CRM initiatives yield positive results for telcos

Telecommunications companies in North America are seeing real benefits from CRM initiatives, and have a higher level of CRM activity than most other industries, according to a new Fujitsu Consulting research study.

The research report, The State of CRM in the North American Communications Industry, includes a survey of 45 communications companies and case studies on eight major telecommunications firms. It found that several leading communications companies had achieved significant improvements in the efficiency and effectiveness of their sales, marketing, and service processes through careful implementation of customer relationship management (CRM) technology.

"Three forces have been driving communications companies to aggressively pursue CRM: soaring costs of marketing and sales, increasing customer churn, and rising competition," says David Yamashita, telcom-360 solutions director at Fujitsu Consulting. "These forces are likely to increase as more and more traffic moves to wireless and internet networks. Communications companies that can leverage CRM will have a significant advantage."

Keys to success
Analysis of the experiences of leading communications companies revealed eight common characteristics that contributed to CRM success.

1. CRM leaders focused on making themselves easier to do business with for customers, not just on cutting internal customer acquisition and retention costs, or on increasing revenue;
2. CRM leaders took a cross-functional or even cross-business-unit approach to CRM;
3. CRM leaders found ways to provide their customers with a desired alternative, automated service channels, complementing their existing human-assisted channels, cutting cost, and improving the customer experience;
4. CRM leaders built information systems that provided a view of company relationships with each customer;
5. CRM leaders established concrete goals for the initiative and frequently measured progress;
6. CRM leaders revised internal corporate measurement and reward systems to focus on customer benefits;
7. CRM leaders designed new marketing, sales and service processes with strong employee input;
8. CRM leaders viewed CRM as an ongoing process, not a one-time change in marketing, sales and service operations.

The report reveals that companies adopting a cross-functional approach to CRM (which involves integrating sales, marketing, and customer service in CRM initiatives) are much more likely to achieve key strategic goals than companies that target just one or two of these functions.

Carlos Morillo (director of e-services at BellSouth) agrees, adding that the magnitude of the investment a telco must make in CRM demands a cross-functional approach if the investment is to pay off. "You have to make a concerted effort across all your channels to have a significant financial return on internet-based CRM initiatives," he explained.

Trends in telcos
The study also revealed a number of significant trends in how communications companies are using information technology to change the way they market, sell and provide customer service:

• Communications companies are more frequently involved in CRM initiatives than most other industries. Some 38% of communications companies had completed a CRM initiative, as compared to only 28% for all other industries surveyed. Only utilities (58%) and financial services (46%) were ahead of communications companies in the percentage of completed CRM initiatives.
• Telcos are shifting a large part of their customer interactions to automated channels such as the web, e-mail and interactive voice response (IVR). The average telco plans to reduce the number of total customer interactions that it conducts through call centres to 31% in 2003 (from 45% in 2001), while the web's share of interactions will nearly quadruple, jumping from 6% to 23%.
• Reducing sales and marketing costs were goals of around 66% of the communications companies that had completed a CRM initiative. Only 44% of companies in other industries cited "cutting marketing costs" as a goal for their CRM programme, and only 50% were focused on reducing sales costs. Sprint has switched almost its whole mass-marketing budget for consumer long-distance services to CRM-powered precision marketing programmes - a move that has improved returns on direct-marketing campaigns anywhere from 65% to 300%.