It Pays to Know Your Customer

Feature Article | June 10, 2003 by admin

Founded in 1971 and headquartered in Milan, the IPSOA publishing house provides legal and financial information to the fiscal, legal, labor and business markets. IPSOA has achieved a 7 percent internal rate of return over 25 months with a projected 30 percent internal rate of return in 36 months.

Customer centricity: Building the business case

IPSOA – a recognized leader in Italian publishing – delivers its products via various forms and channels, including loose-leaf publications, magazines and newsletters, books, electronic publishing, and practice management software. Ninety percent of sales come from a network of independent sales agencies. However, a 2000 internal analysis proved alarming: It documented costly inefficiencies, decreasing customer satisfaction, low retention, and high customer churn.
IPSOA’s management quickly realized it must move toward greater customer centricity. Strategic commitment to customer intimacy would prove indispensable to this transformation, but a strong technological infrastructure was also vital. According to Nunzio Camerada, chief technology officer, “Our strategies are built on having the right information in the right place; and for that you have to have good data, good systems, and good integration.”
They decided the best approach was to integrate mySAP Customer Relationship Management on top of IPSOA’s existing SAP R/3 and SAP Business Information Warehouse (SAP BW) solutions, which would eliminate a host of integration challenges. These solutions share numerous, built-in connection points, and others could be added on-site, rather than having to integrate third-party applications. Smoother integration and compatibility translates to having your CRM initiative off the ground and contributing to the bottom line faster.
IPSOA selected mySAP CRM in August 2000. By February 2001, the solution was configured and launched. The seven-month implementation enabled IPSOA to begin generating quick returns from its initial investment.

From plan to practice: Connected channels, healthier returns

Three years ago, IPSOA’s product focus left their customer contact processes uncoordinated, with customer information flowing through isolated touchpoints: administrative department, credit office, order department, cash in office, sales, and general editors. These multiple contact points prohibited the creation of complete customer profiles. There was no tracking of customer interactions, such as length of call, preference data, or previous interaction information. High volumes of paperwork further frustrated both employees and customers.
IPSOA’s choice of mySAP CRM as one core technology for the customer interaction center (CIC) was based on several factors. The first, as noted, was integration with the existing SAP modules, in particular SAP BW. Second was easy access to all SAP or customer transactions, a key component for more profitable customer interactions based on robust profiles. Finally, mySAP CRM had the required call center features, including inbound/outbound capabilities, agent scripting, access to sales, service and marketing follow-up actions, a callback queue, and call center reporting.

Targeted messages, measurable returns

The successful integration of these technologies, says COO Hendrik Van Buren, means that “the customer has only one place he needs to contact. When any customer calls, we have all of the information available in order to provide service.” With every customer communication, adds Van Buren, “It reduces paper flow, it reduces errors, and it is a very strong tool for building relationships.”
Today, 34 operators in every customer-facing function – subscriptions, billing, orders, delivery, claims, and payment – handle an average of 11.000 inbound calls monthly. They complete transactions and resolve customer issues in 2.3 minutes or less, 94 percent of the time. “Not only are we responding in a faster way to the customer’s issue, but the quality of the answer is much improved,” says Lea Craviotto, operational manager of the CIC. “The answers are the right answers.”
The ability of IPSOA – and in particular the CIC – to efficiently address these issues has numerous positive impacts. Accurate account data and a clearer window into the most up-to-date transaction information have vastly improved the billing and collection process. Since the arrival of mySAP CRM, IPSOA sends out 15 percent fewer reminders and invoices to customers. This translates to tens of thousands of mailings, which saves administrative money, time, and resources.
The CIC capabilities also drive greater effectiveness in the IPSOA sales force, the network of independent agencies. Previously, third-party agents spent approximately 35 percent of their selling time in “problem solving” mode. Thanks to the funneling of customer inquiries and complaints to the CIC, problem-solving activity has been reduced to 25 percent, which leaves more time for meeting customer needs, selling products, and building profitable relationships.
Over both the short and long terms, the new CIC has helped IPSOA improve business networking with agents in the field, streamline customer facing and data integration processes, improve customer intimacy via better customer responsiveness and service levels, cut costs, and build strong revenue.

