The Knowledge-Enabled, Customer-Enabled Company - Why You Should Look At KCRM

The BrainYard - Where collaborative minds congregate.

InformationWeek Staff, Contributor

May 4, 2006

4 Min Read

One area where collaboration meets knowledge sharing head on is Knowledge-enabled CRM, which essentially conflates knowledge management practices with customer relationship management tools.  

Many KM and KM-like initiatives received the go-ahead more on gut instinct than hard facts.  Typical factors for capital appropriations, including return on investment; payback period; cash flow; and discounted present value, were, in many cases, simply ignored.

Knowledge-enabled CRM is one area where hard facts should be in evidence.

KCRM has traditionally been the province of specialist companies such as Kana and Knova (see the recent Basex Industry Survey on Knowledge-Enabled Customer Relationship Management Systems for an in-depth look at the industry) , but telecommunications makers have long been in a stealth-like mode in the KCRM space as well, going back many years when Siemens first introduced Resume Routing, which determines which agents possess the necessary skills to solve a problem, into their call center offerings.
In April, Siemens updated their offering in this area with HiPath ProCenter Enterprise Version 7.0, the company's Internet protocol-ready contact center solution.  A key integredient in the Siemens offering is pre-built integrations with front-office customer relationship management applications from Microsoft, SAP, and Siebel Systems.  HiPath ProCenter helps companies manage multiple modalities where customers can interact - including voice, e-mail, and instant messaging - using Siemens presence and collaboration tools.  They updated the HiPath ProCenter Design Center,which is a visual workflow design tool, to allow companies to map preferred routings of voice and e-mail and also added the ability to map fairly sophisticated Web interaction.

Last fall, Nortel entered the KCRM space with an expertise location tool, Expert Anywhere, which works with the company's contact center applications.

But regardless of how you begin to deploy KCRM, one thing is certain: there are myriad ways in which KCRM can deliver value by increasing productivity, lowering costs, and improving customer response.   

Here are a few areas where KCRM shines.  

Expanded Knowledge about Customers
In focusing KM methods towards the needs of the customer, KCRM software allows its users to get to know the customer intimately — at least as intimately as a computer program can.  KCRM software tracks and analyzes the customers' buying and interaction patterns, from which new opportunities to make more sales, or save money, emerge.  It also raises flags at signs of danger and helps the enterprise anticipate requirements.  Furthermore, KCRM software captures knowledge from the interaction of agents with other agents and customers, adding value to the organization’s intellectual capital.

Increased Customer Satisfaction
With quicker answers to their questions, customers are more likely to be happy and increased customer satisfaction leads to greater customer retention and loyalty.  Satisfied customers may even turn into endorsers for the product and company, speaking favorably to colleagues about their experience.

An example of what this means to the bottom line can be found in the typical mail-order company, where the product return rate can may reach as high as 20%, due mostly to the customers’ questions remaining unasked, unanswered, or answered unsatisfactorily.  By providing better answers, the company should be able to cut the rate in half, perhaps to 10%.  For an organization with $20 million in annual revenues, this can be worth up to $2 million in additional revenue.

Upsellling and Cross-selling Opportunities
Vendors can upsell to happy customers; so increased upselling and cross-selling opportunities are an additional benefit of KCRM software.  KCRM software also helps uncover customer patterns, enabling the enterprise to identify upselling and cross-selling opportunities.

Imagine the same mail order company with $20 million in annual sales, in which the size of the average sale is $100.  If the sales force can upsell 10% of its orders to purchase an additional $25 worth of material, then it will add $500,000 additional revenue – a 2.5% increase in sales.

Improved Response Time
The direct, quantitative benefits of CRM software can be measured in the number of minutes that each representative spends with each customer; the lower the number, the better the CRM software is doing its job.  With the adoption of KM search and document management technology, KCRM software decreases the response time for each inquiry since better search helps the representative find the needed information more efficiently.  KCRM software also makes it possible to find and contact experts more quickly, which also improves response time.

Basex estimates that, through the effective use of KCRM, a call center receiving 200 calls per hour can increase its efficiency and decrease its abandonment rate to handle up to 300 calls per hour with the same number of employees.

These are just a few of the many possibilities for KCRM in the enterprise - we'll examine some more next week.

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