RISING CUSTOMER DEMANDS and ebbing budgetary resources — does this sound like the way the tide has been turning in your company's customer relationship management efforts? In DIRECT's second annual CRM roundtable, experts from the client and consulting side of the industry got together to discuss those very issues. What is the state of building relationships in 2002? We wondered if — as we asked in our first question — the concept of CRM is waning in popularity. Our participants said not quite, but noted that the issues surrounding CRM aren't all that cut-and-dried. Today, you not only have to worry about customer relationships but other important concepts like privacy, who owns the data internally, employee loyalty and — ever increasingly — return on investment.
DIRECT: Is the bloom off the rose? Is it going to be as odious to hear the term CRM in a few years as it is to hear dot-com now?
ELLIS: I think that CRM has the same risks as any enterprisewide IT-led initiative. They need to get overblown in the beginning. And then the reality sets in. There's a natural sobering effect with any wave of technology.
NORTH: As a way of doing business, it will continue to have some momentum. The acronym may change but I think the fundamentals of what CRM is all about will continue in some fashion.
MARCUS: I think people are now in the disillusioned stage, upon realizing that it takes a whole lot more than technology. CRM really needs to be strategy-driven, customer-centric. It takes a great deal of organizational and cross-functional collaboration. And those are tough challenges for most large enterprises.
DIRECT: Cliff, Mark, Laverne: What is the status of your companies' CRM initiatives?
BUSSARD: I'm not sure the whole concept of CRM has really been embraced by the majority of our organization as much more than a buzzword. For a lot of folks in significant positions of authority in this organization I think its still a fairly innovative concept. [In our CRM program], when a customer engages in some sort of activity we need to respond to — like large deposits or large withdrawals or opening or closing an account — we're able, within the day, to e-mail the appropriate relationship manager and find out what's going on. I see all the potential resources we have available to us in terms of customer data, and I see the glass as being half empty by far. I think we've just scratched the surface.
CATALDO: I'm in a similar position at Thirteen. We're all very positive with limited resources, being a not-for-profit organization. So our emphasis is on the philosophical approach. We certainly have adequate technology; however, it's going to be a focus for us in the coming year and next year as we integrate more Web activities. It's been a great experience for me to bring this focus to everyone at our station. So I have a great track ahead of me. But it's being embraced top to bottom, so we're all very excited.
PRICE: We are definitely behind the curve in terms of CRM initiatives. We are just working on building infrastructure. We have a contact management system that was implemented in the broker channel. And we just got some things approved at the end of the year in terms of even creating a data warehouse and cleaning up the data we do have. In that previous world, we were a bit quicker to develop CRM initiatives. I certainly don't think CRM has the same cachet it did before. I don't think people have realized the returns that they put in business cases to get these programs approved in the first place. So I think it's a lot tougher now to try and get some of these things done. You have to have a lot tighter case with respect to return on investment and showing efficiency improvements.
DIRECT: What are the biggest CRM challenges companies are facing?
NORTH: Prior to coming to Nykamp, I worked for a software company in the campaign management/marketing automation space. So I'm guilty of what I'm about to be critical of. But there's no magic pill. And so many companies have pushed a technology solution as being ‘the key’ to CRM. There's no doubt you have to have that technology infrastructure in order to enable it. But without the analytics and the decision process and a good marketing process in place, the technology isn't going to get companies where they expected to be. I think that's why we're seeing what you talked about, Laverne: Companies made this technology investment and they're not seeing the return. Well, y'know, its not the tool, it's the fool. You have to use that technology in a logical fashion and make good decisions.
ELLIS: From Wunderman's point of view, I'm reminded about what Voltaire said about the Holy Roman Empire of the 18th century. Which is that it is not holy, Roman or an empire. There's a certain degree to which CRM is not about the customer or it's not about relationships. At least not how it's practiced now. Like marketing automation is fine, but it's not about the customer. That's about costs and speed. Selling efficiencies are not about the customer. It's about leveraging your resources. Value maximization, in terms of figuring out which of your customer segments are going to deliver the most top or bottom line, that's not about the customer. So a lot of the benefits that are claimed for CRM are really benefits that accrue to the enterprise, but have nothing to do with the customer.
