Is It Time for a Customer-Driven Extranet?

Every day in Internet-land, you hear that one of the potential downfalls of e-commerce is poor customer service. E-marketers are scrambling to improve customer relationships, and CRM (customer relationship management) solutions are among the fastest growing Internet applications on the market.

Maybe the real solution, especially for B2B e-marketers, is creating a customer-driven extranet – a web site established specifically to offer private or preferred customer access to information and order entry.

The extranet can be implemented as a restricted area on an existing corporate web site, or it can be built as a separate site. Either way, it makes it clear that the company believes in the credo “the customer comes first.”

IBM reported at a 1999 Internet marketing conference that the company created extranets with some of its key customers to encourage them to do business with IBM online. The move contributed to moving IBM’s e-commerce revenues from $35 million a month in early 1998 to over $1 billion a month by December 1998. As an aside, IBM saved some $300 million in call center costs in 1998 by handling more customer service inquiries online.

It Gives Customers Private Access

A restricted-access customer service area of a corporate web site is, in effect, a version of a customer-driven extranet. Many companies establish such areas for customers only, so they can interact privately with the organization or gain access to information intended only for them. For the most part, access is permitted via a simple password, which the company assigns or the customer selects.

Private-access customer areas may be acceptable solutions for some companies, but conducting business on an ongoing basis with customers and partners over the Internet could stretch the boundaries of any public web site. An extranet may make more sense, if only because the load of real-time customer service and transaction processing could eat a web server alive.

Tech Data Corp., a $4.6 billion computer products distributor, won a 1998 Enterprise Value Award from CIO magazine for creating Tech Data InterAct, an entire system to meet the individual information needs of its customers.

Customers can make use of a CD-ROM product catalog, an online service that provides preferred customers with specialized information, or the Tech Data web site, which offers password-protected access to an electronic catalog as well as order tracking.

The system not only serves customers better, it impacts the bottom line. Tech Data reported that its electronic volume rose from zero to 50 percent of its sales – even as its sales force grew only six percent – soon after InterAct was introduced.

It’s a Major Undertaking

The customer-driven extranet is, of course, a major technological undertaking. The impact on the organization should not be minimized, as business processes themselves may undergo dramatic change. If systems serving customers within your company are not centralized, the extranet will likely not succeed.

However, if you have your organizational act together and you have the technology to back it up (either with in-house resources or through outsourcing), then the business benefits of a customer extranet can be huge. In larger companies, for example, the costs associated with customer service and support can be dramatically reduced by shifting much of the repetitive person-to-person contact to Internet-based communications.

Even if you believe in the value of a customer-driven extranet, where do you begin? Maybe it’s obvious – but it all starts with what your customers want and need.

It’s Customer-Centric

Asking your customers what they want – and giving it to them – should be the driving force behind an extranet. Using database technology, you can accumulate profile data about each customer’s relationship with your company, track the customer’s interactions with you, and use this data to individualize communications with the customer. In addition, you can learn what customers might want built into an extranet to best meet their needs.

Internet-based customer service requires consideration of new forms of data. For example, transaction data is different from online interaction data. The customer’s transactions represent the inquiries or orders you receive. Analyzing this data will help you understand a customer’s buying patters or need for information. But interaction data can offer insight into online behavior. This is the data that tells you how often a customer accesses your web site, which pages they access most, how they navigate the site, and so on.

It Provides Product Data Solutions

You can also bring together product data with solutions and applications information and what-if scenarios so that customers can interactively learn how products apply to their specific needs or how to solve problems with your products.

The MathWorks, a maker of technical software, developed a database of 10,000 cases that its customers could draw on. This concept – using database-driven web technology to deliver great quantities of valuable information to help customers solve their own problems – is an increasingly common practice among customer-driven companies. The added benefit is that time-intensive customer interactions can be dramatically reduced. Now, 90 percent of The MathWorks’ technical support happens over the web.

It’s a Customer Solutions Center

Solutions-oriented content as part of an extranet is at once the most challenging and most exciting opportunity for both company and customer. Imagine, for example, a customer solutions extranet for your organization. It could take the form of a searchable database that cross-references solutions with your products. Customers could enter their desired parameters and be immediately greeted with a list of solutions that fit their needs. Web pages would be dynamically generated on the fly, based on preferences that customers establish in their user profile. New product information could be selectively displayed.

This solutions center could also be used as a sales tool to allow your direct sales force or partners to better match solutions with products your customers should be purchasing. Electronic fulfillment can be added to the mix so customers could unlock or download relevant information.

It’s an E-Commerce Strategy

Extranets can also become the core of a highly successful e-commerce strategy. Dell Computer provides business customers with “Premier Pages” – extranets that display only the Dell products approved for purchase by the customers, along with the special pricing to which those customers are entitled. With over 15,000 Premier Pages, Dell expects to take the next logical step by facilitating the integration of its extranets with its customers’ own accounting systems.

It Serves up Personalized Information

Extranets with highly personalized information are already widespread. Ultimately, you will be able to cost-effectively offer an even higher level of personalization to customers as Internet database technology continues to advance, and the Internet and the telephone continue to converge.

Not only will you be able to serve up highly personalized information over your extranet, you will also be able to “watch” your customers navigate the extranet and provide live assistance to them when required. That’s where Internet-driven customer service will take us.

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