By Sarah L. Roberts-Witt, PC Magazine
June 9, 2000 2:56 PM PT
If you ask any member of Sunnyvale, California–based online golf retailer chipshot.com about the company's driving philosophy, you'll get an answer that's actually quite simple. To paraphrase liberally, "It's the customer, stupid!" Though this Internet upstart has been around in one form or another for nearly five years, the past couple have been spent in overdrive. The company has been working overtime to bulk up its Web site, to offer more products, andthis is a big oneto expand a core team of golf experts who double as customer service representatives.
This crew of swingers steer potential chipshot.com customers toward the clubs that are best for themor even suggest custom-built sets. They also answer questions about which balls are best and go farthest, and they may even weigh in with opinions on the lightest-weight golf shirt or the most comfortable gloves. The idea is to provide customers with an experience that's as close as virtually possible to shopping at their favorite pro shop, with the added benefit of better prices and the convenience of buying on the Web.
The efforts are paying off: chipshot.com now ships several thousand clubs a week, and it boasts more than 1 million user sessions and upwards of 3.5 million page views per month. According to Doug Smith, chipshot.com's director of customer service, heavy focus on the customer and top-notch service representative are responsible for much of the company's growth.
"Our customer-care agents are essential to what we do, because they help customers through the presale process of deciding which equipment is best for them, and they also play an important role after the sale to ensure our customers are happy," says Smith. "This is a very high-touch business, which means our customers have to feel like they're being taken care of at all times."
Talking about that level of customer service and delivering it are two completely different things, even for a young company like chipshot.com. Yet doing so is critical, especially in today's Internet climate, where customers expect stratospheric levels of service at any time of the day or night. According to a recent report from Forrester Research, 90 percent of the 4.8 million individuals who shop online consider good customer service a crucial factor in choosing a Web retailer.
"Retailers are still struggling to find ways of developing loyalty on the Net. One big piece of the loyalty puzzle is customer satisfaction," says Christopher M. Kelly, an associate analyst with Forrester Research. "A satisfied customer wants to share the positive experience, which helps drive traffic." And as the online business-to-business market explodes, Web retailers aren't the only ones looking for the key to unlocking customer loyalty. These days, competition for customers' attention and purchases in both the business-to-consumer and B2B worlds is just a click away.
Like most businesses, chipshot.com is well aware of this customer conundrum, and in many ways it's on the absolute cutting edge of customer service and customer relationship management, or crm. For starters, the company uses Kana Communications' e-mail management system to help deal with the tremendous volume of e-mail requests for further product information, help with order problems, and the like. The phone-support aspect of chipshot.com's business is addressed by Synchrony Communications, a crm outsourcer that handles the company's call-center crm infrastructure and provides cutting-edge queuing technology to ensure that calls are never lost or forwarded to the wrong company, or even to the wrong agent.
In addition, Smith and his cohorts plan to implement chat on some portions of the site, primarily to assist high-value customers who may need instant, interactive assistance to pick just the right club. BroadVision's One-To-One Commerce personalization and marketing engine is also in chipshot.com's future, to ensure that loyal big spenders can be instantly identified and catered to with special offers and services.
In other ways, this growing company faces the same challenges as any other business attempting to implement sophisticated customer-focused e-business strategies and products. For one thing, even though chipshot.com has top-of-the-line systems for managing interactions with its customers, those systems aren't integrated today. This creates a multitude of problems, one of which is that service agents don't have immediate access to a customer's buying history and demographic information when calls come in from Synchrony's data center. And along with the Kana database and the Synchrony systems, there's also a separate customized order system (which is the true mother lode of customer information and purchase history), and it isn't yet integrated into the customer service systems.
As for further complications, the chat components that should be implemented later this year won't communicate with Kana's application. According to Doug Smith, the thought of integrating all these systems is downright frightening, not to say complex, time-consuming, and expensive. But it's crucial if chipshot.com wants a single integrated view of its customers, and the marketing and customer service power that would yield. "Of course, the direction we want to go in is to tie all these systems together," says Smith. "However, doing that will be really hard, and we may have to make a tough decision at some point about which road to go down."
Finances: $24.5 million in funding; sales figures unavailable.|
The business: An online golf store.
