Stand and Deliver

Multiple-channel CRM strategies can provide better service, customer retention, and profitability

By Hisham Alam

The race to attract and retain customers is fiercely competitive. To stay in the game, you need multiple channels to attract and conveniently service customers. The new competitive advantage for all service-oriented companies goes beyond providing simple customer convenience. Instead, your company must actively engage your customers in a mutually beneficial relationship and manage it through multiple channels in a seamlessly integrated way. Seamless integration of the channels lets your customers begin a transaction through one channel and then complete it through another according to their preferences. The result? More business with the same customers and increased satisfaction and retention - all of which leads to greater profitability.

The arrival of the Internet and sophisticated call-center technologies has spurred the recent rise of the delivery service business. This competitive business uses multiple-channel CRM strategies to an intense degree. The Holy Grail of the business is the quest of the last mile (delivery from the last point of distribution to the home). Your goal is to create a high quality infrastructure that will act as an intermediary between the consumer and the retailer. The consumer benefits from convenient local delivery. The retailer benefits from the economies of scale of a large consumer base extending beyond its immediate boundaries.

Egg and Entree Delivery

Startup grocery delivery and restaurant food delivery companies lead the way in multichannel CRM. These companies take your order and deliver it within the hour or at a scheduled time. Grocery delivery businesses tend to operate their own warehouses and delivery fleets at the major metropolitan locations. Food delivery companies, on the other hand, will partner with food outlets and restaurants while owning or subcontracting delivery fleets at major metropolitan locations. Both businesses save money by operating consolidated call centers, data centers, and Web sites.

For these companies, the initial intent may be to deliver one type of item, such as restaurant food. However, once they have established an infrastructure, they will have the option to expand their services to the delivery of other items such as flowers, office supplies, books, and so on. A successful expansion depends on their customer reach, the quality of their service infrastructure, and the brand recognition they receive.

The key performance criteria of these businesses are high quality customer service and low cost. The profit margins are slim in these competitive businesses and may come from any combination of nominal delivery fees charged to customers, sales commissions for the items sold, or price markups on discounted purchases from retail partners. The profits are generated from repeat business, high volume, and economies of scale.

As with other businesses, 20 percent of the customer base provides 80 percent of the profits. Profitability is directly affected by the ability to retain customers and provide the best service to the highest paying customers. Implementing a CRM solution can help you achieve these goals.

The types of CRM solutions most critical to the delivery service business are call centers and personalized Web sites. They form the front-end operations of the business and must be tightly integrated with the back-end service fulfillment operations.

Front-End Operations

The delivery service business provides a number of intermediary functions. Front-end functions initiated during customer interaction include:

Take customer orders. Customers refer to a catalog of items to make selections and place orders.

Track order status. Customers are provided with the status of the orders placed and the latest estimates on delivery times.

Change order. If possible, the customer is allowed to change, or even cancel, the original order that was placed (may be subject to a change fee or a penalty).

Accept payment. The process of accepting and routing credit card payment authorization, or in the case of corporate customers, routing account validation.

Transaction correction. This process remedies an improperly executed order transaction.

Record customer complaint. This feature provides a means for the customer to express dissatisfaction with the service performed or item delivered.

Call Center Convenience

A call center naturally lends itself to providing these front-end functions. For example, in the restaurant food delivery service, the call center is the main interface between your customer and the business. People find it convenient to pick up a phone and order food. Furthermore, your customers may have so many options for the way a meal is prepared (for example, a steak may be "well done," "medium," "rare," and may be accompanied by a variety of side orders, and so forth) that it is often more convenient for them to order by phone.

The call center can enhance the customer experience in many ways. Through the call center, the customer has access to a live customer service representative (CSR) - the preferred mode of interaction for many people. By looking up a customer's preferences and profile and then routing the call to the most suitable CSR, you can achieve higher customer satisfaction. Interactive voice response (IVR) capability gives the customers greater control and lets them navigate to an appropriate CSR or perform an automated transaction from an easily accessible phone anywhere. Finally, access to a live CSR lets the customer request immediate redress for an improperly executed order.

Reduced call waiting time, fewer repeat calls for the same transaction, and rapid call closure are key performance measurement criteria for monitoring and improving call center effectiveness.

Web and Wireless Access

The customer experience can be further enhanced through alternative channels such as a Web site and wireless access. These channels offer several benefits above and beyond the characteristic features of the call center. Through a Web site, your customers can have access to an up-to-date online catalog. They can track their orders online without superfluous interaction with a CSR, have visual access to information, and navigate with considerable flexibility to access different types of information.

Your customers can actively interact with the Web site. For example, they can write a review about an item purchased or read reviews about an item and form an opinion prior to ordering it. They can also personalize their profiles and preferences on the fly.

Customers can be alerted by email to promotions or order status. The Web site can also process promotions in an automated way. In one scheme, the Web site recognizes a range of IP addresses that originate from a partnering organization and its members obtain an automatic discount without divulging personal information. Finally, wireless devices provide information access from anywhere, albeit in a constrained format.

Your customer experience is maximized when a transaction is initiated through one channel and continued through another. For example, the customer places an order through the call center and then tracks its status over the Web.

Back-End Operations

When an order is entered, back-end functions are initiated. Various steps may be performed until the ordered item is delivered to the customer and the transaction is closed. Core back-end functions include:

Payment authorization. This process involves obtaining authorization for credit card payment or validating an account in the case of a corporate customer.

Geographic zoning. In this step the customer's address is verified to ensure that it is within the service territory. An estimated delivery time is calculated.

