B

APPENDIX
ELECTRONIC CUSTOMER
RELATIONSHIP
MANAGEMENT
Learning Objectives
Upon completion of this appendix, you will be
Content able to:
B.1 CRM and Its Relationship with EC 1. Define CRM and describe its types, scope,
B.2 Delivering Customer Service benefits, and limitations.
in Cyberspace: CRM Applications 2. Describe e-CRM, its usage, and
and Tools implementation.
Managerial Issues 3. Relate CRM to EC and customer service.
Real-World Case: 1-800-FLOWERS.com Uses 4. Explain CRM analytics.
Data Mining to Foster Customer 5. Understand e-CRM applications by category.
Relationship Management
6. List and describe the tools for customer-
facing applications.
7. Describe customer-touching applications
and tools.
8. Describe the major customer-centric
applications and tools.
9. Explain mobile and on-demand CRM.
B-2 Appendix B: Electronic Customer Relationship Management

B.1 CRM AND ITS RELATIONSHIP WITH EC

Customer relationship management (CRM) recognizes that customers are the core of a
business and that a company’s success depends on effectively managing its relationships
with them (see Seybold 2006 and Payne 2005). CRM focuses on building long-term and
sustainable customer relationships that add value both for the customer and the selling
company. (See also crm-forum.com and crmassist.com.)
Just like their offline counterparts, online companies also must deliver customer
services. Customer services are an integral part of CRM.

WHAT IS CRM: DEFINITIONS, TYPES, AND CLASSIFICATIONS

Greenberg (2004) provides more than 10 definitions of CRM, several provided by
CEOs of CRM providers or users. Scott and Lee (2005) and Payne (2005) provide
several additional definitions. Why are there so many definitions? The reason is that
CRM is relatively new and still evolving. Also, it is an interdisciplinary field, thus
each discipline (e.g., marketing, MIS, management) defines CRM differently. Here is
one definition:

customer relationship Customer relationship management (CRM) is a business strategy to select and
management (CRM) manage customers to optimize long-term value. CRM requires a customer-centric
A customer service business philosophy and culture to support effective marketing, sales, and service
approach that focuses processes. (CRMguru.com 2007)
on building long-term
and sustainable Types and Classification of CRM
customer relationships
Three types of CRM activities can be distinguished: operational, analytical, and
that add value both
collaborative. Operational CRM relates to typical business functions involving
for the customer and
customer services, order management, invoice or billing, or sales and marketing
the selling company.
automation and management. Analytical CRM involves activities that capture, store,
extract, process, analyze, interpret, and report customer data to a user who then
analyzes them as needed. Collaborative CRM deals with all the necessary communi-
cation, coordination, and collaboration between vendors and customers. For details,
see mariosalexandrou.com/definition/crm.asp.
Tan et al. (2002) and Payne (2005) distinguish the following classifications of
CRM programs:
◗ Loyalty programs. These programs try to increase customer loyalty. An example is
the frequent-flyer points given by airlines.
◗ Prospecting. These promotion programs try to win new, first-time customers
(see Chapter 4).
◗ Save or win back. These are programs that try to convince customers not to leave or,
if they have left, to rejoin. When one of the authors of this book left AOL, for
example, the company’s representative offered many incentives to return.
◗ Cross-sell or up-sell. By offering complementary products (cross-sell) or enhanced
products (up-sell) that customers would like, companies make customers happy and
increase their own revenue.
Another classification of CRM programs divides them by the service or product
they offer (e.g., self-configuration, account tracking, call centers). Section B.2 presents
these programs.
 Appendix B: Electronic Customer Relationship Management B-3

e-CRM
Managing customer relationships is a business activity that corporations have practiced for
generations. As evidenced by the many successful businesses that existed before the
computer, companies were not required to manage one’s customers well. However, since the
mid-1990s competition has intensified, and CRM has enhanced various types of informa-
tion technologies. CRM technology is an evolutionary response to environmental changes,
making use of new IT devices and tools. The term e-CRM was coined in the mid-1990s e-CRM
when customers started using Web browsers, the Internet, and other electronic touch points Customer relationship
(e-mail, POS terminals, call centers, and direct sales). e-CRM also includes online management conducted
process applications, such as segmentation and personalization. The use of the Internet, electronically.
intranets, and extranets made customer services, as well as services to partners (see PRM in
Chapter 5), much more effective and efficient than before the Internet.
Through Internet technologies, data generated about customers can easily be fed into
marketing, sales, and customer service databases for analysis. The success or failure of
CRM efforts can now be measured and modified in real time, further elevating customer
expectations. In the Internet-connected world, e-CRM has become frequently a require-
ment for survival, not just a competitive advantage. e-CRM covers a broad range of top-
ics, tools, and methods, ranging from the proper design of digital products and services to
pricing and loyalty programs (e.g., see e-sj.org; jsr.sagepub.com, and e-crmguide.com).
Note that e-CRM is sometimes referred to as e-service. However, the term e-service has
several other meanings. For example, some define e-service as EC in service industries, such
as banking, hospitals, and government, whereas others confine its use to e–self-service. To
avoid confusion, we prefer to use the term e-CRM rather than e-service. Note that people
use the terms e-CRM and CRM interchangeably. Most vendors use just CRM, and the
accounting profession literature uses that term most often.

THE SCOPE OF CRM

For online transactions, CRM often provides help features. In addition, if a product is
purchased offline, customer service may be offered online. For example, if a consumer
purchases a product offline and needs expert advice on how to use it, he or she may find
detailed instructions online (e.g., livemanuals.com).
According to Voss (2000), there are three levels of CRM:
1. Foundation services. This includes the minimum necessary services, such as site respon-
siveness (e.g., how quickly and accurately the service is provided), site effectiveness, and
order fulfillment.
2. Customer-centered services. These services include order tracing, configuration
and customization, and security/trust. These are the services that matter the most to
customers.
3. Value-added services. These are extra services, such as dynamic brokering, online
auctions, and online training and education.

The Extent of Service

Customer service should be provided throughout the entire product life cycle. Four parts
compose the value chain for CRM (Plant 2000):
1. Customer acquisition (prepurchase support). A service strategy that reflects and
reinforces the company’s brand and provides information to potential customers to
encourage them to buy.
B-4 Appendix B: Electronic Customer Relationship Management

2. Customer support during purchase. This service strategy provides a shopping

environment that the consumer sees as efficient, informative, and productive.
3. Customer fulfillment (purchase dispatch). This involves timely delivery, including
keeping the customer informed about the fulfillment process, especially if there are
any delays.
4. Customer continuance support (postpurchase). Information and support help
maintain the customer relationship between purchases.

Case B.1 provides several examples of how companies use e-CRM, and the Real-
World Case at the end of this chapter provides an additional example.

CASE B.1
EC Application
HOW COMPANIES USE e-CRM
Almost all large companies have a formal CRM program
(Agarwal et al. 2004). However, CRM programs may be
implemented in a variety of different ways due to the large
number of tools available (Section B.2). Here are a few
examples of how companies have implemented CRM:
◗ Continental Airlines monitors telephone calls to its
data center, using software from Witness Systems
(witness.com), which uses software agents to analyze
recorded conversations. The analysis tells Continental
Airlines what customers really want. It also helps the
company craft marketing plans and business strategy.
Results serve customers better and resolve problems
immediately, saving the company $1 million annually.
To increase efficiency, Continental Airlines uses Call-
Miner, a labor-saving Witness Systems’ program
that automatically transcribes conversations into
digitized text.
◗ Micrel Inc., a leading manufacturer of integrated
circuit solutions for enterprise, consumer, industrial,
mobile, telecommunications, automotive, and com-
puter markets has become known for being “fast on
its feet” in responding to customer needs. To improve
response time and relevancy of information delivered
to customers online, the company uses a sophisticated
self-service search and navigation engine that
directs customers to the right information at the right
time to help them reach buying decisions. As a result,
Web site traffic grew by 300 percent; the retention
rate for new site visitors increased by 25 percent;
the company saved $40,000 a year; and customer
satisfaction increased significantly (see IBM 2006
for details).
◗ Employees at more than 200 Sheraton Hotels owned
by Starwood Hotels and Resorts are using a new e-CRM
system to coordinate fast responses to guests’ com-
plaints and unmet needs. When an employee does not
respond to a request or complaint within a time frame
predetermined by hotel management, the color of a
computerized notice changes from green to yellow and
possibly to red. Red triggers management to quickly
intervene and perhaps include special compensation
for the guest. Starwood has reported significantly
better operating results since it implemented the
system. For details, see Babcock (2004).
◗ Online-only bank NetBank Inc. uses CRM to leverage
customer contacts via the Web and call centers by
analyzing customers’ profiles in real time and presenting
the employee interacting with each customer with
potential for cross-sell and up-sell offers. The bank now
can do more targeted marketing campaigns that better
address its customers’ needs.
◗ Boots the Chemists, a U.K. retailer of over 1,400 health
and beauty stores, uses business intelligence and data
mining (e-CRM analytics) to learn about customers in
its e-loyalty programs. The retailer uses data mining
to acquire insights into customer behavior. Customer
service agents can analyze, predict, and maximize the
value of each customer relationship. This enables
better one-to-one marketing efforts and reduces
customer dissatisfaction.
◗ In a similar manner, outdoor product retailer REI brings
customer data into a single location and analyzes and
manages it in real time. The results are used for various
CRM initiatives. See Amato-McCoy (2003) for details.
(continued)
 Appendix B: Electronic Customer Relationship Management B-5

