The customer is king

Nordstrom Inc.'s salespeople are getting ready to throw out their little black books.

Instead of filling pages with hand-scrawled notes about customers' sizes and designer preferences, 20,000 sales clerks at the Seattle chain's 137 stores soon will be using new software and mobile devices to track their customers' tastes and match them to new merchandise arrivals and store promotions.

The applications, which will be available via new point-of-sale and mobile devices that are in development now, include Blue Martini Clienteling software for managing customer product information and preferences, and Blue Martini Relationship Marketing for creating targeted messages for customers. The software will gather data from sales transactions and correlate it with data the salespeople input.

What makes this aspect of Nordstrom's customer relationship management (CRM) effort unique is that it's intended for in-store employees. CRM rollouts usually stop short of the retail sales floor, and often, valuable customer data collected at the point of sale goes unused by retailers.

Historically, the three pillars of CRM have been sales, marketing and service. Sales applications were built around salesforce automation and have grown to include account management, opportunity management and incentive compensation management. Typical users are direct sales staff and the management teams who monitor sales pipeline information.

Marketing applications run the gamut from advertising and e-mail marketing campaigns to lead management and customer analytics. Typical users are in corporate marketing departments. Service applications encompass field service automation and contact center capabilities. Typical users work in call centers or in the field handling customer service requests.

But after a blizzard of high-profile CRM failures over the past few years - marked by unrealistic goals and ill-suited functional choices - companies are looking not just at the three traditional CRM buckets, but at what makes sense for their businesses.

For Nordstrom, what makes sense is getting customer information to retail sales personnel in real time, whether those customers are conducting business on the Web, in the store or over the telephone.

In Nordstrom's case, if a new shipment of a specific brand of shoes arrives in the store, a salesperson could be prompted to notify customers who like that brand, either by sending an e-mail message or calling a customer directly, depending on the customer preferences.

Typically, those who are selling on the retail floor depend on walk-in traffic to make a sale. Blue Martini's software gives Nordstrom's salespeople a virtual edge to establish stronger ties with their repeat customers.

Service with a smile

Even though CRM has been around for at least a decade, customer service remains a trouble spot, particularly over the Internet.

In its latest study, CustomerRespect.com found that 37% of Fortune 100 companies offered no reply to a general inquiry submitted to their Web site -- despite offering either an online form or e-mail contact.

But that's not the case with Defense Logistics Information Service (DLIS). This division of the Defense Logistics Agency within the Department of Defense has made online response a high priority.

From its Battle Creek, Mich., base, DLIS provides electronic catalogs and other reference information on all items of supply in the Defense Department -- that's a whopping 6.5 million active items. Military and civilian personnel use the catalogs to order supplies and materials. In all, the DLIS supports 18 wholesale sites, 578 retail sites, 2.25 million Defense Department employees and 40 international governments.

The DLIS has had a call center for many years to handle phone and e-mail inquiries, as well as a Web site. But a 1999 study showed DLIS that it wasn't making the most of its expensive call center resources. The study revealed that about 70% of inquiries were basic questions about logistics information management products and services.

A team at DLIS set out to make its Web-based resources more user-friendly -- hoping to offset some of the repetitive calls. DLIS opted to create a Web-based "virtual representative," or vRep, built using NativeMinds' NeuroServer technology. NeuroServer, which runs on Microsoft Windows and Sun Solaris, employs pattern-matching technology that interprets question type, context and subject, and applies algorithms to determine the best answers from among available data sources.

The DLIS vRep, named Phyllis, provides automated, round-the-clock customer service.

"The human beings in our call center were often just typing into a system and reading back what's on the screen. The vRep can do that just as well -- and a lot cheaper," says Raymond Zingaretti, program manager at DLIS.

The vRep is more than a simple search tool, Zingaretti says. The vRep has a human face, to make interactions less intimidating. And instead of simply returning a lengthy list of documents that contain a particular keyword, Phyllis can engage in a dialog with a user to determine what the user needs.

Phyllis -- named after FLIS, or the Federal Logistics Information System -- answers customer questions, phrased in natural language, with conversational dialogue. It can interpret what people mean, Zingaretti says.

Someone looking for an item name that they need for a requisition form might ask Phyllis, "What is the proper item name for XYZ?" The old Web way required users to browse the Web site and find the online section for products, find the application that will help look up item names, type the item description in the search box, hit enter and get the results, Zingaretti says. Phyllis can search the appropriate database and return the answer in one step. "Phyllis gives our customers an easier, more direct way to find the information they're looking for," he says.

