How To Do CRM Online: Three Big Ideas for 2008

How about this for a New Year’s resolution: Find out who your customer is.

We don’t mean the people in internal departments using IT or the business sponsor who shakes the money tree to finance projects, but the people who pay your company for its product or service. Real customers.

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Just 10% of the 558 IT executives we polled in our latest “State of the CIO” survey identified “external customer focus” as critical to their jobs. That’s not enough. The external customer is exactly whom CIOs should understand, says Rick Roy, senior vice president of customer operations at CUNA Mutual Group, a $3 billion company that provides services to credit unions.

IT, operations and customer service are melding, he says, especially in the financial services industry. But even across industries, understanding how customers interact with the company must inform the work of IT managers. Doing so can mean more profits for the company, but it’s also “a tremendous opportunity for career development,” he says. Roy was CIO at CUNA Mutual before taking over customer operations in December 2005.

Following are three ideas about the intersection of customers with technology that IT leaders should take into 2008:

Let folks talk; then listen to what they say

Giving customers online tools to review your site, service and products can spur sales. Shoppers are willing to pay 20 percent more for services receiving an “excellent” rating from fellow consumers, than for the same service receiving a “good” rating, according to research firms comScore and The Kelsey Group. The firms surveyed 2,000 Internet users in October about the influence of peer reviews on purchasing decisions.

Ninety-seven percent of those who said they made a purchase based on an online review said they found the review to have been accurate, the survey says. Perhaps most telling is that respondents said reviews generated by consumers had a greater influence than those done by professionals.

That kind of interactivity is another layer to manage in the relationship with customers, but consumers now expect to collaborate with each other and with their chosen companies, says Bill Band, an analyst at Forrester.

The problem, Band says, is that existing CRM suites from Oracle and SAP, for example, don’t have built-in capabilities for blogs, forums, wikis and social networking. Analyzing the information generated in those interactive outlets requires special tools, he says.

Nielsen BuzzMetrics, a unit of media researcher Nielsen, has tools to mine what it calls customer-generated media–the opinions and preferences people express online. Marketing consultant Andy Beal, who runs the Marketing Pilgrim site, has several ideas for tracking what Internet users are saying about your company, including tips on monitoring blog conversations and social media sites such as Technorati.

As in so much regarding online retail, Amazon is the granddaddy in customer reviews. But customers can chat and review products at sites ranging from discounter Lillian Vernon to luxury carmaker Mercedes-Benz.

Twenty-two percent of retail sites now provide online chat, compared to 12% of sites across industries, says The Customer Respect Group, a research and consulting firm that helps companies improve their treatment of customers online.

Gaining traction, the group says, is “proactive chat,” where visitors are invited to converse based on their online behavior. For instance, features such as “click to call a customer service agent” can help companies limit site — and shopping cart&emdash;abandonment.

Besides, block discussion at your site and you know people will talk elsewhere.

Protect while you serve

With all this interactivity comes data. Lots and lots of data for and about customers. IT managers must help steer internal discussions with marketing, legal and sales departments about whether and how to collect, triangulate, analyze&emdash;and most importantly, protect&emdash;such information. Privacy lapses repel customers. Yet there are no federal data breach laws with which companies can comply; the regulations differ state to state.

This means that IT managers in all industries, not just retail, must batten down networking infrastructure. Healthcare and insurance companies, for example, must guard personal data even while opening up some internal files to customers who want to choose and change benefits online, as well as review medical data about themselves.

Senior IT managers also have to take their heads out of the technology so they can learn how information flows through their companies, says Tom Bowers, managing director of the consulting firm Security Constructs and a former chief security officer at a Fortune 100 pharmaceutical company.

Bowers says, for example, that CIOs should study how customers and employees use e-mail, Web mail and chat forums to share information. Doing so, he notes, is the only way to understand where security policies fall down in the real world.

“CEOs don’t want to be on Larry King Live explaining a breach,” he says.

And CIOs don’t want their employers to join companies such as TJX, Monster.com and The Nature Conservancy, all of which made our list of the most egregious data breaches of the year.

Understand trade-offs

A home page laden with promotions tailored to returning registered customers will be slower to download than a sleek one light on advertising. If internal metrics show that visitors respond to such in-your-face marketing — buying right off the home page, for example — then a potentially frustrating slow download might be worth it.

Amazon, for example, thinks that the math works, says Matt Poepsel[cq’d.ksn], vice president of performance strategies at Gomez, an online consulting company. Poepsel monitored Amazon’s performance during the holiday shopping season and watched while ShopNBC, which is a smaller, less cluttered e-commerce site, consistently beat Amazon in download time. “Amazon made a conscious decision to develop a rich landing page,” Poepsel says, “because there’s a lot of value they derive through the home page.”

Blockbuster and Overstock, on the other hand, offer simple home pages that allow for quick and consistent downloads, he says.

CIOs should watch out. Web designers have high-powered workstations and spiffy tools like Ajax and Javascript. But customers may not be able to deal with such features. “Some companies don’t understand bringing performance to the last mile,” he says. “Design looks good in a data center but not to users on other end of a cable modem [who might not be] getting a good experience.”