CASE B.1 (continued)

◗ Harrah’s Entertainment Inc. treats its customers differently:
The more a customer spends in a casino, the more rewards
the customer gets. The company assigns a value to each
customer by using data mining.
◗ FedEx’s CRM system enables the company to provide
superb service to millions of customers using 56 call
centers. Each of its 4,000 call center employees has
instant access to a customer’s profile. The profile
tells the employee how valuable the customer is and
the details of the current transaction. The more an
agent knows about the customer, the better the
service provided. Customers use one phone number
regardless of where the company is or the destination
of the package. The CRM reduced calls for help,
increased customer satisfaction, and enabled better
advertising and marketing strategy. For details,
see Guzman (2004).
Questions
1. Identify common elements of CRM in these examples.
2. In addition to customer service, CRM systems
provide managerial benefits. Identify and discuss
these benefits.
3. Why is data mining becoming so important in CRM?

BENEFITS AND LIMITATIONS OF CRM

The major benefit of CRM is the provision of superior customer care through the use of the
Internet and IT technologies. In other words, CRM makes customers happy by providing
choices of products and services, fast problem resolution and response, easy and quick access
to information, and much more (see Seybold 2006 and Section B.2). Companies try to gain
competitive advantage over their competitors by providing better CRM.
The major limitation of CRM is that it requires integration with a company’s other
information systems, which may not be an easy task. In addition, as will be discussed
later in this section, justifying the expense of CRM is not easy. Also, it is difficult to
support mobile employees with some CRM applications. It is only in the last few years
that m-commerce has encouraged the creation of exciting CRM applications.

CRM IMPLEMENTATION ISSUES

According to a CIO Insight study (2004) and Petersen (2006), culture, commitment of
top management, and communication lead to CRM success—not technology. Bohling,
et al. (2006), Holland and Abrell (2005), and Seybold (2006) highlight some important
steps in building an EC strategy that is centered on the customer. These steps include a
focus on the end customer; systems and business processes that are designed for ease of
use and from the end customer’s point of view; and efforts to foster customer loyalty
(a key to profitability in EC). To successfully make these steps, businesses must take the
following actions:
◗ Deliver personalized services (e.g., dowjones.com)
◗ Target the right customers (e.g., aa.com, national.com)
◗ Help customers do their jobs (e.g., boeing.com)
◗ Let customers help themselves (e.g., iprint.com)
◗ Streamline business processes that impact customers (e.g., ups.com, amazon.com)
◗ “Own” the customer’s total experience by providing every possible customer contact
(e.g., amazon.com, hertz.com)
◗ Provide a 360-degree view of the customer relationship (e.g., wellsfargo.com,
verizon.com)
B-6 Appendix B: Electronic Customer Relationship Management

Many of these steps are valid both for B2C and for B2B EC. In B2B, CRM is known as
PRM (see Chapter 6).
Large-scale CRM implementation is neither easy nor cheap. Tan et al. (2002)
suggest five factors that are required to implement a CRM program effectively:

1. Customer-centric strategy. A customer-centric strategy should be established

first at the corporate level. The strategy must be based on and consistent with
the overall corporate strategy and must be communicated across the whole
organization.
2. Commitments from people. The more commitments from people across the
corporation to the transformation of the business strategy, the more likely the
CRM implementation will succeed. Employees should be willing to learn the
necessary technological skills.
3. Improved or redesigned processes. It is inherently difficult to identify the
processes that need to be involved and frequently redesigned when imple-
menting CRM.
4. Software technology. CRM software can record business transactions, create oper-
ations focused databases, facilitate data warehousing and data mining, and provide
decision-making support and marketing campaign management tools. Companies
should select the appropriate CRM packages to meet specific corporate CRM
needs as well as to enable integration with legacy enterprise applications, such as
the ERP system. Major CRM vendors are Siebel, Oracle, SAP, IBM, and
Nortel/Clarify. Smaller players are BroadVision, Onyx, Microstrategy, E.piphany,
Roundarch, and KANA. Major CRM consultants are KPMG Consultants,
Deloitte Consultants, and the Patricia Seybold Group (see Greenberg 2004).
5. Infrastructure. Effective CRM implementation requires a suitable corporate
infrastructure. This infrastructure includes network setup, storage, data backup,
computing platforms, and Web servers. However, only effective corporate infra-
structure integration can provide solid support for CRM implementation.

Agarwal et al. (2004) and Bohling et al. (2006) claim that many CRM projects are
disappointing at the beginning and require remediation because companies do not
manage them properly. They offer an extensive methodology on how to implement
CRM. See Compton (2004), CIO.com (2006), and Hagen (2006) for additional tips on
CRM implementation.

INTEGRATING CRM INTO THE ENTERPRISE

Some CRM applications are independent of enterprise systems. However, many CRM
applications must be integrated with other information systems. CRM lies primarily
between the customers and the enterprise. The communication between the two is
done via the Internet, regular telephone, snail mail, and so on. However, to answer
customer queries, it is necessary to access files and databases. In medium and large
corporations, these are usually part of a legacy system and/or ERP system. Companies
may check data relevant to a customer order with their manufacturing plants, trans-
portation vendors, suppliers, or other business partners. Therefore, CRM needs to
interface with the supply chain, and do so easily, inexpensively, and quickly. In addition,
CRM must be integrated with the data warehouse because, as Online File W4.6
 Appendix B: Electronic Customer Relationship Management B-7

showed, it is easier to build applications using data in the warehouse than using data
residing in several internal and external databases. Finally, CRM itself collects customer
and product data, including click stream data. These need to be prepared for data
mining and other types of analysis.
The integration of ERP and CRM must include low-level data synchronization as
well as business process integration so that the integrity of business roles can be maintained
across systems and workflow tasks can pass between the systems. Such integration also
ensures that organizations can perform business intelligence across systems.

JUSTIFYING CUSTOMER SERVICE AND CRM PROGRAMS

Two major problems arise when companies try to justify expenditures for customer
service and CRM programs. The first problem is the fact that most of the benefits of
CRM are intangible, and the second is that substantial benefits can usually be reaped
only from loyal customers over the long run. This is true for both offline and online
organizations. In a 1990 study published in Harvard Business Review titled “Zero
Defections: Quality Comes to Services” (see details at Reichheld and Schefter 2000),
researchers demonstrated that the high cost of acquiring customers renders many
customer relationship programs unprofitable during their early years. Only in later
years, when the cost of retaining loyal customers falls and the volume of their
purchases rises, do CRMs generate big returns. Therefore, companies are very careful
about determining how much customer service to provide (see CIO Insight 2004
and Smith 2006). For approaches for CRM justification, see CIO.com (2006) and
Bonde (2004).

