Tuesday, October 04, 2005

The Real Meaning of CRM

CRM is a great business term. Its use evokes thoughts of intricate systems that contain mountains of information about customers; information ready for anyone to use in order to sell more widgets. Three simple letters whose meaning changes greatly depending upon the speaker.

An entire software genre has been spawned around the variety of ideas about what constitutes CRM. Seems that each interpretation results in a new software product competing in an already crowded market.

To really understand CRM involves looking at each letter in the acronym and defining the word behind the letter.

The letter “C” represents Customer; the most vital of all assets a company can possess. Customers are a unique kind of asset; they have free will. The customer decides when to part with their money and to whom shall the money be given. Customers decide the worth of everything they purchase. When the value of the goods or services received are of equal or greater value than the cost, exchange happens. Lower that value and free will appears; the customer finds another source or a substitute product. Too often businesses forget that the customer always has a choice – always. Not to belabor the simple rules of business but if you want your customers to bring you more customers, always provide more value than you charge. Make sure customers are telling their friends about their “great find” not their latest “horror story”. Yes, “C” is what everyone thinks it is but how many businesses really focus attention on the true value of the Customer?

The letter “R” is the word Relationship. How many businesses really have a relationship with their customers? A relationship is stronger than a friendship. Friends send cards on birthdays and holidays. Relationships involve frequent communication. Friendships are the occasional shared meal or phone call. Relationships are built on a deep concern for the other person. Unfortunately, many businesses today operate in a strictly reactive mode. When the customer appears, the business jumps to attention and tries to build a relationship. Friendships may work that way. Relationships do not.

When relationships involve customers, the rules of relationships still apply. Communication must be bi-directional. Concern about the outcome of business transactions must be sincere. Relationships reflect the depth of knowledge each party has for the other. A strong customer relationship is reflected in the nature of the pro-active communication provided to the customers. The information delivered in known to be that which is desired. The method of delivery is that which the customer has chosen. It’s not enough to be responsive when problems arise. In a customer relationship, the responsiveness occurs before the customer is aware of the problem. That’s the sign of a true relationship.

So we have covered the Customer and the associated Relationship all businesses desire to have with their customers. All that’s left is the “M”.

Finally we get to the letter “M”. Most have heard that “M” stands for Management. Do customers want to be managed? Been in a department store lately? How enjoyable is it to have a sales clerk hovering around constantly asking if any help is needed? Repeated responses of “No thanks” does nothing to send the clerk off to help other shoppers. What that clerk was trying to do was manage the shopping experience.

Have a spouse of significant other? Do they want to have their relationship managed? Sure, a relationship is a continual work in progress affair, but who wants to feel managed in a relationship.

Clearly, when looking at customer relationships, management is not something that should be applied to the relationship.

The real meaning of “M” in CRM is the word Model. The term Model implies a logical process or design for something. A model relative to a customer relationship defines how the customer will be treated, the level of service they will receive and how the customer’s value will be acknowledged. The model outlines the steps that will be taken to build, reinforce and grow the relationship a vendor has with each and every customer.

Models are not about a specific interaction media, not about a specific customer segment nor are they about a specific geography. A true Customer Relationship Model encompasses all this and much more.

Such a model does not happen in a vacuum nor does it happen automatically. As such, every model needs to include methodologies for managing the implementation of the model. Thus it is not the relationship that is managed but the model itself that is managed. Managers charged with seeing the model implemented utilize management practices to insure that the full and complete relationship model is a reality.

As with all management efforts, measuring results is vital to understanding the progress being made towards achieving a goal. In CRM, this is also true. Through measurement, the effectiveness of management towards implementing the desired model comes about. What is measured and how it is measured is a function of the model and the management overseeing the model.

Thus the “M” is not representative of a single term but actually a series of 3 terms: Model, Management and Measure.

Relationships with customers are growing in importance as market geographies shrink, competitive differentiators disappear and distribution channels consolidate.

