VideoNo Room for Error
KeyBank's Maynard is all too familiar with data inconsistencies. The 2001 Gramm-Leech-Bliley Act requires all financial institutions to give customers an opportunity to refuse permission for banks to sell or share their personal data with unaffiliated third parties. At Key, says Maynard, the decision was made to send a single mailing to all customers no matter how many accounts they held. "We didn't want customers to hear from us several times," she says, "because it would appear that we didn't understand our relationship with them."
That meant combining data from almost 30 data warehouses and individual systems. Maynard's team had to comb through a total of about 200 systems to make sure the information in those data warehouses was up-to-date and complete. Ultimately, Key mailed 11 million notices, but the effort to come up with a single list highlighted so many inconsistencies that executives decided to accelerate corporatewide data-governance and data-quality initiatives.
Nowhere is the importance of CRM data quality more critical than with the Web applications that serve customers. "Real-time delivery [of information] makes data integration and quality really key on the Web," says Experian's Quill. Because customers view and use the data in real time, there is no opportunity for customer service reps or direct-mail managers to correct or interpret common glitches. As was the case with AXA's EQAccess, many Web applications simply won't work if the underlying data isn't right. That can frustrate and discourage Web customers. Worse, it can cause call-center volumes to swell with callers looking not for products or services, but for technical support.
Making sure data is good and applications are easy to use is increasingly important. "We find that customers who go to the Web tend to be our best customers," says AXA's Susan Brown-Reitz, vice president of service delivery. "Their account balances tend to be 5 to 10 times higher than average."
Getting It Right
When done correctly, CRM can be an enormous boon to a company's finances. At Cincinnati Bell, the wholly owned subsidiary of diversified telecommunications provider Broadwing Communications, any service order entry for any product immediately populates all of the company's data warehouses. That's even true of the company's Web site. "Customers can go out to the Web and order a service, and that can get provisioned to the switch without any human intervention," says CFO Kevin Mooney.
Three years ago, notes Mooney, the goal of the Residential Service Center at Cincinnati Bell was to answer customer calls with the shortest possible hold time. Today, armed with companywide data, the task of the rechristened Residential Sales Center is to sell products from Broadwing's array of businesses, including local service, long distance, wireless, Internet access, directory advertising, ADSL, and home security services. "About 9 percent of our new wireless customers are people who called us for something else," says Mooney.
That's not just new revenue for the wireless business, he notes; it's a reduction to SG&A. Acquiring a wireless customer is a pricey proposition that averages about $350 per customer. Half of that is the subsidy for the mobile phone itself, but the other half is a commission to outside sales agents — which Broadwing doesn't have to pay if the customer calls them. "If I can halve the acquisition costs, I [will] have a customer who is much more profitable much more quickly," explains Mooney.
CRM, Mooney adds, is an evolutionary process. "Most people overscope the effort to begin with," he says. "They want to create a grand architecture and design that is going to change the world. That is very challenging, and I have never seen one succeed." In fact, when Broadwing acquired IXC Communications to create its national fiber-optic business in 1999, that company had just such a project under way. "We balled that up and scrapped it on day one," says Mooney.
Tim Reason is a contributing editor at eCFO.
Customer Dissatisfaction: You Can't Always Get What You Want
Are satisfied customers worth the trouble? "There was no correlation between how satisfied customers said they were and their economic threshold for switching providers," says Paul Bascobert, senior vice president at Chicago-based Braun Consulting, who studied the cable TV industry to try to put a dollar value on customer satisfaction. Highly satisfied customers would still switch for a 2 percent discount, while even big savings wouldn't budge some disgruntled customers.
Not only is happiness no indicator of fidelity, he notes, "there are some customers you just don't want to be happy — they are credit risks, they tie up your call centers, they abuse your services." Indeed, in a time when companies are reducing inventory, trimming expenses, and cutting head count, maybe it is time to think about getting rid of certain customers. Telecommunications companies were among the first to learn this, says Mike Schroeck of PricewaterhouseCoopers's iAnalytics practice.
"The numbers were shocking — some telcos had a 70 percent annual churn rate," says Schroeck. The companies studied customers with a propensity to switch providers, he says, "and they realized that maybe if some of them left, it wouldn't be the worst thing in the world."
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