Metrics in Customer Service and CRM

One way to determine how much service to provide is to compare a company against a
set of standards known as metrics. Metrics are either quantitative or qualitative. metrics
(See Jagannathan et al. 2001 and Sterne 2002.) The following are some Web-related Performance standards;
metrics a company can use to determine the appropriate level of customer support: may be quantitative or
qualitative.
◗ Response time. Many companies have a target response time of 24 to 48 hours. If a
company uses intelligent agents, a response can be made in real time or the system
can provide an acknowledgment that the customer’s message has been received and
a response will be forthcoming.
◗ Site availability. Customers should be able to reach the company’s Web site at
any time (24 hours a day). This means that downtime should be as close to zero
as possible.
◗ Download time. Users usually will not tolerate downloads that last more than 10 to
20 seconds.
◗ Timeliness. Information on the company site must be up-to-date. The company
sets an interval (e.g., every month) at which information must be revised. If a set
interval is not used, companies may have new products in stores but not on the Web
or vice versa. In either case, it may lose potential sales.
◗ Security and privacy. Web sites must provide sufficient privacy statements and an
explanation of security measures. (This metric is measurable as “yes” or “no”—either
the statement and explanation are there or they are not.)
◗ On-time order fulfillment. Order fulfillment must be fast and comply with
promised delivery dates. For example, a company can measure the time it takes to
fulfill orders, and it can count the number of times it fails to meet its fulfillment
promises.
B-8 Appendix B: Electronic Customer Relationship Management

◗ Return policy. In the United States and several other countries, return policies
are a standard service. Having a return policy increases customer trust and
loyalty. The ease by which customers can make returns is important to customer
satisfaction.
◗ Navigability. A Web site must be easy to navigate. To gauge navigability, companies
might measure the number of customers who get partway into an order and then
“bail out.”

analytic CRM
Applying business
analytics techniques
and business
intelligence such as
data mining and online
analytic processing to
CRM applications.
e-CRM Analytics
Analytic CRM refers to the use of business analytics techniques and business intelli-
gence such as data mining and online analytic processing (see Turban et al. 2008) to
CRM applications. Exhibit B.1 illustrates the basic concept. On the left side we see
the many sources of customer data including real-time Web movement activities and
real-time customer interaction and activities in POS and even while playing slot
machines in the casinos. The large amount of data is processed and stored in a data
warehouse (Section B.2) and/or in a data mart or just in databases. Several types of
analytical tools can be applied to create, for example, customer profiles (Chapter 4)
used for planning advertising and marketing campaigns.
As Web sites have added a new and often faster way to interact with customers, the
opportunity and the need to turn data collected about customers into useful information
has become apparent. As a result, a number of software companies have developed
products that do customer data analysis (e.g., SAP’s Business One CRM, Microsoft’s
Dynamics CRM 3.0 or higher).
Analytics can provide customer segmentation groupings (e.g., dividing customers
into those most and least likely to repurchase a product); profitability analysis (which
customers lead to the most profit over time); personalization (the ability to market to
individual customers based on the data collected about them); event monitoring
(e.g., when a customer reaches a certain dollar volume of purchases); what-if scenarios

EXHIBIT B.1 CRM Analytics

Original
Customers Storage Decisions
Data Processing Analysis Actions

Call Centers

Blogs, Discussion Groups Data Mining Business

and CRM
Data Warehouse, Predictive Analysis Customer
Salespeople Mart, Service
Databases Self-Service
Purchasing Records Advertise
Marketing-
Surveys (opinions) Strategy
Customers’ Profiles
Communication
Collaboration
Complaints

Internet Activities Web Mining

 Appendix B: Electronic Customer Relationship Management B-9

(how likely is a customer or customer category that bought one product to buy a
similar one); and predictive modeling (e.g., comparing various product development
plans in terms of likely future success given the customer knowledge base).
Benefits of CRM analytics lead not only to better and more productive customer
relations in terms of sales and service but also to improvement in advertisement planning
and analysis, marketing strategies, and supply chain management (lower inventory and
speedier delivery) and, thus, lower costs and more competitive pricing.
To derive the most benefits from e-CRM, it is necessary to properly collect and
analyze relevant customer data. Nemati et al. (2004) provide results of a study on the
integration of data in e-CRM analytics. Analytics can analyze and document online
customer or visitor patterns to acquire and retain users. Using data mining properly
provides companies with valuable information on how to serve customers online.
According to a 2004 CRM study (CIO Insight 2004), 75 percent of all large CRM users
are using or will soon use CRM with data mining and analytics.

FUTURE DIRECTIONS OF CRM

Greenberg (2006) points to the following CRM future directions:
◗ The customer experience with products, services, and the company providing them will
be the foundation for CRM’s going forward and increasingly will be a consideration for
corporate strategies. Metrics will be developed to measure the success of the customer
experience, and the idea that value resides with the customer will be critical in the
future. CRM, as we know it, will disappear by the end of 2008.
◗ “CRM on Demand” will become preeminent, and though on-premise vendors will
continue to survive, most companies considering IT investments and system
investments will choose on-demand products for the enterprise and as a platform.
For advantages see CIO.com (2006). However, the on-demand functionality will
still not be as complete as on-premise by year’s end, though that won’t matter.
Also see IBM (2006).
◗ The open source movement and companies such as SugarCRM will become a
credible competition in the on-demand market. (Open source CRM established
itself as a solid alternative in 2006.)
◗ CRM will be integrated increasingly with strategies for social networking and at the
application level, with social networking tools such as podcasting, blogs, and wikis,
in addition to the harder core social networking applications, such as LinkedIn.
A large number of tools and applications can provide CRM, as Section B.2 will
illustrate.

Section B.1 ◗ REVIEW QUESTIONS

1. Define CRM.
2. Describe the benefits and limitations of CRM.
3. List the major types of CRM.
4. Define e-CRM.
5. Describe some implementation issues relating to CRM, including integration with
the enterprise.
6. Discuss the issue of justifying CRM service.
7. Describe metrics related to CRM and customer service.
B-10 Appendix B: Electronic Customer Relationship Management

B.2 DELIVERING CUSTOMER SERVICE IN CYBERSPACE:

CRM APPLICATIONS AND TOOLS
CRM applications are customer service tools designed to enhance customer satisfaction
(the feeling that a product or service has met the customer’s expectations). CRM
applications improve on traditional customer service by means of easier communications
and speedier resolution of customer problems, starting with automatic responses to
questions, customer self-service, or allowing the customer to request a telephone call from
a customer service employee. Today, in order to satisfy increased customer expectations,
EC marketers must respond by providing the best, most powerful, and innovative CRM
systems. They must create customer-centric EC systems.
Customer service (or support) is the final link in the chain between providers and
customers. It adds value to products and services and is an integral part of a successful
business. Almost all medium and large companies today use the Web as a customer
support channel. CRM applications on the Web can take many forms, ranging from
providing search and comparison capabilities to allowing customers to track the status of
their orders.
The first step to building customer relationships is to give customers good reasons
to visit and return to the Web site. In other words, the organization should create a
site that is rich in information, hopefully with more content than a visitor can absorb
in a single visit. The site should include not just product information, but also have
value-added content from which visitors can get valuable information and services
for free. Exhibit 13.11 (in Online Chapter 13, p. 13-40) lists some ways in which online
businesses can build customer relationships through content.

CLASSIFICATIONS OF CRM APPLICATIONS

The Patricia Seybold Group (2002) distinguishes among customer-facing, customer-touching,
and customer-centric intelligence CRM applications. Exhibit B.2 shows these three categories
of applications. The exhibit also shows how customers interact with these applications.
◗ Customer-facing applications. These include all the areas where customers inter-
act with the company: call centers, including help desks; sales force automation; and
field service automation. Such CRM applications basically automate information
flow or support employees in these areas.
◗ Customer-touching applications. In this category, customers interact directly
with the applications. Notable are self-service activities, such as FAQs; campaign
management; and general-purpose EC applications.
◗ Customer-centric intelligence applications. These are applications that ana-
lyze the results of operational processing and use the results of the analysis to
improve CRM applications. Data reporting and warehousing and data mining
are the prime topics here. To this classification of CRM applications, we add
the following fourth category:
◗ Online networking and other applications. Online networking refers to methods
that provide the opportunity to build personal relationships with a wide range of
people. These include chat rooms, blogs, wikis, and discussion lists.
We use these four categories of applications to organize our presentation of
CRM applications in the remainder of this section. (Further details on the first
three categories can be found at psgroup.com, in the free download of An Executive’s
Guide to CRM.)
 Appendix B: Electronic Customer Relationship Management B-11

EXHIBIT B.2 CRM Applications

Customer Systems

Customers

The Customer Experience

Customers

Seller

Customer-Touching Systems Users

Self-service
Campaign
Customer E-Commerce
Management
Support

Integration

Customer-Facing Systems

Customer-centric Intelligence
Sales Field
Contact
Force Service
Center
Automation Automation

Integration

Back-Office Systems

Seller

Suppliers

Supplier Systems

Source: An Executive’s Guide to CRM, Patricia Seybold Group, March 21, 2002. Used with permission.

