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If any industry needs to beef up customer service, it's transportation.
According to a recent survey by the Customer Respect Group, based in Bellevue, Wash., 39 percent of major transportation, distribution and logistics firms don't even respond to inquiries made at their web sites. Only 12 percent automatically confirm the receipt of inquiries. And just 7 percent provide off-line contact information, in the form of phone numbers and postal addresses.
That attitude of apparent indifference extends beyond the internet as well. Customer Relationship Management is a fast-growing segment of business software that has been embraced by manufacturers and service providers in many industries. Not so transportation. Most carriers and logistics providers have yet to launch a formal CRM program. And few CRM vendors have crafted industry-specific applications for them.
As a distinct area of information technology, CRM is far from mature in any sector. Worldwide software license revenues stood at $5.6bn in 2001, according to the Gartner consultancy. That compares with Gartner's prediction of $15.9bn in revenues by 2005. As of now, no vendor has built out a fully functioning suite of CRM tools for all industries. And it's far from clear who will dominate the CRM market in future - stand-alone vendors, such as Siebel Systems, or enterprise software giants, such as SAP AG and Oracle Corp.
Still, such industries as automotive, high-tech, consumer packaged goods and financial services have made far greater inroads into CRM than transportation. They have begun revitalizing their organizations through better information about the customer, and tighter links to key buyers. According to AMR Research Inc., transportation and warehousing accounts for around 2 percent of customer-management license revenues vs. computers and electronics with 12 percent, telecommunications services with another 12 percent, and finance and insurance with 15 percent.
CRM is actually a fairly broad term embracing a number of discrete applications, all centered around a company's ties to the customer: customer service, including contact centers, e-mail management, field service and web self-service; e-commerce, including product configuration, sell-side content and personalization; marketing automation and trade promotions management; partner relationship management (PRM); sales force automation; and customer analytics.
Depending on their unique requirements, different industries will avail themselves of various aspects of CRM. In transportation and warehousing, the most favored applications are, in descending order, sell-side e-commerce, customer service, contact centers and sales force automation, according to AMR. Less popular are analytics, marketing and PRM.
"I see the transportation industry as backing into that capability," says Robert Goodwin, managing vice president of Gartner's global industries practice in Emeryville, Calif. "No one thought they needed it." Up to now, he says, most transportation providers have focused on minimizing price. What customer-facing technology they have embraced has been in the area of logistics execution, such as shipment booking, tracking and tracing.
Most carrier call centers are homegrown, not built from off-the-shelf software, says John Fontanella, supply-chain analyst with AMR in Boston, Mass. In addition, he says, few carriers have adopted sales-force automation (SFA). Many shipments are handled today via the internet or portals, where customers can quickly learn the status of their shipments or the availability of equipment to move them.
In any case, says Fontanella, "SFA in general hasn't been the killer app that everyone thought it would be. Most companies want their sales forces selling, rather than filling out a bunch of forms on a computer."
Part of the problem is the very nature of transportation and the way it's purchased. Nearly 80 percent of transactions occur under contractual or long-term relationships, says Fontanella. Carriers haven't sought the kind of customer intelligence that's better suited to businesses such as consumer goods, where so many purchases are spur of the moment. And transportation isn't built around limited promotions, which foster so much unpredictability in the retail sector.
Some 3PLs Reluctant
Third-party logistics providers have shown even less interest in CRM. For instance, Penske Logistics, based in Green Hills, Pa., deploys a number of tools - strategies for customer acquisition, sales-force performance metrics, a call center - that some might lump under the CRM label. But Joe Gallick, senior vice president of sales, says Penske doesn't have the large and varied customer base that justifies the sophistication of a full-blown CRM suite. Most of its customer-facing applications are related to traditional supply-chain management, such as tracking and tracing.
But new customer demands for shipment visibility and predictability, coupled with post-9/11 concerns about security, have renewed carriers' focus on the service side, causing them to take another look at CRM. As basic transportation services become more of a commodity, providers search for ways to break out of the pack. One solution is better knowledge about customers - what they want from logistics partners, what they'll buy in future, and how profitable they are to their providers.
Carriers are expressing a clear desire to be more efficient about the way they deal with shippers, Fontanella says. The goal is to shore up customer loyalty while making the best use of limited assets. That might help to explain why, in a recent AMR survey, transportation companies said they were committing 21 percent of their applications budgets to CRM in 2004.
CRM is definitely on their radar screens. Another AMR spending report found that 86 percent of transportation companies planned to invest in marketing automation systems and customer data analytics in the coming year. Seventy-one percent cited SFA and partner and channel management as additional spending priorities.
Buddy Meyers, partner and industry segment leader for transportation with IBM Business Consulting Services, believes CRM holds "tremendous potential" for the industry. Over the past decade, he says, shippers have increasingly turned to carriers for help in solving service problems, and performing a wider range of logistics tasks. And carriers have discovered that knowing more about customers can improve their ability to negotiate, set prices and route shipments.
SFA tools are still in their infancy in transportation, but Meyers sees them as integrating the sales team with key execution processes such as shipment tendering and loading, and freight-bill auditing and payment. Improperly rated bills are still costing the industry "tons of money," and threatening carriers' relationships with valued shippers, he says.
Some say a customer-data analytics application is unsuited for the transportation business. Meyers disagrees strongly. Contracts change on a regular basis, he says, and it's vital for carriers to have a handle on their customers' shipping and buying patterns when it comes time to sign a new agreement. They must know exactly where they have failed to live up to customer expectations. Armed with such information, they can even proactively approach customers with quality-control programs.
