The CCM Connection. B o o sting Profits By Tying CRM To Business Pro ce sses Thro u g h C u stomer Communication Management

Transcription

1 The CCM Connection B o o sting Profits By Tying CRM To Business Pro ce sses Thro u g h C u stomer Communication Management May 2005

2 Abstract Over the last decade, many businesses have invested in Customer Relationship Management (CRM) initiatives to increase customer satisfaction and loyalty to boost their revenue streams. At the heart of CRM is a set of activities that come under the heading customer communications. These activities include everything from billing to direct mail marketing to e-marketing to electronic bill presentment and payment (EBPP) to customer call center operations. To maximize the effe c t i ve n e ss of these customer co m m u n i ca t i o n s it is necessary to integrate them with the appropriate business processes they connect with, however disparate those processes may seem to be. Businesses need to make these processes talk to one another, then take those integrated information streams and plug them into their CRM effort. This allows the organization to benefit from examining all relevant customer information before reaching out to the customer. It is this integration of key business processes and their related information streams into CRM that defines and drives Customer Communication Management (CCM). CCM harnesses the power of specific businesses processes and ties them to the CRM initiative in order to create, develop, manage, and maintain more effective customer communications. By approaching customer communication as this kind of catalyst for change, companies can create greater organizational efficiency while optimizing the profit potential of every customer communication. CCM can uncover opportunities for lower costs and higher revenues both by developing customer relationships that are more rewarding in every sense and by streamlining business processes so they are less costly, more integrated and more effective. To realize its full potential, CCM must be implemented enterprisewide. But this needn t be done all at once. There are seven gateways seven points of entry to begin reaping the CCM benefits. 1

3 Table of Contents Overview...3 Background...3 The Situation Today...4 Driving the move to CCM (sidebar)...5 The Problem...6 The Scope of CCM...7 The Seven Gateways...8 Growing Your Business with CSS Adoption and EBPP...10 Unlocking the Potential...12 Concluding Thoughts

4 Overview Background Reducing customer acquisition costs, improving customer retention and maximizing the lifetime value of each customer continue to be key objectives of all successful companies. However, the environment in which companies operate to achieve these goals has changed. Competition has intensified and customers are demanding to be served individually via an ever-increasing number of channels. Companies therefore need to develop economical ways to provide all the services the marketplace demands. They need to use all the data, business intelligence, business geographics and market analysis available, to create a range of effective physical and digital customer communications. While this might appear to be a daunting challenge, it also presents a significant opportunity. The successful companies of today and tomorrow will not only tap into new technologies to improve their service offerings and achieve better operational effectiveness, they will also leverage those technologies to create new products, services and offerings that result in better communications and enhanced marketing abilities. Customer Communication Management (CCM) will be part of that strategy. In the last 10 years or so, business has reengineered its fundamental focus. The impetus for this change was born in the 1980s, with the critical discovery that businesses derive more revenue from sales to existing customers than from sales to new ones. In fact, the American Management Association (AMA) reported that, on average, 65 percent of a company s business comes from retained customers. In addition, the AMA discovered that it costs five times more to acquire a new customer than to make a sale to an existing one. Most importantly, over the lifetime of a customer relationship, the profitability of each transaction rises, as the cost of sales goes down. This, of course, is due to lower marketing costs, more efficient transaction processing and reduced servicing needs. By the mid-1990s, these insights along with developments in IT and telecommunications drove the creation of Customer Relationship Management (CRM). CRM was the first strategy that could increase revenues and profits by concentrating exclusively on an existing asset the customer base. At almost exactly the same time, the Six Sigma phenomenon was causing companies to begin looking at the things they could do to their business processes that could help measurably improve their bottom line. So they began designing and monitoring everyday business activities to minimize waste, maximize resources and improve customer satisfaction. These business process improvements helped companies do a better job of cost control and delivered a better customer experience. Forward-thinking organizations began to focus on getting each process to work as efficiently as possible on its own, and then looking for ways to get related processes to work together more effectively. 3

