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Target Email: From Spam to Choice, Part 6

,   |  March 31, 2003   |  Comments

Companies that fail to get serious about their management of customer service e-mail will ultimately pay the price with higher customer service costs and lost revenues down the line. Bruce McCracken finishes his series on targeted e-mail with a look at the growing reliance on business intelligence for companies looking to meet customer demands.

It is irrefutable that a well designed and executed targeted email campaign produces results with a very positive return on investment (ROI). Frequently, organizations fail to see the bigger potential and assess the endeavor from a long-term strategic perspective. Targeted email is an opportunity for a mutually beneficial two-way flow of communications between the corporation and its clients, customers.

All too often customer responses are not dealt with in a timely and efficient manner in areas of support and fulfillment. This results in erosion of the relationship and can become self-defeating in the efforts of the organization to build stronger loyalty from the customers.

Coordination between departments and business processes must be accomplished. High-level management and key strategic teams must have visibility throughout the enterprise to see the over all process with clarity. The interrelated components of the customer life cycle are only as strong as the weakest link in the chain. Many weaknesses and fissures in the structure may threaten the execution of an end-to-end customer satisfaction solution. Reinforcing the weak points, alleviating bottlenecks, and streamlining processes with coordinated integration from a customer centric perspective will go a long ways in accomplishing a CRM objective. The ability to see into the reality may dispel the customer service myth that many enterprises believe.

CRM: Customer Rapport Mismanagement?
David Daniels, senior analyst for Jupiter Research states, "Companies that fail to get serious about their management of customer service email now will pay the price with higher customer service costs and lost revenues down the line. Inadequate service in the online channel only accelerates the rate at which customers turn to their telephone."

The results in the future will be increased costs for customer service and support as the volume grows. This is illustrated in the figure below from the February 2003 Jupiter Research report, "Jupiter Market Forecast Report: CRM Through 2008."

Online Touch Points Post Modest Growth — Phone Will Continue to Dominate

Service Contracts, Online and Off-line, 2002 - 2008

A key finding of the report states, "Online CRM technology spending will grow to $4.7 billion in 2008. While the share of service contacts initiated online will double between 2003 and 2008, phone contacts will dominate, growing to 58 billion in 2008. Increasing email contacts will frustrate businesses and consumers; accordingly, businesses must invest in email infrastructure and resource enhancements now."

The report further states, "Notwithstanding the continued failure of most businesses operating online to manage inbound email well, email volume will more than double over the next five years, from one billion in 2003 to 3.3 billion in 2008. In a recent Jupiter Consumer Survey, 88 percent of respondents said they have used email to contact customer service. However, the continued lackluster performance of email service will continue to drive customers to use the phone, leading to snowballing service costs and ultimately making email the most expensive customer service touch point to process."

The business support and customer service design in implementing new technologies may be at fault. Fundamental errors at the foundation may account for much of the problem.

Some light can be shed by the report, "Results of Research: Trends in Web Based Support" conducted in October 2002 by crmindustry.com and supportindustry.com. The study surveyed 78 respondents across all verticals and sizes of businesses. Some of the findings indicate a gap in adopting online and email support when viewed from the perspective of strategic planning. While 76 percent said customer demand for their Web-based support options has increased, 65 percent of respondents aren’t measuring ROI from their e-service initiatives. Of slightly more than a third that do, 25 percent said they’ve not been able to quantify ROI to date. The report indicated that only 60 percent of the respondents "have a formalized strategy in place for delivering Web-based service and support." Only about half are "leveraging a problem management feature that creates a single trouble ticket when a customer begins with a self-service session and escalates to a phone call."

These results indicate major problems in the development of a sound strategy to deliver customer care. Perhaps the biggest crime is that the policies are not customer centric. The varied approaches seem to be to the convenience the company and/or speculation about what the customer wants. Customers are not offered a wide menu of options to choose their preferred method of contact. Sadly, less than half of the respondents inquire as to the customer’s satisfaction with the process. The following figures from the research speak for themselves in amplifying support design flaws.

