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Accenture

Because many companies have mastered the CRM basics, they are now focused on deliveringmore consistent customer experiences across all interaction channels.

While many businesses recently had to make cost containment a priority, many also continued spending a considerable amount on developing customer relationships – often, to protect the value of the existing customer base at a time when growth opportunities were limited or risky. Interestingly, despite the high failure rates widely reported, even quite recently, many CRM investments have, over time, created genuine value – in particular, by streamlining customer-facing business processes and helping organizations operate more cost-effectively.

In fact, organizations are increasingly adept at implementing CRM projects and report higher rates of on-time, on-budget and in-scope implementations. Yet there’s still work to be done. Most recent CRM programs focused on “point” solutions – automating sales functions, for example, or implementing an advanced database marketing capability, and consequently produce equally narrow benefits.

With a brighter economy causing more companies to refocus, from cost containment to revenue generation, many will soon encounter the limits of their current customer strategies and operational capabilities. As Figure 1 illustrates, reaching a higher level of value creation will require mastering an even steeper learning curve than the one most companies traversed to reach their current level of CRM competence.

To continue their journey toward becoming truly customer centric, many organizations will now need to break through a broad array of challenges – strategic and operational. For example:

• Customer segmentation and analysis are often overly simplistic. Recent budget cuts and workforce reductions, however, prevent a more granular and insightful approach;
• New electronic channels have provided less costly options for customer interaction. They have also helped fragment messages – and even the brand itself – across multiple channels owned by different departments or business units;
• Organizational barriers often prevent better alignment around a central customer strategy and operating model. The executive who owns the customer loyalty program, for example, does not always own the customer channels; and
• For now, CRM is still a multivendor game. Creating a crossenterprise solution to these issues typically requires extensive integration efforts and custom-built functionality, at a hefty price.

In short, CRM has matured considerably, but a piecemeal approach to developing the customer franchise still prevents many from fully – and cost-effectively – realizing their strategic objectives: increased loyalty, enhanced revenue and expanded share.

Some organizations are also seeking ways to turn existing CRM capabilities into competitive differentiators that will spur growth – no simple task. It will require a deep knowledge of current customer needs and preferences and the ability to predict future customer behavior. More challenging still, it will require unifying sales, marketing and service capabilities around a central customer strategy and possibly acquiring more advanced capabilities in these areas.

Operationally, the challenges are also stiff. A growth agenda means launching new products and services quickly and boosting workforce effectiveness and productivity. It depends on a single, integrated customer data source, readily accessed by decision makers throughout the organization. It requires infusing sales and services practices with customer insight.

It may also require exploring alternative operating models, such as outsourcing or on-demand computing. While economic prospects seem brighter now, don’t expect companies to revert to the days of unchecked IT spending. Managers will remain pressured to contain the cost of technology ownership and minimize the duration and complexity of new CRM initiatives – even while scaling capabilities to meet new enterprise requirements.

In fact, given the range of strategic and operational challenges, the time, cost and sheer effort may well be too much for most organizations.

Reinvigorating CRM

We believe the key to meeting these challenges lies in designing and then operationalizing – efficiently and affordably – “insight-driven” customer interactions that narrow the gap between a company’s brand promise and what customers actually experience. This branded customer experience, differentiated by customer segment and consistent across touch points, aligns real interactions with desired outcomes to generate sustainable, mutual value.

We are able to illustrate this approach through a new solution, Customer Value Accelerator. Customer Value Accelerator combines Accenture CRM expertise and the advantages of the Microsoft .NET platform to form an integrated solution founded on reusable, proven components. This “pre-integrated” approach to innovation accelerates an organization’s mastery of customer relationships for growth, and does so quickly, cost-effectively and with consistent results.

Organizations that have adopted elements of this joint solution are experiencing significant boosts in revenue, lower customer service costs, and faster development and deployment of advanced CRM capabilities.

Creating The Insight-Driven Customer Experience

Creating the insight-driven customer experience includes:

• Defining a well-targeted customer strategy;
• Articulating the appropriate brand experience for each target; and
• Delivering the desired experience through each interaction.

In other words: rigorous analysis coupled with pragmatic implementation. Together, these activities create value by forging the links between brand, customer experience and market impact.

Defining A Differentiated Customer Strategy

Many organizations believe they understand what customers want, but suspect they could do more to differentiate their offering. They also recognize a need for better planning, execution and measurement of cross-channel programs. Often, what they lack is a truly insightful view of their customers and prospects – for example, one based on customer attitudes and behaviors rather than simple demographic segmentation. The more granular, in-depth and data-rich the analysis, the more effective a company is at identifying not only the “right” customers but also the right messages to deliver and the right time to deliver them.

Articulating The Desired Brand Experience For Each Target Segment

The next step is identifying the right experience to provide each customer segment, based on the brand qualities to be stressed in order to trigger the desired customer responses. So, for example, a company might define a different experience for a high-value, big-spending customer emailing a billing question than for a low-value, infrequent customer calling to check an order status. This step essentially produces an experience blueprint that supports the company’s overall customer and brand strategy through a very granular customer analysis.

Delivering The Branded Customer Experience Through Each Interaction

Once customer experiences are defined, a company will want to ensure these experiences are delivered consistently, accurately and efficiently across marketing, sales and service interactions. This involves translating the blueprint into interaction rules, which may be stored in a special database or workbench. Each time a customer interacts with the company, a rules “optimizer” identifies the customer’s segment, intention and current interaction channel. The optimizer retrieves the appropriate rules for handling this interaction and creates the desired experience. For example, a live agent contacts the customer directly and, following a script sent automatically to her computer screen, offers a new service option targeted to the customer’s segment.

