A version of this article first appeared in Customer strategy, a magazine published 10 times a year in London by TBC Research. Through its comprehensive portfolio of magazines, events and research, TBC Research is dedicated to helping senior business professionals make more informed technology decisions.
E-mail management is fast becoming an important issue for companies,. Hence, software vendors are finding sales easy to come by and are in the unlikely position of being able to cherry-pick customers who will generate the largest lisence or contract. Demand is being driven by the recognition that companies must embrace e-mail as a mainstream channel as the number of consumers using it increases exponentially.
However, early adopters are still learning some hard lessons, such as the urgency of integrating e-mail into call centers. When done properly this can result in a powerful customer service prop. Where (as is likely) integration has not taken place, service delivery becomes increasingly fragile.
For Website operators, using e-mail allows a certain intimacy with the customer. It is also being used to explore other problems that have been thrown up following the advent of electronic channels. For example, incorporating data analysis into an e-mail management system leads to a deeper understanding of customer behavior, and it may encourage the estimated 60 percent of potential Website shoppers who fail to complete transactions to go all the way.
To date, e-mail has been both a blessing and a curse. Delivering mail using the Internet provides a way of ensuring a near-documented response in near-real time. Provided both sender and recipient are online and have mail automatically delivered and received, the system works incredibly well. But the problems associated with e-mail have been well documented--incompatible file formats that deliver attachments as garbage, inappropriate content that leads to court cases, and indiscriminate spamming of unwilling recipients are just a few of the better known issues.
E-mail management involves a lot more than managing the flow and response to inbound queries, and once it is intelligently automated it can significantly reduce the number of interactions required to meet the needs of customers. This becomes crucial when a business starts to generate a large amount of inbound mail, not only because it frees up customer service staff, but also because customers judge an enterprise's effectiveness on its ability to respond rapidly and accurately.
The use of e-mail management is changing almost daily and the functionality now offered is way beyond anything envisaged when most of the specialists started up. However, the key vendors are still relative minnows. eGain, one of the best known in this area, reported record fourth quarter revenues of only $6.3 million, leading one to wonder how long any of the vendors will remain independent. Kana recently snapped up Silknet to strengthen its position, but this certainly does not make it immune from predators.
The companies considered here have a heritage in e-mail management and so have become synonymous with the technology. However, they are also trying to break into new markets as customer service or assistance specialists, a natural progression given market conditions which enhance rather than dilute their capabilities.
There are also a number of smaller players beneath these companies, such as private company Talisma, using e-mail as an entry into the field of data mining for marketing effectiveness. Whether these smaller players can be successful remains to be seen.
Despite the featured companies' leadership, and their claims to offer multi-channel customer interaction assistance across a broad set of technologies, their products are Web-based and have no direct call center capability, a key part of enterprise customer management systems. This is a fundamental weakness because it means the vendor does not have direct control over a specific technology with which it will have to integrate. This leads to a higher cost than might otherwise be paid if the entire interaction technology set came from the same source.
Like others in this space, eGain is a minnow in CRM terms. Its revenues suggest a company in second stage start-up mode, with some important wins in Fortune 500 companies. However, it is growing at an astonishing rate and has successfully raised additional funds to fuel growth.
Its key move in the past year was to acquire Inference, giving it critical mass as well as a product line that took it away from being a one-shot wonder. Its e-mail management solution is based on volume, and can cost as little as £2,000 to £3,000 per month for managing up to 5,000 inbound mails. That this is considerably less than the price it was quoting less than six months ago indicates the growing competition which the sector faces. It started out offering only a hosted solution, but today will sell e-mail management software licences. According to senior marketing manager Yad Jaura, "The business model is now 50 percent hosted." This represents a significant shift that should help eGain move into profit more quickly than a pure hosted service.
Today, it leans heavily on multichannel customer management, with e-mail as the underpinning technology and the Web as the focus. At its site resides Eve, a robot "helper" which answers natural language questions. This is really to show how an interactive assistant can contribute to the overall service offering by finding the answers to a variety of common queries. Although it sounds trite, Eve has been given a sense of humour: "She will answer the question 'knock knock' with the expected response," says Jaura. Where the question is unusual or too difficult, Eve has logic that allows her to refer the question to a human operator or to drive an e-mail workflow that ensures the customer receives the correct form of response. eGain says that e-mail marketing and service should not be seen as isolated activities but as integrated parts of an overall interaction service designed to enhance customer lifetime value. eGain recognises that people ultimately buy from other people, so the more "human" the interactions appear to be, the more likely it is that the end customer remains "stuck" to the supplier.
In an effort to get this message across to customers, eGain encourages customers to bring e-mail management and call center activity together, but keeps the choice with the end user. It will, for instance, direct customers to FAQ sections on a Website while offering them a direct route to a call centre representative. eGain was very much a company with instant appeal to dot com businesses, but recent events in the stock market have led it to turn its attention to bricks-and-mortar. These represent both an easy and a hard sell. They understand customer service concepts very well, but they can find it difficult to see the integration picture. eGain may also be getting a little ahead of itself. It is, for instance, looking to provide outbound e-mail marketing, a relatively new area which is not clearly understood.