CUSTOMER-FACING APPLICATIONS
Customer-facing applications are those where customers interact with a company. The pri-
mary application is Web-based call centers, otherwise known as customer interaction centers.
customer interaction
Customer Interaction Centers center (CIC)
A customer interaction center (CIC) is a comprehensive customer service entity in A comprehensive service
which selling companies take care of customer service issues communicated through entity in which EC
various contact channels. It allows customers to communicate and interact with a vendors address
company in whatever way they choose. Providing well-trained customer service customer-service issues
representatives who have access to data such as customer history, purchases, and previ- communicated through
ous contacts is one way to improve customer service. New products are extending various contact channels.
B-12 Appendix B: Electronic Customer Relationship Management

the functionality of the conventional call center to e-mail, fax, voice, and Web interac-
tivity (e.g., Web chat), integrating them into one product—the CIC.
A multichannel CIC works like this:
1. The customer makes a contact via one or more channels.
2. The system collects information and integrates it with a database, then determines a
service response.
3. The system routes the customer to self-service or to a human agent.
4. The service is provided to the customers (e.g., the customer’s problem is resolved or
the question is answered).
An example of a well-managed integrated call center is that of Bell Advanced
Communication in Canada, whose subscribers can submit customer service queries over
the Web. From the Bell Advanced Web site, a customer can fill out an e-mail form with
dropdown menus that helps pinpoint the customer’s problem. Then, the call center picks
up the e-mail and either answers the question immediately or tries to have a human
response within 1 hour. Another example is a product called Customer Service
telewebs Management Suite from epicor.com, which combines Web channels, such as automated
Call centers that combine e-mail reply, Web knowledge bases, and portal-like self-service, with call center agents or
Web channels with field service personnel. Such centers are sometimes called telewebs (see Diorio 2002).
portal-like self-service. Case B.2 provides an example of a teleweb.

CASE B.2
EC Application
DEVELOPING IBM’S TELEWEB CHANNEL
IBM’s sales of technology to large and small businesses
began in the 1960s with sales representatives, individually
or in teams, calling on customers to sell their business
machines. A transformation of the sales and marketing
channels began in the 1990s with a decrease in the cost
of electronically offered support tools.
Initially, in the early 1990s, 130 call centers
provided support to customers in 150 countries, using
5,000 agents who were available to answer questions and
take orders by telephone. These centers were organized
into 25 specialized call centers by the mid-1990s, each
specializing in areas such as multilingual support or Web
responses. Concurrently, an e-commerce channel was
built at ibm.com. However, the company discovered that
online customers were seeking help from human repre-
sentatives, and call-center use increased with Web usage.
This led to the integration of the telephone-based
system and EC by connecting Web sites with customer-
support call centers known as the TeleWeb. The TeleWeb
provides seamless service, improves selling leverage and
market coverage, and reduces costs. The various communi-
cation channels used by customers now are integrated to
provide around-the-clock support for the programs and
applications offered by IBM. Such integration has
increased customer satisfaction and decreased the need for
human agents.
Specific innovations that led to the success of the
TeleWeb include dedicated telecoverage representatives
for specific business accounts; “e-sites” customized for
individual accounts; online support, 24/7; and continual
experimentation with innovative ways of handling customer
needs (e.g., “click-and-connect” or “call-me-back” buttons).
By integrating TeleWeb channels, putting more services
on the front and back ends of the buying process, and
involving humans in the middle process, IBM reaps many
benefits. Two of those benefits have been the freeing up of
agent time, which has saved millions of dollars, and larger
order sizes (30 percent more on Web-only transactions).
Sources: Compiled from Diorio (2002), pp. 209–213, and ibm.com
(accessed January 2008).
Questions
1. What are the advantages of the multichannel TeleWeb?
2. Why is IBM so committed to the TeleWeb project?
3. What were the success factors of the project?
 Appendix B: Electronic Customer Relationship Management B-13

A comprehensive description of Web-based call centers, including a tutorial,

articles, and information on leading vendors is available at callcenters.org. For more
examples of CICs and call centers, see callcenterops.com.

Intelligent Agents in Customer Service and Call Centers

To ease information overload from CRM activities, companies can use intelligent agents.
Of special interest is a suite of five agents (“SmartBots”) from Artificial-Life Inc.
(artificial-life.com). Exhibit B.3 shows how five intelligent agents function in a call
center. As shown, an agent called Web Guide can interactively assist customers to
navigate a Web site using plain English or another language. An agent called Messenger
evaluates incoming e-mail and generates auto responses. The Call Center agent provides
the problem-resolution component to the conversations between the Web Guide and
customers. It also refers the customer to a real person, if necessary. The EC agent executes
EC-related tasks, such as providing real-time information on account status. Finally, the
Sales Rep agent can create a user profile based on information collected from the other
agents. For further details on agents, see agentland.com and Gateau et al. (2004).

Automated Response to E-Mail (Autoresponder)

The most popular online customer service tool is e-mail. Inexpensive and fast, e-mail
disseminates information and conducts correspondence on many topics, including
responses to customer inquiries.
The ease of sending e-mail messages has resulted in a flood of customer e-mails.
Some companies receive tens of thousands of e-mails a week or even a day. Answering
these e-mails manually would be expensive and time-consuming. Customers want

EXHIBIT B.3 Intelligent Agents in Call Centers

Call Center Agent Customer Service

Web Guide Agent

EC Agent
E-Commerce
Server

Internet
Web Server
Product Database
Customers

Messenger Agent

Autoresponse
Sales Rep Agents
Direct Sales
and Marketing

Mail Server
B-14 Appendix B: Electronic Customer Relationship Management

quick answers, usually within 24 hours (a policy of many organizations). Several

autoresponders vendors offer automated e-mail reply systems known as autoresponders, which provide
Automated e-mail reply answers to commonly asked questions (see D’Agostino 2006 for an overview).
systems (text files Autoresponders, also called infobots and e-mail on demand, are text files that are returned
returned via e-mail) automatically via e-mail. They can relay standard information for support of customer
that provide answers service, marketing, and promotions. (See egain.com, aweber.com, and firepond.com.)
to commonly asked The eGain system (egain.com), for example, looks for certain phrases or keywords such
questions. as “complaint” or “information on a product” and then taps into a knowledge base to
generate a canned, matching response. For messages that require human attention, the
query is assigned an ID number and passed along to a customer agent for a reply.
Exhibit B.4 shows this process. Note that the answers and their relationships to
problems (questions) are stored in a knowledge base and are updated each time a
human agent provides a new solution. Such systems are known as e-mail response
management (ERM) systems (see D’Agostino 2006).
Severina Publications is a full-service Internet publishing and marketing company
that offers autoresponders as a service to clients as well as a library of autoresponders as
part of its Internet marketing strategy. Examples of the company’s responders are:
◗ 12steps@severina.co.uk retrieves a list of 12 ways to promote a Web site offline.
◗ Classified@severina.co.uk retrieves a list of classified ad sites on the Internet.
◗ Ezines@severina.co.uk retrieves a list of e-zines on the Web.
Many companies do not provide actual answers in their automatic responses but
only acknowledgment that a query has been received. Customer queries are classified in
a decision-support repository until a human agent logs in and responds. This can be
done in a call center using intelligent agents.

EXHIBIT B.4 An Intelligent Autoresponder

Human agent
7
composes an answer
answer
Updating
8
knowledge
answer

Corporate Memory
Queries-Answers
Knowledge Base,
5 YES
Business Rules, Cases

1 Customer Autoresponse is
generated with
“I have a an answer
problem”
e-mail it to
My 2
Automatic 4
Company 6
acknowledgment: Is there a NO
“e-mail received” good
match? Send problem to a
My Company 3 Check content of human agent
message (e.g., keyword
against business rules
in the knowledge base)
 Appendix B: Electronic Customer Relationship Management B-15

Sales Force Automation

Salespeople constitute the major contact point with customers (both individuals and
businesses). The more computer support they have available, the better (quicker,
more accurate) service they can provide to customers. Sales force automation (SFA) sales force automation
applications support the selling efforts of a company’s sales force, helping salespeople (SFA)
manage leads, prospects, and customers through the sales pipeline. An example of Software that automates
such an application is a wireless device that allows quick communication with the the tasks performed by
corporate intranet. The Maybelline case (Online File W1.2) provided another salespeople in the field,
example; that company implemented a reporting system involving mobile devices. such as data collection
For further discussion, see information on B2E in Chapter 6; for advanced software and its transmission.
products, see salesforce.com.