MARCUS: Len points out some very important trends we're seeing as well. Initially, CRM was truly about efficiency. How do you make your sales force more effective? How do you reduce head count in the call center? How do you minimize the amount of marketing waste? But there is a change and the change is being driven in part by rising consumer expectations. So today we see things like self-service and convenience and multichannel being able to present the same information to customers regardless of what channel they use. The other thing I would point out is consumer expectations are not set within an industry, they're typically set across the experiences consumers have across industries. So their experience with one vendor that exceeds in providing a level of satisfaction that the consumer wants now has to [carry over] to other industries.
ELLIS: We did a survey of consumers to find out if they thought about relationships. We studied about eight different categories and 50 different brands. Forty percent of Americans didn't think there's any relationship whatsoever with any of these companies. We found the determining variable was the quality of the customer contact. Were customers satisfied when they called on the phone? Were customers satisfied when they talked to the sales guy? If CRM is really going to do its job, and I think it does in part, it has to improve the quality of the contact from the customer's point of view. And I think if you can do that then you're very much on the road to where you want to get.
We divided contacts into when you're being proactive, like when you're being attentive to your customer, and when you're reactive, when you're being responsive to your customer. Being good on the reactive side was substantially more important than being proactive, in terms of being attentive to your customers, in terms of showing them that you love them and giving them discounts and all that stuff. The reactive side was much more important. When you did both, when you were good on the response side, and did a little bit of attentiveness, the numbers went off the scale. It was like there was a synergistic impact.
CATALDO: Our product is our programming, and the relationship factor is so strong. We've been sharing every interaction and really trying to influence the way we program, the way we approach underwriters. One of the nice things we've found is that those quality interactions are turning into donations. Problem solving, answering those questions and then asking ‘Would you like to make a donation’ has been working for us. So really being part of the revenue stream, just from that simple act, we've been able to add close to 1 million dollars in fundraising in less than three years' time, which is a wonderful thing. It's a simple process but the participation and the expectations on our part from our members and viewers is so great that that's what we're aiming for. And we know we can do more.
PRICE: For us, the relationship is not really with the company. The relationship is with the financial professional because we sell through brokers and such. That makes CRM even more of a challenge because, should the financial professional leave, oftentimes the customer follows that person. So trying to build that affinity is very difficult. We do some things on a direct basis, but that's more when customers demand it. They may have something easy they want to do or there may be a product where they've done all the research on the Internet or whatever and they are looking to just go direct and don't want to spend the time talking to the financial professional. So we want to be able to provide those capabilities for them. But again, the relationship is really with the financial professional. So we have the issue of who owns the data, because a lot of it is collected by the financial professional, and they don't always turn all of it over. They may have it in their file, but their fear is you'll try to take it.
DIRECT: Which raises the ugly specter of channel conflict.
PRICE: Definitely. A lot of challenges.
DIRECT: Mark, who does WNET consider the customer? The viewer? The donor?
CATALDO: In the past, it was always viewed as viewers or donors. But we look at our marketing partners, our underwriters. They are also our clients. Educators in the community. They play a valuable role. So looking at our constituents beyond viewers and donors, getting people to think of everyone associated with us and our various outreach activities, bringing everybody on board, that's becoming a focus for us. Fortunately, we've got some pretty good member segmentation programs in place. We've been able to track a lot of the interactions that are happening with donors and viewers. But what we'd like to do is share that information with peripheral constituents — our underwriters — and give them more of the feedback and make the viewers and members more interesting to them and hopefully making more of a secure bond in terms of financial support.
Changing Channels
DIRECT: Are customers interacting with your organizations through new channels?
BUSSARD: We've got a sizable and growing segment of our client population that's extremely comfortable with the idea of interacting with us through alternative channels, phone, Internet, what have you. It's sort of a mixed blessing — they're comfortable with these more efficient channels but they're also more demanding in terms of our responsiveness and the quality of service they receive from us. And even with our more traditional segment, which still relies heavily on in-branch transactions and face-to-face interaction, they expect a more immediate response, whereas in the past an individual customer might have been willing to give you a little bit of latitude on when and how you got back to them. We find that today it's getting closer to wanting instantaneous answers and response and resolution to things and that poses a challenge for an organization our size.
DIRECT: Is privacy a big concern?