5 The Situation Today The two major business issues that are top of mind for executives today are increasing revenues and holding down costs. Productivity and efficiency are the watchwords; survival depends on creating new opportunities. Increasing customer satisfaction and building customer loyalty are a major focus, because they directly impact incremental revenues. All these issues are the drivers behind a strong and continuing corporate interest and investment in CRM. In spite of reports of its demise, global investment in CRM, according to Forrester Research, will rise from $42.8 billion in 2002 to $73.8 billion in 2007, while IDC predicts the value will be $101 billion by that year. This is backed up by a META Group survey showing that 75 percent of organizations plan to spend the same or more on CRM in the next 12 months. It appears that CRM s reported failures to deliver have been the result of a number of things: exaggerated forecasts of its impact, inaccurate or missing benchmarks against which to gauge improvement, and, most important, a failure to change the corporate culture to one that is genuinely customer-focused. CCM functions at the point where business processes and CRM converge. In fact, CCM integrates those business processes into CRM systems and activities. The net effect of properly executed CCM is synchronization the moment at which customer communication processes, information, delivery channels and messages are suddenly operating in sync, instead of in isolation. And this can be accomplished without companies having to change the fundamental way they do business. Synchronizing customer information processes and messaging channels will also uncover opportunities for cost savings from lower mailing costs to increased customer self-service. Synchronizing processes with CRM initiatives also boosts profits by lowering operating costs; it also grows revenues by both raising customer satisfaction and enabling better-targeted marketing offers with a higher rate of return. CRM is fundamentally customer facing and outwardly focused. CCM takes this external customer information and links it to internal business processes to create a more comprehensive picture of the customer s behavior vis-a-vis the company. Customer information becomes customer knowledge. Through CCM, companies can better understand customers as individuals, as well as more accurately group them by category, or possibly by trend category. Organizations can therefore make bettereducated decisions about how to leverage their relationship with each and every one of their customers. Using CCM to integrate business processes and CRM at the point of their convergence can be highly effective in helping top-level executives reach their most challenging corporate goals. CRM is fundamentally customer facing and outwardly focused. CCM takes this external customer information and links it to internal business processes to create a more comprehensive picture of the customer s behavior vis-a-vis the company. Customer information becomes customer knowledge. 4

6 Customer Relationship Management (outwardly focused) Business Process Management (internally focused) CCM infuses CRM with BPM S t ronger custo m e r re l a t i o n s h i p s G re a ter custo m e r loya l t y M a ss p e rs o n a l i z a t i o n C u stomer data b e comes custo m e r k n ow ledge enabling m o re info r m e d b u s i n e ss d e c i s i o n s / st ra te g i e s At the point where CRM and business processes converge, CCM synchronizes all customer information, communication channels and messages. Driving The Move To CCM C u stomer self service is gaining acce p ta n ce : N e a r ly 47 p e rcent of co n s u m e rs want more self-service options a d va n ces in te c h n o logy, including vo i ce re co g n i t i o n s o f t w a re, are opening new doors of opportunity. (Source : G roup 1 Software, Inc.) Pe rsonalization is the new pre re q u i s i te to custo m e r loya l t y : Va r i a b le data printing of both promotional and t ransactional documents has raised the bar. Rete n t i o n and cro ss-selling remain top priorities, with custo m e rs expecting co n s i stent, acc u ra te information acro ss all channels. Research carried out in the U.K. during 2004 fo u n d that 88 percent of co n s u m e rs pre fer to deal with co m p a n i e s that treat them with a personal touch. (Source: The Henley C e n t re, UK) Rising co m m u n i cation co sts are impacting the bottom line: Call ce n ter expenses have more than doubled in the past five ye a rs, while declining mail volumes are thre a te n i n g e conomies of sca le. (Source: Group 1 Software, Inc.) Regulations are exerting pre ss u re on business pro ce ss e s : S a r b a n e s - O x ley, Gra m m - L e a c h - B l i ley, HIPAA, Basel II and the National Do Not Call Registry are re s h a p i n g co m m u n i cation re q u i rements and re co rds re te n t i o n. 5

