During the Civil War, Abraham Lincoln demonstrated a
penchant for changing generals. One of his more
difficult choices regarding leadership change was his
decision to replace George McClellan. By all accounts,
McClellan had amassed great resources, developed a
sound strategy, established a finely honed
organization and appeared poised to turn the tide of
the war. Despite these apparent advantages and
promise, Lincoln chose to replace McClellan because
the general had what Lincoln described as "the slows."
McClellan was reluctant to commit his resources and
fight. To modern day observers, it might seem
that corporate America is also suffering from "the
slows." Despite the great promise of customer
relationship management (CRM) and the multichannel
contact center, companies have been slow to make
investment decisions about this technology. According
to a recent report by eMarketer, spending on CRM is
projected to expand to $10.4 billion by year's end,
a 167 percent increase over the amount spent in 2000.
These estimates are reinforced by a recent Forrester
study which indicates that 88 percent of Fortune 500
companies say the multichannel contact center/CRM
model is critical or very important. (See
Figure 1.)
The
same Forrester study indicates that 70 percent of
Fortune 500 companies say they have not implemented
any of these applications. Forrester's findings are
supported by a Yankee Group study in which over 50
percent of companies surveyed reported they were not
currently using the Web for customer service, though
they said they were planning to do so. So, despite its
projected growth, the promise of investment in
multichannel customer service/CRM is still to come
and despite its acknowledged importance, the market so
far is predominantly characterized by hesitancy,
uncertainty and confusion on the part of corporate
decision makers.
The Best Solution Is Not Obvious
The hesitancy in the market is a result of the current
economic environment. Large-scale, IT-related spending
initiatives are being delayed, postponed or cancelled.
In addition, companies are much more risk-averse. Many
companies are still smarting from large-scale,
enterprisewide resource planning implementations or
protracted re-engineering efforts and are therefore
hesitant to undertake another project with
far-reaching consequences.
Corporations are uncertain about the impact of
multichannel/CRM solutions on their businesses and how
best to incorporate Web-based channels into their
existing service offerings. Companies are struggling
to understand the technology, the relative strengths
and weaknesses of different eCRM solutions and the
likely viability of each vendor. At the same time,
they are trying to determine whether their call center
agents have the right skill sets, while gauging likely
impact on contact volume.
Last,
there is confusion in the market regarding how best to
implement a solution. Does the company have the right
set of skills in-house and appropriate bandwidth to
pursue an in-house/direct purchase solution? Should
the company consider bringing in consulting resources,
look to a hosted solution or to an outsourced or a
hybrid co-sourcing arrangement?
Two primary trends emerge as a result of these
factors:
- Companies are looking to pursue smaller scale,
incremental solutions as a means to minimize risk and
avoid getting mired in protracted implementations
(e.g., ERP/re-engineering).
- Companies are looking to external partners to help
them deal with the complexity introduced by
multichannel/CRM implementations.
The Moment Of Truth
With regard to scale, one of the beautiful things
about the Web is that service can be made available
(or not) at the moment of truth: when the customer
decides service is needed. Unlike traditional
telephony-based services through which calls arrive
randomly based on publication of a toll-free number,
Web-based customers determine their need for service
while they are on a Web site. This difference can be
leveraged as a means of controlling the scale of
implementation. For example, customer service links
can be embedded on specific pages or offered to a
sub-set of customers. Similarly, multichannel
implementations can focus on adding a specific channel
before offering all channels.
The Pull-Through Effect Of Multichannel Services
As multichannel options are added to a company's
contact center infrastructure, the need to share
contact history across the enterprise increases. This
is true whether or not the volume of these contacts is
large or small. Typically, while initiatives and
volume of contacts may be small, the fact that
customers will also continue to use traditional
telephony channels drives the need to extend the CRM
platform into these traditional centers.
This notion of multichannel CRM driving platform
changes may seem somewhat surprising given that call
centers are often the last to adopt new technologies.
In the recent past, while nearly all call centers had
their own switches, some smaller number were able to
justify the purchase of computer-telephony integration
(CTI) hardware and software (and fewer still actually
implemented the technology). Since these technologies
were mostly related to operational efficiencies, the
impact of how or whether the solution was implemented
was masked from the customer.
