Why are we hearing so much about analytics these days? Has analytics become the key to truly gaining ROI from an existing implementation?
What are analytical tools? Really, they're better reporting systems than there used to be [in enterprise software]. People talk about performance management, performance analysis but the bottom line is that [analytics] are better reports. Why they're so much better is because in the past people relied on information that already existed in the data structure and based the future on past behavior. Until people had sufficient data stored to gauge the past, you couldn't do predictive modeling for the future. With predictive modeling we can literally predict within 95% statistical significance, future behavior versus past behavior. Until recently we didn't have the data because the tools weren't set up properly. They couldn't access the right tables.
Companies that do this well are Siebel, SPSS, Matrix Technology, Unica, E.piphany and SAS. On the supply chain management end See Commerce does it well. These are companies that are leaders.
But what is important about all this to your average executive is not what [part of their business] is coming down the pike just fine, what's important is identifying what in their business is not working well. A report that tells me who among my best customers isn't buying as much as they were last year is very valuable. A proactive analytical analysis can give key guidance to sales and marketing.
What is the most important issue in the CRM industry today?
I've got seven points that I'm driving on right now. First, there's the integration of people, process and technology. People are the biggest factor in this equation. When I told people that it was the human factor that was going to drive the success and failure of different technologies in 1996 they looked at me like I was crazy, but the failure with CRM in a lot of cases was linked to not looking hard enough at how the people interact with the technology. You have to understand the resistance to change.
Second is an increased emphasis on the business case for technology and metrics. CRM is a big expense and there has to be a solid ROI proposition. You're lost without a plan. If you measure properly you can have success.
Third are software customer trends, such as self-service. Fourth is analytics. We have to look forward. Fifth are customer touch programs that look at customers, read what kind of customer they are and target specific programs at specific kinds of customers. This is lead optimization and customer tracking. It increases the movement from prospect to customer.
Sixth is the area of enhanced implementation. This is well beyond having the internal IT people or some outside consultant run your implementation. This is having a complex plan of where every single penny goes and making sure that ROI is an element of every activity. An alternative is vendor implementation. We're hearing more about this and companies are doing this. One reason is because vendors can no longer afford a failure with their name attached to it. Another alternative is having a mix of people do your implementation or taking the ASP route.
The last topic is a pretty big one, the real time enterprise. This is the ability to connect a company's entire operations via internal Internet applications. This is where the whole world is going in the next 10 years. To get there it's got to go through CRM.
Why are Web self-services becoming so important?
Cisco Systems has a great new self-service application. It's Web-based and something like 82% of Cisco's customers are ordering online. Something like 83% of the company's service requests are completed online. And the system is within something like 90% accuracy for giving people the kind of support information they're looking for, the first time they look for it. Their knowledge base is really strong. That led to some 1,600 technicians and customer service reps being able to leave their desks and go out into the field to generate revenue. In 1999 that got them something like $330 million in savings. In 2000 they saved $506 million. In 2001 it led to $650 million in savings. And customer satisfaction went up every year.
Are there other high profile examples of this we can name?
If you look at FedEx, they have one of the more cost-effective call centers out there. To track a package on FedEx costs them $2.50, which is very good. I think the average cost Forrester came up with for a call center customer touch is $33 per call. They've honed it down to great efficiency. And for customers to do self-tracking via the Web it only costs them 4 cents. That's one hell of a savings. Forrester said the average call center call is $33; it costs a company $9.99 to address it by e-mail and it's $1.17 to do it by Web self-service. That's why it's so worthwhile. But you've got to get it right. It's also an opportunity to turn customers off. You have to have the information behind the applications to make them work.
Do you use the bank or the ATM? It's the same reasoning across the board. And more customers are looking for service, that's been documented as well.
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