Living with a perfect stranger

What keeps a good customer coming back is good service, and today's economic climate demands more than ever that customer acquisition, profitability and retention remain central to a carrier's business.

But that can't be done if customers are running out the door before service providers even discover who they were or, more important, what they potentially were. To keep them in the store, service providers need to offer a better customer experience. And they're turning to customer relationship management (CRM) applications and processes to do just that.

Today, practically every service provider out there is implementing some form of CRM application or program. Though CRM may just be glorified terminology used to upsell and cross-sell customers, carriers are finding it a necessity to help categorize and get a better view of who their customers are and which ones may be interested in purchasing specific products or services.

TRENDS IN CRM THE VENDOR'S VIEW ACCORDING TO AMDOCS Increasing focus on customer retention Greater interaction with third-party providers ACCORDING TO SIEBEL Identifying most profitable customers Driving acquisition of partners via outsourcing ACCORDING TO PEOPLESOFT Extending benefits of Internet deployment to all types of enterprise solutions Marketing CRM as an application Establishing CRM for all employees and suppliers

The systems are designed to extract data about business and residential customers from specific areas of their businesses, such as billing, to help understand who the customers are, what needs they have, what their usage patterns are and what types of services they are looking to add. Then that information should be culled to proactively support the customer in many facets of a carrier's business, from customer service representatives (CSRs) to sales and marketing and even the network-engineering group.

But implementation is neither easy nor inexpensive. In addition, a lot of times the systems fail. According to GartnerGroup, through 2006 customers will view more than 50% of all CRM implementations as failures because of “an inability to link channels, lack of process design or failure to provide any real customer benefits.”

“A lot of companies tend to believe that a software system is actually going to manage their customer relationships better, and that's simply not the case,” says Jeff Hartzell, vice president of network services for Focal Communications. “If you put a CRM system in, probably the biggest mistake that you can make is trying to manage the system and forget about managing your customers.”

TRENDS IN CRM THE CARRIER'S VIEW ACCORDING TO BELLSOUTH Tailoring solutions by better understanding customers through buying patterns ACCORDING TO QWEST Moving CRM across the entire corporation to afford everyone the same view of customer ACCORDING TO COX Opening architecture to reduce component purchases Increasing Web-based applications Cradle-to-grave customer management with aid of service providers and outsourcing ACCORDING TO SPRINT More pronounced regional customer focus ACCORDING TO VERIZON Vendor consolidation as a result of capital constraints

The doors of perception

For a CRM system to truly succeed, all employees should have the same view of the customer, a representation that many current implementations do not provide — at least not yet. The fact is, a lot of CRM systems fail because of the prohibitive costs of implementation. For those carriers that do implement one, getting users to actually adopt and use a new interface can be difficult. Factor in integration costs, training and license fees for CRM packages; then add to the mix the fact that CRM is an ongoing, evolving process, and the costs may seem infinite. For example, Qwest Communications claims to have spent more than $100 million on a four-year implementation of CRM across the company, says Drew Guttadore, the carrier's director of CRM strategy.

Forrester Research reports that CRM costs are increasing because of overlapping products and poorly coordinated spending by service providers that don't know what they want or what problems they are trying to solve. The firm estimates that if companies don't manage their investments and leverage CRM systems to solve the most important problems, they could spend from $60 million to $130 million over a three-year period.

But the demand for CRM is evident. According to Cahner's In-Stat Group, total CRM software application revenues will increase from $9.4 billion worldwide by the end of the year to about $30.6 billion in 2005.

“It's critical that companies move in this direction; however, it's not cheap and it is not fast,” says Mike Nevels, director of CRM for Sprint's national consumer organization. “Your corporation has to have the appetite to adopt this because it is a change from old behaviors. It is critical that you have executive-level support to see the value of CRM.”