BUSSARD: We look at it from a customer perspective: Could the things we're doing be perceived as being intrusive? Compromising privacy is a decision factor for everyone but maybe more so for financial institutions.
NORTH: I think the lines between permission and privacy often overlap. Do I want you to call me at dinnertime? A lot of companies are trying to turn that whole aspect of privacy and permission into a competitive advantage, making a big deal out of their privacy policy and making sure they comply with it. A whole lot of companies have privacy policies and they're not even being followed. I mean, its crazy. Some legal beagle has developed a policy and its not actually being enforced. Those types of things are going to be much bigger issues going forward.
PRICE: I think if companies use the information responsibly that could help to keep the issue down or at bay, if you're calling people at inopportune times and sharing their information with other companies and selling their names, I think that's the kind of thing that leads to the privacy issue becoming such a big deal.
I know personally, through one of the relationships I have with a financial services provider. They also have a brokerage firm which was trying to get me to become one of its customers. They sent me an application that had very detailed information filled in, which I guess they had taken from an application because I have a mortgage with that company. That did not go over well. That made me want to terminate all the relationships I had with that company. To send that in a marketing piece to me was very offensive, and as long as that kind of behavior persists, I think that makes privacy become an even bigger issue.
BUSSARD: That was a challenge for our organization. We had people who were in a business subsidiary leadership role who saw opportunities and would look at the pure black-and-white regulations and say, ‘Well, this is permitted. This is permitted’. And there wasn't necessarily the thought ‘Well, maybe this is permitted but how is it going to be perceived?’ And I think what we've been able to do [at SunTrust] is privacy is partially owned within marketing and partially owned in direct marketing. And people might look at that and say it's like the wolf guarding the hen house. But we have a real sensitivity to the fact that we're trying to sustain long-term client relationships productively. And making mistakes or offending customers in the short term is in nobody's best interest. So I think we have a greater sensitivity than a line manager trying to meet a short-term sales goal would.
DIRECT: We covered a story about a company called Qwest that has backed off even sharing information internally, until they can get some kind of advisement from the FTC about it.
BUSSARD: Basically, that's the way we do it here. It isn't 100% formal. But the data primarily resides in our area, in marketing information, which is an affiliated group of my area. And any request for data had to come through here and come through our privacy area in marketing. So unless it's information you maintain in your business unit, if you're looking for anything to append to that, you've gotta come through us and there's limited access.
DIRECT: So that arguably goes against the model of enterprisewide data sharing.
BUSSARD: Exactly.
SCHULTZ: Have any of you used outside companies to market services?
BUSSARD: We've been slow to warm to the idea of a lot of outbound work. We've been able for the most part to limit that growth to our internal call centers. The one area where we do have that sort of situation and at one point was a lot more aggressive than it is today, is in an insurance subsidiary. We partner with insurers to market their products to our customers. The insurer, through contractual relationships, markets products to our customers under our brand. That means it handles both the mail and the telemarketing. Before privacy was nearly as sensitive an issue as it is today, way, way back — '95, '96, '97, the insurance group really controlled those relationships. Unfortunately, its mindset once again was more short-term than long-term. And its level of commitment to our customers was nil because they weren't [the insurer's] customers. Fortunately, once we got a hold of that we've been able to rein it in quite a bit. There's a lot more control in place.
DIRECT: Claudio, how important do you think having a loyal, motivated employee base is to creating customer loyalty?
MARCUS: To create loyalty, you have to foster behavior among your employees that will drive that loyalty. And if you're going to foster that kind of behavior, [you need] better educated, better trained, happier employees. Our CRM excellence award winner, Boise Cascade Office Products, spent a lot of time worrying about the employee communications around its CRM strategy initiative. They spent a lot of time gathering input from employees so they felt they were part of the process, and a lot of time educating them as to what they could expect in terms of near and long term changes. And that's important. What we see all too often is people rolling out a particular application and then expecting employees to just stand in line with it. Managing the internal expectations is just as important as managing the customer expectations.
NORTH: I agree with that. I'd also take it one step further. And say that perhaps the biggest disservice to CRM is the idea you're going to get it right for every customer at every touch point all the time. Because for most organizations it's just not feasible at a reasonable period of time. One of the things we work with companies to do is identify all the various types of interactions you may have across your organization and which have the most impact.
