adding new customers.

Philip J. MacLaren, a vice president with The Eastern Management Group, is in charge of the company's E-Business Practice and has 34 years experience in telecommunications management with Lucent Technologies and AT&T.

Ephraim Frankel has a varied background in both business and technology. His experience spans the legal profession as an associate attorney, electronics manufacturing and systems integration/consulting as a principle, network systems architect as a consultant, and education as an adjunct professor at New York University.

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