Sweet Talk
Sydney Morning Herald
Tuesday August 15, 2000
Are you a valuable client for your telco? Chances are your vendor is finding out and soon so will you, writes Dorothy Kennedy.
Hang onto your self-image a telco near you is getting ready to decide what you are worth. Armed with customer relationship management (CRM) software and press-gangs of consultants, they are busy tallying up how much their customers have spent in the past, are likely to spend next week, and whether or not their profiles match the latest round of product offerings.
By this time next year, says Neil McMurchy, Gartner Pacific's research director, enterprise applications, most telecommunications customers will have a pretty good idea of where they stand in the eyes of their service providers. ``What you will see is more [customer] segmentation, and you will get to understand much better your relative value as a customer to the organisation, because you will find yourself much more targeted in terms of channel choices, in terms of options, in terms of marketing. That will be the face of it, if you like. If you're a low-value customer you will have limited choice."
Telecommunications companies, large and small, are beginning to hatch e-business systems that will attempt to transform routine customer contacts into goldmines of market information that can be juggled back and forth across various sales and delivery channels, and integrated with back office systems. The aim is to keep customers loyal in an increasingly competitive market, lure customers from other carriers, and market the right products and services to the right customers.
Dingo Blue is a youth-orientated Internet and telecommunications service provider set up last year by Cable & Wireless Optus to attract online customers. Wholly owned by Australia's No 2 telco, Dingo Blue sells bundled Internet access, Optus mobile and long-distance calls, and Telstra local calls to 85,000-odd subscribers. Half of these signed up for their services online. Unlike some of its larger competitors, Dingo Blue has opted for a customer relationship management system developed in-house, and appears to be leading the way with a Web-enabled, real-time interface to its call centre. This means customers can click through to the call centre from an icon on Dingo Blue's Web site, and get help from an operator immediately.
Katrina Horrobin, Dingo Blue's customer solutions director, says the customers ``absolutely love it. What they enjoy is the speed, and the fact that we can push pages to them while the session is still running." Another feature that is cementing customer loyalty is the fact that users can view their current bills online. Dingo Blue is also beginning to notice improvements in cross-selling products, as it finetunes its capture of customer information. Horrobin says that CRM-driven targeted marketing campaigns have yielded twice the sales of traditional marketing methods. At this stage, the Dingo Blue system is not linked to wider Optus networks.
There doesn't seem to be a telco in town that isn't at least considering software-enabled customer relationship management. In a recent industry presentation, Gartner estimated that about 70 per cent of telecommunications organisations in the Asia-Pacific region had implemented more than one CRM function. AMR Research has forecast global CRM market revenues of $16.8 billion by 2003. IDC Australia, which estimated the total value of the local CRM software market in 1998 to be only $36 million, expects year on year growth of 44 per cent to a projected $220 million by 2003. AAPT and Vodafone have announced Rockwell installations over the past 12 months, Telstra is progressively rolling out a Siebel Systems CRM offering, and Primus Communications, which already has Vantive and Remedy on board, is in the throes of drumming up a more comprehensive CRM strategy.
``We have gone through some fairly phenomenal growth over the last 12 months in that our client base has probably magnified by a factor of five or six," says Paul Santamaria, Primus's national manager, customer services. ``Less than 12 months ago we had about 60,000 clients. We now have in excess of 500,000. The growth has just been phenomenal. The importance of holding onto those clients and maximising the return out of those clients is obviously paramount."
Santamaria estimates that Primus has 400,000 clients in the voice market, 100,000 ISP clients and between 30,000 and 40,000 mobile customers. ``We operate on three different platforms within those businesses. Obviously we need to unify that framework, and Vantive has obviously been recognised as one of the platforms we may use. We also use Remedy, and at the moment that's underutilised as well. We're a long way off having a definitive CRM strategy in place."
Many customers use all three Primus services and are viewed as separate accounts by existing systems. Santamaria is eager to get a single customer view up and running. ``Our biggest project is to start aligning customers with services they use," he says.
Pricing is a key issue, too, in an industry Santamaria sees as primarily price-driven. ``If our clients come to us on price, they tend to leave us on price as well," he says. Faster customer service, Web-enabled contact centres, and e-mail responses in less than an hour are some of the things he wants from whichever CRM platform is eventually selected: ``If we don't do it, our next competitor will."
Andrew Keene, vice-president, Cap Gemini Ernst & Young, sees a so-called e-CRM wave about to break in the telecommunications market. ``We've had customer segmentation theory for quite a while, and we're now having the ability to actually do something with it," he says. ``What is not yet there, though, is the full wiring up back into service activation, billing systems, the operating support layer, but it's well under way. It's more than just on the drawing board."
Telstra's efforts in the area are probably the most advanced, he adds. ``Telstra started what they're doing in December. We kicked off a project there in December and they rolled it out in May and they were having dramatic results almost immediately and they're now doing a whole range of things in 90-day cycles. So every three months, three or four new things are hitting. The pace is accelerating."
Peter Frueh, Telstra's executive director, indirect channels, was previously the managing director of Telstra's small and med-ium enterprise (SME) sales group, where a Siebel system was deployed at the end of last year. Along with the new, customer-facing software, Telstra brought together disparate State and Territory organisations into three virtual customer contact centres. With centralised, common customer information, the team could sell right across Telstra's product range. ``What we're offering is a proactive, personalised relationship," says Greg Sky, national general manager, integrated solutions, SME sales. ``We've still got a long way to go, don't get me wrong; we've only been doing this since October, but we've seen huge changes."
Since then, Siebel has been rolled out to all account managed areas in Telstra, and is soon to be introduced to the indirect channels area. Frueh says the system now has 2,000 users within the organisation. ``In at least six or seven other areas in Telstra, domestically and internationally, we're looking at using it, and the more we use it the wider the benefits become," he says. The project is supported by a long-running database integration project inside Telstra that will attempt to link customer contact histories and product databases, but, Frueh says, ``that is not a one-year task".
The importance of good systems integration is slowly becoming clear. McMurchy says: ``We're seeing, just through the CRM space generally, integration issues are enormous. They are consistently being underestimated and underbudgeted, not just by factors of 10 per cent but by factors of three to five, if not bigger. It's one of the reasons you're seeing the rapid development of alliances between applications vendors and some of the back office telephony providers, really to try and start pre-building some of this integration. Integration is becoming a significant issue."
In a June research note, Gartner concluded that ``no suite exists that meets enterprise needs for e-sales, e-marketing, e-service, e-commerce and content". Another major challenge for telcos, says McMurchy, is making the internal cultural changes necessary to run a customer-focused e-business. ``The issue is absolutely a non-technical one," he says. ``This whole issue is changing an organisation to be customer-centric and customer engaging. And that is not trivial. It's like turning supertankers."
Consultants are unlikely to help here. ``The challenge that all the consultant organisations have is an experience one," McMurchy says. ``The rate of growth is such that they can't hire people fast enough. "
``They're flat out getting consultants to understand the relevant bits of technology, so a client expectation of change management and process re-engineering really being driven by the consultant is an unrealistic expectation. "
Which means that there could be some nasty cash corpses littering the CRM highway pretty soon. ``The real issue is that they've got to try and resist driving straight to technology, and you know, four out of five will go to the technology because it's easier but the fifth organisation that doesn't go down that route will differentiate itself in a positive way."
In this environment, smaller, nimble players can achieve dominance in niche areas, McMurchy says, but he does not see many of them grasping the nettle. ``It's not clear yet whether their real engagement with the customer is any better [than big telcos]."
dorothy-kennedy@hotmail.com
© 2000 Sydney Morning Herald