Typical customer: Golf enthusiasts who are particularly interested in custom-designed clubs.
CRM hook: All of chipshot.com's customer service reps are golf experts, so they can guide customers through the process of choosing clubs and other equipment.
CRM problem: Agents were being overwhelmed with requests for order status information, and the company was in desperate need of call-center and e-mail solutions.
CRM solution: To deal with the order status problem, the company created an order status section on its Web site, which links directly to its shipping providers' sites. To handle e-mail requests, chipshot.com uses Kana Response, from Kana Communications, and outsources its call center to Synchrony, a Web-based system. See diagram.
And therein lies the rub, not just for chipshot.com but for other pure Internet-based companies and traditional businesses that have launched e-business initiatives. To compete in today's customer-centric economy means having a holistic view and understanding of your customers' wants and needs, as well as an innate sense of how best to interact with them. This notion is what industry analysts and observers are calling a 360-degree view of the customer.
The business advantages of a unified view are obvious. Consider, for instance, a customer who orders a product or makes a request via e-mail and then follows up on the phone. In a 360-degree world, your service reps would know who the customer is, the items that have been ordered, the channel through which they were ordered, and historical information about buying preferences, as well as how that customer likes to be contacted for both service and marketing. From a practical standpoint, this can be accomplished by tying all of a company's CRM systems together, including sales, marketing, and the so-called touch points. But in terms of business strategies, it means asking not what your customer can do for you but what you can do for your customer.
"Today it's the customers' choice how, when, and where they do business," says Dave Fowler, vice president of marketing at Silknet Software (recently acquired by Kana Communications), an entrant in the electronic CRM arenaeCRM or eRM. "And every customer is a little bit different, so businesses need to understand that and provide individualized service and content." Fowler also notes that the companies he's talked to recently are waking up to the idea of personalized customer service, but they still have a ways to go, psychologically and systems-wise.
Those disconnects are often painfully apparent. Ordering an airline ticket online, for example, is a terrific time-saverunless you need to make a change to your itinerary. More than likely, you'll have to call the airline and give the agent all the information that you just entered on the Web site. And how many times have you submitted an e-mail request for customer service or support that never got a response? And when you finally placed a call, the agent you spoke with had no apparent record of your previous correspondence, no knowledge of your problem, and seemingly no access to that information.
"The dirty little secret about CRM is that most companies have more than one solution in place, which means this idea of a unified customer view is mostly fantasy today," says Erin Kinikin, an analyst with the Giga Information Group. "The challenge companies face is, How do I integrate my call center and my e-commerce channels in a way that's compelling to customers? Which means companies also have to analyze and understand all the ways they talk to their customers."
To understand the current situation, it helps to get some historical perspective on CRM. The first wave of CRM solutions, which many large companies have in place today, surfaced en masse in the late 1980s and early 1990s. These systems came from companies like Clarify (which is now owned by Nortel Networks Corp.), Onyx Software, Oracle, Vantive (acquired last year by PeopleSoft), and the now-colossal Siebel Systems.
All of these vendors provided packaged solutions that were focused on automating and standardizing the internal processes associated with capturing, servicing, and retaining customers. These processes ranged from capturing sales leads to creating scripts for customer service agents to enable consistent service and support across product lines and divisions. Though these applications addressed a pressing need, they did have a significant gotcha: They were very expensive and onerous to implement and maintain.
"The main emphasis of CRM used to be around how can we improve our processes internally to make our customers an asset," says Robert Duffner, formerly of Vantive and now a senior product manager at Vignette who is helping that company develop its own CRM product strategy. "It was about automating around customer support, then sales, and then the way in which field sales and service representatives worked with customers."
But then in the mid-1990s the Web came along, and with it both the CRM market and customer-related business requirements of all-size companies changed completely. Not only did the widespread embrace of the Internet mean that existing and potential customers had yet another channel through which they could interact and communicate with corporations, it also meant that the client/server architecture behind existing CRM applications would eventually be rendered obsolete.
Conventional wisdom holds that Siebel and its ilk were slow to respond to the Internet in terms of providing solutions centered around electronic communications. This left the gate wide open for a smattering of enterprising start-ups that understood the implications of the Web. Almost overnight, they created a new market segment to deal with eCRM.
