Datamation content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.
People naturally expect the best from their healthcare providers. Often, however, they are forced to accept less than stellar service from their insurance companies. But thanks to the Internet, many forward-thinking providers are better at understanding and anticipating their customers’ needs.
Take Capital Blue Cross, for example. IT officials at the 2,000-employee health insurance company, based in Harrisburg, Pa., decided in January they wanted to take full advantage of the ability to reach out and touch customers more efficiently over the Web.
|
|
“If you manage [a customer’s] life cycle and provide products that meet customer needs for excellent value, they’ll stay with you,” says Ted DellaVecchia, senior vice president and chief information officer of Capital Blue Cross. “In our business, healthcare impacts people’s lives. We’re not selling toasters here. We’re tying together services people can use for a reasonable cost to keep themselves healthy.”
Before embracing the Internet, CBC strove to meet its customers’ needs using “information based on legacy/heritage systems, which were COBOL-related applications using nonrelational systems,” says DellaVecchia. “The executives responsible for customer relationships had to expend more labor to maintain those relationships than they do today.” Today, CBC manages relationships with its 1.4 million central Pennsylvania customers by offering up-to-date insurance plans and services, attracting new clients, and keeping existing customers happy–all via the Web.
An Internet-enabled customer-support portal designed and implemented by DellaVecchia’s team allows Web-savvy customer service agents to easily manipulate CBC’s online applications using simple Internet browsers. These applications are answers to customer queries prepared by CBC’s customer service organization. They are mostly information-based queries such as a claim status or the explanation of a particular benefit associated with the appropriate health plan.
|
CBC’s focus on nurturing existing and potential purchasers via Web-enabled customer relationship management (CRM) systems is hardly unique. All types and sizes of businesses are beginning to discover the importance of adding the Internet’s direct connection to the traditional mix of telephone and fax methods by which companies interact with their customers.
“The Web is becoming critical as part of an overall CRM operation,” says Howard Koenig, a corporate vice president with Automatic Data Processing (ADP) Inc., a $5 billion supplier of payroll and human resources services in Roseland, N.J. “Customers want to interact with you in different ways–telephone, voice, paper, and physically. The Web is one channel of many.” ADP employs Clarify Inc.’s eFrontOffice Web-based CRM software to customize customer interactions.
Today’s hottest enterprise application field
Businesses automate customer service operations to cut the costs of sales, boost revenue, and collect better customer data to improve support and increase selling opportunities. CRM market leader Siebel Systems Inc., as well as Clarify, Vantive Corp., and a slew of others sell software that helps companies govern marketing, service, and salesforce departments, as well as track customer sales histories and call center data.
With analysts calling CRM today’s hottest enterprise application field, enterprise resource planning (ERP) vendors such as Oracle Corp., PeopleSoft Inc., and SAP AG are targeting the market, with good reason–CRM sales are booming. AMR Research Inc., a Boston-based market-research firm forecasts that customer support license, maintenance, and service revenues will jump 58% annually, from $1.2 billion in 1997 to $11.5 billion in 2002.
|
Increasingly, enterprise customer-care solutions involve the Internet. Some 57% of 100 customer-care executives at large companies already use the Web for customer support, according to a recent survey by market researcher Yankee Group Inc. in Boston. In addition, 55% of the other companies plan to use the Web for support during the next 18 months, says Robert Mirani, CRM strategies research director with the Yankee Group.
To that end, suppliers are flooding the market with new products. In addition to Web-enabled software from Clarify, Oracle, Siebel, and Vantive, several smaller companies–including Onyx Software Corp. and startup Octane Software Inc.–offer CRM functionality through fax, telephone, e-mail, and Web-based self-service applications. The aim is to provide an integrated solution that lets companies keep track of customers through all contact points, and allow customers to enter orders, tap into account status, and request service online.
But the benefits don’t come cheap. High-end CRM software such as Siebel 99 “can cost several hundred thousand dollars for a customized, multi-user system with 100 installations,” says Barton Goldenberg, president of Information Systems Marketing Inc., a research firm in Bethesda, Md. An “enhanced contact management package” like Multiactive Software Inc.’s Maximizer can run about $17,500 for 50 users, he says.
Michael Bettua, marketing director with CRM vendor Silknet Software Inc., says the average cost for software and consulting services is about $440,000 for 35 users. Silknet’s software starts at $150,000; you then have to add $2 for consulting services for every $1 spent on software.
|
Tony Leach, executive vice president of services and operations with E.piphany, of Palo Alto, Calif., backs that up, saying its projects usually range from $250,000 to $500,000, depending on complexity.
One-to-one marketing
The payoff for many corporate enterprises, though, is worth it. The ease of Web-based CRM systems enables many more workers in organizations to get at data faster than ever. Until KPMG LLP deployed the e.4 System from E.piphany six months ago, the tax and accounting consultancy relied on 50 financial analysts to query an Oracle database using a complex decision-support tool from Business Objects SA in San Jose, Calif. Now, between 400 and 500 users are accessing the system directly. Queries include sales revenues, what services and products individual clients buy, etc.
A program manager might want to know, for example, what state and local tax products a customer has purchased, what other products that customer has bought, what other products KPMG could sell to that client or why the client won’t buy them. E.piphany’s solution lets KPMG consultants “understand what [we] do for [customers] and what they might need,” says Carey White, the former controller with KPMG, a $4 billion firm based in New York City. “That’s the essence of one-to-one marketing.”
