“CRM in retailing is very different from CRM in other industries,” says Peter Baskin, vice president and general manager of CRM for Minneapolis-based Retek Inc. “Many of the transactions are anonymous. E-CRM only kicks in when you have a named customer or when the customer does something to identify herself.”

And on the Internet, the challenges become even greater because there is no face-to-face contact between the retailer and the customer. Thus customers seek out some kind of assurances that the order has been received, processed and is on its way. And giving those assurances raises retailers’ cost of doing business. “We’re focusing on the mundane aspects of ordering in a non-face-to-face environment,” says David Himes, senior vice president for technology solutions with Greenwich, Conn.-based NewRoads Inc.

The trick is for a retailer to identify the customer as quickly as possible and make sure any information about the customer is immediately available as soon as the customer contacts the company. To make that happen, the retailer must have a broader view of what constitutes CRM to be able to capture much more data than is currently possible and to communicate data to customers. The key to making CRM work, then, is to make sure the internal CRM system can talk to customers outside of the enterprise, says Loyd Olson, chief marketing officer with Atlanta-based eshare Communications Inc. “Until now, CRM has been working primarily within the four walls of a company,” he says. “It was used to track contacts and to track customer information. We provide the capability to link directly to customers, vendors or partners in the outside world.”

“CRM is no longer an early-adopter market in the U.S., in which large companies purchase CRM to determine if the solutions can offer competitive advantage,” Chris Fletcher, researcher with the Boston-based Aberdeen Group, says in his “What Works: 10 Significant CRM Implementations of 2000” report issued in April. “Depending on the market, the competitive advantage is assumed, and smaller organizations - midsize companies in the market mainstream - are purchasing CRM to stay current with their larger rivals.”

When considering an eCRM system, retailers must measure one way of communicating with customers against others, says Frank Badillo, Columbus, Ohio-based senior retail economist and principal consultant with PricewaterhouseCoopers. “For eCRM to work, you really have to understand your customers,” he says.

For instance, a retailer would manage the relationship differently with customers who come online to shop and compare prices then purchase in a store from how it would manage the relationship with those who come online to buy, he says. “ECRM is another channel for reaching your customers,” he says. “And you have to weigh an investment in CRM against all other investments, such as in stores, catalogs, kiosks and the new ones that come along all the time like mobile communication.”

Among the companies making a pitch for this lucrative market are Retek, NewRoads and eshare. While each takes a different approach to the market, they share a belief that companies can successfully leverage the information they already possess into processes that improve customer service and thus strengthen the customer relationship. “We have all this data and customers are calling and asking for it already,” says NewRoads’ Himes. “We can give it to them via an e-mail or a web-based capability.”

NewRoads’ automated system also can keep the customer informed of the status of the shipment—even alerting customers to any delays due to weather—and give an estimated delivery date. “Probably most customers will never even ask for it,” Himes says. “But those who are not confident that the order is being handled right will ask for it, and we’ll be able to deliver the information to them.”

NewRoads, which operates 21 fulfillment centers with a total of 2 million square feet, performs outsourced fulfillment for some 200 retailers and manufacturers who are selling direct to the consumer for the first time. “We are focusing on retailers and manufacturers who have no experience doing this sort of sale,” Himes says. “The need for companies like those to fill individual orders has raised the opportunities for companies like NewRoads.”

NewRoads employs 3,500, which grows to 5,000 during the holidays, including 1,500 in call centers.

Himes says that not only can a retailer improve relationships with customers through this system, but it can also reduce costs. “Today we get a lot of inbound phone calls from customers seeking that information,” he says. “It can be outrageously expensive to give customers the kind of customer service that customers like to have.”

IRCE 2008 Conference Multi-Media CD-ROM

How expensive? Depending on volume, inbound calls cost 75 to 95 cents a minute and a typical call is three minutes. Thus one follow-up call from a customer to check status could cost $2.25 to $3. One such call per order may be part of the cost of doing business, but Himes recounts the case of one retailer last fall who received 12 customer service calls for each order. And one to 2.5 calls per order is typical, he says.

NewRoads operates as an application service provider, hosting the information at its site and sending e-mails from its system. After what Himes describes as a modest set-up cost, there is a volume-based transaction fee. “You come out ahead if you can eliminate one call per order,” he says.

Eshare traces its history to 1979, when it started as Melita International. Melita developed predictive dialing technology that outbound call centers use to contact customers and potential customers. In 1999, Melita bought eshare Technologies, which developed web-based customer management products. The combination allowed the company to offer both telephone-based and web-based products. Melita took the eshare name after the acquisition.

With customer service information coming from both the web and the telephone, eshare has created a service by which all customer contact information is integrated into a single database. If a customer contacts a retailer via web chat, the system automatically archives a transcript of the exchange in the customer’s file. Similarly, if a customer calls the company, the customer service agent records notes of the conversation and stores them in the database. And the same is true with e-mail communications. “It allows the customer to communicate with the CRM system in the format they choose and it puts all the information right there the next time the customer has contact with the company,” Olson says. “We call it personalizing the CRM system.”

With the eshare purchase, Melita also acquired the NetAgent product, which today is a key part of its customer relationship management services. NetAgent allows customer service reps to push pages to customers on the web, allowing the agent to intervene if it appears that a customer is having trouble with, for instance, a form that needs to be filled out. “A good share of people who bail out online do so when they get to a form that they’re having trouble filling out,” Olson says. NetAgent can monitor how long a visitor has been stalled at a page doing nothing and alert an agent who can send the customer a message asking if the customer needs help. “This humanizes the enterprise,” he says.

The most recent enhancement to NetAgent has been to make it available to wireless devices.

With this system, retailers can improve service in stores by helping store personnel know where products are when they are needed, by allowing customers to buy on the web and pick up in the store and by doing away with rain checks on sale items because store personnel can order out-of-stock promotional items via the web and have them delivered to customers. The Retek system manages the inventory process, so that when stocks get low, it generates automated replenishment steps for retailers to take.

Baskin says the Retek system is particularly useful when creating a special order from a store. Using the web, store personnel can order not-in-stock items directly from the vendor, using a purchase order that the system generates. For instance, Baskin says, a customer in a home-furnishings store can pick out a fabric pattern and design, the clerk can enter the customer information, enter the order information, immediately generate a purchase order and submit the order to the supplier. The supplier is alerted that it has an order, then logs onto the Retek web site to retrieve it. The supplier can then update the status as the order progresses. “This eliminates all the paperwork and dropped balls with the old systems,” Baskin says. “It provides a Dell-like order status capability.” The result: “I’ve achieved the Holy Grail,” Baskin says. “I’ve cut costs, I’ve created efficiencies and I’ve exceeded the customer’s expectations.”

When Retek sells its system to retailers, it focuses on the technology and lets the retailers work with systems integrators to create how the material is presented to customers. “We are less about the presentation layer than about the plumbing behind the scenes that makes this all work,” Baskin says.

Retek has worked with a number of retailers who are using its system in a variety of ways. It has a contract with Nordstrom Inc. to install a web-based system for special orders. “They chose us to institutionalize their world-class customer service,” Baskin says. It is also working with Best Buy Co. Inc. and Gap Inc. and is in a joint venture with Tosco Corp., Accenture Technology Ventures, and Amerada Hess Corp. to develop a system for convenience stores.