The eCRM space includes players like eGain, Genesis, Octane, Silknet, Talisma, and others. The first products from these vendorswhich began to surface about three years agomostly helped companies deal with customer service requests via e-mail and, in some cases, via chat or Web-based forms. But the market has progressed rapidly, and many of these vendors are starting to offer product suites that allow businesses to integrate multiple communication channels, including voice. Some, like Octane, are accomplishing this by building their own technology; others, such as eGain, are doing so via acquisition. Even Cisco has jumped in, with its recent purchase of WebLine Communications, which provides a wide range of electronic customer service offerings, including a call-center application.
"One of the bets we took when we started the company is that businesses would eventually want to build across multiple channels, such as e-mail, chat, Voice over IP, telephone, and even video," says Gunjan Sinha, president and cofounder of eGain. "And we knew this kind of system would have to be intelligent enough to keep a consistent view of the customer, regardless of the channel."
Though eCRM players like eGain have made impressive strides, the traditional CRM vendors are fighting back hard. Siebel, for example, announced its eBusiness suite in April, which includes applications for selling, marketing, and providing customer service over the Internet. Personalization features have been built in, as well as software that will let field personnel access sales and service information via cellular phones. Onyx also made a string of announcements this spring about its portal product line, which was built to address direct-to-customer as well as partner interactions. This suite represents a complete reinvention of the product, which now has a Web-based architecture.
Also this spring came Clarify's eFrontOffice, which includes software components for managing Web interactions with customersand integrates those elements with call-center applications as well as fax to create a universal queue for e-mail, voice, and fax requests. Oracle has launched an e-business suite as well, which includes marketing, sales, and services modules that let businesses deal with call-center, Web, and e-mail channels in an integrated fashion. Industry-specific CRM modules are also available for the communications, financial, and high-tech markets.
"Companies like Siebel and Clarify are running to catch upespecially Siebelto make sure they can provide the Internet part of their CRM systems," says Robert Morani, an analyst with The Yankee Group. "However, they will be formidable in their plays to this new market, especially Siebel and Oracle. And you also have to remember these are companies with lots of market share and very large organizations using their systems."
Clearly, both segments of the CRM market are pushing hard on the notion of integrated CRM suites, but the truth is that these application suites are, for the most part, just now becoming available. Take Siebel and Oracle, for example. Both have announced e-business product lines but haven't yet delivered all the pieces. And it may take some time for companies like eGain and Cisco to figure out how to integrate the solutions they've recently acquired with existing platforms. All of which poses an interesting question for businesses, none of which have time to wait: Should they get their CRM needs filled by one vendor, which may mean waiting for pieces to become available, or look to buy best-of-breed point solutions and deal with the integration issues later?
"Companies are confused about ERM implementations, because the job is huge," says Frank Prince, a Forrester Research analyst and author of a study on eCRM implementations. "Also, the ERM market remains immature, as there is no clear market leader and no common architecture among the products, and companies must consider new business requirements as the Internet economy moves ahead."
Despite the confusion, both traditional and dot.com companies are forging ahead with either single-vendor solutions or a creative mix of so-called best-of-breed offerings. For example, Nantucket Nectars, which is renowned for the pithy sayings and advice on the underside of its bottle caps, decided that an integrated platform from one vendor made the most sense for its CRM needs. This decision came about a year ago, after the company faced up to what had become a customer relationship nightmare. Drew Farris, the company's director of IT, maintains this was due in large part to the older, disconnected systems that Nantucket Nectars was using.
"Last year we ended up in desperate straits, because our customers, who are mostly small beverage distributors, were extremely upset. We couldn't get them the products or information they needed," says Farris. "We have a fantastic operations and manufacturing center and a great sales and marketing organization, but it became apparent that our software systems were a big problem."
After this revelation, Farris made some bold moves. He and his staff tossed out the Solomon software that was being used to track sales numbers, the Access database that held marketing projections, and the ERP system that simply wasn't robust enough to handle the company's needs. After reviewing offers from several companies, Farris decided on an Oracle solution. On the manufacturing end, Oracle's ERP modules are now in place, and sales and marketing information is stored in Oracle databases. The next phase involves popping in Oracle's CRM modules, an initiative that's currently under way, and in-building what Farris calls Nectar Net.