7 The Problem To put it bluntly, most businesses have significant amounts of customer information but very little customer knowledge. That lack of knowledge is at the root of customer communication challenges. Credit card companies, insurance companies, banks and mortgage companies, for example, all hold detailed, in-depth information on their customers. Yet rarely do they make offers relating to the specific interests, age, job or even gender of these customers. The reasons are simple. These companies typically have serious internal issues with data accuracy, data integration and data access. They seem to have no way of applying business rules, no way of mass customizing messages, no way to put everyone in the organization on the same page. Synchronization simply doesn t exist at these companies. Yet all this lack of coordination negatively impacts process efficiency, process costs, customer satisfaction and, eventually, the organization s overall revenue stream. With the CCM approach, however, information inputs and outputs are orchestrated, and every new piece of customer data that is received by the company is automatically updated at every point along the communication chain. That s why CCM can make communications and revenue streams run more quickly and efficiently But CCM doesn t just create opportunities for cost savings. There are even bigger opportunities for revenue enhancement: CCM makes it possible for businesses to take everything they know about its customers and then turn that knowledge into a micro-marketing opportunity. To differentiate products and services and meet customer demands, information-based businesses are using mass customization to wrap transaction data with value-added information in one consolidated single view in all customer communications and service points. Richard K. Crone, Director, Edgar, Dunn & Company, a leading analyst firm specializing in document management To put it bluntly, most businesses have significant amounts of customer information but very little customer knowledge. That lack of knowledge is at the root of customer communication challenges. Customer Communication Management 6

8 The Scope Of CCM From the mailroom to the mailbox, from the web visit to the phone call, the challenge for CCM is to embrace the entire scope of an enterprise s customer communications and target a message for that enterprise consistently across different media. Increasing automation is a key goal, but, paradoxically, so is improving human contact. Four critical elements are nece ssary fo r s u cce ssful enterprise CC M : 1. System synchronization for information accessibility. Developing effective customer communications requires an enterprise CCM solution that provides access to all relevant customer information information typically housed in myriad back-end systems. Furthermore, the solution must also provide the tools and processes necessary to locate and extract the high-quality, clean data necessary to create powerful and effective output. 2. Breadth of solution as wide or as targeted as it needs to be. To meet enterprisewide customer communications needs, an enterprise CCM solution must have extensive functionality. It should support interactive document creation, dynamic messaging and data modeling. It must be able to output to multiple channels, including the web for online presentment and bill payment, printing for paper-based communications, and in-house archives for high-fidelity document storage. Information accessibility, breadth of extensive functionality, and flexibility are several critical aspects of enterprise customer communications. Kemal Carr, President, Madison Advisors (consultants to the enterprise output management industry) End-to-end customer communications management (CCM) solutions offer tremendous ROI potential. Businesses can increase revenue by reducing churn and using analytics-driven cross-selling campaigns while lowering their costs by streamlining call center and document distribution operations. Taken together, these add up to a significant return on investment for forward-thinking companies. Toby Bell, Research Director, Gartner, Inc. 3. Scalability. An enterprise CCM solution must scale across application types and volume requirements from one-off interactive documents to high-volume, industrial-strength batch applications like end-of-month financial statements. 4. Flexibility. An enterprise CCM solution should be easy to use, yet robust enough to be handled by everyone from business analysts to editors to designers. And for easier integration and administration within an existing environment the solution should be able to run on any platform. 7

