IBM's BEST EXAMPLE OF BUSINESS TRANSFORMATION: IBM

Over the next 18 months, IBM will help Sprint transform its customer care and other customer-facing functions from network-centric to customer-centric activities using a mix of technology and technique. IBM will instill new business processes, install new technology and institute a new training program. And to show its solution to Sprint’s customer satisfaction problem is more than just good advice, IBM will offer its own transformation as proof-of-concept.

When tough times and even tougher competition caused IBM to rethink the way it deals with customers back in 1999, the company had 59 different voice and Web portals for customers to reach it. IBM was experiencing a decline in the average revenue per customer transaction, a ballooning amount of support requests, a less-than-stellar customer satisfaction rate and lower productivity.

According to a case study by IDC of IBM’s transformation of ibm.com, the company’s primary customer portal, the dominant theme identified by IBM was “the need to simplify and transform business processes for the benefit of the customer…especially in areas where significant customer contact was concentrated.” That meant IBM’s Web site and its contact centers.

IBM instituted many of the changes it now is proposing for Sprint along with the technology improvements that have come along since. “We have seen real and beneficial effects of this in validating the solutions internally,” said Dean Douglas, vice president of IBM’s global telecom industry division.

IBM’s first step was to integrate the voice and Web portals customers used to communicate with them. Having done that, the company realized technology alone wouldn’t cut it. “IBM, like nearly all large companies, had designed its customer-facing processes around its own needs instead of the customer’s experience and needs,” said IDC in its report.

IBM provided its customers with a single face, or common look and feel across its customer touch points, but it still had no better idea how to serve them. The company then conducted extensive use-case research, including market segmentation, as to how and why different segments of their customer base wanted to communicate with them.

Customer segmentation has since become an important part of customer resource management and, in turn, customer care. Amdocs, a billing and customer care provider that competes with Convergys—IBM’s outsourcing partner in the Sprint deal—has created a group dedicated to developing customer (not market) segmentation.

Using the customer usage data, IBM was able to better apply its technology and best practices. “It is one thing to segment the call and understand what the customer is all about; it is another thing to get the call to the right [agent] with the right skill set,” Douglas said. “It’s not just about whether an agent can handle a certain type of call, but whether they can handle it from a particular customer set.”

One year after applying its segmentation data and best practices along with an integrated phone and Web desktop, ibm.com’s overall customer satisfaction rate was up by four percentage points, agent productivity increased by 15% and inbound calls dropped by 20%.

Sprint may need slightly better numbers to achieve the $550 million in saving it is looking for, but Nextel Communications can point to some benefits of a smaller transformation project it did with IBM. The push-to-talk carrier went form bottom to top in customer care quality ratings according a J.D. Power and Associates report last summer.

As it could be with Sprint, “The real value to customer satisfaction at Nextel was in the way it handled the self-service element,” Douglas said.