Though service providers and vendors may believe that CRM will help them gain and retain customers, what is right for each particular provider may not be what every vendor is offering. “It's incumbent upon a company to really sort out their own strategy and lay out their own blueprint and be very realistic about what benefits they can achieve and in what time frame,” says Lori Groves, vice president of e-commerce and technology architecture for BellSouth. “There's lots of hype in terms of what's possible. You have to get beyond the hype and determine what is really going to work for your particular company and customers.”

'CRM is not something you just buy in a system....It relies on understanding who the customers are and using that knowledge to differentiate the services provided.' --Dror Orbach, Amdocs

Understanding customer needs also allows carriers to bundle services and add features for upsell and cross-sell opportunities. “CRM is not something you just buy in a system, although you need systems and a solution to support it,” says Dror Orbach, vice president of R&D for CRM solutions provider Amdocs. “It requires changes in processes — sometimes changes in organizations — as well as technology. It relies on understanding who the customers are and using that knowledge to differentiate the services provided.”

Vendors and carriers agree that one of the most difficult components of CRM is measuring the benefits of improved customer service. Some carriers think it is easiest to measure specific components of customer usage by tracking call duration or churn or by directly asking customers through surveys. Another popular method is the use of scorecards to measure the effectiveness of a CRM platform. There also are tools available to help measure the cost of deploying a specific service vs. the projected impact of that service.

“CRM is finally becoming a board-level decision. They understand the need for this,” says Dan Ford, general manager of Siebel's communications and media business unit. “The bad news is it's a board-level decision. If you have any part in successfully positioning this, you have to quantify the benefits of CRM.”

Units of Measurement

Carriers and vendors agree that measuring specific services and their potential impact on markets is better than performing random marketing efforts. Qwest, for example, applies predictive models to campaigns that target specific markets. Guttadore says the carrier also uses sophisticated tools to split up campaigns to target specific market segments and to measure the effect of the predictive models against doing nothing.

Sprint, however, uses customer surveys. “Customers will let you know their satisfaction. Customers complain,” Nevels says. “The biggest [measure] of how well you're doing is how loyal your customer base is. That is the No. 1 response to whether you are treating your customers appropriately, especially at a time as competitive as now.”

SBC Communications looks at customer metrics, which are divided into various sales channels, to gauge consumer satisfaction on an ongoing basis to see if there are improved benefits. SBC gathers information from its databases, sales force automation tools and call center activity; the carrier also gauges the effectiveness of its marketing activities. “You can both observe directly what customers tell you they think and then you can observe indirectly what's happening as they vote with their dollars,” says Donna Harrison, SBC's vice president of marketing.

Four top CRM Challenges According to 300 North American companies implementing CRM services
Integrating data sources into a single platform	46%
Training user to use solutions effectively	31%
Getting different company departments to participate	27%
Integrating back office applications	22%
Source: Harte-Hanks Survey

WorldCom acknowledges the importance of improved customer service but understands that one can't easily measure such intangible benefits. So the company tries to stick to the metrics it knows it can get: WorldCom has implemented certain modules of CRM that look at customer retention and growth and also tracks queries from potential customers asking for certain capabilities. “In this current business environment, we only will do development or launch [CRM] capabilities if there is that kind of payback that we can point to,” says Mike Marcellin, director of e-CRM marketing for WorldCom.

Verizon is changing its infrastructure to get a single view of the customer, organizing the business so that nothing operates within a product silo and then creating interaction points of the customer's choosing. The carrier creates test calls and control groups through virtual routing in call centers where they can assess different technologies, says Stephen Butler, Verizon's director of enterprise data warehouse implementation. At the call center front end, these technologies provide CSRs more information more quickly.

Focal primarily looks at churn rates, which Hartzell says have been “pretty much nonexistent in the five or six years that we've been providing service to Fortune 1000 customers.” The carrier also looks at usage of tools such as Web-based billing and builds scorecards to manage relationships with ILECs.