Software that promises to deliver CRM is mislabeled as it is part of the overall model but clearly not the model itself. CRM is much larger than any single piece of software.

The next time you hear someone talk about a “CRM Solution”, ask them to define the meaning of CRM. Their answer will highlight how much they have thought about 3 very important words: Customer, Relationship and Model.

If you would like help designing an optimal Customer Relationship Model, please call me regarding available consulting services: 602-492-1088

Friday, August 26, 2005

SIP: The Telephony Community Hits an Inflection Point

Session Initiation Protocol or SIP is an exciting technology that promises to revolutionize the telephony industry as we know it. SIP is an industry standard for the connecting of IP endpoints. In plain English, this means SIP is a standardized method of connecting phones together, connecting phones to IVR ports, connecting phones to voice mail systems and connecting wired and wireless devices together. In short, SIP is the beginning of the end of limitations imposed by proprietary PBXs and their expensive support contracts.

In their place, SIP offers a business model of replaceable parts in which customers can choose their vendors based on service, competitive pricing and capacities without a concern for being locked into a single vendor solution.

The SIP model is producing an inflection point that parallels that which occurred in the Local Area Network (LAN) marketplace 20 years ago with the development of a single-chip Ethernet controller. This development drove the price of network adapters down to less than $100. Almost overnight, the data world lost interest in any connectivity standard other than Ethernet. Even token ring technology quickly became viewed as proprietary rather than an industry standard. The cost-to-performance ratio of Ethernet commoditized data connections and rendered almost a dozen other “standards” obsolete. SIP is the “Ethernet chipset” of the telephony world.

As with all inflection points, new and exciting business opportunities are a primary byproduct. In the telephony industry, the focus of consumers and technology provides will shift to applications and away from proprietary hardware.

Applications like the intelligent routing of all forms of communication will quickly become a necessity. As computers and phones overlap further and further, tools will be needed to allow phone users to filter, control and re-route incoming and outgoing communication to suit their immediate circumstances.

Spreading the cost of applications such as intelligent routing and silicon assistants across the hundreds or thousands of users in an enterprise means everyone can regain control of their lives without having to shut down the very devices that keep them connected; all at a cost that makes the ROI very reasonable.

These types of applications will provide a “communication umbrella” which will oversee the flow of all forms of communication; applying personal “interruption rules” to each device. Today, the only real way to filter incoming interruptions is a binary method; turn the device on for interruptions an off for peace and quiet. Tomorrow, consumers will have tools available to them which put them in complete control of who reaches them when and where without having to resort to turning the devices off.

Communication umbrellas are an ideal software subscription business for the carrier market looking to boost revenue through add-on products and services. Homeowners, small business owners and enterprise users looking to try out new technology before committing to a large scale deployment are all potential customers. Imagine controlling who goes straight to voice mail, who gets forwarded to your mobile phone and whose call launches a series of calls in order to find you wherever you are. This same technology also provides voice-controlled changes to the rules, is tied in with your calendar, can place calls on your behalf through voice commands, can conference callers based on voice commands and can read your e-mail to you. When all the communicating devices are easily connected, applications such as this are no longer a pipedream as the inhibiting integration nightmare is no longer part of the equation.

SIP is the long awaited catalyst that is unleashing the application community to revolutionize the methods by which we communicate with one another. Its impact is that basic and that profound.

If you would like help understanding the impact SIP could have on your business, please call me regarding available consulting services: 602-492-1088

Tuesday, August 23, 2005

The Business of Call Center Reporting

The results of a recent call center survey, “Merchants Global Contact Centre Benchmarking Report 2005“ proves what many have suspected for years; our patience is wearing thin. Dimension Data’s recent report clearly highlights that more and more of us are choosing to hang up rather than wait for an agent to take our calls. For the third year in a row, the rate of abandoned calls has reached a new high: 13.3% of all calls placed never reach an agent. Appears agents are not being added to keep up with the increasing volume of calls.

