Building Customer Loyalty-through Internet-enabled CRM

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The electric utility industry stands at the confluence of two drivers of change. Deregulation and the Internet will forever alter the way utilities deal with their customers. In the new competitive environment, utilities must compete for the acquisition of customers, and, once they have acquired them, they must attempt to build loyalty among those customers. Deregulation makes customer loyalty a necessity for utilities; the Internet gives utilities the means to gain that customer loyalty.

Internet- or Web-enabled customer relationship management (CRM) solutions take advantage of the Internet’s speed, interactivity and ubiquity to deliver customer information to all parts of the utility enterprise in real-time. These comprehensive ‘Net-enabled solutions comprise many parts: interactive utility home pages, e-mail, chat sessions, electronic bulletin boards and tools to connect all levels of the utility organization-front office, back office, field workers, third-party suppliers, etc. By incorporating Web-based interactive tools with the more traditional points of contact within the utility call center, the call center of old becomes the integrated “contact center” of today. All interactions between customer and utility contact center can be disseminated instantaneously to the parts of the utility company that need the information-whether it be to field workers, accounts receivable, customer service representatives or some other customer-facing segment of the enterprise.

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Market trends indicate that such networked solutions are driving a great deal of growth in the CRM industry. Market analysis firm AMR Research predicts that by 2003, the CRM market will reach $16.8 billion with a compound annual growth rate of 49 percent over the next five years (see Figure 1). One driver of this growth, according to AMR Research, is the fact that companies are moving toward e-business models and establishing contact centers that will provide a total view of the customer.

Although the knee-jerk reaction to Internet-driven CRM might be fear of a dehumanized, impersonal customer/utility relationship, the reality of “e-CRM” is a more personalized understanding of each customer and, hence, a more personalized relationship between utility and customer. The ability to disseminate customer/contact center interactions facility-wide leads to a more complete view of who a utility’s customers are. That knowledge of customer is key to developing profitable business relationships, says Chuck Riehm, senior principal at eLoyalty, a consulting and systems integration company specializing in e-CRM and building customer loyalty.

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“You can’t develop a relationship between people without expressing some level of knowledge about who they are, some level of caring about what they care about,” said Riehm. “E-business is a tremendous lever to doing that kind of one-to-one marketing. On the road to loyalty, you need some levels of automation, from a technology standpoint, before you can begin to establish a one-to-one relationship with customers. You don’t build loyalty until you’ve integrated the front and the back office to get a better idea of who your customer is.”

Customer Loyalty at an Attractive Price

Not only does Internet technology foster strong, one-to-one customer/utility relations, it does so at an attractively low per-interaction cost. Telephone interaction between utility customers and utility contact centers probably will never go away, but if a utility can build a contact center that takes advantage of the Web and e-mail in addition to the traditional telephone representatives, and if the utility can detour some customer queries from the phones to the Internet, the utility will realize a significant cost savings.

“In the mid-1990s, everybody was focused on call centers, and that was leading the Web strategy. Now, we see the Web strategy and its capabilities leading the call centers,” said Bill Mahoney, president of SCT Corp.’s utility group. SCT recently introduced its own Web-enabled customer management solution called Synchronization Solutions for Utilities, or Synchro. “What we’re finding is that a call center transaction is anywhere from a $10 to $25 interaction. Web interactions are anywhere from $2 to $5 interactions-or even lower as volume goes up. These are very significant costs savings with respect to the delivery of customer service.”

Cathy Tough, a solutions architect for SAP’s utility segment, agrees that Web-enabled CRM offers utilities the ability to save a great deal of money while still communicating effectively with customers. SAP, which has more than 400 CRM customers across numerous vertical industries, offers several e-CRM solutions to utilities, one of the most progressive of which is through the Internet-driven portal/workplace/marketplace called Tough has seen evidence of significant cost savings as a result of moving a portion of customer interaction to the Internet. “We’ve seen estimates of cost decreases of up to 75 percent. If you provide customers with the ability to do self-service transactions-such as move-ins, move-outs or billing inquiries-you’re reducing the cost of care to those customers. And you’re eliminating, or at least delaying, the need to expand your call centers.”

