CRM Investments Coming to the Rescue
The number of individuals seeking online customer service will jump from 33 million in 2001 to 67 million in 2005, according to Jupiter Media Metrix, but companies seem willing to invest the money needed to meet the demand.The number of individuals seeking online customer service will jump from 33 million in 2001 to 67 million in 2005, according to Jupiter Media Metrix, but companies seem willing to invest the money needed to meet the demand.
Nearly three-quarters (74 percent) of businesses will spend more money on customer relationship management (CRM) infrastructure in 2001 than they did in 2000 -- with a majority committing to increasing their spending by as much as 25 to 50 percent. But Jupiter analysts warn that companies investing in online-only solutions will fail to advance customer satisfaction because they will not build a consistent customer experience across all channels.
"Although the current state of the economy is causing companies to cut costs in many areas of their businesses, customers still expect the same level of service," said David Daniels, analyst at Jupiter Media Metrix. "Customer satisfaction has always been a key metric for positive financial results. Businesses must not make CRM investments only to keep pace with the growth -- they should view their CRM spending as a strategic benefit that will bring higher levels of customer satisfaction and retention."
According to a Jupiter Executive Survey, 63 percent of companies use customer satisfaction metrics to measure the ROI of their CRM investments, compared with 33 percent that view cost savings achieved by reducing service staff as the best measurement of return. Businesses using customer-satisfaction ROI measures should not expect a quick return on their CRM investments, because the rate at which a business can measure satisfaction will depend on how frequently and through which channels it touches its customers.
One of the biggest obstacles facing CRM systems has been redundant spending. According to Jupiter, redundant spending will cost Global 2000 companies between $3 billion and $4 billion over the next two years. Large companies with disparate corporate goals and separate business units have led made investments in CRM solutions that have failed to unify the customer experience. According to Jupiter analysts, to combat these issues, companies should budget for CRM at the enterprise level with "c-level" ownership.
"To create a consistent customer experience and reduce redundant investments, companies must adopt a company-wide customer culture," Daniels said. "This approach might require larger capital investments upfront, but the resulting business consolidation should cut managing costs by as much as 20 percent. In effect, companies have been buying separate CRM systems to service the same customer base."
Web-based self-service knowledge bases are emerging as an integral component for online customer care and CRM initiatives, especially as contact centers face escalating costs and increased challenges for resolving client inquiries. According to the Frost & Sullivan report, "Web Self-Service Knowledge Base Solutions," this industry generated revenue of $123 million in 2000 and is projected to increase to $1.6 billion by 2007.
"This market is poised for significant growth as a growing number of brick-and-mortar companies move online for sales and support," said Frost & Sullivan industry analyst Katrina Howell. "The trend towards self-service among governmental entities is also allowing revenues to accelerate."
When compared to voice e-mail or text chat, self-service knowledge bases offer advantages in terms of dramatically reducing the cost of answering customer questions and increasing client satisfaction. Customer care centers are just beginning to realize the advantages this technology brings.
"Providing customers with faster access to the information they desire while simultaneously reducing the cost of service presents a powerful value proposition -- one poised to drive explosive growth in the market," Howell said.
According to the Frost & Sullivan report, customer service knowledge bases have considerable benefits, but they are rarely the first e-service purchase considered. Instead, the true utility of these systems becomes apparent only after adopting other applications, such as e-mail management and less sophisticated self-service tools, often with disappointing results. Only then do companies realize the need for effective Web-based self-service, capable of deflecting common queries yet qualified to disseminate complex information.
Reprinted from CyberAtlas.