Field Service Automation

Field service employees, such as sales representatives, are on the move, and they interact
directly with the customers. Field service representatives include repair people (e.g., from
the telephone or electric company) who go to customers’ sites. Providing service employees
with mobile devices can increase customer service. Field service automation applications
support the customer service efforts of field service reps and service managers. These
applications manage customer service requests, service orders, service contracts, service
schedules, and service calls. They provide planning, scheduling, dispatching, and reporting
features to field service representatives. Examples are wireless devices, such as provided in
SFA. Some of these are wearable devices (see Chapter 9).

CUSTOMER-TOUCHING APPLICATIONS
Customer-touching applications are those where customers use interactive computer pro-
grams rather than interacting with people. The following are popular customer-touching
applications.

Personalized Web Pages

Many companies provide customers with tools to create their own individual Web pages
(e.g., MyYahoo!). Companies can efficiently deliver customized information, such as prod-
uct information and warranty information, when the customer logs on to the personalized
page. Not only can a customer pull information from the vendor’s site, but the vendor can
also push information to the consumer. In addition, these Web pages can record customer
purchases and preferences.Typical personalized Web pages include those for bank accounts,
stock portfolio accounts, credit card accounts, and so on. On such sites, users can see their
balances, records of all current and historical transactions, and more.
American Airlines is an example of one company that uses personalized Web sites
to help increase the bottom line, as shown in Case B.3.

E-Commerce Applications
As described in Chapter 1, e-commerce applications implement marketing, sales, and
service functions through online touch points, most typically the Web. These applications
let customers shop for products through a virtual-shopping-cart metaphor and purchase
the products in their shopping carts through a virtual-check-out metaphor. Customers
may also perform self-service support tasks such as checking order status, history inquiry,
returns processing, and customer information management. This provides convenience to
many customers and also saves them money, thus, increasing their satisfaction. Chapter 3
provides details on such EC applications.
B-16 Appendix B: Electronic Customer Relationship Management

CASE B.3
EC Application
AMERICAN AIRLINES OFFERS PERSONALIZED
WEB SITES
In late 1998, American Airlines (AA) unveiled a number of
features on its Web site (aa.com) that some thought made
the site the most advanced (at that time) for personalized,
one-to-one interactions and transactions on the Web. The
site’s most innovative feature was its ability to generate
personalized Web pages for each of more than 1 million
registered, travel-planning customers. How was AA able to
handle such a large amount of information and provide
real-time customized Web pages for each customer? The
answer—intelligent agents.
BroadVision (broadvision.com), a major developer of
one-to-one marketing applications, developed the AA site
using a complex software called One-to-One Application.
One of the core components needed to generate personal-
ized Web pages is intelligent agents, which dynamically
match customer profiles (built on information supplied by
the customer, observed by the system, or derived from
existing customer databases) to the database of contents.
The output of the matching process triggers the creation
of a real-time customized Web page, which for AA can
contain information on the consumer’s home airport and
preferred destinations.
By using intelligent agent technology, AA built a con-
siderable edge over its competitors. Personalizing Web
pages offered the potential to increase customer loyalty
and cement relationships with customers. The Web site
also fostered the community of AA frequent flyers.
In May 2002, AA launched the new and improved
Web site using the flexibility of Art Technology Group’s (ATG)
Relationship Management platform. The new site offers more
value and convenience and greater personalization with its
platform upgrade, new booking engine, and improved navi-
gation. Today, most competitors have similar systems.
Sources: Compiled from aa.com (accessed January 2008),
broadvision.com (accessed January 2008), and Yoon (2002).
Questions
1. What are the benefits of the personalized pages
to AA?
2. What role do intelligent agents play in the
personalization process?

Web Self-Service
The Web environment provides an opportunity for customers to serve themselves.
Web self-service Known as Web self-service, this strategy provides tools for users to execute activities
Activities conducted by previously done by corporate customer service personnel. Personalized Web pages, for
users on the Web to find example, are one tool that may support Web self-service. Self-service applications can be
answers to their used with customers (e.g., to support CRM; see rightnow.com) and with employees,
questions (e.g., suppliers, and any other business partners.
tracking) or for product A well-known example is FedEx’s self-tracking system. Previously, if customers wanted
configuration. information about the whereabouts of a package, they had to call a representative, give the
information about their shipment, and wait for an answer. Today, customers go to
fedex.com, input their airbill number, and view the status of their package shipment. Many
other examples exist, ranging from checking the arrival time of an airplane to finding the
balance of a checking account. Initially, self-service was done in voice-based customer
response systems (known as voice-activated response [VAR]; e.g., intervoice.com).Today,
these systems are integrated and complementary to Web-based systems.
Some self-service applications are done only online. Examples are using FAQs at a
Web site and self-diagnosis of computers online. Updating an address with a personnel
department can be done online or via VAR.
The benefits of Web self-service for customers are quick response time, consistent
and sometimes more accurate replies or data, the possibility of getting more details, and
 Appendix B: Electronic Customer Relationship Management B-17

less frustration and more satisfaction. The benefits for organizations are lower expenses
of providing service (up to 95 percent savings), the ability to scale service without adding
more staff, strengthening business partnerships, and improved quality of service.
It is not easy to implement large-scale self-service systems. They require a complex
blend of work processes and technology. Also, only well-defined and repeatable
procedures are well-suited for such systems. For further details and implementation tips,
see IBM (2006).
Of the various self-service tools available, three are of special interest: self-tracking,
FAQs, and self-configuration.
Self-Tracking. Self-tracking refers to systems, such as that of FedEx, where customers
can find the status of an order or service in real (or close to real) time. Most large delivery
services provide such services, as do direct marketers such as Dell, Amazon.com, and
Staples. Some auto manufacturers (e.g., Ford) allow customers to track the progress of the
production of a customized car. Some employers, universities, and public agencies will let
job applicants track the status of their job application.
Customer Self-Service Through FAQs. Every Web site needs a “frequently asked
questions”—FAQ—page that helps customers help themselves. A FAQ page lists FAQ page
questions that are frequently asked by customers and the answers to those questions. A Web page that lists
By making a FAQ page available, customers can quickly and easily find answers to questions that are
their questions, saving time and effort for both the Web site owner and the customer. frequently asked by
An effective FAQ page has the following characteristics: customers and the
answers to those
◗ The FAQ page is easy to find. The FAQ page should be available from a navigation
questions.
bar or navigation column, even if it is on a pull-down menu. Alternatively, include
a prominently placed link on the homepage and on every page offering customer
service.
◗ The FAQ page loads fast. The FAQ page should deliver answers to questions a
customer might have, and do so fast. Both purposes are best met with text; only
rarely will diagrams, pictures, or art be justified. If the number of questions or the
length of the answers increase page size enough to negatively impact loading time,
then the FAQ page should be divided into a number of smaller pages by category
(e.g., product FAQ, customer support FAQ, shipping FAQ). Alternatively, create a
FAQ index page with all the questions and link to individual pages with answers.
◗ The questions are easy to find. Do not force visitors to page down through screens
of questions and answers to find the question they want to ask. List all questions at
the top of the page and use an internal hyperlink to take the visitor to the repeated
question with an answer further down the page. After each answer, include a “back
to top” link to assist visitors who have additional questions. Questions should be
grouped by category, with headings, and in a logical order (e.g., questions about
placing an order should precede questions about shipping).
◗ The answers are written from a customer’s perspective. Answers should be written
in a simple and straightforward manner with a focus on telling the customer what to
do and how to do it. Limit the use of technical terms and clearly explain any that are
used. If the Web site serves two or more distinctive markets, more than one FAQ
page may be needed to serve each type of customer.
◗ The answers do not repeat information offered elsewhere. Writing duplicate
information is a waste of FAQ space and creates problems when the original
information is updated and the FAQ page is not. For example, the answer to the
question, “Is my credit card information safe?” should include a one-word answer—
yes—with a link to the privacy policies page. Similarly, do not be afraid to refer the
answers to complex questions to user manuals or technical documents, especially
B-18 Appendix B: Electronic Customer Relationship Management

if they are available online. Finally, if the answer to a question is best provided by an
external Web site, create a link to that page, but in a new window so that the
customer can easily return to the original Web site.
◗ Offer an opportunity to ask a question not on the FAQ. Because no FAQ page
can answer every question a visitor might ask, every FAQ page should also have an
e-mail address, telephone number, a “search this site” box, and a prominently placed
“ask your question here” box.
◗ The FAQ page is never done. Customer service representatives should always
be looking for new questions customers are asking that need to be added to the
FAQ page. Be open-minded in this process; many people may be asking the same
question in different ways. By definition, a FAQ page is not intended to answer
every question that is asked or submitted, but someone should be responsible for
looking for truly frequently asked questions. Similarly, at least twice each year
relevant staff should review each question to ensure that the question is still justified
and that the answer is correct. Perhaps every new staff person should be required to
read the FAQ page and suggest additions, deletions, and changes.