When Nectar Net is completed, both sales representatives and customers will be able to log on via the Internet. Customers will be able to check on order status and eventually place orders online (these are now received via fax and entered into the system manually), while the reps can determine whether they're meeting sales and marketing goals. The CRM modules will pull the information that populates Nectar Net from the Oracle back-end systems.
Finances: $60 million in sales in 1999.|
The business: A juice manufacturer.
Typical customer: Beverage distributors and wholesalers..
CRM hook: The company offers customers a marketing blueprint that includes collateral and advertising as part of its goals system, and it maintains a stable customer base.
CRM problem: Because Nantucket Nectars was using different systems to manage its marketing blueprints, sales numbers, general ledger, and inventory, customers could not get information about their accounts and were receiving inaccurate orders.
CRM solution: The company ripped out most of its existing systems and replaced them with Oracle databases, an ERP system, and CRM modules. See diagram.
According to Juliette Fulton, Oracle's vice president of CRM product strategy, there are many companies just like Nantucket Nectars with older tools in place that are preventing them from moving into the customer-centric Internet age. Fulton maintains that more and more businesses are looking for suites of products that handle the front-office processes of sales, customer support and services, and marketing as well as the back-end duties associated with inventory and manufacturing.
"Corporations are struggling to move from point solutions to suites," says Fulton. "They are realizing that they need to be totally unified across all their customer touch points, but this is hard to do with point solutions because of the integration piece."
On the other end of the spectrum from Nantucket Nectars is Tradient, based in Alameda, California. A start-up B2B marketplace that launched this spring for the transportation industry, Tradient didn't have any legacy systems to discard, since it was only a few months old. But like Nantucket Nectars, this company concluded that a one-vendor solution was needed for serving a far-flung and highly diverse customer base, which includes shippers, suppliers, and shipping intermediaries of all shapes and sizes.
Because Tradient exists solely on the Internet, a CRM solution that had been architected for the Web from its inception was crucial, according to Greg Johnson, Tradient's director of product marketing. This ultimately led the company to Octane, whose product and platform allow Tradient to handle all its Web-based, e-mail, and call-center customer interactions. Tradient has also completely integrated its marketplace databasewhich captures information from all areas of Tradient's Web sitewith the Octane customer database. For now, this information is being used to drive prospect lists into the Octane system, which will provide fodder for electronic marketing campaigns.
"A big part of our market expansion plan is the ability to capture and retain new customers, which means we have to capture knowledge about our existing customers and their questions and problems and use all that information to pivot on a dime and serve them better," says Tradient's Johnson. "This also meant that when it came time to choose our underlying systems we needed to nail it from the beginning, because the name of the game is growth, and you have to invest in systems to allow for that."
Along with the customer service basics of dealing with orders and answering general questions, Tradient is using Octane to create knowledge bases about all corners of its business. These knowledge bases are being used to populate self-help portions of Tradient's Web site, and customer service representatives are using them to answer questions even in areas they are unfamiliar with, and to ensure that the responses are consistent across the business.
Not surprisingly, going with a one-vendor CRM solution these days doesn't necessarily mean loading up software yourself. Like Nantucket Nectars and Tradient, Servteka division of $1.6 billion plastics-processing and metalworking behemoth Milacronwas also facing a CRM crisis.
Servtek consists of an inventory-planning group, a warehouse center, and a shipping group, all of which are devoted to filling and servicing orders for the plastics-processing–related industrial products that Milacron manufactures. Because of the close ties among these groups, the opportunity to provide great customer service was within the division's grasp. But Servtek's antiquated call-center technology was an obstacle hard to ignore.
"When we bought our call-center system a few years ago, it was state-of-the-art," says Steve Hayden, Servtek's business unit manager. "But it required lots of manual intervention; we had to ask callers about their history and then go run reports, and we had no way of tracking them." In addition, Servtek's agents spent loads of time answering calls about order status, a less than efficient use of manpower.
After some CRM soul-searching, Hayden and his staff determined that they had to do three things: get rid of their call-center system, find a way to use the Internet as a customer contact channel, and let someone else figure out the technical ins and outs of implementing this. Servtek did land on one company that could supply the new-fangled CRM system it wanted: CRM outsourcer Synchrony.