There is a risk that without solid data analysis attached to the e-mail facilities, companies will end up spamming end customers. This is obviously undesirable so eGain will need to demonstrate a sparkling way to guard against it. At the same time, it is talking about providing voice over Internet protocol (VoIP) as a communications alternative to second line telephone conversations. On the basis of the current state of VoIP technology, this is a non-starter as it means adding the equivalent of two tin cans joined by string into the hi-tech electronic solution which it currently offers.
eGain has executed well on a strategy designed to keep it in the race for customer service mind share, and its acquisition of Inference has also gone well. With more than 600 customers and 200 engineers in a total workforce of 650, it has achieved that all-important critical mass that helps it prove market credibility. But it will have to become profitable quickly if it is not to burn too much cash. It will also need to come up with some big licence deals in bricks-and-mortar businesses to present any sort of threat to the large customer service and call center vendors.
Brightware was the result of a spin-off from Inference in 1995, but has already established itself as a dot com and bricks-and-mortar enterprise solutions provider. As a private company it is not obliged to divulge financial information and refused to provide any details for this round up, casting doubt on the company's ability to reach a critical mass--a key due diligence factor in any product selection process.
Brightware argues that its private status allows it to be driven by providing good product rather than stockholder considerations. But from a shareholder perspective, financial success is what it is all about and since it has raised institutional finance, those investors will want a return. From a customer perspective a good product set does not guarantee success, since in the current market not only a customer base but good financial backing is essential if today's presence is not to become yesterday's faded memory. Brightware has nevertheless attracted important support from Hewlett Packard and Rockwell as VAR partners, its chosen method to market. It has achieved success through its clear understanding of the nature of customer relationships and how they go wrong.
Senior presales consultant Tom Castley says: "Financial services sales will generate at least seven mails per transaction. If the customer receives a response in under an hour, the chances are the business will be completed." Brightware's solution does more than provide a fast response. It can be used to categorise customers so that the enterprise can determine what kind of revenue is at stake and then tailor a response system to suit. A high-value client will almost certainly generate a human interaction. This can be on a permissions basis or, using workflow based on business rules, an escalation mechanism can be triggered that decides how best to tackle the customer need.
It has solved the problem of "call me" facilities, a part of many commercial Websites, through a combination of live chat, predictive dialling and intelligent operator routing. So if a customer only has one telephone line, dialogue can be continued without having to abandon a Web session.
E-mail management is offered in a number of guises, but the most useful is as a way of trapping and answering complex queries that cannot be managed through automated Web-based assistance. It also uses analysis techniques to help clients refine their business processes so that customer responses are improved with experience.
Brightware's product set is already tightly integrated but its design is rooted in the client/ server world, limiting scaleability for Internet use. It is redeveloping for Internet architecture so that it can achieve the scaling and broader reach that e-business demands. This is not to say that the company cannot scale now. At Tesco Direct, it has a proven peak rate of 8,000 e-mails a day. By today's standards that is not particularly high, but it claims 17,500 daily inbound e-mails at Carphone Warehouse and has bench tested (albeit in ideal conditions) 50,000 for Virgin.
Overall, the company shows a well thought-out approach combined with a credible product strategy. However, its lack of a public face is a genuine concern based on the reasons it gives for remaining in private hands. And its positioning as a best-in-class component set does little to raise its profile as a technology leader. The risk is that Brightware will be gobbled up by vendors that need a neat package they do not possess. This would have significant and unpredictable implications for customers.
Like other companies in this category, Kana's founders were solving an e-mail management problem for a U.S. toll-free call center business when they realised the solution could be made into a product. In less than four years, it has matured from an Internet-style start-up to one of the larger customer communications management vendors. Much of the recent growth has come from the February 2000 acquisition of Silknet, which specialised in providing personalised Web-based customer interaction software.
That should not detract from management's understanding of the need to develop product out as a category expands.
In the quarter to June 30, the company reported revenue of $25.5 million but turned a heavy loss of $284.9 million as it absorbed Silknet and ramped up sales and marketing expenses. Kana has the financial strength to execute on its ambitions to become a world-leading vendor, but will need to balance product development and marketing costs against revenue in the medium term if it is to ensure it preserves its cash position.
With the Silknet acquisition, Kana offers a broad application set that positions it as a Web-based commerce platform builder. Whether this is sensible when Internet start-ups are struggling for funding and bricks-and-mortar businesses are still working out their e-business strategies is a moot point. Kana responds by pointing to its significant bricks-and-mortar installed base as an indication of its marketing and sales future.
The acquisition has not changed the company's product strategy. Its intention is to give enterprises a customer-oriented solution rather than address internal business processes, although internal processes are inevitably weaved into the solution. One of the ways it achieves this is by providing customers with a range of interaction choices, that can include e-mail, Internet chat, personal contact or VoIP.
A particularly useful feature is the ability to intelligently route e-mail questions through the call center so that the customer gets the impression that a single individual is managing a query. What actually happens is that call centre operative time is maximised by routing each question either to the appropriate person or as a continuance where the first operator is engaged on another matter. The caller history travels between call centre operators so they can tell what has happened during the interaction session. "There's nothing more irritating than having to repeat yourself. We think this way of interacting while new to customers neatly solves that problem," claims head of European marketing Terry Wilcox.
Wilcox says the e-mail management component in the offering is a relatively easy sell that allows Kana to engage with customers in discussion about the broader problems of customer interaction management. However, it faces execution issues and acknowledges that it currently does not have sufficient people to meet customer requirements. That situation is expected to resolve itself as its global alliance with Andersen Consulting comes into effect. Andersen has plans to train more than 650 people in Kana technology over the coming three months.
Kana's product, alliances and financial position are all geared towards providing a solid, credible offering. It needs to provide more intelligence and analysis capability rather than relying on business rules that give configuration capability. It acknowledges that this is a weak spot, but has made no specific announcements about how that gap will be filled. Its play as a platform provider for relationship management is fine from a Web standpoint, but it needs direct call center management to make that message stick.