Self-Configuration and Customization. Many build-to-order vendors, from Dell to

Mattel, provide customers with tools to self-configure products or services. One of the best
ways to satisfy customers is to provide them with the ability to customize products and ser-
vices (see Chapters 1 and 2). Holweg and Pil (2001) assert that in order to have an effective
build-to-order system, companies and their suppliers must first understand what customers
want. This can be done by finding the customers’ requirements (e.g., via self-configuration)
and then linking the configured order directly to production so that production decisions are
based on real customer demand (see the Dell case in Chapter 1). In addition, customers
should be linked interactively to the company and if necessary to product designers at the
company. According to Berry (2001), the superior “new retailer” provides for customization,
offers superb customer services, and saves the customer time.

CUSTOMER-CENTRIC APPLICATIONS
Customer-centric applications support customer data collection, processing, and analysis.
The major applications are as follows. Data reporting and warehousing CRM data need
to be collected, processed, and stored. Here, we present two elements of the process:
reports and data warehouses.
Data Reports. Data reporting presents raw or processed CRM-related information,
which managers and analysts can view and analyze. Reports provide a range of tabular
and graphical presentation formats. Analysts can interact with the report presentation,
changing its visual format, “drilling up” into summary information or “drilling down”
into additional detail.
Data Warehouse. Medium and large corporations organize and store data in a
data warehouse central repository called a data warehouse so that it will be easy to analyze later on,
A single, server-based when needed. Online File W4.6 describes this process. Data warehouses contain both
data repository that CRM and non–CRM data. According to the Patricia Seybold Group (2002), data
allows centralized warehouses can be effective CRM tools if they contain the following information:
analysis, security, and customer information used by all operational CRM applications and by possible analytic
control over the data. applications (such as customer value scores); information about the company’s products
and services and the channels through which it offers them; information about the
company’s marketing, sales, and services initiatives and customers’ responses to them;
information about customer requests and the company’s responses; and information
about customer transactions. For more information, see Dutta and Roy (2006).
 Appendix B: Electronic Customer Relationship Management B-19

Data Analysis and Mining

Analytic applications automate the processing and analysis of CRM data. Many statisti-
cal, management science, and decision support tools can be used for this purpose (e.g.,
see Turban et al. 2008 and Seybold 2006). Analytic applications process a warehouse’s
data, whereas reports merely present that information. Analytic applications are tools
that analyze the performance, efficiency, and effectiveness of an operation’s CRM appli-
cations. Their output should enable a company to improve the operational applications
that deliver customer experience in order to achieve the CRM objectives of customer
acquisition and retention. For example, analytic applications may be designed to provide
insight into customer behavior, requests, and transactions, as well as into customer
responses to the corporation’s marketing, sales, and service initiatives. Analytic applica-
tions also create statistical models of customer behavior, values of customer relationships
over time, and forecasts of customer acquisition, retention, and desertion. See SAS
(2007) for additional information and examples.
Data mining is another analytic activity that involves sifting through an immense
amount of data to discover previously unknown patterns. In some cases, the data are
consolidated in a data warehouse and data marts; in others, they are kept on the Internet
and in intranet servers. For more on data analysis and data mining, see Online File W4.6
and Nisbet (2006).
An example of analytic CRM is provided in Case B.4.

CASE B.4
EC Application
HOW HSBC MEXICO ATTRACTS NEW BUSINESS AND
MAXIMIZES EXISTING RELATIONSHIPS WITH CRM
The retail banking environment is very competitive and is
operating in a rapidly fluctuating business environment
(currency exchange changes, interest rate fluctuations,
deregulations, online banking). With 1,900 branches, over
17,000 employees, and over 6 million customers, this bank
faces both opportunities and stiff competition. Using CRM,
HSBC Mexico was able to become one of the fastest growing
financial services firms in Mexico. This is how they did it.
The bank’s executives decided to use EC to target
customers with intelligent offers that can increase prof-
itability. This is done by using CRM solutions that provide
the right product or service, at the right time, and through
the right channel.
In the competitive environment, it was necessary
to keep the existing customers and develop more prof-
itable relationships with them. The CRM targeted the
most valuable customers (including the ones that have a
potential to become so). The company needed to find such
customers and then reach out to them with excellent
services and one-to-one intelligent offers—that give them
what they really need or want.
Using analytic CRM (mainly data mining, due to
the large number of customers and data about each) and
campaign management software (both from infor.com,
a global software company for enterprise solutions),
HSBC Mexico was able to improve its interactions with
customers, support the cross-selling of services, and
identify and retain the most valuable (and profitable)
customers. The solution also works in real time, so when
an employee talks to a customer, or answers an e-mail,
the employee can find the customer’s profile online in
a second.
A major portion of the project was to integrate the CRM
with other information systems as well as align it with the
corporate business goals. Using the software, HSBC is able to
plan, develop, execute, manage, and analyze the results of
multichannel marketing campaigns. The channels are: e-mail,
Web portal, ATMs, and face-to-face conversations. The bank
also pushes special offers and uses relationship building
programs (e.g., preferred relationship-based pricing). The
information collected also helps to improve asset allocation
strategies to the branches.
(continued)
B-20 Appendix B: Electronic Customer Relationship Management

CASE B.4 (continued)

In its first year, the bank’s CRM offers generated
23,000 new accounts, and its CRM-based campaigns brought
in 22 percent of all credit card accounts, 12 percent of all
personal loans, and 8 percent of all car loans. The retention
rate of profitable customers increased from 77 percent to
90 percent.
The bank is planning even more one-to-one offerings.
Also, by coordinating offers in real time across its network of
ATMs, call centers, online banking sites, and retail branches,
the company continues to increase its offers’ acceptance rates.
Finally, HSBC Mexico captured Gartner’s prestigious
CRM Excellence Award for Large Enterprises.
Sources: Compiled from Infor (2006) and Lager (2006).
Questions
1. Why was it necessary to define the business
goals?
2. Why does the bank want to raise the retention
rate?
3. Enter infor.com and check their SSA Outbound and
Inbound Marketing Products. Which one was used
here? Why?
4. What CRM tools are being used here?
5. Many banks offer gifts to anyone who opens
an account. Are CRM-based decisions to go to
one-to-one incentives really superior?

ONLINE NETWORKING AND OTHER APPLICATIONS

Online networking and other applications support communication and collaboration
among customers, business partners, and company employees. Representative technologies
are discussed here.

