Of all the people who claim to be experts in caring for the customer, few can match the credentials of Thomas M. Siebel. Ten years after receiving his MBA from the University of Illinois at Urbana-Champaign, he founded Siebel Systems Inc. and built it into the dominant maker of customer-relationship software.
This week, Siebel Systems broke away from the pack to be one of the few software companies reporting surging quarterly revenue and earnings. The eight-year-old company unnerved some investors by warning of tougher times ahead, but it still commands a stock-market value of nearly $20 billion and a customer list as diverse as Dow Chemical, Perrier, and Yahoo. Let other business gurus tell you that finance, engineering, or some other discipline matters most. In Siebel's world, "the fundamental objective of every organization is to profitably acquire and retain customers."
So what's the magic formula?
In Taking Care of eBusiness, Siebel shares eight key principles that he believes will help companies make the most of their customer opportunities in the Internet Age. Like many top executives who produce strategy books on the side, Siebel brings his intelligence and energy to about two-thirds of the book — and clearly relies on news clippings and safe, puffy phrases to pad out the rest of the manuscript. But even if Siebel the author isn't quite as formidable as Siebel the CEO, his best ideas are highly compelling.
As Siebel points out in his opening chapter, the opportunities to gather customer data have never been better. Used effectively, that data can translate into better and more profitable service — where the "right" products and services are offered to the "right" customers at the "right" time. But the playing field is also increasingly complex.
Customers with an order or a complaint don't just call a toll-free number or wait for their district sales representative to arrive. They may turn to email, a Web site, or a host of other channels to do business. If companies can't make each of those channels work well or can't integrate information throughout each piece of their sales, marketing, and service systems, well, it's never been easier for customers to say good-bye and take their business elsewhere.
So, straight from Siebel's playbook, here are five of his best insights for connecting with customers.
Get good at dealing with the same customer in a variety of channels.
A few years ago, there was an assumption that each of a company's sales channels would attract a different type of customer. Executives could imagine themselves running four or five different types of businesses: selling to twentysomethings via physical stores, affluent women via mail order, highly educated men via the Internet, and so forth. But those diligent attempts to segment the market miss a much more important truth, Siebel contends.
Watch customers' behavior closely, he says, and you will discover that buyers hop from channel to channel, depending on what they want to do. The stock-brokerage firm of Charles Schwab & Co., for example, discovered that 70% of its new accounts were opened at branches — but 90% of customers' trading was done online. "Indeed, some 95% of Schwab customers use all channels to interact with the company," Siebel writes.
The lesson is clear: Smart businesses coordinate their sales and service efforts across multiple channels, moving information around so that customers' preferences and history are accessible no matter whether the next interaction is online, in a store, or via a call center. That's not an easy task, but Siebel argues that the payoff is immense.
Personalize the customer experience.
Siebel writes admiringly of Marriott International's ability to gather data on repeat customers' preferences, so that it can present them with appealing choices for restaurants, golf courses, and the like — as well as a night's lodging. One such program, he notes, has produced both an improvement in guest-satisfaction ratings and a $100-a-day jump in spending beyond the basic room rate.
In essence, Marriott has become smart enough about its customers that it can cross-sell with clarity and success. That sort of personalization is easier than ever when dealing with customers through email, the Web, or even a call center with Internet-based technology. There's no easy way to reconfigure a physical store for each customer or to print customized catalogs for each shopper. But in the online economy — as shown by the early success of customized home pages on Yahoo — it's easy to tailor information and presentation to suit each customer's own tastes.
Store your data in one place.
Most companies, Siebel notes, have allowed customer data to become incredibly fragmented over the years. Billing departments, marketing divisions, and service centers all may know a bit about the same customer, but companies have no effective way to tie that knowledge together.
Those discontinuities are likely to sound grimly familiar to anyone who has bought or serviced a car recently. But Siebel is optimistic about a $300 million initiative being undertaken by Saturn Corp., which he calls "an emerging eBusiness leader in the automotive industry." Saturn is creating a Web-based information system that will link all 400 of its retail facilities nationwide with each other and with customers and partners. That should make it easier for car buyers to canvas multiple dealerships in search of their exact model choice; it also should help owners schedule service appointments no matter where they are.
Get relevant data to your frontline workers as fast as possible.
The biggest users of Siebel software are regional sales reps on per diems and call-center specialists who wear headsets all day long. Their jobs may not be as glamorous as a CEO's — but to Siebel Systems, they are crucial to a company's success. And the only way for those employees to reach maximum effectiveness is to put knowledge on their screens and in their hands.
Siebel approvingly cites computer and telephony integration at the global-accounts call center for WorldCom, the long-distance and Internet-services company. The system "ensures that a customer's complete account profile automatically appears on screen before an agent takes a call," he says. That avoids exasperating — and unproductive — calls where call-center agents struggle to track down relevant information. Instead, that approach should let agents anticipate customers' needs, handling calls faster and more effectively.
Go the extra mile for your best customers.
It sounds obvious, but as Siebel notes, too many businesses don't even know how to identify their best customers. Revenue is part of the story, and that's easy to track. But the real key is customers' contribution to profit margins. And that requires a much more sophisticated analysis that looks at the actual mix of business coming from each customer, plus adjustments for returns, repairs, and unexpected custom adaptations.
Once that analysis is in, it's time to maximize those key accounts' potential. Siebel writes approvingly of the Gold Service program that IBM extends to several hundred of its top enterprise customers. Those key accounts get their own telesales and telecoverage teams, ensuring "a consistent point of entry into IBM's breadth of offerings." And that "has made IBM an easier company with which to do business."
And as Siebel bluntly notes, "Not all of an organization's customers are desirable." His advice: Either create a profitable, new offering for otherwise low-value customers, or avoid acquiring them in the first place.
George Anders (firstname.lastname@example.org) is a Fast Company senior editor.