Reality Online: Key to the CRM Agenda
Reality Online: Key to the CRM Agenda
Technology always has been a critical element of customer relationship management. The advent and widespread use in the 1990s of tools such as sales force automation software, data warehouses, and of course, the Internet, enabled companies to fundamentally change — and improve — the way they conducted their marketing, sales, and customer service activities. E-commerce has not only cut the cost of customer contact dramatically, but it has helped companies greatly enhance the customer experience. However, challenges still remain as customer satisfaction also relies on aspects that are firmly rooted in the physical world, such as getting customers the quality of the goods they expect, when they expect them — and this was often beyond the scope of e-commerce.
A new wave of technology innovation promises to help transform CRM yet again. Reality Online — Accenture's vision of how technology is going to impact business in the future — will be instrumental in enabling companies to further enhance their ability to build and maintain lasting, profitable customer relationships. New technologies applied innovatively are about to broaden the scope of traditional e-commerce to include more of "reality" and to further synchronize the virtual and physical worlds. The reason is that a number of trends are converging that will take the connection of people and even smart objects to the next level and, literally, bring reality online.
In addition to serving as an enabler of the next wave of CRM, technology also will be one of the drivers of new CRM initiatives. As technology developments result in the continual reduction of cycle time in critical business processes, particularly, product development, marketing demand forecasting, and fulfillment, companies will have to develop new capabilities to help them meet the demands of a real-time economy.
In short, we see Reality Online as a key component of the next-generation CRM initiatives that companies undertake in their neverending quest to increase customer value, deliver better service, and enrich their brands.
The New Focus of CRM
As they look to the future, companies find themselves grappling with two distinct CRM challenges. The first involves determining how to build on their past CRM activities to accommodate a continual raising of the standard of excellence in dealing with customers. To be sure, previous CRM programs — which first emphasized improving customer service and sales, and later, integrating the myriad customer interaction channels — resulted in many benefits for companies: reduced customer contact center costs, greater sales force efficiency, and more convenient customer interactions, to name just a few. However, today's customers don't sit still. They are more sophisticated and demanding than ever before, and their expectations continue to rise at an increasing rate. It's become much more difficult for companies to know not only who their potential customers are and how to best attract them, but also to understand the needs and behaviors of their existing customers to keep those customers in the fold. As a result, simply continuing to perfect their current activities is no longer sufficient for companies to maintain parity within their industries, let alone stake out a leadership position.
The second challenge companies face involves return on investment. In the past five to 10 years, many companies invested considerable resources in building CRM capabilities, but too many seemed to approach CRM without fully understanding how the CRM capabilities they were building would generate value for the organization and enhance the value of the customer relationship. Now, these same companies have found that their costs to attract and retain customers continue to rise because they are not fully leveraging the CRM capabilities and infrastructure theyve built.
It's time for companies that are serious about positioning themselves for profitable growth to adopt a new CRM focus, one that's characterized by three guiding principles:
- Customer experience is essential to creating brand value. Brand strength and brand value are the sum total of experiences that customers have with the company and all its products and services.
- Customer insight should inform and drive customer treatment. CRM initiatives going forward must enable companies to develop deeper insights into who their customers (and prospective customers) are and what they want and to use those insights to create, promote, and deliver more relevant products and services (and, in the process, create more positive and compelling customer experiences).
- CRM programs should be executed in a pragmatic way that mitigates financial and delivery risk. As they pursue future CRM efforts, companies must be pragmatic, learning how to acquire the new capabilities they need with minimal upfront investment; reduce financial risk by reducing operating expenses; and improve both the predictability of costs and increase the variability of fixed costs.
Reality Online: A Critical Enabler
Just as information technology made possible previous CRM efforts, technology will be a critical enabler in this next wave of CRM. Accenture envisions a world in which objects can sense, reason, communicate and act; in which every physical entity or event has a corresponding "virtual double"; and in which the time between stimulus and response approaches zero. In this world, privacy and business insight will be bought and sold in a market that rewards those who effectively harness the real-time economy.