The vRep's expressions change from happy to confused, depending on whether she can provide an answer to a customer's inquiry. Submit profanities, and Phyllis portrays a disappointed look and then gently reprimands the asker: "Excuse me, I'd be glad to handle your question, that's no problem, but I'm not able to handle your abusive language."

This consistency of answers and attitudes is a benefit that can't always be achieved with live personnel. "With the vRep, no matter how many times the question gets asked, you get the same answer," Zingaretti says.

Zingaretti and his team review Phyllis' conversation logs daily and constantly update its database to provide better service. Usage of the vRep is climbing steadily. Phyllis' accuracy rate hovers at about 85%, Zingaretti says.

Travel time

The good news for travel and hospitality companies is that online travel sales are hot.

Research firm comScore Networks Inc. reports that online travel sales represent the largest consumer e-commerce category, and its growth continues to outpace the non-travel sector. Travel is gaining an increasing share of total consumer online dollars: 43% in the first three quarters of 2002, up from 39% during the same period last year.

The bad news is, along with opportunity comes competition.

Six Continents Hotels --- which has assets that include the InterContinental, Crowne Plaza, Holiday Inn, Holiday Inn Express and Staybridge Suites hotels -- is using CRM to fuel its online sales efforts. Personalized, stellar service is key to its efforts, says Del Ross, director of Internet business at Six Continents.

"Our product is a lot more than a comfortable bed and a clean room," Ross says. "Our product is every interaction that you have with us, from the moment you start thinking about your trip to when you turn in your key before you leave."

The hotel chain recently completed a migration from multiple Web platforms to ATG's Commerce Suite, which runs on Windows, Solaris or Hewlett-Packard Co.'s HP-UX.

With ATG's Scenario Personalization technology, Six Continents is working on targeted marketing campaigns and personalized offerings. The new Web site features include the ability to store favorite hotels, so business travelers can save their preferences. The Web site automatically will display the rates for which the person qualifies. "We can make the reservation itself an almost-effortless exercise for them," Ross says. "They pretty much just have to tell us whether they want to order breakfast in the morning or not."

In addition to its new ATG software, Six Continents has new wireless reservation services to capture the business of people who make travel plans while in transit. With the new wireless services, people with Palm VII devices and Web-enabled mobile phones can search for hotel information, make reservations, receive itinerary and confirmation information, and access their customer loyalty accounts.

The two upgrades share a common goal of improving customer service. "The combination of the economic environment, the competitive environment and the political environment has made people very conscious of value," Ross says. "They want to know that their business matters to you."

Call center savvy

LightBridge is focusing much of its CRM energy in the call center -- it's the lifeblood of its business.

LightBridge, of Burlington, Mass., makes credit-checking and fraud-detection software, and provides outsourcing services for communications providers. Its specialty is handling call center operations for companies that offer mobile services, which require screening, qualifying and activating new wireless customer accounts. Last year, 300 LightBridge agents handled more than 12 million calls.

To handle growing call center volumes while keeping costs in check, the company recently completed a $2 million renovation of its call center operations, deploying Blue Pumpkin workforce optimization software and Genesys call routing software.

From Blue Pumpkin, LightBridge is using Director-Enterprise, Activity Manager and Advisor. The applications, running on Windows servers, handle tasks including planning workforce levels, monitoring the skills agents acquire, tracking how agents spend their time and measuring employee performance against corporate expectations.

From Genesys, which is a division of Alcatel, LightBridge has rolled out Enterprise Routing, which lets it route calls based on real-time statistics, customer-stored data and customized business rules; and Internet Contact, which lets LightBridge integrate e-mail management and Web-based interaction capabilities into its call center. The Genesys suite runs on a Solaris platform.

Recently, LightBridge made one minor routing adjustment that's saving the company $150,000 a quarter by reducing headcount requirements, says Kelly Stropp, call center operations manager. LightBridge typically maintains multiple small call queues, each staffed by about five agents. With the old call routing system, some agents were achieving only 30% utilization. Fine-tuning the Genesys system to better monitor queues and route calls to the most appropriate agent has helped LightBridge increase its agent utilization average to more than 65%.

Lighter-weight skills-based routing products couldn't give LightBridge that flexibility, Stropp says. And manual scheduling techniques are too unwieldy to adapt on the fly to changing conditions. "That's what really gives us the savings -- scheduling correctly to the new call routing," he says.

This story, "The customer is king" was originally published by Network World.

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Copyright © 2002 IDG Communications, Inc.

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