Published September 14, 1999

ERM: Good Customer Service & Customer Retention Strategies

The State of ERM Today

To say that companies could be doing a better job retaining customers would be gross understatement. The first article in this series recounted a recent study by The Yankee Group [http://www.yankeegroup.com], showing that two-thirds of the customers who leave a company do so because "they feel they have received inadequate care." A chilling figure, given that over 90 percent of dissatisfied customers never come back, and that the cost to regain a lost customer is over 12 times the cost of originally acquiring that customer. To the extent that Enterprise Relationship Management can help a company hold on to customers, it fills a critical need.

Good ERM means making sure your customers feel important to the company, that they can communicate effectively and that they receive the necessary attention for their concerns. As shown last week, the Internet and e-mail are important ways of doing this, since they're always available to the customer, allow detailed product information and order-taking in the same system, are able to provide customer service, troubleshooting and assistance 24/7, and impose no incremental labor or communications costs.

Doug Goddard, president of Toronto's The Client Server Factory, [http://www.tcsf.com] says as much customer service as can be placed on the Web must be. "I don't think we're far away from Web-based ERM being expected of a well-run company," he says. "If you're in software, you'd better get there if you're not already."

And simply having ERM mechanisms does not mean you're doing a good job on ERM. The New York Times published a study this past July testing the e-mail response of 21 major U.S. corporations on the scale of Nike, Disney, Charles Schwab and Goodyear. Five firms didn't respond at all to an e-mailed query. Responses that did trickle in took somewhere between Anheuser Busch's rapid-fire response of three hours and Disney's own sweet time of 15 days. Bear in mind Pat House's warning in SFA Plus two weeks ago: Although a major company may seem solidly entrenched today, the shift to eBusiness will determine who will be successful in coming years.

ERM will get better -- simply because, in many cases, it can't get much worse. Last spring, Intellimedia [http://www.intellimedia.com] surveyed the Web sites of 10 major national fast food chains, finding that three provided absolutely no way to contact the company via the Web site, four gave postal contact information, and only three provided an e-mail address.

Two of those three needn't have bothered: When e-mail was sent to them, according to Intellimedia, "one responded in three days with a well-written response, one took 13 days to reply with a well-written response, and one replied within one day. However, the one-day firm's entire reply was, and we quote, 'We at Customer Service Department, take of e-mails relates to complaints or comments to company, only.'"

Not all Internet ERM case studies are horror stories. Cisco is doing billions of dollars of business and customer support a year over their Web site, and Dell does well over a million dollars a day. Yet such instances remain few and far between.

Nevertheless, the trend is clearly to make ERM a higher corporate priority. Forrester Research Inc. [http://www.forrester.com] in Cambridge, Mass., has estimated that companies can trim 43 percent off their customer service costs by offering service online.

Intellimedia theorizes that the adoption of e-mail, the most important application on the Web for ERM, has been a "quiet revolution." When one thinks of sales opportunities and the Internet, one visualizes millions of consumers surfing the Web and browsing cool sites. But each of these people uses an e-mail account. And companies around the world are wiring their employees into e-mail by the hundreds of thousands. But e-mail is not flashy or showy. Consequently, Intellimedia says, few companies -- precious few outside high-tech -- have proper staff, procedures, equipment or specialized software to deal with volumes of e-mail. Instead, they foist the problem off on an overworked Webmaster, whose solution often is to close his eyes and hope they go away. They do.

ERM isn't expensive to do, especially when compared to the costs of losing customers. Internet technology is inexpensive, with high returns. Clearly this message has gotten through some heads in the business world, and will profit those who listen.