Online Networking
Representative online networking tools and methods include the following:
◗ Forums. Available from Internet portals, such as Yahoo! and AOL, forums offer users
the opportunity to participate in discussions as well as to lead forums on a “niche” topic.
◗ Chat rooms. Found on a variety of Web sites, they offer one-to-one or many-to-
many real-time conversations.
◗ Usenet groups. These are collections of online discussions grouped into communities.
(See usenet2.org for details.)
◗ Blogs and Wikis. Blogs and wikis are becoming the major online networking tools
(see Chapters 2 and 8). Blogs enable companies to approach focused segments of
customers. In addition to Stonyfield Farm (Chapter 2), airlines, cruise companies,
banks, and similar businesses sponsor blogs for their customers. Companies can
learn from the blogs and try to improve their operations to make customers happier.
For example, by monitoring its blog U.S. Cellular learned that many teenagers were
unhappy due to the limited time on their cell phones. The company then started
offering unlimited “call me” minutes to attract the teenagers. Note that wikis can be
considered collaborative whiteboards because everyone can participate.
◗ E-mail newsletters. These newsletters usually offer the opportunity for readers
to write in, particularly in “Let us hear from you” sections. Users can find
newsletters of interest by browsing a topic in a search engine. Many newsletter
services (e.g., emarketer.com) invite you to sign in. Others (e.g., aberdeen.com)
only allow access to articles to users who register. Usually registration is an opt-in
option (i.e., a person can opt out of the list at any time).
◗ Discussion lists. A discussion list is a redistribution tool through which an e-mail is
sent to one address and then is automatically forwarded to all the people who subscribe
to the list. The following text discusses these last two networking tools in more detail.
 Appendix B: Electronic Customer Relationship Management B-21

E-Mail Newsletters
The goal of an e-mail newsletter, according to Kinnard (2002), is to build a relationship
with the subscribers. The best beginning is to focus on service by providing valuable
information about an industry, which may range from tips (“tip of the day”) to a
full-blown newsletter consisting of extensive text and graphics.
Because of the current bulk of e-mail advertising and marketing, customers may
initially be distrustful of e-mail marketing. Therefore, newsletter articles, commentary,
special offers, tips, quotes, and other pieces of information e-mailed to people must be
presented in a professional and attractive manner. As customers find that they can
trust the information provided, they will supply a company with more demographic
and personal information that the company can add to its customer database.
Sample resources for information on e-mail newsletters are list-universe.com and
new-list.com.

Discussion Lists
Discussion lists automatically forward an e-mail to all the people who subscribe to the
list so that they can react to it. Discussion lists are distributed post-by-post (each recipient
gets each e-mail from other members individually) or as digests (all e-mails are compiled
and sent out according to a schedule—for example, once per day).
The three main reasons a company may use such lists are (1) to learn more about
customers in a particular industry (assuming customers will react to the e-mail), (2) to
market the company’s products and services, and (3) to gather and share information
with a community of individuals with similar interests. If a company hosts a discussion
list, it can define the subject matter to be discussed, determine the frequency of the
publication, and even make it a revenue-gathering tool. Another source for more
information on discussion lists is edwebproject.org/lists.html.
The Creative Enterprises Network at creativethought.com, About.com’s chat site at
chatting.miningco.com, and Usenet 2 at usenet2.org provide additional information
about networking online.

Mobile CRM
Mobile CRM refers to the delivery of CRM applications to any user, whenever and mobile CRM
wherever needed, by use of the wireless infrastructure and mobile devices. The delivery of CRM
Many wireless and mobile m-commerce tools can provide customer service. applications to any user,
As described in Chapter 9, services such as finding your bank balance, stock trading, and whenever and wherever
checking airline arrival times are available with wireless devices. The major objective is to needed, by use of the
provide customer service faster and more conveniently. Furthermore, companies can use wireless infrastructure
a “push” rather than a “pull” approach to giving customers needed information (e.g., by and mobile devices.
sending SMSs). The government also is going wireless with some of its public services.
Finally, many employees’ and partners’ services are provided in a wireless environment.
The advantages of mobile CRM over traditional CRM are shown in Exhibit B.5.
Mobile video, which became commercial in 2007, also has become a platform for
fostering communication with customers.

Voice Communication and Understanding by Machines

The most natural way of communicating is by voice. Given the opportunity to do so,
many customers prefer to connect to the Internet via voice. During the 1990s, VAR
systems became popular. Today, Web-based voice systems are taking their place.
Companies such as bevocal.com and TellMe (tellme.com) provide one solution for
accessing the Internet by voice. It involves converting voice to text, processing and
B-22 Appendix B: Electronic Customer Relationship Management

EXHIBIT B.5 Traditional vs. Mobile CRM

Traditional CRM Information Gap
Service Call, Product Service Dispatch,
Pitch, Negotiations Applications Product or Part Availability,
Pricing Approval, New Leads

Frustrated Users
Mobile Phone
Time Delay
Handheld
Incomplete
Pager Information

Personal Organizer Higher Incidence of CRM Systems

Errors

Customer Feedback, Territory Management,

Contact Information, Applications Forecast Pipeline
Product Requirements
Mobile Connected World
Applications: Product Pitch, Negotiations, Pricing Approval,
Product and Marketing Updates,
New Leads

Mobile Phone CRM Systems

PDA
Handheld Pager

Personal Organizer
Benefits: Virtually no delay, complete information, and lower incidence of errors

Applications: Customer Feedback, Contact Information,

Territory Management,
Forecast Pipeline

Source: The Business Case for Mobile CRM: Opportunities, Pitfalls, and Solutions. Pleasanton, CA: PeopleSoft Press, 2002. © 2005 Oracle.
All rights reserved.

transmitting the text message, and then converting text found on the Web to voice.
Even more advanced systems will be available in the near future.
Imagine the following scenario: A traveler gets stuck in traffic on the way to the
airport. She calls the airport on her cell phone and hears. “All agents are busy. You are
important to us; please stay on the line.” With Visual Text to Speech technology
from AT&T, she can click on “talk to agent” on her Internet-enabled smartphone.
The smiling face of a virtual agent appears on the phone screen. The traveler tells the
agent her problem and asks to reschedule her flight. A voice confirmation is provided in
seconds, and action is taken within a short time.
Most people are more comfortable talking with a person, even a virtual one, than
they are interacting with machines. The smile and the clear pronunciation of the agent’s
voice increases shoppers’ confidence and trust. For details, see Lohr (2002).
Speech analytics, a technology that monitors word usage, analyzes voices of callers to
call centers, recognizing words such as “need assistance” and “problems,” for example.
Another technology is emotion detection, which can track voice volume and pitch to alert
managers to angry callers.
Speech recognition by computers is critical to the operation of efficient call centers
because it cuts costs considerably and enables real-time responses. The use of voice portals
 Appendix B: Electronic Customer Relationship Management B-23

such as tellme.com is increasing rapidly. Although not perfect, speech recognition is critical
for self-service. For an overview, applications, and resources, see D’Agostino (2005). Related
to speech recognition is language translation by computers.

Language Translation
Some people prefer customer service to be in their native or selected language. Web site
translation is most helpful in serving tourists. A device called InfoScope (from IBM) can
read signs, restaurant menus, and other text written in one language and translate
them into several other languages. See Wisegeek (2006). Currently, these translators are
available only for short messages. For more on this topic, see Chapter 12.

On-Demand CRM
Like several other enterprise systems, CRM can be delivered in two ways: on-premise
and on-demand. The traditional way to deliver such systems was on-premise—meaning
users purchased the system and installed it on site. This was very expensive with a large
upfront payment. Many SMEs could not justify it, especially because most CRM
benefits are intangible.
The solution to the situation, which appears in several similar variations and names,
is to lease the software. Initially, this was done by ASPs for SMEs. Later, Salesforce.com
pioneered the concept for its several CRM products (including supporting salespeople),
under the name of On-Demand CRM, offering the software over the Internet.
The concept of on-demand is known also as utility computing, and it is discussed in detail
in Online Chapter 14. On-demand CRM is basically CRM hosted by an ASP or other on-demand CRM
vendor on the vendor’s premise, in contrast to the traditional practice of buying the CRM hosted by an ASP
software and using it on site. or other vendor on the
However, according to Overby (2006), the hype surrounding hosted, on-demand vendor’s premise; in
CRM must be weighed against the following implementation problems: contrast to the
traditional practice of
◗ ASPs can go out of business, leaving customers without service.
buying the software and
◗ It is difficult, or even impossible, to modify hosted software. using it on-site.
◗ Upgrading could become a problem.
◗ Relinquishing strategic data to a hosting vendor can be risky.
◗ Integration with existing software may be difficult.

The benefits are:

◗ Improved cash flow due to savings in up-front purchase
◗ No need for corporate software experts
◗ Ease of use
◗ Fast time-to-market
◗ Vendors’ expertise

The Role of Knowledge Management and Intelligent Agents in CRM

Automating inquiry routing and answering queries requires knowledge, which can be
generated from historical data and from human expertise and stored in knowledge bases
for use whenever needed. Examples would be the answers to FAQs or the detailed
product information requested by customers. Companies need to automate the provision
of such knowledge in order to contain costs. Intelligent agents support the mechanics of
inquiry routing, autoresponders, and so on. Some autoresponders, for example, use
agents that use keyword recognition to guess what the query is about. The answer may
be correct in only 80 percent of the cases.
B-24 Appendix B: Electronic Customer Relationship Management

Kwok et al. (2001) developed a much more intelligent system that can answer less
structured and nonroutine questions. This is done via intelligent information retrieval
systems, using a technology called natural language processing.
For more on intelligent agents in CRM, see Chapter 4. Exhibit B.6 provides a
summary of some of the applications presented in this chapter, as well as some
additional applications.