The link between Reality Online and CRM is very strong. In fact, we believe that Reality Online is intimately tied to the three guiding principles to which future CRM initiatives will adhere. New developments in technologies such as sensors and actuators, radio frequency identification (RFID), wireless communications — coupled with the emerging standards for application-to-application communication via the Web — will make it possible for companies to develop deeper insights into their customers than ever before (and, thus, create more positive customer interactions and compelling customer experiences); reduce the time and cost associated with many customer-related activities; and make decisions related to customer treatment based on truly real-time data.
Deeper Insights
As customers become ever more mobile, demanding, diverse, and informed, companies will have to be far more adept at getting to know their customers and treating them in ways that are relevant and appropriate. To that end, Reality Online will enable companies to generate, collect, and analyze more and richer types of data than ever before, such as:
- Personal data, which will include information, such as contact preferences, calendar of commitments, addresses, shirt size, and health status.
- Real-time business process data, which will enable companies to see which products are being bought in real time, and permit them to arrange for manufacturing and logistics to match without having to wait for a weekly or monthly rollup and summary.
- Physical data gathered about physical assets due to the proliferation of sensors that will enable companies to monitor the operation of its products, the condition of the products, and how customers use and interact with them on a continual basis.
Using the deeper insights that are drawn from this data, companies will then be able to craft more positive, compelling experiences and highly personalized interactions for each customer. A simple example: When a customer permits trusted parties to access his personal data, he ultimately will be able to more effectively manage his health, wear better-fitting clothes, have deliveries made to where he is instead of to an empty home, and receive only those commercial offers in which he has a current interest.
Sensors that continuously monitor and record temperatures could be embedded in products, such as frozen food, that must never rise above a certain temperature between processing and display in the grocer's freezer. At a glance, consumers can know whether that nice-looking filet of sole thawed while sitting on the dock at the distribution center or remained frozen for the duration of its trip. Customers peace of mind that they are getting safe food is a valuable byproduct of such a shopping experience and will help reinforce the grocer's brand as a store that customers can trust.
In many automobiles, sensors are already in place to monitor things such as speed, location, throttle position, and state of the engine. Similarly, sensors that enable "continuous reporting of state" could be embedded in major appliances such as washing machines, clothes dryers, and dishwashers to monitor and report how the item is functioning and the condition of key parts. They could help the manufacturer understand how the products are operating and step in with preemptive maintenance before the product breaks down, thus saving customers time spent without the product and potentially greater repair costs. Furthermore, by understanding how the customers are using those products, the companies could offer complementary products or services that more closely meet customers needs. If, say, a washing machine tells the manufacturer that its users consistently wash muddy clothes, the manufacturer might deduce that the owners are sports enthusiasts who could use a detergent specially formulated to eliminate dirt and grass stains (not to mention a whole host of other products geared toward the sporting lifestyle).
Companies will be able to bolster their insight-generating capabilities significantly through the virtual double. Just as we are all used to a printer icon on a PC network being a virtual double of the printer that enables us to share the printer and information about it and manage print jobs, we believe that we will see an online representation or virtual double of almost every event or item that can be shared easily with and accessed by selected parties anywhere.
A computer manufacturer could capitalize on this concept to significantly improve the effectiveness of its customer service function by creating a virtual double of each computer before it leaves the manufacturing floor. If each component were tagged and had all the relevant component specifications (such as part and model numbers), a shop worker simply would have to scan the finished product to capture the information that would then be accessible via a unique URL that is "owned" by the customer. If a customer needed technical assistance, he could give a technician access to the URL. The technician would be able to access the virtual double and understand the exact nature and configuration of the customer's PC — improving his ability to diagnose and fix problems correctly and reducing or eliminating the time the customer would have to spend on the phone trying to describe the problem to the technician. As the customer adds peripheral components (a scanner or new software), these components simply would be added to the virtual double as well as to the physical product, thus keeping an up-to-date replica online. Therefore, subsets of information (or parts of the virtual double) can be made available to relevant parties by the customer, according to the value-added services the third party will offer.