Finances: $1.62 billion in sales in 1999.|
The business: A plastics and metalworking equipment and parts supplier.
Typical customer: A plastics-processing plant that needs equipment and replacement parts.
CRM hook: Under the Servtek umbrella are inventory-planning groups, the warehouse center, and shipping groups. Customer service agents will have almost immediate access to any information about a customer's product request—with the right systems in place.
CRM problem: Servtek was using antiquated call-center technology that didn't allow service agents to be aware of each other's activities or of a customer's buying history.
CRM solution: The company converted to Synchrony's outsourced eCRM solution, which lets agents see up-to-the-minute information on customer histories, including whether other agents have already started working on a customer's problem or question.
This decision not only took the burden of figuring out unfamiliar technology off Servtek, it also enabled the company to get up and running faster and make improvements to its customer interactions and business plan that Hayden had never dreamed possible. For starters, customer service reps are now rewarded with what CRM enthusiasts call a "screen pop" whenever they get a call, all the calls being routed through Synchrony's data center in Cincinnati. This screen pop tells the representative who's calling and provides a link to that person's buying historya big improvement over the old system. The agent also immediately gets information as to whether any coworkers are dealing with the customer's problem already.
"Often the same person will call five different times and talk to five different agents about one problem, which means we have people running around doing the same work," says Hayden. "Eliminating that will help us work better and will in the end let us serve the customer much better."
Agents are also able to keep tabs on how many of the quotes for equipment they pass out each day are actually converted to purchases, something the old system was incapable of permitting. Last, Hayden plans to take care of the company's nasty order-status problem by implementing advance shipping notices through Synchrony's e-mail management offerings. He anticipates that this move will cut down on customer service calls by up to 20 percent, which obviously will result in significant cost savings for Servtek. The e-mail notices will tell customers when their orders were shipped, who the carriers were, and what the arrival dates will be.
Hayden isn't the only person concerned with trying to put an eCRM system in himself. In line with larger industry trends, a veritable cottage industry is springing up around outsourced CRM. In addition to Synchrony, eConvergent, iSKY, Neteos, RainMaker Systems, safeharbor.com, and Talisma are also hawking CRM services for rent. Also, many packaged-application eCRM vendors, such as eGain and Oracle, are partnering with hosting companies like Exodus, or using their own infrastructures to offer CRM-for-rent solutions.
"All kinds of businesses are realizing that the technology now exists and is mature enough to put CRM and eCRM applications in place, but they don't know how or don't want to deal with implementing them," says Karen Smith, an analyst with the Aberdeen Group. "So there's a big shift towards outsourcing, and you're going to see a whole new class of application service providers emerging to handle these types of business solutions."
For all the examples of companies that opt for one-stop CRM solutions, there are just as many that are picking and choosing the best of what the market has to offer. As mentioned earlier, chipshot.com has put solutions in place it felt were more than up to the task at hand. These range from its back-end Oracle ERP applicationswhich run the financial, manufacturing, and supply chain parts of the organizationto the Kana Communications and Synchrony solutions that are key elements of attracting and keeping customers.
OfficeLand, a North American office equipment and supplies company, also felt that best-of-breed solutions would help ensure a smooth clicks-and-mortar transition last year. Like Nantucket Nectars, OfficeLand decided to scrap its existing information infrastructurethe inadequacy of which was underscored by the acquisition of three new companies, and three new sets of software systems, in less than a year.
"About a year ago, we decided the place to go was on the Internet," says Leonard Golberg, OfficeLand's VP for operations. "But we knew we needed to do a better job of managing our customers if we were going to make this succeed, so we started over with our systems."
The first task Golberg and his associates undertook was building OfficeLand's copiercopia.com sitewhich sells office equipment directly to the small-business and home-office marketsas well as the parent company OfficeLandGroup.com site, from scratch. They put ERP software from Navision on the back end of their operations, then tied it all together with CRM and e-marketing software from FirstWave. The one constant in all these systems is their reliance on Microsoft SQL Server.
