KNOW thy CUSTOMER - Company Operations

Industry Standard, The, Nov 6, 2000 by Michelle V. Rafter

STEP BY STEP

As is the case at Chase, some large corporations are finding it easier to embrace CRM in stages. Three years ago, Charles Schwab didn't have a CRM strategy. Since then, the San Francisco-based financial services company has introduced programs on an as-needed basis. Among the first was a database of Schwab's 7.1 million active accounts that employees in its branch offices can access through their computers. Eventually Schwab's telephone center operators plugged into the same database. By early next year, Schwab hopes to integrate transaction information into the database that comes from customers who contact the company using e-mail or wireless devices like Web-enabled cell phones or Palms. "It's taken a long time for Schwab and companies overall to get a crispness about what the strategy is and the benefits are for the customer. There are a lot of moving parts," says Schwab's Devin.

Some click-and-mortar companies embraced CRM when they launched their Internet ventures. Staples, the Framingham, Mass., office-supply chain, is one example. When it opened its Web site in 1998, Staples revamped an existing customer information management system so the company could track the activity of 6 million business customers, and whether they shopped online, at a store or from a catalog. Over time, research showed that customers who buy goods through all three channels spend three times as much as customers who shop through a single channel. "It showed that many of our (marketing] activities should work together and not be focused on just one channel," says Jackie Shoback, Staples.com operations VP.

Staples.com uses its CRM system to track the kinds of products customers buy online compared with what they buy at retail stores or by catalog, and stock merchandise accordingly. Staples carries only 7,000 items in its stores and 40,000 on its Web site, so the company is testing kiosks in 20 locations that let customers place online orders for products the store doesn't carry. Customers can also use the kiosks to look up information on the company's small-business services, like printing and cell-phone rate packages.

Staples officials won't say how much they've spent on the company's CRM initiatives, but they say the payoff in sales has been big. They predict that Staples.com revenue will jump from $94.3 million for the fiscal year ended Jan. 29 to $350 million for this fiscal year, mainly because of improved selling through CRM. "I can't imagine running the business and doing what we need to do if we didn't have these tools," Shoback says.

But CRM hasn't been a cure-all: Staples.com continues to lose money. Officials expect a $135 million loss this year -- lower than previously anticipated -- but say they're on track to break even by fiscal year 2002.

Technology vendors would have you believe CRM is all about buying servers and upgrading databases. But it's also about getting employees to buy into the concept. Employee support of a new CRM program was a key factor in transforming an ailing Kansas City, Mo., travel agency into an online corporate travel bureau, renamed iTravel [see "The Power of Information," page 160]. After an investor group bought the business, 120 of 180 employees either quit or were laid off. The company had to convince those who remained that it would be worth their while to learn the skills necessary to work with the company's new CRM programs. ITravel President Steve Harmon helped employees overcome their fears of the new technology by hiring in-house trainers and creating an incentive program. When they meet performance goals, iTravel customer-service reps earn points they can redeem for gift certificates, dinners or merchandise. Top performers are honored quarterly and one employee of the year wins a seven-day cruise. "It's been t he single most effective thing to encourage skills transition," Harmon says. "People really covet those award."