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.
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 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, 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.