Profit From Customer Relationship Management Solutions

Companies can still improve their bottom lines by squeezing more efficiency from their supply chains. However, more companies are learning that establishing and managing long-term customer relationships can also yield big savings.

Many companies spent the better part of 1999 making sure their enterprise systems were Y2K compliant. Now, with both feet firmly planted in the next millennium, information technology (IT) personnel are evaluating applications and implementations for the future. With few exceptions, customer relationship management (CRM) solutions are at the top of many IT agendas. Companies that have not explored this option should reconsider. Or, better yet, look at what your competition is doing. After all, it is with these companies that you will battle for market share.

Every study confirms that it is more costly to acquire new customers than it is to retain current customers. CRM solutions are designed to help companies provide superior customer service, which will translate into improved customer retention and less-expensive customer acquisition. The level of functionality differs from vendor to vendor, however; CRM software often supports customer contacts, technical services, product sales, order processing, and warranty issues. These solutions allow a single point of customer contact for many business processes. Because a customer service representative can access customer data from the desktop, answers are quick and accurate. A customer's problem is resolved with minimal effort on the customer's part. The result, customers experience no frustration and have no immediate reason to choose a competitor over your company. In fact, if the contact experience is positive, the process can actually reinforce a customer's commitment to a particular vendor.

Measure Performance With CRM Solutions
Integrated Solutions (September/October 1999) detailed the technology implemented by RPS (Pittsburgh) — a billion-dollar small-package ground carrier. However, the article did not detail the company's CRM solution. RPS has an entire floor at its corporate headquarters dedicated to customer service. Customer service representatives' cubicles are spread throughout an expanse of open space. The reps handle a barrage of incoming calls that range in content from package tracking to shipping charges. While the reps are located in cubicles, the efficiency of each individual and the department is monitored on a centrally located PC. From this PC, calls are routed, employee performance is measured, and department statistics are displayed in real time.

For example, RPS' CRM solution allows managers to instantly gauge performance. Some of the metrics that are continuously evaluated are average response time to calls (the goal is 12 seconds or less), average length of customer calls (the goal is 120 seconds or less), and the average number of calls handled each day. The names of customer service reps and their individual statistics also scroll at a steady pace on the main PC. The system automatically highlights the amount of time employees have spent away from their station — yellow highlight for more than six minutes, and red highlight for periods of 12 minutes or more. The system also produces real-time statistics on the performance of each individual in handling calls.

One of the main functions of RPS customer service reps is to answer questions regarding package tracking. In most cases, however, package-tracking information can be obtained by customers on the Internet. Still, most calls are placed by customers who want a human voice to validate what they already know. Said one RPS customer service rep, "There are many cases when customers have already gathered tracking information from the Web. They read the tracking information to me and want to know if it is accurate. Some customers find it hard to believe that I am looking at the same information that they have in their hands."

Your Competition Is A Mouse Click Away
As companies evaluate the state of their current CRM solutions, there is little doubt that vendors are positioning themselves as top suppliers of this type of software. Recently, Nortel Networks acquired CRM vendor Clarify, and PeopleSoft announced plans to acquire Vantive Corp. Also, Lucent Technologies merged with Mosaix, with the goal of providing a comprehensive enterprise-wide CRM solution. While SAP and Baan have not announced acquisitions, both companies have released major CRM initiatives.

"The hallmark of any business idea is when you start to see the big players with deep pockets moving into a particular space. That is what's happening with CRM," says Mike Martinez, executive director, product marketing, CRM solutions at Lucent Technologies. "The amount of interest in CRM technology is terrific. We are really encouraged when we see the number of organizations that are spending time discussing these types of solutions."

One of the reasons for the rise in popularity of CRM solutions is that many companies are reaching maximum savings in terms of supply chain management. There will always be continuous gains in terms of productivity, but the gains will not be as significant as they once were. Large revenue growth is now more likely to come from establishing and securing long-term relationships with customers. "With the emergence of the new economy comes the realization that your customers are literally a mouse click away from your competitors," relays Martinez. "If a company is going to be successful in this type of marketplace, it has to focus on maintaining and keeping its current customer relationships."

Customer History Translates Into Profit
National City Bank (Cleveland) is the first organization to work with Lucent Technologies following its merger with Mosaix. National City Bank is no different than most organizations in wanting to handle its customer contacts more effectively. The installation of a new CRM solution will allow the bank to process customer interactions to completion. Customer phone calls, e-mails, faxes, letters, and Internet contacts are all routed to the appropriate employees within the bank. A complex workflow system allows customer orders to be processed in a timely manner. The entire system links departments within the bank with the ultimate goal of better customer service. A customer service representative can instantly view a customer's entire history with the bank. It is the awareness of this history that is so important. A history implies a long-term relationship. And, a long-term relationship can lead to increased profits.

Ed Hess