ELLIS: The hard reality is that technology alone is not an answer. It's always people, processes and systems. So that's a hard reality in terms of what ultimately works. The soft reality in terms of actually what gets implemented, yeah, mostly it's technology first and then maybe the people. But tell you the truth, the people fix doesn't work either without the process fix. But the process stuff is actually the hardest to do.
MARCUS: I would throw incentives into that. For example, if you're giving more customer-satisfying behavior in the call center, yet your call center reps have an incentive to keep calls less than two minutes on average, that's working against the idea of fostering a stronger relationship.
PRICE: Having worked for different organizations that were implementing CRM initiatives, while the employee pieces sound good, I don't see a whole lot of it going on in practice. And I think part of the reason for that is as people have tried to push some of these initiatives, trying to quantify the benefit is extremely difficult. And so when there are choices to be made about where investments will be spent, it's not usually in the employee part.
CATALDO: Part of what we do, I'm happy to say, in the last two years, part of our new employee orientation program is a whole segment on our member/viewer relations efforts. So that people coming in know that people call us and the nature of the calls, and we're able to get them as they walk in through the door. And that's been very helpful. Although we have a small operation and call center, the average age in our department is 33. We do a very good job on incentives with these folks and keeping them involved. They are very much a part of the customer relationship process, making recommendations for improvements to the databases we use. We also involve our members and viewers in focus groups, and that has had a significant impact on not only scheduling decisions but how we do our on-air pledge drives.
The ROI Factor
DIRECT: Is there a point where we have to become more efficient and companies scale back some of what they were spending? Is the ROI factor more important here? Are we going to do everything but only for some customers? Is this what you're seeing?
PRICE: Absolutely. When I joined the MONY Group, we were going to build the whole infrastructure enterprisewide and that got pulled back. Now it's kind of project by project and each one has to get approved and have a separate business case — each one has to show the ROI is there. So it's been more difficult than in the past, even when I was with organizations that had implemented CRM solutions because they did go the route of enterprisewide solutions, and now it's component by component. If those year-ones aren't [delivering] returns, it becomes more difficult for later projects.
BUSSARD: Our organization has been very interested in its ability to segment customers and treat different customers in unique ways. We've got two challenges there. One, they have the information tools to do that. However, we don't have the platform infrastructure from a technology standpoint, at the very lowest level out in the field. So there isn't that immediate access to data they need to have to make those calls, to make those decisions at the point of impact, at least not universally throughout our footprint. Two, there's also certain regulatory limitations regarding how we treat customers. Obviously, we can't discriminate. And a lot of things we might think of as being good targeted marketing, a lot of times the federal government doesn't see it that way. So we have limitations on both sides. I think in our organization [there's a drive to at least have] the ability at a CSR level to determine how aggressively to satisfy a customer at that point. Literally, the model we had in mind was a red-yellow-green light kind of thing. When a CSR pulls up a customer record, a designation would say if it's a red, don't bother; if it's a green, go to all lengths to make that customer happy.
NORTH: We've seen a big shift. Four or five years ago, companies were coming to us saying, ‘We need you to help us develop an RFP for a marketing database or a CRM system or whatever it was called.’ The last 18 months to two years, a lot more of our business is ‘My CEO just said we're doing CRM. What does that mean?’ and helping to really develop the vision.
CATALDO: I think the people and the process is correct and we've been handling it that way. I remember when I approached our IT department, I didn't even use the letters CRM. I said ‘I have this need, I need a report’. And next data warehousing, and going back and forth, and that's how we started. We've come a long way. I think this year we'll probably spend a little bit on technology but we're still going to emphasize the people part of it and the philosophy.
NORTH: The technology has become almost commoditized, if you will. Five years ago, there were the big battles over campaign management tools and this tool or that tool. I think today a lot of it is much more a given. ‘OK, I know I need a database. I know I need campaign management, I know I need a call center.’ But it's what you're going to do with it that's more important. Whether I have it in place yet or not, almost obviously there's an issue of getting the technology installed. But the harder part is the people and the process and the overall plan.
PRICE: Interestingly, after we had scrapped our project and came back with more of a base approach, all the business cases had a map of what the best processes are for each of these functions as part of the business case. So process management is becoming more of a focus than it was before.