10 CRITICAL SUCCESS FACTORS FOR CRM IMPLEMENTATION Establish measurable business goals Align business and IT operations Get executive support up front Let business goals drive functionality Minimize customization by leveraging out-of-the-box functionality Use trained, experienced consultants Actively involve end users in solution design Use a phased rollout schedule Measure, monitor and track Source: Siebel

Hartzell says that CRM has helped Focal quantify areas that may need improvement both internally and externally. “[CRM] gives us a view in terms of how quickly we can open, resolve and close a ticket for our customer,” he says. “It gives us benchmarks to measure both our new markets as they grow into more mature markets, [and] it allows us to identify any patterns.”

BellSouth looks at surveys, retention and market share to gauge customer satisfaction levels. Groves says BellSouth divides CRM into two specific components: operational CRM for online marketing, sales, service and support; and analytical CRM, which also deals with marketing in conjunction with compiling data, history, buying patterns and customer behavior.

Cox Communications, meanwhile, uses customer satisfaction surveys on a quarterly basis. In addition, efficiency increases with the use of CRM solutions because customer information is more readily available, says Kimberly Edmunds, vice president of customer service for Cox.

As carriers continue to figure out how to measure improved customer service, there still is a question as to how it affects their bottom lines — and who gets credit for it. “I take CRM with some caution relative to how big of an impact it makes,” Edmunds says. “A customer is going to expect that you know what kind of products and services they have, and therefore manage how you deliver service to them. [CRM] allows the representatives at least to quickly know about that customer and about what their value is up front.”

But the benefits of customer service tend to be elusive because the metrics used do not provide specific proof points. Implementing a specific marketing campaign does not guarantee that you gain or maintain a specific group of customers. Nor does having faster access to customer data make them less angry that their service is down. Carriers are dependent on looking at the overall value in improved customer service. But as CRM systems become embedded in the culture of a corporation, crediting revenue gained to new systems and procedures becomes more difficult.

“You hit a point of diminishing returns,” Qwest's says. “Once the systems are embedded as part of a corporation's revenue stream, they consider it business as usual, and you're not the new kid on the block creating great big new pieces of revenue for the corporation.”

World of difference

Vendors prefer that carriers take a best-of-breed approach to manage customer interactions across all points in a company when building out CRM applications. But carriers have different methods of going about implementation: They generally take a modular approach, preferring to use best-of-breed applications and products of their own creation.

“I don't think there's anybody who really can nail all of those pieces [of CRM], particularly not for a company that's the size of SBC,” Harrison says.

Of the carriers interviewed for this article, all use different components from various CRM vendors; Cox, Focal, SBC and Sprint also use implementations created in-house.

For example, BellSouth uses Oracle for ordering and Siebel for sales force automation. The carrier also looks to partner with either solutions providers or, in some cases, with companies such as Dell that it would go to market with.

“Turnkey solutions are customized to satisfy BellSouth's needs,” Groves says. “Where the market-based products don't fill the carrier's needs, the company builds its own.”

Qwest takes a best-of-breed approach to CRM because, according to Guttadore, there was not a good suite of tools available when the carrier started implementing CRM. Qwest had created some components within their modeling system but replaced them. “We took the ‘off-the-shelf is cheaper and faster’ approach,” Guttadore says.

View masters

The market for CRM solutions is here to stay. But carriers must remember that the difficulties of CRM not only center on implementation but on targeting the solution to fit a specific user.

Six of the eight carriers interviewed are working toward a total view of the customer. Focal and Cox use alternative measures to help them achieve that view; Cox uses customer perception studies.

“Customer satisfaction surveys measure how we're doing in the broader sense of customer service, whether it's the field service in the home or the interaction on the phone or the interaction on the Web,” Edmunds says. “The interaction management system will tell us every interaction that we have with that customer, but that's just information. It doesn't really tell us how that interaction was from the customer view.”

Focal is not aiming to create a 360-degree view of its customers from its CRM implementation because its sales model has an account manager for each customer. “The account manager maintains that historical information as well and certainly knows what each of his customers has from a product perspective,” Hartzell says. “So we don't do any of the inbound or outbound telemarketing where that 360-degree view could really come into play.”