Classic sales techniques work just as well in the Web space as
everywhere else.
Antony Savvas explains how to convert page hits into sales
figures
Many larger companies have already adopted or experimented with
specialist production and supply systems built around enterprise
resource planning (ERP) packages to improve production flow and
tighten up financial systems. But the smart move now is towards
more customer-facing technologies, to improve relationships with
current customers as well as to help win new business.
The adoption of e-business is the biggest step towards this
goal, and customer relationship management (CRM) software is
designed to help companies get there. CRM solutions, or e-CRM
solutions as suppliers often market them, use databases to record
every detail of a company's relationships with current and
prospective customers. The best solutions deploy databases
accessible to all in an organisation, and permit the access
privileges of different members of staff to be modified.
A CRM solution should be an integral part of an e-commerce
strategy. Staff need to be able to communicate in real-time with
visitors to the corporate Web site (see Just The Job box overleaf),
or a programmed voice should be able to hold a 'conversation' with
visitors on the basis of their mouse clicks on different parts of
the site. Details of conversations should be recorded for use by
the organisation in further dealings with those customers.
Putting customers at the heart of an IT strategy in this way
could give a business a competitive edge, especially as most
companies are currently focusing on back-office systems. A recent
survey of 1,200 managing directors by Saratoga Systems found that
most still saw systems associated with back-office functions as the
most important to their business, with managing the supply chain
and security the main areas of IT concern. Much less interest was
shown in front-office technology solutions, or more customer-facing
activities.
Only 35% said they had some kind of system for recording
customer relationships, and many of these weren't fully integrated
into other systems. 15% said they didn't understand what was meant
by the term CRM, and 65% agreed that the biggest barrier to CRM was
a lack of understanding of what it could do for the business.
"The results of this survey are worrying, in that it looks like
industry is taking a very blinkered approach to its future," says
Alistair Bremner, UK managing director of Saratoga Systems. "Now
the Millennium bug has been stamped out, industry needs to change
its focus from implementing vast, time-consuming and expensive ERP
solutions to more customer-facing activities."
Companies need to start looking at their organisation through
the eyes of their customers so they can cultivate closer and more
profitable relationships with them. CRM solutions and e-business
will be key in this. But major companies aren't even expanding
their data storage capacities to cope with such a positive move,
despite the expansion of e-commerce and the valuable data it
generates.
Another survey, this time of the Times Top 3,000 companies by
NOP on behalf of Compaq, revealed that almost half spent nothing on
storage systems last year and that the majority didn't plan to do
anything in the near future either.
The major theme of the survey was directors' ignorance of the
commercial possibilities that flow from storing e-commerce
data.
This doesn't bode well for the fledgling analytical CRM market,
which Datamonitor says currently stands at around £563m globally.
Most CRM software is sold in the US, with Europe much further
behind in adoption. Nevertheless, Datamonitor predicts the total
CRM market will reach £2.1bn by 2004.
Datamonitor's positive take is backed by fellow analyst AMR
Research, which says CRM's share of the applications market will
grow from the current 16% to 26% by 2004. AMR believes most of this
growth will be at the expense of the ERP market.
CRM take-up has been slack despite an estimated 40-fold increase
in data generated as a result of e-commerce over the next year. A
third of the NOP survey's respondents admitted their data
requirements had already risen by up to 40%. More worryingly, the
survey revealed that almost 50% of stored data was out of date,
duplicated or unused, and that 26% of respondents had no data
management policy in place. Instead of collecting useful customer
data from e-commerce, users were storing mainly internal data.
Just 2% stored the sales histories of their customers, and only
3% held supplier information. A whopping 93%, on the other hand,
stored employee information, probably to satisfy statutory
requirements on employment and tax.
Yet in a world of poor storage strategies and back-office tunnel
vision, CRM could give the pioneers a real boost to their business,
as the following three case studies show.
Iceland
A good example of e-CRM in action comes from frozen food
retailer Iceland, which is using it to help sell fresh food to
customers of its online shopping service. The e-CRM system, from BT
Syncordia, has been combined with Iceland's existing telephone
ordering system.