MARCUS: What we've seen with people who are more advanced is that they've standardized processes. But it's not a single process. Now people are really looking for the capability to deploy dynamic processes. So depending on your role, the context of the interaction and the objective, there may be different processes taking place. That's going to be a challenge, not only for the organization but for the underlying technologies, to support these dynamic processes, and distributed not just within the enterprise in an extra-enterprise fashion, working with partners and customers like that. But even within an enterprise, rather than trying to figure out what process is the answer, it may be that there are literally hundreds of similar processes that look for some important output. We have to be able to support the dynamic nature of those requirements.
ELLIS: But on this notion of dynamic processes, there's a movement in the software industry among people who build software called pattern building. You build software around patterns of activity that the user needs to do. And the question comes from the 1970s, from architecture and urban design. This notion of understanding what the user needs to accomplish called upon a more dynamic environment to address the variations on what the user might want to do.
MARCUS: I think you've hit on something. What I've seen in some systems are business rules driven with certain objectives. So you have some objectives and you have some constraints and some business rules. But then the system itself adapts to optimize those objectives given the constraints. That's really where we're heading, and the problem has been that when you try to focus on the process, there isn't such a thing as the process. And there are literally hundreds of little processes, right? And that becomes unmanageable. I know a financial services organization that has a staff of 40 people managing their enterprise business rules and they literally have thousands. A few months back, they lost a few of their key people and they didn't know how to replace them. They don't know how to maintain those business rules. It has to become something that, where a system essentially reconfigures depending on a smaller subset of higher-level rules and addresses some objectives that the enterprise and the consumer are trying to accomplish, as well as the constraints, resources, things like that.
Getting Personal
DIRECT: From your own experience, what's an example of good CRM?
ELLIS: I can think of a good one. The automobile industry does a pretty good job. I lease a car and two weeks after the lease commences I get a call from the dealership, ‘Was I happy with the Acura?’ They send a postcard when the car needs to be serviced and I'm six months away from returning the car at the end of the week, and they send me a big brochure on how to close out my lease and what I was going to be expected to do. So in terms of supporting me through the process, that wasn't bad at all.
PRICE: The airline industry would be one I'd say is good. When I lived in Chicago, I had been flying United all the time and then I bought a ticket on a credit card from American and I got a call. ‘The last however many trips were United, why did you buy an American ticket?’ Then they sent me a coupon for a discount, which I thought was great.
CATALDO: I enjoy being able to personalize my own affinities with an organization. Ticketmaster is great, Amazon.com, all these places. They're really good. They don't overdo it as far as I'm concerned and really are keeping track of my interests and likes.
MARCUS: My favorite is a DVD service called NetFlicks. You rate films you've watched, so they come to understand your personal tastes. Then the service starts to make suggestions and keeps a list of your favorites. The next in line of your favorites is sent to you when you return [the DVDs you have]. The customer service experience has been tremendous.
NORTH: I do have one excellent example from L.L. Bean. My husband ordered a sweater for me for Christmas and the FedEx guy dropped it on the back deck, where my dog got it and ate both arms off. My husband thought it would be a waste of time but I picked up the phone and called L.L. Bean and said my dog ate my sweater, Fed Ex left it, is there anything you can do. They said, we do have one problem, we don't have it in that color in the size your husband ordered. Do you want to pick another color or size and we'll ship it out today? Literally, within two days I had the replacement. They wanted the ruined sweater back as proof it had been ruined. They paid all the postage. And I will be a loyal L.L. Bean customer as a result of that. They had no culpability there whatsoever and they took total responsibility for it.
Participants:
Laverne Price, Vice president, market research and strategic planning, MONY Group Inc., New York
Cliff Bussard, Group vice president, direct marketing, Sun Trust Bank, Atlanta
Claudio Marcus, Research director for CRM and business technology, Gartner, Andover, MA
Susan E. North, Vice president, client relations, Nykamp Consulting Group, Peabody, MA
Len Ellis, Executive vice president, enterprise strategy, Wunderman, New York
Mark Cataldo, Director, customer relations management, WNET Thirteen, New York
Representing DIRECT:
Ray Schultz, Editorial director
Richard H. Levey, Senior writer
Transcript edited by Beth Negus Viveiros
