Guest author Michael Collins explains the concept of ‘cloud computing’ and tells how to leverage it to best effect.

In the current economic uncertainty, we see daily evidence of cut-backs not only in marketing but across all areas of business. However, marketers still need to deliver convincing propositions to acquire new customers while minimising churn through customers feeling less than ‘loved’ or fully understood.

For many organisations – irrespective of sector – the dilemma often arises with regard to the outsourcing of IT services, especially those associated with supporting the marketing and CRM activity.

The concept of Software as a Service (SaaS) or ‘cloud computing’ in the CRM space removes the need to invest in IT infrastructure and software while offering an extensive range of business applications that can provide enormous efficiencies in handling customer and prospect enquiries, in directing and measuring sales force activity, event management, marketing and budgeting.

Users can access their contact data, maintain workflow, manage customer relationships, run reports and create campaigns from anywhere in the world; all they need is a web browser, Internet access and a password. They access the CRM environment at minimal set-up cost, at a flat user rate, obviating investment in software licences or hardware and removing strain on usually stretched IT resources.

It is flexible and a cost directly variable with the number of users: recruit new salespeople – buy a few more seats; reduce your customer service department – stop paying for their access to the system.

The key is acceptance of two revolutionary cultural issues:

One is that your data will be held in a multi-tenant data server – a data storage facility that accommodates many thousands of companies with scrupulous security to ensure no company can access another’s data.

The second is relying on a third party for access to your data 24/7, the most robust of business continuity programmes and recovery from any disaster that will mean little or no effect on your day-to-day business.

Come to terms with these concepts (as many thousands of businesses have done) and you are ready to benefit from the efficiencies of cloud computing.

The efficiencies

These occur not only in paying just for the functionality required at the time but also in being able to reduce the number of staff members tied up with often time-consuming customer service operations or data entry activities.

Customer self service (CSS) is becoming very popular as a means of both handling queries and requests and managing the touchpoints to ensure the opportunities are maximised. It has been found that this generates greater customer satisfaction since they get an answer to their problem quickly, easily and without needing to hang on the line while they listen to a never-ending rendition of ‘Greensleeves’ on a glockenspiel or await a return email.

Research by Gartner, the IT industry experts, has concluded that the challenge during the next five years for organisations interested in improving service at touchpoints will be to find software suppliers that understand that the central focus of managing the relationship has changed from enabling the agent to enabling the customer or prospect; this has now become a major user need.

The negative shift in the economic climate will exacerbate this focus because customer retention will require greater attention, given that the loss of a valuable customer is expensive and preventable.

The contact touchpoints are the most-critical flashpoints for the customer relationship; back in the 90s, Angus Jenkinson termed such a touchpoint where the relationship is tested a ‘moment of truth’; never has this been so apt.

A contact point, thus, must integrate Internet, call centre and salesperson with the object of providing a consistent and professionally delivered experience to the customer. This consistency and speed is delivered out of a central knowledge base that can be developed by the organisation and maintained through additions from cases as they occur of by allowing users to contribute their own answers like a forum or wiki environment.

Enabling customers and prospects to find the information they are looking for online at any time removes the need for them to call in or email. In fact, according to one major CSS system provider, automation can result in 25-40 per cent fewer emails needing an agent’s response. Measures such as this will reflect in fewer calls, emails and letters or faxes and so, in turn, fewer agents to handle enquiries.

Repetitive requests will make up a large percentage of total inbound enquiries. They can be received, routed, managed and fulfilled via workflow and business rules through an automated web-based process, meaning that fewer calls will come in, enabling the organisation to apply a ‘green’ and sustainable programme focused on online strategies to reduce or reassign headcount and save costs.

On a more marketing-orientated note, knowing who is enquiring and what their query is can often mean an opportunity for up-selling or cross selling.

Consider the scenario where the information acquired in real time at a touchpoint from an enquirer is matched to the information held in a marketing database. The touchpoint management process can exist off-site in the ‘cloud’.

This can be used to drive the next best action for that enquirer. Does their previous action indicate possible churn? Has their most recent purchase been exceptionally different to all those before? Are they approaching a major milestone in their relationship with the company, such as coming up to a critical churn point for customers like them?

Having this insight in how customers behave can be used to direct the enquiry to the right web page or, if required, to a salesperson who, with the customer’s details before them on their screen, can work to retain their business by perhaps cross-selling or even stepping down perhaps to a reduced price product. What you know about current customers can be extrapolated against prospective customers in a similar way.

If every touchpoint feeds into the same database, all connected through a software-as-a-service environment, any user can, in real time, be fed hot prospects, key customers at risk of churn or opportunities for up-selling an existing customer whether they are office bound or field reps on the move.

For example, a key account indicates intention to cancel a contract via the self-service portal. This can be transmitted instantly as a warning to the account manager responsible for that customer as a ‘ping’ to his Blackberry or mobile phone and, within moments, that manager – wherever located – can log on to the CRM ‘cloud’, be fully appraised of the situation and speak to the customer about keeping the business.

When I first wrote about software-as-a-service about five years ago, it was called hosted software. Then, the main critics tended to concentrate on the strategic costs that underlie the attractive initial costs and ease of deployment and the (sometimes) unrealistic expectations of the users.

The speed with which this concept gained ground since then, has led to many companies mistakenly seeing it as a tactical, short-term remedy for a long-term problem and do not expect to take on board the issues that would beset them with an in-house system like data integration, business process re-engineering, training and support.

In addition, there still remains a need for a business strategy for the CRM application to support; purely accessing a system service does not constitute a CRM strategy.

Finally, whatever the solution, the company needs a data strategy – a documented business process that details how and where data is acquired, how it is to be stored and managed and what the processes are for maintaining data quality.

Michael Collins is managing consultant at Database Marketing Counsel, a specialist data strategy and CRM consultancy. He is a Chartered Marketer member of the CIM, a Fellow of the Institute of Direct Marketing and an internationally acknowledged consultant, trainer and author on database marketing.

Michael Collins