In exploring the most effective way to achieve these outcomes, we have developed an extensive collection of innovative methods and tools – including one we call the Customer Experience Blueprint: pre-built data models for customer segmentation, treatment and execution. A related innovation, the Customer Experience Workbench, provides a dashboard capability that enables more profitable operational decisions about customer treatment, by projecting the economic impact of different customer experiences.

These resources helped one client – a high-tech company widely recognized for selling effectiveness service quality – design and deliver customer experiences based on a fairly complex segmentation strategy. The company had segmented the customer base according to its strategic imperatives, such as “drive retention” and “grow revenue.” Using our Customer Experience Blueprint and Workbench, we were able to help the company define and evaluate a wide range of treatment options and actions with great detail and precision – including service levels, marketing offers, business policies and so forth – and then select the treatment protocol most appropriate to its objectives for each segment.

What’s differed in our approach was not the use of rules, which are already widely used to create specific customer interactions. Instead, rather than applying the typical method of creating redundant rules for each interaction channel, this approach created one set of rules enabled by a rules optimizer engine that governs the actions across all channels, as illustrated in Figure 2.

This model has three significant advantages. First, it’s far more efficient to create only one rules database. Second, when a change must be made to a specific rule across all interaction channels, it need only be made once. Third, one rules database ensures consistency of customer experience across all channels. So, for example, a high-value customer is recognized as one whether he calls a live agent or contacts the company online.

Another key differentiator is the use of Microsoft .NET as the platform for developing and deploying these advanced capabilities – not just the rules database and optimizer, but also the interaction channel platforms (contact centers, points of sale, portals, etc.). The .NET environment offers major advantages, enabling companies to achieve a quick, comparatively simple integration of new and existing CRM solutions. Its cost advantages, in particular, are considerable. Development costs are much lower because it supports standard business languages and device-independent presentation tier logic. Runtime costs are also lower, since commodity hardware platforms, one-fifth the cost of UNIX counterparts, can be used. Further, .NET offers greater scalability, supporting up to 10 times the number of clients supported by other platforms.

Companies Are Enjoying Significant Benefits

The approach described above – our Customer Value Accelerator model – offers myriad operational and financial benefits by improving how companies create and use customer intelligence, manage customer contact and, ultimately, manage the customer experience. The most obvious beneficiaries are business-to-consumer companies, yet business-to-business and even B2B2C organizations stand to benefit.

In our experience, companies have been able to cut customer churn as much as 20 percent, increase average revenue per customer up to 10 percent and realize up to a 30 percent boost in customer acquisition effectiveness. We’ve also seen organizations slash campaign cycles in half and reduce customer service costs as much as 35 percent.

Besides generating significant benefits on the customer side, this approach helps companies dramatically reduce the cost, time, complexity and risk of CRM through the use of the .NET platform. In fact, companies can expect up to a 50 percent reduction in capital expenditure, a 20 percent reduction in development effort and up to 10 percent reduction in operation and maintenance costs.

To help illustrate the impact, consider the case of a leading retail bank in the US that used the methods and capabilities described in this article. This company wanted to boost revenue by cross-selling brokerage products to existing customers, but its traditional marketing approaches were falling short of its aggressive goals.

Using pre-built software, designware and other packaged innovations for creating and capitalizing on customer intelligence, we helped this company create an integrated view of their customers, conduct sophisticated behavioral segmentation and predictive modeling and launch numerous multichannel campaigns – within six weeks of the project start.

As a direct result of this pilot project, the bank executed 15 campaigns in just four months and opened more than 2,000 new brokerage accounts. Its outbound marketing campaign outperformed its own benchmark for conversion rates by a factor of 60, and its email campaign produced a 150 percent improvement in conversion rate.

Another project, conducted with a US telecommunications company, also helps illustrate the potential impact of insight-driven interactions. This company, which serves more than 20 million customers through more than 5,000 call center representatives, faced steep performance challenges, resulting from the need for these representatives to navigate as many as 24 separate desktop applications during their customer interactions.

Not surprisingly, this swivel-chair environment was extremely counterproductive; it forced agents to rekey customer data, increased agent time to competency and contributed to high call center turnover. However, neither replacing these legacy systems with a third-party solution nor creating a unified Web-service layer was economically feasible.

By implementing another preconfigured capability, our Contact Center Framework, we were able to reduce repetitive typing, sign-on delays and inefficiencies, as well as improve training and retention. As a result of this project, the company reduced average call handling time by 20 percent; increased call to revenue by 24 percent and raised newhire retention to nearly 100 percent.

Conclusion

With a growth focus on most companies’ horizons, the need to reinvigorate customer management capabilities becomes ever more intense. Yet, as we’ve illustrated, the challenges facing organizations as they take steps toward a greater customer orientation are equally intense. Indeed, the CRM difficulty curve stands to get much steeper since companies generally have mastered the CRM basics and now are embracing an emphasis on delivering more consistent customer experiences across all interaction channels.

To succeed in this next phase of CRM, companies need a new approach, such as the one pioneered by Accenture and Microsoft, that can help them deliver, in a more modular, timely and cost-effective manner, the kind of differentiated branded customer experience that drives growth and increased profitability.