Feature

Using IT to keep customers

Retaining customers is as important as winning them, and IT can play a major role in an organisation’s customer retention strategy. Here’s what corporate IT heads can do about it, says Soutiman Das Gupta.

‘A customer is the most important person in any business. A customer is not dependent upon us. We are dependent upon him.’

This universal truth is something CIOs of all businesses know very well, and use as a keystone around which all their IT strategies are crafted. It is common to see an organisation spend more money and resources on gaining new customers rather than in retaining existing, profitable ones. In reality, retaining customers for good is an important part of any organisation’s business strategy.

“IT can help make the process of retaining customers easy, simple, and cost-effective. Companies can use the combination of IT and business processes to keep back the most valuable asset of a business,” says Rajiv Gerela, GM, Technology, Wipro Spectramind.

The value of retention

Any business without a focus on customer retention is at the mercy of the market. Without loyal customers, a competitor will eventually satisfy un-serviced desires, and customers will begin to switch loyalties to the newcomer.

Many companies which have spent a lot of money getting hold of new customers seem to believe that it is not very necessary to focus on existing ones. In such cases, customer loyalty is taken for granted. This perception is slowly changing, and Indian companies have been forced to come to terms with harsh reality.

Now that there is stiff competition in almost every product, service, and solution area, customers have plenty of choices. They can simply walk away. As a management guru once declared, “Dissatisfied customers don’t complain. They just don’t come back.”

A customer retention strategy has therefore evolved to become a very important aspect of any company’s business plans.

The role of IT

Being instant, reliable, flexible, interactive, and—in today’s world—present everywhere, IT has a major role to play in an enterprise’s customer retention strategy. IT allows organisations to send information and messages to multiple entities in an instant. Data can be sent in a secure manner to ensure tamper-proof delivery and allow interactive behaviour so that customers can convey their likings and specific needs which can be received by the solution provider in an instant.

Another big advantage of IT is that it has penetrated most large and medium businesses in India. Also, many small businesses are beginning to move to IT and some are in a fairly mature stage of IT use. Numerous individual buyers are also IT-savvy and have learnt to take advantage of the benefits of technology.

In such a situation, let the CIO be the first man to exploit the advantages of this medium and lead the organisation forward with happy customers and an improved bottom-line.

A good facilitator

In the new economy, a good way to retain customers is to build meaningful and contextual relationships with them. The most cost-effective and efficient way is to use e-mail.

Your company may have made a better product and revamped its service portfolio—both great ways to retain customers. But how does the message reach the customer? “Besides these two, e-mail is probably the best tool for retaining a dissatisfied customer,” says Gerela.

A simple solution comprising a reliable e-mail program (Exchange or Notes) and a database of customer e-mail IDs can keep your customers abreast of your products, solutions, schemes and loyalty programmes.

The CIO’s e-mail push

E-mail is easy to maintain, and its management can even be outsourced to competent service providers.

CIOs should ask business heads to stop thinking about e-mail in terms of one-off campaigns, and consider them as e-mail conversations that record and archive the customer’s case history. The use of archival and retrieval tools along with efficient networked storage will help support this process.

The business should consider e-mail a part of the communication lifecycle. E-mail isn’t for promotional efforts only; it embodies all aspects of the customer relationship, including marketing, promotion and service messaging. That said, e-mail should always be relevant, personalised and timely. There may be a fine line between information and spam, so this form of communication must respect a customer’s privacy and time.

A company can carry out satisfaction surveys, receive complaints and reply to them, send newsletters, and distribute information about new products once in a while. The most valuable customers are the ones you already have. In order to retain these customers, stay in touch with them through e-mail and offer incentives for their continued patronage of your company.

Intelligence in business

Companies, typically those who have a very large number of retail customers, can use business intelligence (BI) tools to gain competitive advantage and increased customer satisfaction, thereby resulting in better customer retention.

BI tools can gather critical business information and allow enterprises to gather, organise, distribute and act on its findings. They aim to eliminate guesswork and ignorance in enterprises by leveraging existing mountains of data that companies collect in a variety of day-to-day corporate applications.

A case in point is Standard Chartered Bank. They had over 2.2 million retail and 1.3 million credit card customers, and more were being added every day.

The bank wanted to keep up its standards of customer service, and at the same time look for more avenues for profit growth. It deployed a BI system which revealed that a large number of the bank’s customers were women, and a significant number of them earned a reasonably high pay-packet. The bank therefore introduced a new credit card named Diva aimed specifically at this segment. It now enjoys the dedicated patronage of its women customers, and their numbers are growing every day.

Another example of the use of BI tools for customer retention can be that of an FMCG company. Any FMCG entity can use customised BI tools to identify its top-selling products, its most loyal customers, the efficiency of its promotion campaigns, and their effect on sales.

A BI solution has components such as Extract Transform Load (ETL) tools, data warehouses, and reporting and querying tools.

Reducing churn

The issue of customer churn is something all companies in the retail segment have to contend with, especially telecoms. Effective churn management allows a telecom to stay ahead of its competitors, increase profitability and improve investor confidence.

Fierce competition has raised the cost of acquiring new customers, making it imperative to determine which customers are likely to churn, and which you’d like to keep, so you can take the necessary steps to prevent the latter from leaving.