Not surprising when you consider that at the same time, almost half of the call centers surveyed report that cost savings is a major focus of management. Seems that in the battle for cost savings versus service quality, cost savings is winning. Perhaps this singular focus on cost savings within the call center is simply a logical outcome of the data provided to the managers upon which decision are based.

Take a look at the content in the ACD reports supplied to the managers of a call center. In them will be found numbers indicating peaks, valleys, totals and averages for things like speed of answer, call arrival rates, talk times, abandon rates and hours worked; all valuable data that illustrates how efficient the call center staff is at taking and completing calls. Also included in these reports are figures indicating the cost of the staffing the call center for the reporting period.

While these reports are great for the managers overseeing the work of the agents, from a business perspective, these reports provide a very myopic view of the outcome of the work performed. An ACD report in the hands of a P & L owner represents a guide to where a lot of money is being spent. In other words, the call center represents a very big “L”. When a P & L owner is being asked to find ways of reducing costs and the ACD report appears, is it any wonder that reducing the number of agents appears to be a great way to achieve the goal with a minimum of impact. When you realize that 60-70% of the cost of operating a call center is personnel related, reducing staff is an easy solution. It’s also the worst when made based on ACD data alone.

The better decision starts with the call center implementing reporting tools that capture effectiveness data alongside the efficiency data. Effectiveness data measures the outcome of each call; was anything sold, how much, to whom, based on what incentive, is the problem resolved. These types of data points mapped against the individual agents can provide terrific insights into the customer base as well as the real agent skills. Effectiveness data allows the business to measure the impact of changes in service against changes in customer behavior.

Effectiveness reporting requires a system through which the raw data can be captured, stored and indexed as well as a system through which the data can be analyzed. Unfortunately, current ACD systems are not equipped to capture the necessary data elements much less analyze the captured data.

Not to worry. Today, there are software solutions from a handful of vendors that can provide true effectiveness reporting. These solutions capture the necessary data to highlight relationships between service delivery changes and customer behavior changes.

The results of implementing effectiveness reporting can be profound. Which customers are receptive to up-sell and cross-sell offerings? Which customers will increase their purchase if the agent spends a couple of extra minutes describing add-on extras? Which agents are better able to sell to which segment of the customer base? Which customers are willing to accept help from an agent when having trouble with a self-service system like an IVR or web site?

When effectiveness reporting is combined with traditional efficiency reporting, the business then has the information it needs to make truly intelligent business decisions.

Thursday, July 14, 2005

The Meaning of Optimization

Great word to use in business: Optimization. It conjures up all kinds of thoughts about high performance, streamlined methods and maximum ROI. Yet, what is so great about this word optimization is also what makes it so hard to use in a business setting. Exactly what does optimization mean?

The dictionary definition of optimization is “the procedure or procedures used to make a system or design as effective or functional as possible”. While this definition is acceptable to most people, it does not provide a picture of what optimization looks like. How does one know when something has been optimized? What measure or set of measures properly reflects the changes indicating that optimization is occurring? I suggest that such a picture cannot come from a definition of the word as the very subject is fraught with a wide variety of viewpoints.

In the call center, what one constituency sees as the most “effective” system may be quite the opposite from what another group sees as the most “effective”.

A call center supervisor whose income is tied directly to the volume of calls the agents are able to handle during a given time period views “optimal” as having enough agents to never have a caller abandon and for callers to never hear an expected wait time message.

This is in stark contrast to the call center business analyst whose focus is on minimizing the number of agents per shift while maintaining a competitive stance from a service level standpoint.

Let’s not leave out the VP Sales who sees the responsive, knowledgeable call center agent as a great source of product differentiation and thus, optimization means continual efforts to maintain if not grow this point of differentiation.

Each of these 3 views is valid yet in conflict with the other 2. “Optimizing” the call center for any 1 of these views will negatively impact the other 2. So how do you optimize a call center?