Has the demand for your web-based customer service increased, decreased or stayed the same over the last year?

Choice Number
Of Responses
Percent Graph
Increased
59
75.6%
Decreased
3
3.8%
Remained the same
16
20.5%
Total Responses: 78 100%
Source: CRMindustry.com/Supportindustry.com

If customers/employees fail in their attempt to solve their issue, what escalation features do you have in place? (Choose all that apply)

Choice Number
Of Responses
Percent Graph
Phone
64
47.1%
Automated Call Back Option
14
10.3%
E-mail
50
36.8%
Other
8
5.9%
Total Responses: 136 100%
Source: CRMindustry.com/Supportindustry.com

It is important to note that in the figure immediately above, that the 78 companies surveyed were offered choices in four categories and could choose all that applied. This offered a potential of 312 responses if each respondent offered an option in each category. Yet the responses totaled only 136, an average of 1.74 without any single feature being available to customers by half of the respondents. Perhaps lessons that should have been learned about consumers from the dot-com bust of 2000/2001 have not been mastered.

The distance between the needs and desires of the customer versus the internal service level performance metrics of the company are illustrated clearly in the figures below. Indeed, benchmarks may actually be graffiti carved into the process by disgruntled frustrated customers that may choose to resolve the issue by taking their business elsewhere in the future where their needs can be met on their terms.

Does your company have established service levels for every customer communication channel?

Choice Number
Of Responses
Percent Graph
Yes
50
64.9%
No
27
35.1%
Total Responses: 77 100%
Source: CRMindustry.com/Supportindustry.com

Does your company conduct customer satisfaction and ease of use surveys for your web site?

Choice Number
Of Responses
Percent Graph
Yes
35
45.5%
No
42
54.5%
Total Responses: 77 100%
Source: CRMindustry.com/Supportindustry.com

Positioning for Profits
Upper level management is recognizing that more effective planning for strategic initiatives is required at top levels of the enterprise to close the gap between an increasingly demanding sophisticated customer and often disjointed business practices.

Business reporting tools to integrate the view of the business processes are becoming more important to steer the corporate ship out of the fog that can enable strategic planning. Implementation capabilities are looming on the horizon in a cost effective, timely, and relatively painless fashion through technological advances leading to enhanced business intelligence (BI). Called a dashboard by some, the customized reports tie information together from varied sources.

John Hagerty, vice president, AMR Research, elaborates on the emerging use of dashboards. "A lot of folks have created a management dashboard or scorecard. The number one area is in sales and marketing. The concept of pulling information in from any type of SFA or CRM system, in general, is one of key things that people do around performance management. They have to have that top line view to establish the marching orders for the organization."

In a March 2003 report, an AMR Research survey revealed that, "More than 50 percent of responding companies are planning to implement scorecards and/or dashboards in the near term." Further, 14.3 percent of the respondents cited customer service as a dashboard and scorecard preference.

Combining BI for a wider view is termed enterprise performance management (EPM) by AMR Research. In the March 2003 report, "Enterprise Applications Outlook for 2003: The Performance-Driven Enterprise," AMR Research contend that EPM (also customer fulfillment), and BI will see strong growth as indicated by the figures below.

Top 2003 Initiatives

BI/Analytics Market Growth Projections

BI/
Analytics
2001 2002 2003 2004 2005 2006
Revenue ($M) 5.6 6.1 7.5 9.3 10.9 12.2
Growth 10% 8% 23% 24% 17% 12%
CAGR
Revenue ($M) 17%
Growth 17%
Source: AMR Research Group, 2003

Bob Anderson, research director of Gartner, looks ahead to see BI as imperative. "With XML as the transport, we will see analytics across the value and supply chains. It is not a matter of if; it is a matter of when. They need the information, but they do not need to be in this business. In this area we will see a very preferred paradigm using an ASP or outsourced model. It used to be one business against another, now it will be one ecosystem against another."

