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Lessons in CRM: when it comes to caring for customers, telecom firms need to wise up. Here’s a primer of best practices, complied from a roster of CRM experts

Lessons in CRM: when it comes to caring for customers, telecom firms need to wise up. Here’s a primer of best practices, complied from a roster of CRM experts – Telecom Corporate

Shira Levine

September means back to school–and telecom service providers could take some refresher courses as well. The summer of 2002 marked an unprecedented loss of consumer confidence in the telecom industry, as stocks plummeted and the inner workings of companies such as WorldCom and Qwest were put under the microscope. Meanwhile, despite the CLEC crash, incumbent telcos continue to face a competitive threat in many of their markets, long-distance carriers are waging a war against wireless substitution as mobile operators grapple with high churn rates and saturated markets. There’s never been a better time to learn more about customer relationship management (CRM).

Most CRM vendors agree that telecom service providers have a lot to learn. “Most telecom companies have perceived themselves as being good at doing CRM, and frankly, in most cases, I find that they have a very insular view,” says Steve Home, president and CEO of consultancy Analytici. “They do not understand what CRM is–they think of it as a technology solution, not as a change in business processes. The reality is that telecom companies need to fundamentally change the way they do business in order to become business-focused.”

Granted, telecom carriers have challenges that other industries haven’t had to face. For one thing, they have huge volumes of customers, meaning that any systems they put in place need to be large-scale.

Additionally, Raghav Sahgal, managing director for CSG Systems Asia Pacific, says every service provider will soon have to make those CRM upgrades as mass adoption of new services like Multimedia Messaging Services (MMS) and mobile commerce are just around the corner. “Service providers who want to offer these new mobile services must either supplement or replace their legacy billing platform. So, while billing systems are improved to collect revenue for these new services–the information collected on the back end becomes much richer, much more knowledgeable in terms of who the customer is, what services they use and what services they are likely to buy in the future.”

But Jeff Maling, vice president of strategic accounts for consulting firm Roundarch, has a drill-sergeant approach to telecom CRM. “To me, the telecom industry doesn’t have any excuses,” Maling says, “Other industries have faced some of the same issues and have overcome them effectively. Telecom has just been too focused on other issues, such as domination and consolidation, and now survival, to really get CRM right. Ultimately, this industry needs to decide whether or not they care about customers.”

Once carriers do indeed decide to focus on CRM, they have one significant advantage–they can learn from the successes and mistakes of other industries. Granted, sectors such as manufacturing, hospitality and banking have many fundamental differences from telecom, but ultimately, it boils down to one simple fact: A customer is a customer, and telecoms could stand to learn some lessons on how to treat them right.

Lesson 1

Use lots of customer data

The telecom industry has a significant advantage over other sectors–it has a huge amount of customer data. The key is collecting and integrating that data to create a single, comprehensive view of the customer across all of his/her services. Telecom carriers need to start understanding that a customer may have other relationships with the company. Daniel Kenyon, vice president of communications industry strategy at PeopleSoft, cites as an example a high-volume business user who also buys services from the same carrier for his home.

“Telecom’s existing systems aren’t very good at relating one customer to another and figuring out that while two customer may have different account numbers, they’re actually one and the same,” Kenyon says. “They need to be able to manage customer relationships beyond the obvious.”

Similarly, telcos need to learn how to identify a customer’s value using more than the traditional metrics. Historically, carriers have valued their customers purely by minutes used and revenue brought in. As airlines have learned, however, basing a customer profile entirely on usage–in their case, miles flown–can create a one-dimensional view of the customer.

“Historically a lot of companies, not just telecom, have been able to capture a lot of information about how their products are performing,” Kenyon says, “but few have designed systems that allow them to take information about customer data, profitability, customer usage, likes and dislikes, and using that information to extend the customers’ relationship with the corporation.”

Lesson 2

Obey Pareto’s principle

In the early 1900s, Italian economist Vilfredo Pareto determined that 80% of the wealth in most countries was controlled by about 20% of the people, a phenomenon which he called a “predictable imbalance”. The basic premise of this theory–that the majority of results come from a minority of input–has since been extended to other areas, including telecom, where a small percentage of customers generally produce the majority of a carrier’s revenue.

Telecom service providers should then focus the majority of their efforts on servicing its most profitable customers, once they are identified.