With the introduction of multichannel CRM solutions,
seams are more visible. A customer who follows-up an
e-mail message or chat session with a phone call is
immediately made aware that there is a lack of
integration when he or she is asked to repeat the
inquiry, or when the customer gets switched to a
multichannel agent. Companies that don't integrate
technology, intending to reduce costs and improve
customer satisfaction, will actually increase costs
and customer dissatisfaction.
Companies that think they can dodge the front-line
integration bullet and keep call centers operating in
silos will only have to revisit the issue in the
not-so-distant future. Technologies and tools such as
XML, which facilitate information exchange between
applications and Web servers, are already available.
Emerging tools, such as Microsoft's BizTalk Server
(one of the new Microsoft.Net servers) are on the
horizon. These technologies will help drive back-end
integration to further support front-line personnel.
Companies that implement multichannel CRM solutions
and have integrated front-line centers will be able to quickly reap the
benefits of back-end integration and customer service
will be a differentiator for them. Conversely,
companies that fail to integrate will be at a
competitive disadvantage.
Focus, Bandwidth And Expertise
As companies adopt multichannel/CRM models, the
complexity of their service operations will increase
materially, creating a greater need to seek assistance
from third-party subject matter experts. This leads to
an increase in the outsourcing of the management,
maintenance and monitoring of the CRM service
platforms and/or personnel. This is accomplished via a
hosted (application service provider, or ASP) model or
by outsourcing either a portion (often referred to as
co-sourcing) or the entire call center operation.
The decision on which solution to implement comes down
to focus, bandwidth and expertise. The outsourcing
decision becomes somewhat binary for companies that
feel the need to own the customer relationship.
Hosting and co-sourcing come down to questions of
degree of complexity of the solution and a company's
desire to focus on core elements of its business.
Using external resources also permits a company to
focus on integration with legacy systems.
Since companies will be moving to hosted and
outsourced options based on the need for technological
support, they will increasingly reward providers who
have the best solutions with higher margins. This will
pose a threat to traditional outsourcers who don't
expand their multichannel capabilities and decide
instead to continue competing on price. Increasingly,
their business will be awarded to multichannel
providers or their margins will be squeezed below
existing levels.
While expected growth in the multichannel/eCRM model
remains high, initiatives will be smaller in scale.
These initiatives will occur both as small-scale
pilots at large corporations or as full
outsourced/hosted implementations at small and
mid-sized companies.
Growth in outsourced and hosted business from small
and mid-sized companies will also increase. These
companies share the need to provide multichannel
support with their larger brethren, but are limited in
their ability to deliver this capability internally.
Inherent in these limits are both the availability of
technical personnel and the affordability of eCRM
software for smaller companies.
Additionally, the availability of platform-based
speech recognition solutions and usage-based pricing
makes this technology affordable to smaller companies.
Speech recognition is ready for prime time. It has all
of the cost benefits of IVR but much greater appeal
from a human perspective. Here again, the increased
complexity of this solution will further drive small
and mid-sized companies to look for support via
outsourced and hosted providers.
Outsourcers looking to serve this market will need to
act as service and technology consultants, able to
provide a number of solutions including hosted (ASP)
and co-sourced solutions. They will also need to be
more specialized and flexible, and build processes and
organizational structures that facilitate their
ability to support smaller implementations.
Last, outsource companies that can transition to the
multichannel/eCRM model will be able to realize higher
margins, while those that fail to make the shift will
face disintermediation, leading to a loss of business
or lower margins.
Corporate America need not be exemplified by "the
slows" when exploring the potential of CRM and the
multichannel contact center. Options such as
outsourcing, co-sourcing and application hosting
remove the uncertainty that is present in today's
CRM marketplace, while the external partners that
offer such options can assist businesses in
understanding complex technologies and deciding which
options best solve current challenges. Our advice is
to look to the past and listen to advice that Lincoln
gave to Major-General Joseph Hooker, upon Hooker's
taking command of the Union Army. Lincoln wrote, "Beware
of rashness, but with energy and sleepless vigilance
go forward."
Tim Evans is the chief operating officer of Ziptone,
LLC., a provider of live, Internet-based customer
support channels for e-business. The company offers a
suite of services that facilitate online commerce
through integrated and customized applications of
traditional voice, chat, browser-sharing, e-mail and
voice over IP.
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