Howard Dresner, vice president and research director of Gartner, notes, "The whole notion of the real time enterprise is going to emerge. The benefits are going to be impressive for some organizations. This is being done today, but the organizations have had to do the heavy lifting themselves. In a lot instances, the small enterprise can now get many of the same benefits as a large enterprise would that has a large IT organization. A real benefit of the ASPs is that they can service to their customer constituents an entire menu of metrics. For the small and mid-sized market, they really don’t have where with all to it themselves. It is a natural fit."

Hagerty adds, "We are seeing the reemergence of the outsourcing process, not just in the hosting but the whole shebang. With a little bit of effort, it is pretty easy for folks to dive in and really understand their business a lot better. They have to figure out which metrics really matter to the company so as to not get caught up in all of the chatter."

Dresner points out that speed impacts the value of the information. "The issue at hand is the culmination of ’perishability.’ We did an extensive study last year on business intelligence with 540 organizations. One of the things we asked involved the latency associated with data. If they can improve to yesterday’s data that would be more than sufficient. If we fast forward to 2006, that is a very different circumstance. Then you will see to the 35-40% level, a desire for instantaneous access to data."

Dresner also submits that the enterprise must exercise due diligence in planning and have clearly defined objectives with sound reasons for the endeavor. "They have to have a clearer business model and business justification for doing it. You just don’t do this on a lark. You have to know why you are doing it and what the benefits are going to be."

Hagerty points out an obstacle and consideration for implementation, especially if the organization has been involved in mergers or acquisitions. "One of the trade-offs especially for larger companies is that people have different metrics. You have to have a common basis of understanding, or one source of the truth, to be sure that people are looking at the same information in the same way. A huge issue for a lot of organizations is the inability of people to come to a consensus on what they are actually talking about."

In considering an ASP, Dresner does caution that the service level agreement (SLA) is very important and must be designed so as to not have caveats leading to exorbitant costs for customization or non-standardized reports. The enterprise must also ensure that it has ownership of the data should it want to take its ball and go home by opting out of the relationship. "The issue with the ASPs in general is the ownership issue. The service level agreement is everything. You have to be very careful."

In Sync, in Step, Into the Future
Hagerty notes a cultural change that is having an impact on business. "As senior executives move up the ranks, the people who were brought up using computer systems will be much more in tune to figuring this out. Analytics become more important over time as people become more comfortable with this way of viewing business and have a more savvy key management team."

Dresner sees a viable value proposition. "Ultimately, there is the opportunity to deliver deep insights into the business without the latency. Organizations will be able to react to critical business events without having to anticipate what is going to happen in the future or reacting too late."

Hagerty submits, "What you will see in the next couple of years is a much more of an intense look at using performance management as a drive to a desired state of performance in goal setting, meeting those goals, and predicting performance in a sense of being able to determine something to drive the process to its conclusion."

Anderson sees a faster business speed looming. "By sheer necessity, businesses are going to have to take BI more seriously than they ever have before. As soon as the economy revives, those who made the investment to get ready for it will be the winners. This train is coming. This is a strategic focus that needs to be invested in for when the economy picks up. In the future BI can be an active watchdog for the CEO, CFO, and COO."

Through dashboards and other aspects of BI that are increasingly being offered in a cost effective manner, business will have the vision to potentially meet customer demands. The dots can be connected to create a clearer picture of how the experience works for both the customer and company. A strategic approach that is proactively based upon reality will yield a positive change. As the Spaniard Santayana observed many years ago, "Those who do not learn from mistakes of the past are doomed to repeat them."

Bruce McCracken is a business writer with specialization in outsourcing. His coverage areas are primarily in IT, eCommerce, CRM, HR, and supply chain/distribution with focus on small to mid-sized companies. He may be emailed at abatar@bsn1.net.

Reprinted from eCRM Guide.

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