With almost no training, a KPMG program manager directly responsible for a specific client can now access and analyze information that resides in an SQL 7 database on an NT-based Compaq Computer Corp. 5500 server. “Rather than a series of financial or data-extraction experts querying a mainframe and giving a response back to someone else,” customer managers or marketing experts have data at their fingertips within 10 seconds, says White. Although KPMG looked at another database vendor, which White declined to name, E.piphany demonstrated its ability to pre-aggregate data, which was attractive to White. Its totally Web-based architecture was also a selling point.
Integration isn’t easy
At CBC, in many cases, the Web-based interface navigates the health insurance company’s core delivery systems (via the use of thin middleware), mines the required information, and delivers it in a format that is designed for efficiency and organization. “We need to be flexible enough so that plans are designed to meet customer needs as they change in our market,” says DellaVecchia, who notes that many of CBC’s clients surf the Web often, based on traffic analysis and tracking weekly hits and queries from customers. Those hits and queries are on “a positive growth path, incredibly positive. It’s an exponential growth slope,” he says.
|
Of course, Internet-enabling CRM solutions doesn’t happen by slapping a Web interface onto a salesforce automation application. Technological challenges abound for companies integrating the Web with other business systems, including legacy and ERP applications. For instance, customers may want to track order status via the Web, which means the Web front end must obtain data from back-end manufacturing or distribution systems.
CBC has to migrate data from IBM mainframe-based VSAM flat files and CICS-based transaction repositories into a relational format in a single, consistent system. “We have vast amounts of information” on disparate systems that often define terms like “customer” differently, says DellaVecchia. “It’s a huge task.” E.piphany consultants are helping with the data cleansing and transformation, and e.4 System’s open architecture will link easily with a future Oracle financial applications implementation. “Any application we move forward with designed on Oracle will be able to use E.piphany because of its open nature,” he says.
It’s clear that supporting customers over the Web is good for business. Companies can cut costs, provide constant service worldwide, and form closer and stronger ties with customers. Organizations that don’t provide Web-based support risk losing customers to their competitors.
“To conduct relationships effectively with millions of customers, the Web is almost indispensable,” says Don Peppers, a partner with Peppers and Rogers Group, a CRM consultancy in Stamford, Conn. “There’s almost no other cost-effective way to do that.” //
Emily Kay writes about technology as a principal with Choice Communications, an editorial consulting firm in Chelmsford, Mass. She can be reached at mlek@mediaone.net.
Outsourcing CRM is a blooming business
When Punch Networks Inc. hired outsourcer Safe Harbor Corp. in April 1999 to manage its customer relationship management operations, the Web-based document-collaboration services company saved an immediate $100,000 annually.
“To hire two [full-time] support people–which we would need at a minimum to do this in-house–would cost at least $200,000 per year,” says Scott Fredrickson, sales and support VP for Seattle-based Punch. “Safe Harbor’s solution saved us at least half that cost.”
Outsourcing is a growing trend in the hot customer-support arena. All the major systems integration and consulting firms offer CRM services, analysts note. Keane Inc., for example, expects its $75 million CRM outsourcing business to grow 35% per year for the next several years, says Frank Evan, sales and marketing director with the Boston-based consulting firm’s Cleveland, Ohio, branch.
As with any type of technology outsourcing, organizations farm out CRM operations so they can focus on strategic aims. KaBloom Ltd. hired eSupportNow (eSN) LLC in Boston, for just that reason. “eSN manages the entire back end of order processing, including the call center and e-commerce,” says David Hartstein, co-founder and chief executive with KaBloom, a Boston-based chain of flower stores with five physical facilities and a new Web-based business. “They let us focus on what we do best, which is to buy and sell flowers.”
Companies also outsource CRM operations to lower costs. Punch would spend some $500,000 for hardware, software, consulting services, and a staff of Web developers, knowledge engineers, technical support analysts, and telephone support reps, says Bo Wandell, sales and marketing vice president with Safe Harbor in Satsop, Wash. Instead, Punch pays Safe Harbor a flat monthly fee of $10,000 to host and manage its technical and customer support services, based on Silknet Software Inc.’s eService application.
KaBloom has a different arrangement with its CRM outsourcer. Under a revenue-sharing relationship, eSupportNow makes money every time the flower vendor makes a sale. “We support them to deliver and sell more flowers on the Internet,” says Renan Levy, president of eSN, a 20-employee company that’s been in business since late last year. “The more orders we get, the more money they make,” echoes Hartstein.
eSN’s NetReps answer kabloom.com visitors’ questions about daily specials and appropriate floral selections. An audit trail of all NetRep chat sessions enables sales reps to tailor future product offerings and services to individual customers. eSN runs Acuity Corp.’s WebCenter 2.3 and icontact.com’s Web-based customer interaction software products on several Pentium servers operating Windows NT and Linux with an SQL Server 7.0 database.
Offloading CRM support to an external service provider is not without its challenges. For one thing, service providers don’t know the ins and outs of a company’s products and services. “You have to get the outsourcing company up to speed on your applications, but they’ll never know them as well as you do,” says Fredrickson. Safe Harbor has dedicated a person to learning Punch’s business, but Fredrickson cautions that initial and ongoing training takes time. “As our needs grow, we’ll have to continue to keep Safe Harbor up to date with what’s going on inside our company.”
It’s not for every organization, but outsourcing can be a cost-effective, efficient way to provide Web-based customer support. And outsourcing firms will do almost anything to succeed. “We’re committed to being an extension of the client,” says Levy, who occasionally fields customer’s online questions himself to keep abreast of issues. “We’re committed to learning their environment and vision and reflecting that with our Internet reps.” –E.K.