The starting point is an agreement on the overall goals of the optimization effort. Goals that take into account the needs of all effected parties. Goals that take into account the larger enterprise-level goals. Goals that have specific measures of success and for which there are systems in place to provide ongoing status reports.

Every organization should be engaged in an ongoing optimization effort. The worst thing such an effort can produce is a better understanding of the conflicting goals found in most organizations. The best outcome is a highly focused organization that knows the goals they are striving to achieve, knows why the goals are important and is able to continually measure their progress towards achieving those goals.

Take a look at your own company. Can you find your optimization initiatives?

Wednesday, April 20, 2005

Understanding Voice Over IP – The Basics

As I travel the world teaching students about the world of contact centers, I am amazed by the growing number of students who are asking about Voice over IP (VoIP). Most are confused about how VoIP differs from a normal PBX when it comes to delivering calls and many of these students are wondering if the PBX as we know it today is the antique many vendors suggest that it is. I am also frequently asked about why the move to VoIP is not a stampede. The answer to these questions begins with an understanding of how calls are made using a PBX as compared to how calls are made using VoIP.

When a call is placed from a standard telephone to another standard telephone, the phone company dedicates a set of wires or circuits for the exclusive use of the call. This dedicated set of circuits is essentially an electronic model of 2 soup cans and a piece of string. The “string” in the case of a phone call is made up of a number of wires that are electronically connected together end-to-end by the phone company. Like the children’s can and string model, a modern phone call is between 2 phones or end points with the line or “circuit” being dedicated to the caller and the recipient for the life of the call. As soon as one of the parties on the call hang up the phone, all of the connected wires or circuits are released for use by other calls; it is like someone cutting the string between the soup cans. The key concept to grasp is that a phone call involves a dedicated connection between 2 points for the exclusive use of carrying voices from one end to the other and back.

VoIP operates using a different model. In the VoIP world, all sounds are converted from analog form, like those you hear through a standard telephone handset, into digital form, a stream of 1’s and 0’s. The stream of 1’s and 0’s is assembled into a series of small groups called packets. These packets travel across a variety of wires along with a packets from other devices until they reach their destination. Thus when something is spoken during a VoIP call, a digital stream of 1’s and 0’s is created which are broken up into a numbered series of packets. When that series of packets reaches the other end of the call, the digital stream is re-assembled and converted back to its native analog form and heard through the phone.

Thus you have the connection between the world of voice carriage and the world of data carriage. VoIP, in a nutshell, is the carrying of voice traffic over the traditional data processing hardware. Instead of voice switches electronically connecting lots of lines together to form a dedicated circuit, VoIP uses a series of data routers to move packets of data from one phone to another. It is the potential cost-saving opportunity to share the data network for both computer traffic and voice traffic that has brought about the interest in VoIP.

The advantages of sharing a single network for both voice and data are obvious:
• Why pay for voice lines and data lines that all go to the same places when 1 line will do?
• Why have 2 sets of staff, 1 for the voice equipment and 1 for the data equipment, when I can have a single staff?
• Why pay for long distance calls between offices when I can use my existing data network?

Those who understand only the basics of VoIP see these advantages as compelling reasons for an immediate shift from the PBX world to the pure IP world. Those who understand the true nature of VoIP know how to properly evaluate when VoIP makes sense.

The Dirty Little Secrets

A single network to carry both voice traffic and data traffic rather than a network for data and a separate network for voice is certainly compelling. Less staff, less complexity and less vendors appeals to most business people. Before anyone charges off to replace their existing PBX with a series of VoIP switches, it is important to understand some very important differences between the traditional data world and the traditional voice world. Knowledge of these differences is vital for accurately assessing the value of VoIP in any given situation. These differences can be categorized into 4 areas: line sharing, network expansion, capacity planning and prioritization.

Let’s start with line sharing.