The casino industry may be one of the best models of how high-end customers should be handled. The Harrah’s chain of casinos, for example, has a “Total Rewards” loyalty program that entitles members to entertainment, food and hotel vouchers. In return, Harrah’s is able to collect those customers’ casino spending and usage patterns and combine that with demographic information–which it does using a CRM solution from NCR division Teradata–and then use that information in its marketing efforts. The result, says Jack Knapp, vice president of communications of communications industry marketing at Teradata, is that Harrah’s can identify its most valuable customers when they arrive and treat them appropriately.

That’s not to say, however, that the plain-Jane customers should be ignored.

“It’s an issue of spending the right amount of money in order to market the right bundle to the right customers,”

Lesson 3

Become Web-savvy

Call centers are expensive propositions for every industry–between $30 and $75 per call, depending on its complexity. The Internet promised a way to reduce those costs by offering customers a self-service model. Unfortunately, it’s a model that hasn’t quite worked out as planned.

“I think the idea was that companies could drive people to the Web to buy products and services and have their customer care needs handled,” says Michael Hefler, CEO of WhisperWire. “What those companies have learned, though, is that all the needs of all the customers cannot be handled online, and the dream that everyone would be self-service is fading away.”

At the same time, though, customers are increasingly expecting companies to make information available online, even if they’re not quite willing yet to move all of their transactions to the Internet.

“A company’s Web site needs to act as a virtual branch office,” says Louise Kirkbride, president and CEO of Broad Daylight. “You had better make sure your customers can do everything online that they can do in a field office. I’m always amazed when I go to a Web site and I can’t order products online.”

So how does a company gently nudge its customers away from the call center and toward the Internet? Kirkbride says the best solution is to continuously remind customers that self-service capabilities are available on the Web–via bill stuffers, while they’re waiting on hold for a call center agent, via email, etc.

“You need to promote it at every touch point, and sooner or later, they’ll give up and go to the Web site,” she says.

Ensuring that the Web site is truly customer-friendly is also essential to widespread consumer adoption of Internet selfcare. Analytici’s Horne believes that telecom carriers can learn some valuable lessons from the retail industry, which has made their Web sites more customer-friendly by integrating them with their call centers–providing realtime email or click-to-talk functionality, for example.

Lesson 4

Rethink your expectations

Telecom carriers are large entities with a tendency to think large, which has discouraged them from taking on CRM initiatives. Most have bulky legacy back office systems that are difficult to upgrade, but carriers don’t have the capital to tear those out and replace them with new, CRM-friendly systems.

Roundarch’s Maling advises carriers to look to the airlines and financial services industries for examples of how companies with complex back offices can still enable customers to access their systems.

“If you take the airline industry, you could argue that those reservations platforms are ten times more complex than any carrier’s billing platform,” he says.

Maling also points out that a CRM strategy can be rolled out incrementally, allowing carriers to gauge results before moving on to the next phase. American Express, for example, has deployed its CRM strategy for under $1 million, rolling it out in a few key markets first, then expanding it.

Lesson 5

Change your mindset

All the sophisticated CRM systems in the world aren’t going to make a difference unless carriers fundamentally change the way they interact with their customers. As monopolies, the large carriers didn’t particularly need to worry about customer care and CRM, and their mindsets have been slow to change. Some are taking steps in the right direction, by revamping their call centers, redesigning their Web sites, and generally recognizing that keeping a valuable customer is worth far more than having to acquire a new one.

But CRM experts say carriers must realize that it’s more than just setting up a snazzy Web site–it’s about creating a lasting relationship with the customer.

“CRM has become difficult to do at seven cents a minute,” says Analytici’s Horne. “The whole concept behind CRM is that you move from an ambivalent relationship driven almost exclusively by price to a bonded relationship based on a combination of factors, including trust, reciprocity, concern–human-emotion type things. Carriers need to work on building loyalty and creating rapport. If they can’t do that, none of their other efforts are going to have a tasting effect.”

CRM case studies

What telecoms providers can learn from other industries

Casinos Harrah’s “Total Rewards” loyalty program entitles

members to entertainment, food and hotel vouchers.

In return, the casino operator is able to collect

those customers’ spending and usage patterns and

combine them with demographic information to

identify its valuable customers.

Retail Online chat can help motivate customers to use a

Web site. They know someone will be there to help

if they have problems.

Banking Don’t bulldoze people into Web-based self-service.

Instead of charging a fee for using a call center,

a more gentle approach is to disconnect its

toll-free number.

Airlines Airline reservation systems are at least as

complex as telco back offices. Yet that industry

has managed to section off Sabre so that customers

have access to flight information without having

to go into the guts of the system.

Financial services Implement CRM systems incrementally. American

Express deployed its CRM strategy for under $1

million, rolling it out in a few key markets

first.

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