CRM SUITES
Several vendors offer CRM software suites (see Team Assignment 2). Notable are
NetSuite CRM+ (from NetSuite), Sforce (from salesforce.com), and Siebel On Demand
(from crmondemand.com). Details on the capabilities of CRM suites are available at
Caton (2004). Also, adding visualization to CRM is useful (see Ganapathy et al. 2004).

EXHIBIT B.6 Customer Service Facilities and Tools

Facility or Tool
Search and comparison tools
Free services, samples, and entertainment
Tracking accounts or order status
Frequently asked questions (FAQs)
Chat rooms and discussion boards
Product (service) customization and configuration
Detailed product information, tutorials, demos,
and more
Support services, maps, news
Troubleshooting tools
Arrange for live communication
Animated agents
Personalized Web pages
Automatic response to e-mail inquiries
Customer interaction (call) centers
Description
Search for items, compare prices (see Chapter 3).
Customers love free stuff (e.g., netbank.com provides free online
bill payment).
Self-service for finding current information; popular in
e-banking, online stock trading, shipping (e.g., FedEx, UPS,
USPS), and checking the status of an order (e.g., amazon.com).
Self-service for answering common questions.
A place to discuss problems and opinions with others; creates
a community of users; company experts monitor discussion
and help customers resolve problems.
Customers can use customization tools to configure thousands
of products and services (e.g., dell.com, nike.com); also
popular in B2B.
Customers can access expert information (1800flowers.com),
tutorials, technical advice, and more (e.g., livemanuals.com
provides information on how to assemble products; people
can learn about tires at goodyear.com).
Information of general interest to site visitors; supports the
interest of the community visitor.
Self-service problem resolution; intelligent diagnosis and
recommendation tools (e.g., prismnet.com, woodfinishsupply.com).
Customers may arrange to talk or chat in real time with
a company representative.
Animated Web site agents provide guided tours and make
customers feel as if they have personalized service.
Can display a customer’s frequent-flyer mileage, bank balance,
or purchase history; vendors also use the accumulated
information from these pages for advertisement and cross-selling.
Provides a quick response to customer queries. Answers are first
provided by software agents. If answer is not satisfactory,
a human answer can be provided.
Customer interaction (call) centers aggregate all inquiries,
distribute them so they can be answered, and manage all
communication.
 Appendix B: Electronic Customer Relationship Management B-25

Section B.5 ◗ REVIEW QUESTIONS

1. Discuss key customer-facing CRM applications.
2. Describe customer-touching CRM applications, including Web self-service.
3. Describe customer-centric CRM applications.
4. List online networking CRM applications.

MANAGERIAL ISSUES
1. How is our response time? Acceptable standards
or metrics for response in customer service must be
set. For example, customers want acknowledgment
of their query within 24 hours. Many companies
seek to provide this response time and do so at a
minimum cost.
2. How do we measure and improve customer service?
The Internet provides an excellent platform for deliv-
ery of superb customer service via a variety of tools.
The problem is that the returns are mostly intangible
and may only be realized in the distant future.
3. Is CRM for real? How can it be justified? CRM is
a necessity; most companies must have some
CRM in order to survive. The issue is how much
to provide. However, it is difficult to financially
justify CRM, and there are many CRM software
programs from which to choose. Therefore, a
careful analysis must be done (see Holland and
Arbell 2005).
4. Do we have to use electronically supported
CRM? For a large company, it is a must. It is not
economically feasible to provide effective CRM
otherwise. Some e-CRM programs, such as e-mail
response, are inexpensive. However, large comput-
erized call centers are expensive to install and
operate.

KEY TERMS
Analytic CRM B-8 Data warehouse B-18 Sales force automation (SFA) B-15
Autoresponders B-14 e-CRM B-3 Telewebs B-12
Customer interaction FAQ page B-17 Web self-service B-16
center (CIC) B-11 Metrics B-7
Customer relationship Mobile CRM B-21
management (CRM) B-2 On-demand CRM B-23

QUESTIONS FOR DISCUSSION

1. Many question the short-term return on investment
of CRM tools. Explain why.
2. How would you convince a CEO to invest in Web
self-services? With what issues could the CEO
counter your advice?
3. Discuss how CRM can increase the profitability of
a business.
4. Discuss when on-demand CRM is more beneficial
than standard CRM (see Patton and Wailgum
2006 and Overby 2006).
5. Discuss the benefits of analytical CRM to customers
and to the selling company.
B-26 Appendix B: Electronic Customer Relationship Management
INTERNET EXERCISES
1. Enter dell.com and examine all the available
options. What CRM services are provided?
2. Enter support.dell.com and examine all the
services available. Examine the tracking services
Dell provides to its customers. Finally, examine
Dell’s association with bizrate.com. Write a report
about customer service at Dell.
TEAM ASSIGNMENTS AND ROLE PLAYING
1. Each team should select an overnight delivery service
company (FedEx, DHL, UPS, U.S. Postal Service,
and so on). The team will then identify all the online
customer service features offered by the company.
Each team then will try to convince the class that its
company provides the best customer service.
Real-World Case
1-800-FLOWERS.COM USES DATA MINING
TO FOSTER CUSTOMER RELATIONSHIP
MANAGEMENT
1-800-FLOWERS.com (1800flowers.com) is a true
Internet pioneer. It had an Internet presence in 1992
and full-fledged e-store capabilities in 1995. Online
sales are a major marketing channel (in addition to
telephone and fax orders). Competition is very strong in
this industry. The company’s success was based on
operational efficiency, convenience (24/7 accessibility),
and reliability. However, all major competitors provide
the same features today. To maintain its competitive
advantage, the company transformed itself into a
customer-intimate organization, caring for more
than 15 million customers. The challenge was to make
1-800-FLOWERS.COM the only retailer that customers
really trust when shopping for gifts online or by phone.
The company decided to cultivate brand loyalty
through customer relationships, which is based on
3. Enter oracle.com/siebel and
crmondemand.com. Find what
it offers in its CRM OnDemand
product. Why does Siebel collab-
orate with IBM’s OnDemand
program?
2. Each team is assigned a CRM software company
(e.g., Siebel, Salesforce, NetSuite, Accpac, or
E.piphany). Find the company’s leading products
and prepare a presentation of their capabilities.
All teams should consult Caton (2004).
intimate knowledge of customers. How is this accom-
plished? SAS software spans the entire decision-
support process for managing customer relationships.
Collecting data at all customer contact points, the
company turns that data into knowledge for under-
standing and anticipating customer behavior, meeting
customer needs, building more profitable customer
relationships, and gaining a holistic view of a cus-
tomer’s lifetime value. Using SAS Enterprise Miner,
1-800-Flowers.com sifts through data to discover
trends, explain outcomes, and predict results so that
the company can increase response rates and identify
profitable customers. The rationale for the customer
intimate effort is to build loyalty. In addition to sell-
ing and campaign management, the ultimate goal is to
make sure that when a customer wants to buy, he or
(continued)
 Appendix B: Electronic Customer Relationship Management
she continues to buy from 1-800-Flowers.com and can-
not be captured by a competitor’s marketing. To build
that kind of loyalty, it is necessary to know your cus-
tomers and build a solid relationship with each one
of them.
Identifying Each Customer
At 1-800-Flowers.com, the objective is not just about
getting customers to buy more. It is about making sure
that when they decide to purchase a gift online or by
phone they do not think of going to the competition.
Loyalty is earned through the quality of the relation-
ship offered. The difficulty is that not every customer
wants the same relationship. Some want you to be
more involved with them than others; some will give
you different levels of permission on how to contact
them. At the end of the day, the data mining software
helps the company identify the many different types of
customers and how each would like to be treated.
The company plans its ad campaigns based on the
results of the data mining done on a one-to-one basis.
For example, some customers like to be notified about
sales, others do not. Some prefer notification via
e-mail. The data for the analysis is derived from the
data center, which is backed-up by AT&T technology.
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