In such a situation, a churn management solution can track usage and spending patterns from the past history of the vast volume of customers. The software can identify patterns by using mathematical modelling techniques to identify customers who are likely to spend more, to remain stagnant, or to leave.

Prominent telecom service providers such as Bharti, BPL and Hutch have installed churn management tools and benefited from the same. The solution predicts a customer’s likelihood of cancellation or switchover by scoring them on a scale. The lower the score, the more content the customer. Once the scores are known, it is easy to figure out if a customer is likely to switch.

Predictive information becomes crucial as it gives the service provider a window to pro-actively fix glitches in service and contain churn, thereby improving the bottom-line. The solution also helps identify cross-sell and up-sell opportunities which can have a further positive impact on the operator’s bottom-line.

Bharti uses a product called Adagium PACS to manage its complete prepaid business support functions; it has the capability to handle up to 10 million subscribers. “Our systems use powerful subscriber modelling techniques to help achieve service segmentation. This, coupled with customer care systems, present a unified and seamless customer-focussed process. One of the most important benefits of the system is that it optimises customer retention,” says Amrita Gangotra, CIO of the company.

Our customers value our services, and are happier with us than with any other bank C N Ram Head, IT HDFC Bank	The CIO should induce change from the top-level of management Arun Gupta Senior Director, Business Tech. Pfizer

More choices for customers

Customers love to be given choices. A traditional share brokerage firm used to receive purchase orders and booking requests from customers over the phone. Enter IT. Share broking companies can now offer purchases through well-designed Web sites that can be accessed all day. The sites can receive payments, make payments, provide updated information on companies’ financial performance, and offer live tickers from various stock exchanges.

With facilities like these extended to the desktop, a customer will have very little reason to defect.

Private banks in India scored over PSU banks because they offered banking over the Internet, through ATMs, and over the landline and cell phone–all with the help of IT. Customers today have several choices to carry out many of their banking activities without even visiting a branch. IT has provided these banks with the power to retain their existing customers. Banks that were slow to deploy IT have been unable to retain their customers.

Queues at railway ticket counters are fewer, and customers are more motivated to purchase tickets Dr Rajesh Narang Chief Systems Manager CRIS	Companies can use IT and business processes to retain the most valuable asset of a business: the customer Rajiv Gerela GM, Technology Wipro Spectramind

Integrating systems

Some companies suffer from the problem of low levels of performance optimisation of their IT systems. This especially happens when the systems are developed over a few months and are built like silos in various business areas. The company cannot share vital customer data and business-critical information in time since there are several reports and tables made by various departments which are difficult to integrate and centralise.

The simple act of integrating the existing systems or deploying newer systems that allow inter-operability and open standards will allow better information flow and ultimately result in better customer satisfaction and retention.

Or take the case of the Indian Railways. They used standalone machines at their nationwide unreserved ticket counters. These machines were subject to frequent downtime and could not be centrally managed. This resulted in long queues at the counters, so sometimes passengers who were in a hurry would not buy tickets at all, which of course caused a revenue loss to the railways and inconvenience to customers. The Centre for Railway Information Systems (CRIS) then deployed an integrated ticketing system with networked and centrally managed machines that dispensed tickets in a speedy and efficient manner. People could also buy unreserved tickets between two stations in a different part of the country. “The queues at our counters are now less, and customers are more motivated to purchase tickets. This has resulted in more customer satisfaction and revenue for the railways,” says Dr Rajesh Narang, Chief Systems Manager of CRIS.

Other means

There are various other innovative ways in which IT can be used to retain customers.

HDFC Bank has deployed a fraud management system for its credit card division. It uses tools that track the spending, usage pattern and behaviour of each individual card holder. If the system finds a transaction out of the ordinary—beyond pre-defined limits—an alert is raised and the card holder is called on the phone to verify the transaction or purchase. “Our customers value our services, and are happier with us than with any other bank. This is a significant benefit to the goodwill of the bank,” says C N Ram, Head, Information Technology, HDFC Bank.

Then there is Fortis Healthcare, which has extended its patient monitoring systems over its LAN and WAN through wireless means so that doctors can receive vital information (like a patient’s heart rate and blood pressure) in real-time from a remote location. This allows them to suggest remedial action even when they’re not at the hospital. Satisfied healthcare customers have recognised the value of this service offering and do not hesitate to come back in case of other ailments.

Or consider MTNL, which uses an SMS-based system to alert line-men to repair faults. An SMS is sent to the line-man on duty through a hand-held communication device. The message has information such as the telephone number, docket number, date, fault type and location. This enables servicemen to attend to line-faults faster because the earlier systems used paper-based and pager-based reporting. The reduction in complaint redress time that the system has introduced has had a direct and positive effect on MTNL’s ability to retain customers.

Looking beyond the technology

The challenge of using IT for customer retention is not technology. The challenge is to manage the processes and introduce change. A customer who has just made a payment to the insurance company through the Web in the morning should not get a call from the insurance claims department in the evening asking for the same payment. There should be smooth processes that tie the efforts of IT to the overall customer retention activities.

“The CIO should explain the benefits of moving to the new IT-enabled systems, be it e-mail or a BI solution. He should also induce change from the top-level of the management to make it successful,” opines Arun Gupta, Senior Director, Business Technology, Pfizer.

The CIO has the potential to be the champion of the customer retention strategy. He only needs to play his cards well.

soutimand@networkmagazineindia.com