CRM ON THE WEB

CRM ON THE WEB
By Del Fasoranti – Event Director for Webcom 2000

Synopsis
We all know the old cliché that finding a new customer costs more than five times as much as retaining an existing customer. This figure far understates the figure for e-commerce business. Attracting visitors to a web site is costly, but keeping them loyal and encouraging them to spend more is the essence of customer relations management. It requires building sophisticated relationships and having a robust infrastructure to ensure that all aspects of the customer relationship are thoroughly tested and working to the highest level of efficiency. A good looking web site is not enough: it must provide what the customer wants, whether thats product information, ways to contact the company, ordering, tracking an order once placed, background on the company or making a complaint.

Many existing customer relationship management stratagems are appropriate for e-business too, but the nature of e-commerce means the customer expects a much speedier response. This demands automated, but personalised email responders, backed up by sophisticated customer databases which can tailor responses to customer requirements. Customer call centres are often necessary to ensure that the customer can talk to a human when necessary. Opt-in mail lists are now an essential part of the relationship, with many internet users finding too much unsolicited and irrelevant email clogging up mailboxes.

    Webcom 2000 incorporating Intranet Expo - UKs leading event dedicated to intranets, extranets and e-commerce
 18 -20 April 2000
 Olympia 2, London
 www.web-com.co.uk
 Tel: 0870 7511 454
 Fax: 0870 7511 461
January 2000

CRM ON THE WEB
By Del Fasoranti – Event Director for Webcom 2000

1160 words

Keeping customers is much cheaper than finding new ones. Few traditional businesses would be surprised by this statement, yet many web businesses appear to find customer service problematic, despite the fact that replacing web customers probably costs 10 times as much as keeping them - twice the usual figure quoted for non-web businesses. Newcomers to e-commerce believe that attracting new business is cheap - a simple matter of ensuring high rankings on search engines.

The reality is very different. The dot.coms were amongst the worlds biggest advertisers in the traditional media last year. Not many will come clean about how much each new customer is costing. But when the cost of acquiring customers and the profit they generate are compared, the figures are often truly frightening. The true e-commerce businesses learned early on that customer relations management (CRM) is critical to business success. Customers who find a site difficult to use or feel neglected quickly move elsewhere. After all, customers rapidly become adept at finding out where to go to get what they want. If they dont get it at one site there are usually dozens of others only a click or two away.

Keeping those customers clicking at your site and discouraging them from clicking elsewhere is a sophisticated art, demanding not only well oiled CRM strategies, but robust hardware and software and, of course, a superb product and service offering. Many web sites are truly appalling in their disregard of the actual needs of their target audience. Even some of the best known names on the web have made mistakes on the way. A survey of Fortune 500 company web sites found that many gave no easy way of contacting the company and, of those that did, a significant proportion failed to respond. For companies whose business is entirely electronic, such a slipshod response would be instant death, which is why the best e-commerce sites such as Amazon (the online book retailer) and eBay (online auctions) have invested hugely in designing easy to use sites with state of the art infrastructures behind them.

According to the Danish e-Commerce Association, only 5% of visitors to e-commerce sites actually buy. The other 95% are merely doing product research or comparing price. Converting just 1% of these browsers into customers would increase business by 20%. Another finding from the same survey showed that convenience and ease of use were absolutely paramount in the decision to buy. The top reasons cited why people shop on the web are:
Easy to place an order      83%
Large selection of products   63%
Cheaper prices         63%
Faster service and delivery    52%
Detailed and clear information about what is being offered   40%
No sales pressure               39%
Easy payment procedures            36%
(source Jakob Nielsen's Alertbox, February 1999)

These figures are worth bearing in mind when developing a web and CRM strategy. Price is not even a secondary factor, but is only the third most important reason for buying, suggesting that sites which get everything else right could consider putting up prices without necessarily losing customers. One company that initially failed to make it easy for customers was Barnes and Noble, the worlds largest book retailer (in terms of ‘bricks and mortar). It was so concerned with building its existing brand on the web that its site was a mess: slow to download and not attuned to online customer needs. Yet barnesandnoble.com soon became almost as adept as its fiercest online competitor. Significantly Amazon is now suing Barnes and Noble over its ‘single click ordering facility on which it claims a patent.

It is no good sitting back once an order has been placed. An order should be acknowledged and further information about delivery given. If problems ensue about stock, make sure you are proactive in telling the customer - do not wait until he contacts you with a problem. If the customer does encounter a problem make it easy for him to contact you eg by giving a special priority telephone number or email address. Complaints can be turned into opportunities to cement a relationship if the response is fast and helps to solve the problem.

Luckily, technology can be a great advantage in managing relationships with e-customers. By definition, these are likely to be e-literate, comfortable with searching for information and ordering over the web and communicating by email. On the other hand, they are less likely to be impressed by technology per se: they want service which meets their needs, not unnecessary ornamentation which often gets in the way. They also demand useful, relevant information. To ensure that they get it, there needs to be a careful strategy to extract data on the customer and use that intelligently to tailor the service.

Customers often complain about junk mail or email and are understandably wary about releasing personal details. But if they have confidence in the organisation to which the information is being divulged and which uses that information sensibly (and better, offers real incentives to extract the information), then there is less likelihood of complaints about irrelevant email. Keeping the focus on the customer will avoid alienation through irrelevant information or offers. As is often pointed out, even though email is cheap, business should be sparing in its use. Already 7 billion emails are estimated to be sent each day in the US: most are unread. Make sure that customers opt-in to lists and can opt out easily. Dont make the mistake of British Airways - once the ‘worlds favourite airline - which allows customers to subscribe to a travel service list but states boldly that ‘unfortunately we cannot respond to email at present!

Also key to good CRM is that all customer information should be stored and accessible to everyone who needs it in the company. How many of us have spent time on the phone talking to one person after another repeating the same information about our lost order, broken part or whatever? Customers must be instantly identifiable, with their order history, preferences, address details all to hand. There is absolutely no excuse for e-businesses not to do this, but it demands robust infrastructure, customer focused strategies and management commitment to make sure it happens right first time.

Business leaders should take the opportunity to educate themselves on the rapidly evolving world of CRM on the web by attending key events such as Webcom 2000, which will have on show all the technologies and information necessary to implement and develop a successful strategy. The UKs longest running and most successful corporate web event, it takes place at Olympia 2, London on 18 - 20 April 2000. Leading e-commerce solution providers will be on show, eager to demonstrate how they can help new and existing businesses to flourish in an electronic world. Webcom also incorporates a major two-day conference where participants can hear directly from speakers at the sharp end, and how they have grappled with the problems and the rewards of building CRM strategies to help their businesses. To register for a free ticket just visit the website at www.web-com.co.uk or phone the Hotline on Tel: 0870 7511 454.