One example of how creating a virtual double of a consumer's sensory preferences can transform online retailing is the Accenture Scent Insight prototype developed by researchers at Accenture Technology Labs. It uses sensors to analyze the components of an odor to gain insight into preferences and, therefore, make accurate recommendations of other items. By adopting Scent Insight, a company could understand which compositions a customer prefers (for example, in a perfume or wine) and then accurately predict which new or existing products the customer might have an affinity for based on the similarity of the products compositions. This type of recommendation through insight differs from most current Web recommendation systems that are based on buying patterns. It would improve targeted marketing and the chances of new-product acceptance among targeted audiences, and it would contribute to the building of brand loyalty among customers who feel that the company consistently meets their needs.
Importantly, Reality Online will enable critical contextual data to be captured as a byproduct of customer interactions or by being able to access information about customer behavior in real time. This is a marked difference from most attempts made thus far to collect contextual data, which required serious effort by either the company's employees (such as customer service representatives who must fill out a comprehensive report on each service call) or customers (who are asked to slog through a huge questionnaire on preferences, needs and demographics). Not only have such efforts been seen as a burden by the parties involved, they understandably resulted in much less complete and accurate data and, subsequently, insights of questionable quality.
One of the challenges companies face is dealing with customers is the lag between gathering data and acting on that information. |
User-centric services (for example, Microsoft's .NET My Services and Liberty Alliance) will be the prime method of collecting and aggregating consumers profile and preference data. These services will standardize application interfaces (through Web services) to personal data, providing permission-based access to new customer data. A user's context, such as his online presence, location, history, and intentions, will be made available via a Web services interface. This interface will allow the user to control which service providers get access to certain elements of his identity for specific purposes. Accenture Technology Labs is already breathing life into this concept through the Accenture Dynamic Delivery prototype, based on the Microsoft .NET My Services platform. It demonstrates how shipping companies will be able to migrate from an address-centric delivery system to a customer-centric one using the customer's .NET profile to locate the person in real time, receive instructions or validation via the customer's preferred channel (including electronic signature or thumbprint), or if required, reroute the package to another address.
Lower Costs
Reality Online also will offer numerous opportunities for businesses to dramatically reduce the cost of their customer-related activities — especially customer service — while improving its quality.
Sensor technology is advancing at such a rate that, in a few years, we expect to have operational "smart dust" that could be scattered in water supplies or across fields to monitor the acidity or various chemical conditions without having to dispatch teams to the field to take multiple soil or water samples and return to the lab for testing. Sensors or actuators could be embedded into equipment, such as airplane turbines or the materials themselves, to continuously monitor for problems and eliminate the need to disassemble the equipment for visual inspection. In both cases, the amount of time saved by the company is tremendous, and customers are assured of a safer product.
Automobile manufacturers could reap the cost savings of Reality Online. The sensors that monitor automobile systems, discussed earlier, currently are most useful to technicians diagnosing a problem after there's been a breakdown. By downloading the information recorded by the car at the time of trouble, the technician can better understand the conditions that are causing the problem. If those same sensors were teamed with communications technologies to continuously transmit information to the factory on how the car is operating, the manufacturer would be able to monitor potential problems — for example, a rapidly decaying catalytic converter — and change the design immediately to stop producing what would eventually turn out to be warranty liabilities. The costs saved in such a scenario could be quite significant, and the R&D team at Accenture Technology Labs is working on how such new technology developments will impact the telematics of the future.
As hinted at earlier, the virtual double also has the potential to significantly reduce the costs of customer-related activities. It would most certainly eliminate the need for many of the costly onsite service calls now being made by technicians for many types of products. Furthermore, it would reduce the time that representatives would have to spend on the phone with customers querying and answering questions, which would enable the company to provide excellent service with fewer people. And the virtual double would help companies boost the effectiveness and efficiency of their marketing campaigns by reducing the need for mass marketing. The contextual data generated by the virtual double could be used to create campaigns for individuals with offers that are highly tailored to their specific needs — for example, services based on how a customer uses an existing product, or products that would be complementary to the existing product — so companies would significantly reduce the use of a one-size-fits-all marketing push that would more than likely hit only a small percentage of potential customers and result in an even smaller percentage of customers who accept the offer.
