Putting a lid on CRM costs with self-service

Building an ad hoc e-mail management system didn't help Remington Arms Company, the nation's oldest firearms manufacturer, control its growing customer service woes. A more targeted approach, using self-service CRM, however, did.

The $400 million, Madison, N.C.-based company wanted to find a way to improve customer service and contain costs while handling the more than 1,000 e-mail inquires and 6,000 telephone calls it received weekly during its peak season.

"With 35,000 to 45,000 individual visits to our Web site daily, it became obvious that our consumers were active Internet users and ready for online self-service," says Ned Moore, Remington's e-business development manager. He was right.

Within months of implementing RightNow eService Center from RightNow Technologies, the company had reduced e-mail volume by almost 90 percent and telephone calls by 10 percent, according to Moore.

Another enterprise ripe for self-service CRM was Andale, an online provider of commerce management tools and services for automating and integrating all aspects of multichannel retailing. With more than 1 million users of its products and services, Andale needed to provide customer service despite its modest staff of 30-plus employees.

"We got to a point with customer service [where] we were operating in firefighting mode, and it had to stop," says Dan Russo, vice president of marketing at the Mountain View, Calif., company.

Using technology from eGain Communications--specifically, eGain Mail to manage thousands of inbound e-mails per week and eGain Inform, a dynamic FAQ generator--the company has seen a 70 percent reduction in the number of incoming e-mails and has been able to cut its customer service team from 20 reps to 10. (Through attrition, it's now down to five.) Wait times and the number of abandoned calls have also dropped.

Self-service CRM lets customers find immediate answers to many of their questions through FAQs and search-and-browse tools. (For Remington customers, that means finding answers to questions regarding 200 years' worth of firearms products.) Successful self-service implementations are measured by a reduction in call volumes and cost per interaction plus perceived quality of service. According to Forrester Research, the number of buyers requesting self-service while shopping online is on the rise--30 percent in 2001 vs. only 12 percent in 1999.

Other vendors offering self-service CRM applications include Banter, iPhrase, Kana, and Siebel. Companies can opt for point solutions or suites; many are also offered on an outsourced basis.

Calculating the benefits of self-service CRM to the bottom line can be eye-opening. At $32.74 per transaction, telephone-based customer service is the most costly channel for CRM, followed by e-mail at $9.99 per transaction on average. In contrast, Web self-service costs just $1.17 per transaction, according to Forrester.

Remington's Moore reports that his company realized a return on its investment in self-service CRM in less than a year, after initially paying about $30,000 for it almost three years ago. Today, Remington still uses RightNow's hosted package, with its Revelation self-learning knowledge base and e-mail management system, and sees greater productivity with the same 20-rep customer service team.

Recent Forrester research indicates that CRM tops most companies' lists of application investments. "Companies want frequent contact with their customers, but they want to do it without driving up customer service costs," says Bob Chatham, principal analyst with Forrester's business application research group. Self-service CRM can help companies control customer service expenditures by reducing the cost of each interaction.

That's exactly what's happening at both Remington and Andale. "To get round-the-clock coverage using people, we would have to more than quadruple the number of reps at a cost well in excess of $100,000," says Remington's Moore. Russo says Andale's self-service CRM setup hasn't "reduced the costs of providing customer service," but it has allowed the company to "control costs with a growing customer base." Andale has between 200 and 400 FAQs on its site now and two five-person crews manning its customer service desk from midnight to 7 p.m. seven days a week.

Painless but not pain-free
Remington chose hosted self-service CRM because it relieves the company's 10-member IT staff of direct application development and maintenance. Andale, on the other hand, opted for an in-house application that runs on two mirrored Hewlett-Packard servers.

Regardless of the delivery method, self-service CRM is very much a hands-on application, with special attention needed to maintain the FAQs and knowledge base. "Self-service CRM isn't worth committing the resources to if a company isn't going to do the required maintenance to the data," says Esteban Kolsky, senior research analyst at the Gartner Group. In fact, customers may not only get frustrated, but they may also resort to picking up the telephone, shooting down the whole premise of self-service.

With about 250 FAQs on Remington's Web site, the knowledge base, and 30,000 Web pages, Moore and his team are always reviewing questions to look for trends and repetition. Russo says that Andale has a person dedicated to making sure that the right questions are getting answered. "We refresh the FAQs every other day or they get stale," he says.

One of the other key issues to making Web-based self-service work is focusing on internal processes and getting your customer service reps to buy into the proposition.

"You don't just put a self-service component on your Web site and expect it to solve your customer service problems," says Moore. "It's not self-service for the organization implementing it."

What do you think are the ingredients for a successful self-service CRM implementation? TalkBack below.

Lynn Haber reports on business and information technology from Norwell, Mass.