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Solutions of the World: Part II
Through economic woes and political upheaval, CRM continues its march around the globe.
For the rest of the January 2002 issue of CRM magazine please click here
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It was not a great time for British Airways. There was the general economic downturn. Foot-and-mouth disease in Britain had discouraged tourism. The Concorde had been grounded for a year. And then came the events of September 11. Robert Elding, commercial manager at British Airways, estimates his company lost about $1 billion in revenue from the combination of those factors.

The company had to cut costs. But it also needed to maintain its level of customer service. RightNow Web, an online customer service solution from Bozeman, Mont.-based RightNow Technologies Inc., seemed to offer the answer.

Reducing Call Volume

British Airways gets 24 million calls a year to its approximately 15 call centers in Europe and the United states. "A portion of those calls--about 7 million--are information-based," Elding says. "For example, customers who want to know how many hours before check-in they have to arrive at the airport. We figured we could target those calls with online help." Each call handled live by a customer service representative costs about $4.50 to $6, so British Airways hoped to achieve a significant cost savings by moving some of its service online.

Last July the company started testing RightNow Web on two of its Web sites: its North American executive club site and its U.K. site for travel agents. With RightNow Web, visitors can click an icon to ask British Airways a question. They type in their questions and RightNow Web provides them with the top answers to questions similar to the one they asked.

British Airways started with 50 questions in the database. In the U.S. executive club site, there are now 300 questions. "Over the first three weeks it was a big learning process as we populated the site with content," Elding says. "Now it's less and less likely a customer won't find an answer." Of course, if the customer can't find an answer to his particular question, he can then e-mail the question to a representative.

Along with the answer, the software also asks the questioner, "How well did this answer your question?" Using that feedback, over time, the system becomes more accurate. "The tool becomes tuned," Elding says, "and what the customer wants comes up first." It was this self-learning knowledge base technology--which dynamically builds content based on customers' actual inquiries and interactions--that convinced British Airways to settle on RightNow Web.

The British Airways case illustrates some key points about the current state of international CRM. First, a company can no longer assume its customers are in the same country. British Airways gets most of its calls from the U.S. and the U.K., but now that the system has proved successful--with 94 percent of customers requesting in an online survey to make it permanent--the company plans to roll it out in French, German, Italian and Spanish to better serve its customers in other European countries. The Internet is often how global customers communicate and British Airways estimates that almost 98 percent of its executive club members have Internet access.

Also, an emphasis on quick implementation and clear, provable return on investment (ROI) is increasing. RightNow Web, running in a hosted environment, took only 10 days for British Airways to implement. After calculating the costs of the trial, Elding says the software has already paid for itself.

The British Airways implementation illustrates that even in today's tough business climate, companies around the world are embracing CRM. Far from deterring British Airways from the RightNow deployment, the terrorist attacks of September 11 convinced the company of the technology's utility. Although British Airways originally planned a three-month trial, it decided to purchase the solution after trying it for only six weeks, Elding says.

Where in the World Is CRM?

Paul Clark, a British citizen who is based in Paris and is in charge of product line marketing for San Jose, Calif.-based business intelligence provider Business Objects, has a handle on the international nature of CRM these days. Business Objects has customers in 80 countries and is available in 16 languages. "CRM is certainly continuing its march around the world," Clark says. "I was in South Africa recently and they're hyped about CRM the way we were last year."

And Europe has become a CRM hotbed. "The last time we broke down the statistics at the end of 2000, the European CRM market was worth $1.2 billion, out of a $5.7 billion global market," says U.K.-based CRM analyst Nick Hewson of the Hewson Consulting Group. "But what's happened since is the European market has been significantly more buoyant than the U.S. market." Hewson predicts negative growth in the American CRM market for 2001, giving Europe a significant proportion of CRM vendors' income. "There is a huge latent growth potential in Europe," Hewson says. European companies are just now at a turning point, he says, and he predicts they will invest heavily in CRM technologies over the coming years.

Which vendors will profit from that surge? "Our last figures showed that Siebel Systems Inc. had 34 percent of the European market," Hewson says. "But it is not totally clear that Siebel will retain that big a share in 2001. The data suggest that the company is in a decline." On the other hand, PeopleSoft Inc.--which purchased CRM's number two player Vantive Corp. in 1999 and has now integrated Vantive's technology into its new Web-based PeopleSoft 8 CRM--is a rising star, according to Hewson.

