Rules Tools Automate Tricky Product Configurations

Until 1920 a socket wrench was a socket wrench. In that fateful year, however, Snap-On Inc. of Kenosha, Wis., invented the interchangeable socket wrench and suddenly a simple sale became a complex one.

Why? Buying a book, for example, is simple: You don't choose the jacket cover or the type size; you pick what you want to read. The publisher determines what it looks like. And so it was with the socket wrench until Snap-On designed a socket wrench that comes in different sizes, with a handle that can be long or short and finished in chrome or black. Adding such options to the buying process makes the sale more complicated.

Good salespeople can handle this challenge. If a customer lists five attributes, the salesperson can root out which variables are most important, find substitutes and add-ons and come up with a solution close enough to the customer's original needs to result in a sale.

E-commerce sites often lack this ability to guide customers to an appropriate alternative. For example, if someone had searched the beta version of Snap-On's online catalog for a three-eighths-inch socket with a long handle and an industrial finish, the commerce engine would have reported back "not available." Only an experienced salesperson would know that a handle extension add-on to the short three-eighths-inch socket would do the trick.

"Most shopping baskets are not well-integrated with back-end systems," says Chris Selland, the Yankee Group's vice president for CRM in Boston. "There's a growing need for more front-end intelligence in the system when you've got more complex products and services being sold, not just books and CDs."

To provide a satisfactory experience for customers, Snap-On Tools realized that the degree of intelligence in its e-commerce application had to match the complexity of its products. Among 15,000 different products, customers could easily get lost and never find what they needed. For help, Snap-On turned to OnLink of Redwood City, Calif. Its configuration product OnLink Sales helps companies to build self-service e-commerce applications with built-in business intelligence.

"It's easy to create an application that just says 'not available' to a specific request," says Brad Lewis, the e-commerce manager for Snap-On. But it's harder to build an application that knows, he adds, "if a customer wants to buy a vehicle lift, pad adapters need to accompany it. Configuration is important not just for the customer, but for e-commerce. It's more than search--it's about speed and usage."

Rules to live by
Salespeople live and die by the knowledge they acquire about customers, products and competitors, but online transactions often lack this kind of experience. Configuration technology compensates by codifying and embedding in logic best practices and other kinds of business rules that an application can tap at run time. These rules can include what questions to ask a customer, when to cross-sell and how to price a product for a particular customer. Based on them, the seller can build to order complex products such as cars, computer networks or insurance portfolios.

There are almost as many ways to incorporate business logic into a rules-driven application as there are policies in a corporate handbook. But the core technology that's likely to be used comes from artificial intelligence research, which developed rules as complex algorithms. Selling may not be rocket science, but rules-driven applications can be very sophisticated.

Recently the trend has been toward simplifying technology so a person with product knowledge can implement and maintain the rules, and now these capabilities have become available in packaged applications. "Seven years ago, people didn't know what configuration tools were," says Steve Waters, vice president of marketing for Firepond, a configuration tools vendor in Waltham, Mass. Now small companies are adopting the technology.

Firepond and OnLink are two of five privately held vendors of customer relationship management (CRM) software that specialize in the growing market of configuration tools for e-commerce applications such as exchanges, auctions and online storefronts. For information on all five, see the table on the previous page.

A seller's market
Today, although all the major CRM vendors include configuration capabilities in their product suites, it's not clear how big the market is for such tools. The Yankee Group predicts that Internet selling tools as a category will reach $2 billion in sales by 2003, but it hasn't broken out the configuration segment. A rash of mergers and acquisitions in this space over the past year and a half give an indication of increasing interest in the segment.

Snap-On's Lewis says he chose OnLink because of its technical approach to solving the configuration problem. OnLink Sales pushes all necessary information into the browser, making it unnecessary to add hardware or make changes to back-end systems. Three people on his team maintain the model that dictates how best to interact with the customer.

Configuration technology can improve any potential buyer's understanding of a product. These applications extend beyond product knowledge in guiding customers to other options. According to Jim Rudden, director of product management for Trilogy Software in Austin, Texas, handling the "fuzzy" part of the initial needs analysis is a key to making the sale. "Configuration rules help the user avoid certain choices" or pathways, he says, that wouldn't lead the person through typical ways of shopping for an item.

Trilogy has clients in the automotive industry, where brand managers dominate the selling process. They spend a great deal of time segmenting customers into groups that are attracted to a particular model or brand. To determine how a person chooses a particular make or model, a rules engine must first present a series of questions about family, hobbies and location. The rules engine must incorporate branching logic that allows it to respond appropriately to a customer's individual needs. For example, someone looking for a family car typically wouldn't want only two doors. However, a buyer for whom price is the main consideration might prefer the generally cheaper two-door model. A good salesperson can make this distinction; Trilogy mirrors this capability by scoring the buyer's choices among configuration options.

Opportunities and complications
The goal of Snap-On's configuration technology is to close the sale. In some other industries, the technology is being used to provide research and assessment capabilities that may eventually lead to a final sale.

For example, of Sewickley, Pa., helps small and midsize businesses to design retirement plans. Once a user has designed a plan that suits him, the application can place the order or trigger a call from a salesperson. Customers are able to specify the level of hand-holding they want, which can increase their sense of satisfaction in dealing with the company.

Configuration applications can be used to support other activities that are part of the sales process, from support to customer self-service. Sunrise Medical Inc. in Longmont, Colo., sells medical equipment, such as wheelchairs, to 25,000 dealers, who call customer service representatives to order products. Sunrise uses the Calico system to inform its customer service reps about several hundred possible wheelchair combinations. Before the configuration tool was installed, they might not know that a specific configuration was impossible to build until manufacturing looked at the order and reported back. Now the customer representative can know immediately.

Configuration can be a powerful tool, but it's neither inexpensive nor easy to maintain. Analysts estimate six months to develop and deploy it, while vendors claim that the initial configuration development can be done in 45 days to three months. It's realistic to expect to hire consultants; defining how best to sell is not a simple task. The final bill will be at least five times that of the original software purchase. There can also be internal complications. Eric Schmitt, an analyst at

Forrester Research in Cambridge, Mass., reports that customers he's talked with don't have trouble writing the rules; "it's the maintenance that's difficult," he says. But when the marketing department sets certain rules and engineering sets others, deciding who has the final say becomes critical. "The processes and strategies required to implement these solutions take time to hash out," Schmitt warns.

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