The VoIP model is very similar to the old-fashioned party-line phone system found in the traditional voice world. In a party-line system, multiple people share a common phone line. When you want to place a call, you must first wait for the line to be available. If you pick up your phone to make a call and hear that someone is already on the line, you must wait until they are done before placing your call. When you have secured the line to place your call, the line is yours until you hang up the phone. As long as the line is in use by another party, everyone else who shares the line must wait before they can place their calls.

Fortunately, computers do not “talk” to each other in the same way people do. Computers have been designed to talk in short, quick bursts. Access the line, ship some data to another computer and release the line. Thousands of times per second, computers can get on and off a line. This pattern of short bursts allows many computers to share a single line without seriously impacting the other computers on the same line. Human conversations are not shorts bursts of words but exchanges of sentences, sometimes lengthy sentences. VoIP combines these opposite patterns together on the same wire and it comes with a cost.

Computers have been designed to wait patiently for the line to become available. In the voice world, waiting to hear what the other person has said is not an acceptable condition. We have been conditioned to expect that when talking into a phone, the party on the other end hears what is said as soon as it is spoken. Telephones are not walkie-talkies; we don’t accept delays on the telephone. The need for immediate access to the network segment means limiting how many devices, computers and phones, can share a given segment.

So how many is too many? It depends. It depends on the speed of the network. It depends upon the number of simultaneous phone calls. It depends upon the amount of data traffic being generated by the computers. In other words, it requires regularly evaluating network bandwidth consumption by all the connected devices. Too much traffic combined with too little bandwidth means it is time to expand the network.

In the voice world, expansion of the overall capacity of the PBX occurs every time a phone is connected. Each phone is connected to the PBX via a dedicated line. No sharing. No waiting. No worries. In the data world, the capacity of the network segment remains constant regardless of the number of devices connected. Expand from 10 devices to 20 devices; the effective bandwidth available to each device has effectively dropped by 50%.

Thus we come to the issue of capacity planning. In the VoIP world, expanding capacity in order to accommodate additional devices requires adding network segments. Adding network segments costs money and personnel’s time. Whether or not these costs are less than those to expand the PBX must be evaluated on a case-by-case basis. There is also the issue of bandwidth usage for each device. Adding segments without regard for usage patterns may only produce a short term solution. Proper measurement of bandwidth consumption is necessary for expansion activities to produce a long-term solution.

Once the capacity issues that lead to the expansion issues have been worked out, there is one remaining hurdle to overcome; prioritization.

Line sharing in its simplest form treats all devices as equals. No one device has a priority higher than any other device when it comes to using the line. In the world of computers, that may be fine as delays are tolerated by design. In the voice world, delays are not acceptable.

When phones and computers share a line, it is important that phones be given access priority. The good news is that most vendors of data routers have developed some form of prioritization into their products. Interoperability of prioritization schemes between vendors is not a given. The only international standard for prioritization is included in a forthcoming IP standard called IPv6. Today, some vendors support IPv6 and others do not. The only way to guarantee end-to-end prioritization is to use routers from a single vendor or only use IPv6 for all the network devices. That may or may not be an option.

So does VoIP have a place in the enterprise? Absolutely. Remote agents are ideal for VoIP connections. It is usually cheaper to use a single connection for both voice and data than buying separate, dedicated lines for both voice and data connections. Branch offices are a similar situation as the cost of implementation is generally less than the cost of installing and maintaining both a PBX and data router.

Small workgroups within the enterprise are like a branch office in overall requirements. Segmenting their voice and data needs can be done with relative ease provided the term “small” is accurate.

Even large enterprises can be ideally suited for VoIP implementations. It all comes down to a thorough evaluation of traffic patterns, network capacity and cost.

The bottom line regarding VoIP is very simple. If you understand the underlying technology, have the tools to continually measure bandwidth consumption, have an end-to-end packet prioritization scheme in place and have network design expertise, VoIP can be a very viable way to deliver voice calls to the desktop. If you think a pilot project of 10 users translates directly into an enterprise configuration of 100 or 1000 users, let me be the first to say, “You have been warned.”