Charles Grover, director of international CRM for PeopleSoft and a Vantive veteran, says it is a deliberate policy of PeopleSoft CEO Craig Conway to expand internationally. "We have had significant growth in international revenues. Forty percent of our transactions now come from international markets, up from only 15 percent."

SAP AG, the German back-office giant, is also a contender in the European CRM market, Hewson says. "SAP has not quite gotten its CRM act together," he says. "But SAP [back-office] customers have been waiting a long time for a CRM offering. Those customers have a lot of political capital invested in SAP, and they have a propensity to buy a CRM system from SAP. They'll buy a 60 percent solution from SAP, rather than a 100 percent solution from someone else."

These big boys also have competition from smaller, homegrown European CRM providers such as Chordiant Software Inc. and POINT, Hewson says. "I assumed 18 months ago that the technical and financial clout of U.S. CRM vendors would mean they would dominate the European CRM market," Hewson says. "But I was wrong." Some players, such as Pivotal Corp. and Onyx Software Corp., have had trouble building a Pan-European infrastructure, he says. Considering the complexities of selling into the different European countries, "some European companies can do quite well."

Hewson emphasizes how important it is for CRM vendors to have a presence in Europe. "We think U.S. vendors have poor infrastructure in Europe," he says. "They have little in-country ability." Paradoxically, as the European share of CRM vendors' revenues rises, Hewson says, the failing economy is causing those same companies to slash their European budgets. With Vantive folding into PeopleSoft and Invensys plc. doing nothing to develop the front-office part of its Baan acquisition, "there aren't a lot of global CRM vendors left," Hewson says. "Taking a vacillating attitude towards investment in European operations is not the way to success."

In Hewson's opinion, Asia is less CRM-ready than Europe. "There's no money for CRM at the moment," he says. But under pressure from European and American companies selling into Japan, Japanese companies will have to invest in CRM technologies soon in order to retain customers, he says.

On the other hand, Tom Rearick, vice president of enterprise solutions at Sunnyvale, Calif.-based e-service software provider eGain Communications Corp., sees great potential in Japan. EGain chose Japanese and Italian as the first two languages in which to make its eGain Assistant virtual representative technology available.

Using eGain Assistant, Web-site visitors can have a typed conversation with a character developed to answer their questions. "There is every expectation that Japan is embracing text-based chat technology," Rearick says. He points to the popularity of wireless chat from NTT DoCoMo, Japan's dominant mobile operator. Because eGain and other service software providers have discovered that in Japan customers are reluctant to seek help from strangers over the phone, it is necessary for Japanese companies to maintain larger field forces. But Japanese customers gravitate to artificial personalities like the eGain Assistant.

EGain sells its products in 18 countries and gets, depending on the year, about 25 percent to 35 percent of its sales from outside the U.S. "There's growth all over the place," says Max Pfizer, the company's vice president of marketing.

Short-Term Return

While the market for CRM technology is not saturated, companies purchasing the systems are now focused on ROI, says John Ragsdale of the global IT advisory firm Giga Group in Cambridge, Mass. "We've always said that CRM offers good ROI," he says. "But now companies want an exact formula for calculating it, so they can budget the purchase. CRM projects are reviewed two or three times, so project managers need to show a solid cost justification."

"People are stopping to think before they spend," Hewson agrees. "There's a shift to shorter-term return and more tactical projects than long-term projects. Companies are saying, 'It needs to be working in six months.'" EGain's Pfizer predicts that big CRM projects, which require gathering all customer data in one place and completely reengineering customer-facing processes, will be retrenched. But, he notes, technology that makes a company more efficient right away and offers short-term ROI will thrive. "We tell our customers they don't have to do everything at one time," Pfizer says. "They can opt for gradual involvement."

"In a weird, opposite way, recession is good for us," says Tony Delollis, vice president of product management for FrontRange Solutions Inc., in Colorado Springs, Colo. FrontRange is the provider of GoldMine sales and marketing solutions and HEAT service and support solutions, which are aimed at small and midsize companies. "Last month [September 2001] we had our best month and quarter ever. Companies are realizing they don't want wasteful spending in the high end and they're coming home to us."

While that may not be true for all companies, it certainly was for U.K.-based print technology and services provider PrintMountain Ltd. After investing almost $150,000 in a Siebel system to manage its sales and marketing function, PrintMountain replaced that system with GoldMine 5.5 from FrontRange in June 2001. PrintMountain director, Tom Kahrl, decided that the Siebel system was not cost-effective for his company because it required consultants to make even minor changes. "We pay close attention to the changing needs of our customers over time, and we reflect those changes in our selling process," Kahrl says. "It doesn't make sense to have a system that requires someone to make changes for us."