9 The Seven Gateways To CCM There are seven points of entry to an enterprise CCM solution, and a business can begin the implementation process at any one of these points. In order for a comprehensive solution to be developed organically over time, a true enterprise CCM approach is one that not only will work with the systems already in place but that will be scalable at every stage and across the entire organization. Let s take a closer look at these seven gateways, with an eye to understanding the advantages gained at each phase. 1. CCM Data Access and Ingestion Learn everything there is to know about the customer The first step to more effective customer communications is finding out just who the customer is. CCM data access and ingestion tools give instant, seamless access to customer information wherever it lies. Companies can then consolidate and integrate this data across the variety of systems in which it may reside. CCM data access and ingestion tools also give marketers the ability to generate business intelligence reports, marketing campaign analyses, customer segmentations and customer audits. This gives them the means to consolidate statements, target-market to key customer segments and produce laserfocused customer documents. Perhaps most importantly, with this kind of information access, managers can make more timely business decisions. 2. CCM Data Manipulation Take dead aim at the right customer targets Companies employ CCM data manipulation tools to put their newly accessible customer information to use more profitably. These tools perform address cleansing and mail coding tasks to avoid duplication and reduce printing and mailing costs, ensure prompt delivery, improve response rates and, ultimately, increase cash flow. Other CCM data manipulation tools perform address-level geographic analysis and enrichment to ensure compliance with ever-shifting jurisdictional boundaries. These tools c a n also target offers based on specific business geographics and even create customer profiles defined by household demographics and buying patterns. As a result, companies can predict response rates for a range of offers and more readily identify up-sell and cross-sell opportunities. 3. CCM Document Creation C a p t u re the customer s attention in entirely new ways CCM document creation tools provide a single, easy-to-use approach to creating multichannel one-to-one communications quickly and easily. The tools make possible a wide range of document types letters, direct mail, contracts and complex statements, even elaborate packages consisting of multiple documents. Users can save time and reduce errors by collaborating on refining designs prior to production. CCM document creation tools also help speed the document development process, while facilitating consistency across the organization. A design can be created once, then repurposed across applications and multiple delivery channels for business rules, templates, text and other content, for distribution via the web, faxes, and print. The level of integration possible in CCM document creation also simplifies and reduces costs of ongoing maintenance, which can represent up to 80 percent of total application expenses. 4. CCM Production/Distribution Process digital and physical communications with speed, accuracy and agility CCM production/distribution tools streamline both highvolume and on-demand production of all forms of customer communication. They let users distribute and proof d o c u m e n t s over the web prior to giving a final production 8

10 OK. These tools also generate multiple data streams in a single pass to reduce CPU costs. And they let users reformat and add content (such as barcodes or OMR marks) to the print stream without touching the original-composition applications. On the distribution side, CCM Production/distribution tools presort and commingle mail classes to optimize postal discounts. They can dramatically reduce return-mail processing costs by tracking documents and mail from inception through delivery. 5. CCM Data Vault Secure all customer data and documents in one place Data storage costs are mounting; companies are worried about the security and scalability of their customer archives; and multiple repositories for customer data and documents make for inefficient internal business processes and poor customer service. In addition, there are new legal and regulatory record-keeping requirements to contend with, like HIPAA, Sarbanes-Oxley and the USA Patriot Act. CCM data vault places all customer data into a single, secure yet accessible electronic environment. It integrates print and digital files without the high costs of PDF- and HTML-based solutions. Storage costs are dramatically reduced and all customer data can be instantly accessed for, say, trend analysis. The modular architecture of a CCM data vault can deploy call center, customer self-care, and electronic bill presentment and payment (EBPP) applications quickly. And CSRs can easily navigate archives from remote locations for more responsive customer service. 6. CCM Customer and Call Center Support Deliver better customer service; facilitate more customer self-service With the availability of centralized CCM data vaults, CCM customer and call center support tools can help achieve a far higher level of customer service. Call centers can reduce call handling times and callbacks by instantly retrieving exact replicas of all customer documents. In addition, CCM gives customers 24/7 web access to their accounts, enabling them quickly to get information and make online payments. Since 80 percent of all customer calls are about account information, increasing customer self-service (CSS) activity can make a huge reduction in call center volume. And expanding the use of EBPP reduces customer churn rates, deflects calls, improves payment processing and increases revenue. 7. CCM Replenishment Keep everyone on the same page CCM replenishment tools create closed transaction loops, providing automated updates and connecting all c o m m u n i c a t i o n s back to the related business processes. For instance, these tools link to accounts receivable for round-trip processing; they mine data from dynamic documents; they continuously refine business intelligence, reduce remittance processing errors and costs, and generate timely and accurate financial reporting. CCM replenishment tools also track documents in the mail every step of the way; they audit print and mail facilities; and they integrate electronic payment options into the entire process. Most importantly, these updating processes can be automated across disparate business systems There are many reasons why customers c o n t a c t call centers, but it s usually in response to either a paper or digital message. CCM manages the print and digital mix, so the appropriate media can be used for the response back. Our CCM customers realize an increase in revenues by caring for their customers this way. We call it expedited processing. Jeff Cohen, Vice President, Global Marketing & Product Management, Group 1 Software 9

