Getting to Know Customers Through CRM

By Meridith Levinson

February 15, 2004 — CIO — Wouldn’t it be nice if just once, one of those surly airline employees offered a sincere and unequivocal apology for losing your luggage or for a delayed flight? If you fly first class with Continental Airlines, you may finally get that apology.

Since 2001, the Houston-based carrier has been enhancing the in-flight reports it provides to flight attendants just before takeoff with more detailed information on passengers. For example, in addition to indicating which passengers ordered special meals, the expanded reports flag the airline’s high-value customers and detail such things as whether they’ve had their luggage lost in the recent past or experienced a delayed flight. Armed with this information, flight attendants can now approach these customers during the flight to apologize for the inconveniences. Such high-touch, personalized service increases customer loyalty, particularly among Continental’s most valuable patrons, and that loyalty in turn drives revenue. Continental breaks customers into different levels of profitability: Since building its new system, the airline reports earning an average of $200 in revenue on each of its 400,000 valuable customers, and an additional $800 in revenue from each of the 35,000 customers it places in its most profitable tier?all because it accords them better service.

Since the mid-1990s, companies have been trying to make their enterprise and customer data pay off. They know this data has value, but they don’t know how to effectively extract it. In their mining efforts, companies have built huge data warehouses, sunk millions of dollars into CRM systems and endured painful change management initiatives?often with lackluster results. Four of this year’s corps of Enterprise Value Award winners, however, have found ways to exploit customer and enterprise data to their advantage. Academic Management Services (AMS), a provider of student loans that was acquired by Sallie Mae in November 2003, was able to expand its business in early 2001 into the lucrative loan consolidation market by developing an interface to its various customer and product information systems. Executive recruitment company Korn/Ferry International bolstered its management assessment business, which specializes in evaluating executive talent, and its executive search business by creating a system that automates the company’s esoteric process for gauging an executive’s or manager’s leadership capabilities. Both Continental Airlines and retail cooperative Ace Hardware built enterprise data warehouses (EDWs) that have helped them boost customer loyalty through more effective target marketing campaigns and profitability through more powerful pricing structures.

The stakes for each of these companies’ success in building systems were high: Both Ace and Continental spent multimillions to build their data warehouses. Korn/Ferry risked losing credibility in the marketplace, as well as market share, if its automated system for evaluating executive talent didn’t work effectively because it had put so much importance on the system. And even though AMS made an initial investment of only $311,500 to build its CRM interface, known as the ICE (Integrated Counseling and Enrollment) system, it was spending much more to build a call center that fully depended on this application. These companies’ investments succeeded because they first analyzed their business needs and goals, reengineered existing business processes to take advantage of the data they were capturing, and put technology in place that’s both easy to use and supports the needs of users as well as the company’s business objectives. And they haven’t forgotten that it’s the customer-facing employee who can make all the difference in whether or not a customer feels well served?and that no technology, however superior, can make up for that human touch.