Real-Time Decisions
One of the challenges companies face in dealing with customers is the lag between gathering data and acting on that information. Typically, fact-based decision-making is a long, tedious, and often inaccurate process. Managers spend considerable time identifying data generated in the past, gathering it and analyzing it in the present, and using the results of the analysis to make decisions that will influence the future. Such an approach is no longer tenable in a world in which customer tastes and trends come and go with alarming frequency, and a hot product can be rendered obsolete in a matter of weeks.
But what if a company could know instantly what customers around the world thought of a new product the day of its launch, or catch on to the waning of a trend weeks or months before competitors? Such information surely would be a huge competitive advantage. But how to get it? One way would be to monitor the plethora of channels on the Internet via which groups and individuals exchange unfiltered opinions on issues, products and companies. An application from Accenture Technology Labs called Sentiment Monitoring Services does just that. This prototype searches newsgroups or Web sites for opinions and, using advanced language technologies, interprets the sentiment of the text toward a specified product or service and provides an analysis of the results. The result is an instant gauge of market perception of any feature, product, brand, or company, which can help a company correct a flaw in a particular product early in its lifecycle or recognize a latent lifestyle trend and be the first to market with a service that capitalizes on that trend.
Optmization will be possible because serving "markets of one" becomes eminently more practical and achievable as companies gain a deeper understanding of the needs of individuals. |
Applications such as Accenture Sentiment Monitoring Services demonstrate how Reality Online will enable companies to adopt true real-time decision-making and, in the process, both synchronize and optimize many customer-related activities.
Synchronization could be achieved because companies will be much better at linking, in real time, business activities with events that respond to those business activities. For example, the typical customer of car insurance pays a rate that represents the average risk of all drivers in his demographic and behavioral group. But for most people, the rate paid rarely reflects the actual risk incurred; the safest drivers are always penalized by the more reckless. With Reality Online, however, insurance companies could create better pricing models for car insurance that charge customers only for the risk being incurred at any particular moment rather than for a larger average. A car can communicate its position and who is driving it directly to the insurance company. When the car is parked in the garage, the base rate would be charged because little risk is being incurred. When the car's owner lends the vehicle to his 19-year-old son, who drives it to the latest hot nightclub in town, the insurance premium rises commensurately. By linking cause and effect in this way, the insurance company would delight those customers who don't represent a high risk and, at the same time, ensure that it was covering itself appropriately for the risk incurred.
Optimization will be possible because serving "markets of one" becomes eminently more practical and achievable as companies gain a deeper understanding of the needs of individuals. For instance, a company that supplies feed or medical products to ranchers could, using sensors, track and monitor individual cows in a herd and tailor its products or services to each animal based on individual medical or nutritional needs (instead of feeding them all in the same way). Similarly, a provider of pesticides or agricultural products could embed "smart dust" in a customer's fields and monitor the conditions and needs of individual segments of the field and treat each accordingly. In both cases, the yield of the entire farm goes up, which satisfies the ranchers and farmers, and higher-quality meat and produce are ultimately produced, which benefits consumers.
With Reality Online, companies will have the data they need, available and accessible in real time. This will enable them to always know what's happening with their customers and suppliers, and to make suitable decisions based on current conditions, not past transactions.
Conclusion
The examples presented of how Reality Online could influence a company's operations only scratch the surface of what's possible because as technological advances continue, many more applications certainly will emerge. But one thing is clear now, and that's the fact that Reality Online has tremendous potential to make the next-generation CRM initiatives more effective and more profitable than any previous efforts. In part, this is thanks to Reality Online taking e-commerce to the next level to fulfill more of its promises.
Changes will be necessary. While the technology infrastructure of most companies is sufficient to support today's customer insight applications, new capabilities will be needed — particularly those that enable companies to capture, store, and analyze ever greater amounts of data, and those that provide the means for sharing data and insights (internally as well as with customers and suppliers).
By adopting these capabilities and by making the Reality Online vision part of their future CRM strategies, companies will be much better positioned to keep up with their demanding customers, outpace their competitors, and grow profitably in the years to come.