Mahoney also pointed out that besides being cost-effective, a quality Web-enabled CRM solution can result in enhanced revenue streams. Systems like SCT’s Synchro help contact center representatives forge what Mahoney refers to as “effective relationship moments” with customers. During those effective relationship moments, utilities who understand their customers have a greater ability to cross-sell or up-sell to customers-or at the very least to build stronger customer loyalty, he said.

Strong customer loyalty must be the main goal of any business-to-consumer CRM solution. A well-thought-out Web-enabled CRM strategy can help a utility build customer loyalty by making it easy for customers, regardless of size, to work with the utility. A CRM solution that encourages customer self-service and decreases the amount of time that high-volume customers must interact with the utility provides positives for both sides of the CRM equation-both the customer side and the utility side.

“When you integrate CRM with the back office and an e-business strategy, you can drive a lot of costs out, get more efficient and build loyalty to the level that your customers can’t be stolen,” said Riehm.

Enterprise-Wide View of the Customer

Delivering his paper “Improving Customer Relations Management in Utilities through the Use of the Internet” at DistribuTECH 2000 in Miami Beach this past March, Michael Rigney, product manager at Coherent Networks Inc., stated another benefit of Internet- or Web-enabled CRM-the ability to provide real-time customer information throughout the utility organization.

“Managing customer relations is a function of every employee at a customer-centric utility,” Rigney stated in his paper. “To successfully and consistently manage customer relations, accurate and timely information must be available to every employee in the enterprise. What better media for disseminating information enterprise-wide than the corporate intranet or the Internet.”

With a Web-enabled CRM solution, a utility has the ability to disseminate customer information to all parts of the enterprise instantly. Enterprise-wide dissemination of customer information was possible in the pre-Web days, but the application of Internet technology to CRM has made the process quicker, easier and far more accurate. When a customer contacts a utility with a problem, a billing question or a request for service, the entire utility now can have access to the customer’s pertinent information-regardless of whether the customer interacted with the utility via telephone, fax, e-mail, a Web-based form or some other means.

“Because the Web interaction can communicate customer information to all levels of the utility business, you don’t get a silo effect,” said Mahoney. “We’ve had our clients tell us that their entire organization can instantly know what their customer’s requirement is, and in that same session, they can acknowledge and commit to servicing that customer. You really can’t do that as well in a local call center environment. It takes too long.

“If customers can sit at their personal computers and interact with the whole customer service system and fulfillment infrastructure of the utility, and get acknowledgement that the service person is going to show up at a certain time, that utility is going to be successful in the deregulated marketplace. Through that successful interaction, they’re going to be able to secure customer loyalty.”

The ability to provide customer-to-utility interconnectivity and, to an even greater degree, interconnectivity within the utility organization itself is what makes a comprehensive Internet-driven CRM solution so attractive. “With the advent of, we have a new framework through which we can offer these (CRM) solutions,” said Jon Wurfl, SAP’s CRM evangelist. “Customers (within the utility organization) can leverage the Internet, have a zero footprint on the desktop, and now provide windows for different roles in the organization that need access to customer information. It’s real-time and it’s synchronized across the entire company.”

Caught Outside the ‘Net

Exponential, seemingly day-to-day, advancements in technology make it easy to rationalize a wait-and-see attitude when it comes to launching a Web-enabled CRM solution. What’s avant-garde today may be obsolete tomorrow. But the electric utility that hasn’t begun to integrate Internet technology into its CRM strategy may soon find itself too far behind to catch up to energy providers who have taken the initiative. Utilities must find for themselves an appropriate, scalable Web-enabled CRM solution or risk losing customers as the electric utility markets continue to deregulate. Customers are key in this new age of power distribution, and a Web-enabled CRM strategy gives utilities the comprehensive tools they need to determine who their most valuable customers are-and to retain those valuable customers.

“The ultimate winners in the game of deregulation will master application of the Web to the distribution and customer administration channels,” said Mahoney.

That statement is echoed by SAP’s Tough, who also believes that those who hesitate to integrate Internet technology into their CRM strategies may learn that guarded restraint comes at a price. “Those that are sitting tight and waiting to see what’s going to happen (with Web-enabled CRM) are the ones who are going to be behind the eight ball.”

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