InformationWeek
Defining The Business Value Of Technology
January 25, 1999
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Enter US West's WISDM (World/class Information Strategy for Database Marketing) customer/relationship management initiative, which incorporates data mining technology from SAS Institute and marketing applications from Exchange Applications. SAS's Data Miner analyzes customers to see what they've bought, what they're likely to buy, how profitable they are, and so on. Exchange Applications' Valex uses that information to "score" customers, so that new-product informa- tion is sent only to the most profitable and most-likely-to-buy prospects.
In the past, US West would offer new products, such as call-waiting or Internet access, to every customer. Now, instead of marketing the product du jour, the company markets what's best for the customer. But while targeted marketing may sound like a no-brainer, US West had a tough time getting the marketing department to change its ways. The cultural shift had "blood flowing," says DeGregor, but it ultimately paid off--he expects annual campaign yields will increase 20% to 30%.
Sales and service representatives may see even bigger changes as a company's focus shifts to building relationships. US West, DeGregor says, "had to convince the customer-service reps that they were in the business of selling to and servicing customers. They were not just order-takers." The company is implementing a database scripting application that will help sales representatives suggest certain products based on analysis of a customer's history with the company. "There's a pocket of resistance among certain reps that are afraid of losing control," says DeGregor. "They believe they know best what to sell to their customers." One solution is to assure employees that the technology won't replace them, or their decision-making abilities.
Top-Down Focus
Brokerage firm Charles Schwab & Co. is also "intensely customer focused," says Schwab CIO Dawn Lepore. "It comes directly from the top, from Chuck Schwab himself."
Indeed, the company uses a host of technologies to get closer to its customers. At the Schwab Web site, for instance, customers can keep up-to-the-minute tabs on the value of their stock portfolios. They can see a history of all their transactions. And they can read the latest reports and ratings on stocks they want to buy.
Schwab also has proprietary software that notices changes in customer behavior based on account activity. If there's an unusually high cash build-up on a particular account, "we can make an outbound call--maybe that customer is confused and doesn't know how to invest his money," says Lepore. The software also keeps tabs on accounts in which customers have a large concentration of a particular stock. If the stock moves significantly downward, for instance, a Schwab representative will put out an urgent warning call, potentially saving the customer significant sums.
Schwab invests an eye-popping 15% of revenue annually on technology, most of which is now focused on improving the customer experience, especially on the Web. To drive more customers to the company's site, Schwab last year hosted some 400 free training seminars at its branch locations. Customers were personally taught how to use the Web and how to take greater control of their financial future by visiting the Schwab site. "We are using high tech and high touch to redefine what it means to be a full-service brokerage," says Lepore. "A financial dream is a very personalized thing. We need both the high tech and the high touch to build those relationships."
A true customer-focused approach to business requires companies to rethink longstanding processes. Those processes are often in place because they're easy, or simply became habit. "A lot of the things we said we did for the customer, we didn't do for the customer. We did them for us," says Gary Botkin, manager of sales and accounting for furnace manufacturer Lennox Industries Inc. in Richardson, Texas. For instance, Lennox kept prices fixed year-round, despite the fact that customers not only wanted lower prices in the off-season but would also be willing to pay more in the winter and summer. Lennox felt it was too difficult to make changes, but it also didn't have the technology in place to roll out changing prices to all of its salespeople and dealers. It recently implemented SC Commission and SC Promotion customer-management software from Trilogy Corp. to help it set better prices for its customers and communicate them to salespeople and dealers--as well as automate compensation for its people.
Barriers To Remove
Companies also need to tear down barriers among business units. They need to pull together data from sales, marketing, and service--departments that aren't used to communicating.
Steve Bonadio, a research analyst with the Hurwitz Group, says customer-relationship management requires collaboration, but it's not always easy to make that happen. "Sometimes there are turf wars between different functional areas within a business," he says. There's mutual suspicion and a hesitancy to share data. But while holding on to information may help an individual unit, it doesn't help the company provide better service or get more revenue from customers. The solution, in part, comes back to technology. If you have technology that lets everyone enter data into a common repository that can be seen by everyone, then it's much more difficult to hoard info. Collaboration may also require training. And it helps to focus unit structuring around the customer, rather than the product.
Mark Holland, director of market research and product development for Sierra Health Services Inc., says that prior to the company's implementation of customer-relationship software from Onyx Software, Sierra's individual units were almost self-contained. "Each department was working in a silo," he says. "Everyone wants to do the best in their own job. It's difficult to cross over to see how it affects others' jobs." That obstacle was partly overcome by tearing down the technology barriers--each group had used legacy applications that didn't communicate with any other.
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Illustration by Bob Scott
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