Kahrl also realized that PrintMountain had been over-enthusiastic about including back-office information in the Siebel system. The company now uses GoldMine to manage prospects up to the moment they convert to being customers. Order and customer service information resides elsewhere. "Our view is, 'less is more,'" Kahrl says. "We want to keep it simple. There are only about 10 data elements a salesperson needs to decide how valuable a customer is, for example spend to date, annual spend, recent activity and average order value. We pass that information back to GoldMine, but we don't include specifics about each job transaction."

CRM: Up, Up and Away

Hewson admits that new CRM projects in Europe ground to a halt after the attacks on America, but he predicts this will be a short-term interruption. "Ultimately, companies' CRM investments are driven by immutable things," he says. Customer expectations are rising, and companies realize they have to enhance the way they offer access, buying opportunities and service. "Those things don't go away," Hewson says.

EGain's Pfizer agrees. "It's surprising that there is still a strong commitment to address customer service problems," he says. Pfizer says eGain had a couple of deals that failed to close following the terrorist attacks, but those customers just rolled the deals forward to the next quarter. "It's more important than ever for companies to hold onto their customers," he says.

British Airways had the opportunity to find out just how useful the RightNow Web technology was after the World Trade Center attack. For stranded customers, the company posted refund and scheduling information on its Web site, which it updated hourly, Elding says. Customers who could not get through on the phones had an additional channel for contact, which reduced stress in the call centers considerably. Usage of the British Airways Web site by travel agents increased 150 times during the period following the disaster. Customers' ability to find answers to their own questions was invaluable, Elding says. The difficult situation was in fact a great test bed for the technology. "We were assisting channel shift while offering better customer service," he says. "In this crisis situation, we would not have been able to service our customers without this technology."

In the present business environment, certain types of CRM technology are more likely to thrive than others, say analysts. Business intelligence is one example. In its white paper titled, "Business Intelligence--Now More Than Ever," Business Objects points out that a business intelligence solution can leverage existing investments in CRM applications by extracting value from the data they hold within.

For one, PeopleSoft is touting the built-in analytics capabilities of its new CRM solution. "Business intelligence has been terribly successful," Hewson says. "We'll see an increase in interest in it this year. Companies need to know who they're selling to." Giga's Ragsdale agrees. "Before [September 11], if your experience on one airline was bad, you just switched to another," he says. "Now loyalties are running deeper. It is a good time for loyalty marketing, which is done with analytics based on CRM data."

Other solutions that will be popular are remote and self-healing software, and anything that cuts down on customer service calls and allows agents to spend less time on the phone, Ragsdale says.

One example is Seattle-based PAR3 Communications, a provider of personalized, multichannel alert and response systems. "Airlines, for example, could use this technology to notify customers of flight cancellations," Ragsdale says. Sales of these products will see jumps as the travel industry desperately tries to lure back customers, he says.

Out of Harm's Way

GTS-Geotech, a London-based provider of IT support and consultancy services to the oil and gas sector, is another example of a company using CRM technology to weather stormy times. With operations on four continents, the company has just integrated Orbital Software's Organik expertise-sharing platform into its ExPert intranet--where users also have access to remote-monitoring software, a help desk system, and IT and geosciences applications. A GTS-Geotech consultant working in Shell Company offices in Nigeria, for example, can log on to the Internet and ask Organik a question. The knowledge database records previously asked questions and answers, so it can provide the consultant with an appropriate past answer, reducing the amount of time he has to spend searching through databases. In addition to sharing information internally, staff can distribute it externally to customers and partners, enhancing external relationships and boosting the reputation of staff as experts.

GTS-Geotech found that its engineers dispatched to customer locations around the world--from Abu Dhabi and Saudi Arabia to Norway and France--could become isolated without this system.

"Our customer relationships are based on trust," says Steve Kaye, a GTS-Geotech consultant. "We have to deliver someone who can do the job. Organik bolsters the trust chain. Our customers can see there is a whole web of expertise behind each engineer."
Kaye predicts that as the political situation in the countries where GTS-Geotech customers do business gets increasingly dangerous, this type of information sharing via the Internet will increase. As oil companies remove employees from insecure parts of the world, they still have to feed knowledge back into the country, which they can do via leased lines or satellite links. "Internet technologies will come to the fore again," Kaye says, "so that our customers can still get the job done in-country without endangering people needlessly."

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