Placing order with partner. Here the order received from the customer is validated and then forwarded to the business partner (or warehouse in the case of grocery delivery service companies).

Driver dispatch. A driver is assigned to pick up the order from the business partner and have it delivered to the customer. The addresses of the partner and the customer are sent to the driver.

Order delivery status. The status of the delivery is tracked with the driver and recorded for reference by the customer.

The system infrastructure must let information be efficiently exchanged between the front- and back-end operations.

CRM Architecture

The multichannel CRM architecture consists of several interacting components. Figure 1 depicts a schematic of the various elements. A key component is the CRM solution, which is implemented as a software package. One of the principal functions of the CRM solution is integration with call routing. This integration is achieved through the interaction of a number of servers. The computer telephony integration (CTI) server provides the interface between the CRM server and the telephony components, which are the IVR and PBX/ACD (Automatic Call Distributor).

The integration with the PBX/ACD telephony component ensures that the call is directed to the appropriate CSR and that at the same time, the caller's information appears on the CSR's workstation. The connection between the IVR and the CTI server lets the customer perform automated tasks that require access to database information. The CRM solution lets the agent perform order entry, payment acceptance, and look up the customer's profile. The ability to access customer information instantaneously is critical. If you're a repeat customer, the CSR can quickly respond to your preestablished preferences. This capability leads to high customer satisfaction and as well rapid call closure.

Beyond the Call Center

To be successful with a multiple-channel strategy, the packaged solution must also provide an interface to the Web and increasingly to wireless devices (personal digital assistants, or PDAs, and cell phones) as their usage becomes more widespread. Conceptually, this strategy is relatively easily provided. However, the user interface requirements of the call center are very different from the user interface requirements of the Web and of wireless handheld devices. For instance, the call center's user interface is designed for rapid navigation by trained CSRs.

For the Web, the user interface is designed for intuitive navigation, attractive display, and hyperlinks to promote exploration of various services for a wide variety of users. For handheld devices, the user interface provides limited functionality through menu-driven options geared toward quick selection and execution. A CRM package will rarely address the totality of the user interface requirements satisfactorily. In such a scenario, separate packaged software solutions may be required to address the call center and the Web/wireless access needs.

The back-end operations are typically implemented through a highly customized in-house proprietary software application that integrates many functions. Currently, no packaged solutions effectively address all the back-end operational needs. The back-end application consists of a number of different components. The payment authorization process involves connecting to an external credit agency and using its particular software. The system categorizes addresses into zones that are integrated into the application. The scheduling and assignment of delivery drivers is integrated with a wireless infrastructure such as Wireless Application Protocol (WAP). The system may perform delivery-status tracking with this technology as well. Fax machines are universal, so you can use a fax server to forward customer orders to retail partners. The back-end operation also involves interacting with the company's financial systems to process credit card and other forms of payments that are due or will be received. The system routes payments due to partners to accounts payable and routes corporate account receipts to accounts receivables.

Integrating Information

The challenge is to integrate the front- and back-end functions. Information overlaps in the two systems. New orders created through the front-end CRM system must be routed to the dispatch application. Order tracking information must be updated with the latest delivery status and routed back to the front-end system. Likewise, information about a new customer needs to be propagated from the CRM application to the dispatch application. These updates must take place in real time. Payment owed to drivers, customer payment and billing, and partner payment information may be loaded into the financial system on a nightly basis.

Information common to the different application systems includes:

• Customer information
• Partner information
• Employee/driver information
• Order information.

As you add systems, common information needs to be replicated across these systems. You may be able to designate a particular system as the system of record for a certain type of information, but this situation is not ideal. You need a fully integrated architecture.

Integrating Channels

The integrated multichannel CRM architecture facilitates the seamless flow of information. Figure 2 depicts a schematic of the integrated architecture. The common information bus is the integrating feature of this architecture solution. The "bus" is a relational database storing the common information used across the different systems. The various components of the solution interrelate with each other through this "bus." The use of a central database provides the flexibility to separate the call center CRM and the Web and wireless CRM applications. This separation of applications is a tactical choice depending on the business fit of the different CRM packaged software solutions. The CTI server may also access the central database directly to look up customer information and use sophisticated business rules to route calls to the most appropriate CSR. The architecture also simplifies the process of adding a reporting database, which can be a replication of the central database. The purpose of the reporting system is to provide various types of operational reports without affecting the performance of the mission-critical components of the architecture, which are the CRM, Web, and dispatch servers. Data replication can take place on a nightly basis.

This integrated architecture provides many benefits; for example, it lets you incorporate additional applications without creating individual interfaces. The central database permits a common interface that can be leveraged across all applications. Common data is centralized, data redundancy is reduced, and all applications have a uniform view of the data. Transaction routing between applications is simplified and processed through the central database. Last, it is scalable with growth because the integrated architecture is not constrained by the number and the types of different application components.

Happy Customers and Higher Profits

Multichannel CRM strategies are becoming increasingly important. They offer a competitive business advantage by leveraging economies of scale across the multiple channels. They enable better customer reach while at the same time providing customer convenience and high customer satisfaction. The net result is higher customer retention and profitability. Startup delivery service companies, along with other types of companies, are building businesses based on this strategy. The hope for the delivery service companies is to conquer the last mile to efficient home delivery by being able to locally deliver anything and everything within the hour.

Hisham Alam (hisham.alam@us.pwcglobal. com) is a principal consultant with PricewaterhouseCoopers. He has extensive experience implementing strategies and solutions in the areas of Web-centric and client/server application architecture, data warehousing, and technical architecture.