11 Growing Your Business with Customer Self-Service Adoption and Electronic Bill Presentment and Payment by Richard K. Crone, Director, Edgar, Dunn & Company Today, recurring bille rs, including utilities, financial inst i t u t i o n s, and telecommunications companies, are increasingly faced with rising competition, mounting fixed costs and numerous other market factors affecting profitability. To meet the demands of both customers and billers, customer selfservice (CSS) and electronic bill presentment and payment (EBPP) have recently emerged as a strategic silver bullet. Gartner Group Research reports that the top 200 U.S. utility companies could each save at least $10 million annually by implementing customer self-service offerings through their web- and telephone-based interactive response units. Currently, up to 100,000 consumers each day enroll directly with billers to access their statements, initiate electronic payments and manage their accounts online. Recent market studies show that nearly 75 percent of all customer service requests are related to billing and payments. Offering CSS and EBPP to customers is a winning strategy, because these innovations help recurring billers differentiate their brands, streamline billing operations by deflecting call center volume, and dramatically reduce payment float and processing costs. By enabling earlier payment collection, opening opportunities for new fee offerings, and promoting the cross-selling of existing and related services, CSS and EBPP also impact earnings. As a rule, 80 percent or more of the calls to a biller s contact center are able to be resolved with online account access. Migrating customer service phone calls to a web self-service channel can save the average recurring biller as much as $7 per call a 59 percent reduction. Sometimes, the benefit is s i g n i f i ca n t ly gre a te r. For ex a m p le, automating invo i ce dispute s can save recurring billers $25 per incident, almost half the $55 per-incident average for manual resolution. Automation also accelerates collections and reduces receivables financing costs. Adoption Curve and Critical Succe ss Fa c to rs for CSS Simply offering customers service online or via the phone through IVR (inte ra c t i ve vo i ce re cognition) will not guara n te e a u to m a t i c adoption. A biller must invest in a robust, state-ofthe-art, second-generation CSS infrastructure and promote its CSS functionality to customers in the early stages. Most recurring billers, concerned about new technology costs, are likely to find that they already have many of the required elements in place. An inventory of current capabilities often reveals the only additional technology needed is an integrated customer database or an upgrade to second-generation CSS platforms. The annual savings of $5-10 million from the holy g rail of paper turnoff is more than enough to justify the co st. Strategic Impact of CSS for Recurring Billers and Consumers Best-in-class recurring billers are realizing that the immediate, tangible cost reduction benefits of CSS and EBPP adoption is only the tip of an iceberg. Beyond billing and payment, CSS and EBPP are strategic initiatives that can impact a company s ability to manage fixed cost variables, including procuring or generating a product or service, and infrastructure outlays for service delivery, labor costs and c u sto m e r - facing activities. Implementing CSS offe rs managem e n t more substantive opportunities for improvement than any other business variable clearly, a strategic silver bullet worthy of the investment. 10

12 For Larger Recurring Billers, Most Calls Into The Contact Center Deal With Account, Billing And Payment Issues % Of Calls To Contact Centers Source: Edgar, Dunn & Company & Selected Industry Firms 11

13 Unlocking The Potential A c ro ss Europe and the United Sta tes, 40 percent of companies in the high-tech, re tailing, utilities and aero s p a ce a renas have inve sted in CRM systems. This grows to more than half of financial services prov i d e rs and two - t h i rds of te le co m m u n i cations companies. Inve stment in CRM software a lone is pegged glo b a l ly at around $3.5 billion a ye a r. ( S o u rce: AMR.) Allowing for the fact that software typica l ly re p resents only 20 percent of to tal CRM project co sts, it is p ro b a b le that the final annual bill is around $17.5 billion wo r l d w i d e. Yet there are plenty of findings that give companies pause when it comes to continuing to spend on CRM. Gartner p redicts that by 2006, more than half of all CRM projects will h a ve fa i led to meet their goals. Gartner also notes that the majority of companies will have undere st i m a ted co sts by b e t ween 40 and 75 percent. In the U.S., among re tail banks that inve sted in CRM, only 20 percent have increased their p ro f i tability as a result. The benchmark for succe ss or fa i l u re of a CRM project is usually that within year one, at le a st 50 percent of the fo re ca sted return on inve stment is d e l i ve red. (It must be noted, however, that measuring o u tcomes acro ss all areas remains a significant challe n g e for many companies, and payback may also be mid- and lo n g - term, especially in the area of customer satisfa c t i o n.) Still, the fact remains that there is still no alte r n a t i ve st ra tegy ava i l a b le with the potential to deliver as much p e r fo r m a n ce improvement as CRM. In the economic climate of the 21st century, custo m e rs will continue to be harder to find and more difficult to please, and companies will need to work more diligently than ever to ensure that the custo m e r ex p e r i e n ce is positive, co n s i stent and we l l - co n s i d e re d. That is why CCM s ability to unlock the full potential of CRM is so importa n t. 12