The 8 Point Takeaway

ROI methodology

ROI methodology

As shown by the ValueMap above, IPSOA uses mySAP CRM to integrate touchpoints, collect valuable data from customer interactions, then leverage that data to build profitable customer relationships. Establishing smooth integration and the free sharing of information between the customer interaction center, independent sales agencies, and the administrative back office elements are the keys.
By bringing together in-bound phone calls, emails, faxes and Web messages, mySAP CRM enables IPSOA to compile customer profiles based on purchase history, interaction history, and expressed customer preferences. Seamless integration produces results on both a strategic and a financial level, the latter revolving around increased contribution per customer and decreased administrative costs, as evidenced by the 8 Point Takeaway.

1. Achieve measurable returns

Measurable, incremental return is the most telling benchmark of success. On an initial mySAP CRM investment of just under Euro 620,000, IPSOA has reaped nearly Euro 1.1 million in actual, attributable benefits. This represents a 7 percent Internal Rate of Return (IRR) over a 25-month period. Over a 36-month period, the return will reach Euro 2.1 million, or 30 percent IRR. When projected over year four, the IRR reaches 45 percent.

2. Up and running means better productivity

Seamless integration can be the quickest path to generating returns. Built upon the foundation of SAP’s R/3 and BW solutions, the mySAP CRM application was configured, up, and running in seven months.

3. Spread the wealth

Customer insight can generate return and promote enterprise-wide efficiency. IPSOA’s 7 percent IRR on its initial investment is due to improved operational efficiency, reduced administrative and technology ownership costs, and increased revenue.

4. Executive leadership produces results

Strong support from top management is a critical success factor in implementing a cross-organizational initiative like CRM. IPSOA’s parent company, Wolters Kluwer, played a vital role in IPSOA’s decision to incorporate customer-based strategies and technologies. IPSOA’s management team led the internal charge, reorganizing the company around the needs of customers.

5. Leverage your customer base

Ninety percent of IPSOA’s Euro 1.1 million return was generated through share-of-wallet, higher retention, and improved communication with existing customers deemed valuable to IPSOA. Within IPSOA’s legal business unit alone, product development based on customer insight has doubled the share-of-wallet revenue per customer in just four years.

6. Boost resolution, boost satisfaction

At IPSOA, 34 Customer Interaction Center representatives now handle 11,000 inbound calls monthly, ranging from subscriptions, billing, orders and delivery to claims and payment. Inbound calls are resolved in 2.3 minutes or less, 94 percent of the time.

7. Free up selling time

A more efficient CIC frees IPSOA sales agents to focus on selling products rather than service or complaint resolution. Sales agencies conduct an average of 1.5 more customer visits per week, and selling time has increased from 65 percent to 75 percent.

8. Be efficient, be productive

Tighter account resolution and more efficient billing reduce cost. IPSOA has streamlined its billing and account resolution processes via a 15 percent drop in previous annual averages of reminders and invoices sent.
In addition to the CIC project, IPSOA empowered its sales’ force and enhanced its product base with the help of mySAP CRM. The benefits of customer-driven product development and enhancement, more effective selling by agents, and an efficient, streamlined CIC are significant. So what does IPSOA’s overall investment cost vs. captured ROI look like? What additional areas of return can be identified?
Thanks to its own set of customer strategies backed by SAP technologies, IPSOA is providing more of what each unique, individual customers needs. Whether it’s improved, more relevant, or comprehensive products or faster, more personalized service, IPSOA’s reformulated customer-centric business processes, along with its newly mySAP CRM-enabled customer interaction center, are getting it done.

Source: This article is based on a study of Peppers and Rogers Group

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