Much of the CRM buzz has centered around what larger companies are doing, and with good reason. Until recently, CRM has been the almost exclusive domain of big business because of the cost and expertise required to maintain the applications. But this is yet another rapidly changing area, as companies that are traditionally associated with the contact management worldsuch as GoldMine Software Corp., Multiactive Software, and SalesLogixjump into CRM with both feet. Not surprisingly, there are pure-play start-ups in this arena as well, including salesforce.com and UpShot.com.
This spring, GoldMine announced a new CRM division that will focus on what the company calls front-office solutions for sales, marketing, and customer service. At the core of this initiative is GoldMine FrontOffice 2000, which has modules to address the needs cited above. "Our customers have been moving from contact management to sales force automation, and now they're ready for CRM applications," says Larry Twersky, the president of GoldMine's CRM division. "We're helping them see that CRM means understanding your customers and holding onto them for life, and that they can take all that to the next level by adding in the Web."
GoldMine isn't alone, however. Multiactive Software, maker of the contact management package Maximizer, is also hoping to capitalize on the CRM needs of small and medium-size businesses with its Entice! and Maximizer Enterprise product lines. And Commence Corp., a contact management company, is offering a product road map for small businesses that want to move to CRM with its Commence 2000 offering. Similar to GoldMine FrontOffice 2000, this product provides contact management, sales force automation, and service and support functionality. In addition, Commence provides an outsourced Internet piece of its product line, called Allure, through a partnership with Exodus Communications. Allure allows Commence's customers to put forms on their Web sites that integrate with the Commence database.
As the Allure service clearly illustrates, outsourcing isn't just for big business. Some of the providers mentioned earlier (including Neteos and safeharbor.com) intend to serve the small to midsize market exclusively. And many of the eCRM vendors, such as eGain and Talisma, provide hosted options for their applications.
Traditional CRM players are also starting to offer solutions that are suitable for relatively small businesses. Onyx's various CRM portal solutions, for example, are turning out to be highly palatable to smaller businesses, as evidenced by the implementation of its customer relationship portal at Creativepro.com, a graphic design portal based in Portland, Oregon, and its Extensis Products Group division, which makes graphic design software.
When Creativepro.com decided to get rid of its homegrown system, which supported Web-based customer interactions but wasn't up to the rigors of Web traffic, it opted for Onyx's product. And the results have been astounding: In about six months, the company realized that a large chunk of its salesespecially to individuals and small graphic design shopscould be handled on the Web site. But just as important, the information captured in Onyx is helping Creativepro.com and Extensis to build substantial self-help sections on their Web sites, which result in fewer customer service reps and lower support costs.
"We knew that people liked electronic information, and this is one way to provide it," says Max Brammer, director of sales for Creativepro.com and Extensis. "The self-service parts of our site are still new, but we're already feeling positive effects internally, because our staff can concentrate on other areas."
Finances: $21 million in revenues in 1999.|
The business: A portal for graphic design professionals.
Typical customer: Individual graphic designers, small design shops, and the design departments of corporations.
CRM hook: While the portal provides designers with information on product reviews and industry happenings, the Extensis site enables customers to get better service and to buy software over the Internet.
CRM problem: The homegrown system that Creativepro.com put in place wasn't hearty enough to support information generated by the Web site, and there was no easy way to get access to that data.
CRM solution: Onyx's portal helped the company understand where to put its sales resources and enabled it to build a customer self-service area on its Web site. See diagram.
Though CRM goals, implementations, and strategies fluctuate wildly from company to company, at the root of this recent CRM revolution is the desire of all businessesregardless of sizeto know their customers better. And pulling the electronic communications media mentioned here into an overall CRM strategy is one way companies can do that. Not only do these channels offer untold efficiencies when implemented smartly, but electronic interactions with customers allow organizations to capture massive amounts of information about how individuals behave when purchasing products, whether they are buying books or wholesale auto parts. By understanding that data, businesses can market their products more effectively and provide an unprecedented level of service.
At the end of the day, no matter how sophisticated or confusing the underlying technology may be or how many competing players there are, CRM is an incredibly simple concept that all companies must understand. "Everything old is new again, and the same is true with CRM," says Mark Bartin, vice president of marketing at OfficeLand. "When you get down to the basics, CRMeven on the Internetis as old-fashioned as the barber on the corner remembering your name."