Iceland information systems director Martin Chatwin says there
was a six-month planning and testing phase before the system could
be rolled out. "We went with BT Syncordia because it proved it had
the ability to integrate with our customer, payment and ordering
systems and stock databases," he says.
BT's research and development centre at Adastral Park was used
to test the system and get customer feedback. BT Syncordia and
Iceland staff took part in the testing alongside customers and
other opinion formers to tailor the system.
The Website service is open 24 hours a day, seven days a week,
with customers able to create their own shopping lists and save
them for future ordering. Shoppers specify a delivery time within a
two-hour period. Each order is electronically transmitted to the
customer's nearest Iceland store where it is picked and packed,
with orders of £40 and more delivered free. Postcode mapping is
integrated into the e-CRM system so that products not available in
a customer's local store are not on offer in their view of the
site.
Chatwin says the customer information collected is being used to
build a database that can be shared by the entire Iceland
organisation, to improve and personalise customer service and to
fine-tune marketing.
Eurostar
Eurostar claims to be one of the first train companies in Europe
to build an e-CRM system. The firm is spending £1m with Sema Group
building up customer profiles of visitors to its Website.
"Many train operators are selling tickets via the Internet, but
our system is far more advanced and will be invaluable to
Eurostar," says Scheherazade Zekri, Eurostar's head of
international sales and distribution. "Not only is our site an
easier way to order tickets, our system allows us to target
customers with information that will be of real value to them."
A small example of the CRM functionality of Eurostar's Website
is that instead of giving customers an option for the language they
want, it uses information logged from previous customer visits to
take them straight to the English, French or Dutch version.
The wider picture for Eurostar is to cut distribution costs and
to increase revenue by exploiting customer profiles. These will be
used to cross-sell services such as hotel reservations, restaurant
bookings and car hire. Zekri says Eurostar will also integrate the
system with mobile phone and digital TV sales. Services will
include information about last-minute travel changes to
bookings.
One2One
One2One, one of the UK's big four mobile operators, has relied
heavily on a CRM system from BusinessObjects to help it to put
together specific marketing campaigns. Combining its data warehouse
with an e-business intelligence tool and segmentation tool, One2One
has carved out a number of campaigns for its six million-plus
customers.
"We're close to our ultimate goal of achieving a closed-loop CRM
model, where information from the data warehouse drives operations,
and the resulting information feeds back into the warehouse for
further analysis," says Adrian Daniel, One2One's client team
leader.
Mobile phone customers are very savvy when it comes to getting
the best deals, and are willing to shop around regularly to make
sure they're not missing out. Targeted marketing through CRM is
therefore critical for One2One, says Daniel.
Information is collected from a variety of sources, including
customer care initiatives, telephone network switches, pre-paid
phone voucher sales, and external demographic data. It is shared
equally between the finance, marketing and customer services
departments, and will in future be published on the company's
intranet to give staff easier access.
One2One was able to use its CRM applications to generate a
marketing segment of all customers who'd bought pre-paid phones but
had only bought one voucher and made few calls. Daniel said the
data was used for a mail-out to remind those customers that
vouchers no longer expired and they still had call time to use. The
segmentation tool was used to track the success of the promotion,
based on an increase in calls made.
A similar segment was created from customers who'd registered
for international call roaming but had made no calls while abroad,
even though they'd taken their phones. These customers were mailed
with reminders of their call roaming ability. Again, a system is
monitoring any increased international call usage from that
customer segment.
Daniel says CRM is increasingly important in the mobile market
as people adopt the mobile Internet and use their mobiles as
payment devices while on the move.
Clearly, companies are increasingly prepared to adopt more
customer-facing technologies, although fully integrated systems
that can record every phone conversation, Web hit and paper
transaction in a single database are probably still a long way off
for most firms.
Just the job
Online chat technology has allowed recruitment agency
Pertemps to quadruple customer sign-ups from its Website
One company busy integrating CRM into the running of its
business is recruitment agency Pertemps. Pertemps has adopted an
interactive data acquisition solution from NetRep on its Website.
Online sales assistants approach the site's visitors and talk to
them, live and online, to improve customer care and retention.
Since implementing the solution at the end of last year, Pertemps
has achieved some good leads. In the first week of CRM being up and
running, the site quadrupled its customer sign-ups.