14 Concluding Thoughts The idea of merging marketing and billing in the same document is beginning to interest major companies who invest heavily in these channels. Research shows that bills and statements garner 42.5 seconds of customer attention, compared to 19 seconds for a TV commercial. A bank, for instance, can create a billion items of direct mail annually and send 100 million items to existing customers at a cost of 25 cents per item. If it leveraged existing communications channels, it would cost only around $2 million rather than $25 million to distribute these messages. Yet at the moment, only 23 percent of companies on average include ads, personalized messages, or cross-sell and up-sell marketing in their transactional mailings. (Source: Group 1 Software.) And transactional mailings are just one opportunity Customer Communication Management can uncover. Overall, CCM acts to synchronize every link in the communication chain. With CCM, the flow of data, documents and messages across the organization and out to customers and prospects emerges from a new, streamlined infrastructure. Being able to more effectively capture responses creates a new level of sophistication in customer profiling. Finally, legacy databases and data warehouses, ERP systems and CRM applications can be linked to print/mail production components, software and call center operations. All this serves to illustrate how CCM exists at the point where business processes and CRM converge. CCM integrates these activities while adding sophisticated capabilities that let companies capitalize on the many opportunities inherent in their customer relationships. At the same time, CCM simplifies managing those opportunities. It is engineered as an integrated, scalable solution, eliminating the difficulties and costs involved in managing multiple, single-point solutions. With CCM allowing everyone in an organization to access and share all customer data all the time, everyone can interact with everyone else more efficiently and effectively, in a perfectly synchronized way. CCM is about stronger, more profitable customer relationships; the result is increased revenues, greater customer loyalty and growing market share. At the same time, CCM is about being more human and tactile in the customer communications experience reaching out to establish and develop a meaningful customer relationship. With corporations making major strategic shifts toward customer management, realigning their marketing toward oneto-one communications, and rebalancing their prospectingretention ratio of investment, CCM provides the key component that s been missing up to now a consistent, coherent and coordinated customer experience in every channel and at every touchpoint. CCM can do this because it finally brings critical business processes into the management of the customer relationship. CCM is about stronger, more profitable customer relationships; the result is increased revenues, greater customer loyalty and growing market share. 13

15 Ask the Expert: Interested in finding out more on Customer Communication Management? Call Jeff Cohen, Vice President, Group 1 Software, Inc. a Pitney Bowes company, at or jeff_cohen@g1.com Group 1 Software 4200 Parliament Place Suite 600 Lanham, MD For more information about our products and services, please log onto our website: For more information about Pitney Bowes, visit G roup 1 is a re g i ste red trademark of Group 1 S o f t w a re, Inc. Pitney Bowes is a re g i ste red t rademark and the Pitney Bowes Pro ce ss Bar Design is a trademark of Pitney Bowes Inc. All other trademarks are the property of their re s p e c t i ve co m p a n i e s. World Headquarters 1 Elmcroft Road Stamford, CT For more information about our products and s e r v i ces, please log onto our we b s i te: The following marks are trademarks or registered trademarks of Pitney Bowes Inc: Pitney Bowes, Engineering the flow of communication. All other referenced marks are owned by their respective parties Group 1 Software, Inc. All Rights Reserve d An Equal Opportunity Employe r. P r i n ted in U.S.A. W P W / G Pitney Bowes Inc. All Rights Reserve d An Equal Opportunity Employe r. P r i n ted in U.S.A. 14