As with any area of IT, the definition of CRM grows fuzzy around the edges. Certain tasks that fall under the category of supply-chain management might also be considered aspects of customer service, if not classic CRM.
Shipment tracking and tracing, for example, are crucial to every major carrier's basic offering. Yet "it's very much a part of the whole customer-relationship piece," Meyers argues. "It's about more than the shipment. It's about what's going on around it, with supply-chain partners, too."
Schneider National, UPS, FedEx, APL, Burlington Northern Santa Fe Corp. and the Union Pacific Railroad are among the transportation companies to have adopted some form of CRM, Meyers says. All have realized that, while the industry is grounded in physical functions, it is also highly service-oriented. "Transportation, at the end of the day, is one of the most relationship-intense businesses around," he says.
APL first implemented CRM in its liner service two and half years ago, according to Vincent F. Gulisano, senior vice president of global sales, marketing and solutions engineering with the company's APL Logistics (APLL) unit. APLL latched on to the concept in March of this year.
Siebel Systems provided APL with its CRM tool. On the liner side, it has been applied to customer service. APLL uses it mostly for sales and customer management. The application helps the provider to assign resources to new customers, as well as new projects for existing accounts. It manages the proposal, design and implementation stages. Already the system has helped to automate and speed up the company's access to critical data, Gulisano says.
APLL intends to broaden its use of CRM to include customer service and integration with financial applications. Gulisano says there's no reason why CRM can't benefit transportation providers as much as it has other industries, although he acknowledges that the industry has been slow to adopt the technology.
When it comes to specialty vendors, Siebel is by all accounts the leader in CRM. The company was launched in the early 1990s with a focus on SFA, says Jim Dunham, general manager of Siebel Travel and Transportation in Amherst, N.H. It subsequently added support for call centers, customer service and marketing automation.
Consumer-goods makers were among the initial adopters of CRM, says Dunham. Soon after came insurance and financial services. Transportation has emerged as a customer within the last three years, both on the freight and passenger side. Siebel now has around 70 customers in that sector, including major North American railroads and a couple of truck lines.
Many of those customers can benefit from Siebel's base product. Dunham is also exploring ways in which the application can be tailored to the specific needs of transportation. He says the market is at a "tipping point," with consolidation and competition forcing carriers simultaneously to reduce costs and better serve their customers.
Shipment visibility is a familiar tool among carriers, Dunham says. What's been missing is the ability to convey such information to multiple partners across the supply chain, especially those outside the carrier's network. A container, for example, might be resting on a siding, awaiting a dray. For that period, it could be invisible to the originating carrier.
Similarly, old-style call centers aren't necessarily linked to all of the handlers of a given shipment. Some customer-care representatives even lack access to the company's web browser, Dunham says. They must undertake a series of time-consuming, manual processes in order to satisfy an inquiry. CRM systems can help to link disparate functions so that freight doesn't drop into a series of black holes as it changes hands or status.
In developing Siebel's transportation practice, Dunham has taken on two main tasks. One is to link in-transit visibility with the vendor's call center and service offerings. The other is to employ analytics in the creation of "morning reports," which present a dynamic picture of a carrier's network, and isolate service glitches.
Siebel's transportation accounts include Lufthansa Cargo, which is deploying SFA in order to smooth relationships with freight forwarders, Dunham says.
With the recent acquisition of enterprise software vendor J.D. Edwards, Pleasanton, Calif.-based PeopleSoft now has two CRM suites on the market. Up to now, PeopleSoft has focused its own product on service industries such as financial services and telecommunications, says Joe Davis, vice president and general manager. The J.D. Edwards deal moves the vendor in the direction of manufacturers and distributors.
J.D. Edwards' CRM suite has placed a greater emphasis on transportation than that of PeopleSoft. Yet Davis agrees that the market has been something of a "technological laggard" in embracing CRM. Companies that deal directly with consumers are more motivated to adopt new technologies, he says. In the business-to-business environment, of which transportation is an example, "other things in business relationships make [technology] less important."
Nevertheless, says Davis, CRM has plenty to offer carriers. "It gives you the ability to understand any issue about your customer," he says. Companies looking to widen their margins would do well to know which customers are behind on their bills, haven't paid, have previously received huge discounts, or aren't otherwise remunerative to the provider.
At the same time, it's crucial to know which accounts are the most profitable, and deserving of extra attention from sales and customer service. And, with the help of a marketing automation tool, carriers can follow up after the contract is signed, to ensure continuing customer satisfaction.
Davis agrees that the line between CRM and traditional logistics functions can be a thin one. Both UPS and FedEx have merged PeopleSoft applications into their homegrown tracking and tracing systems, he says.
In fact, he argues that customers are taking a broader approach to their IT purchases, buying multiple systems from the same vendor so as to minimize integration headaches. "Companies found that if they bought from a best-of-breed vendor, they were spending huge amounts to integrate CRM into their financial software," he claims. That's the sales pitch used by big enterprise vendors to chip away at the market share of standalone providers like Siebel.
The dominance of Germany's SAP AG was bolstered by the vendor's early entrance into the market for enterprise-resource planning systems. Now, it is pushing CRM as part of an integrated offering. Christoph Lessmoellmann, SAP's director for supply-chain marketing at the company's headquarters in Walldorf, says the transportation function is closely related to order management. As such, it is a prime candidate for some form of CRM.
When taking an order, a company must check on the availability of goods, where they are, and whether one item might be substituted for another in case of a supply problem. That's followed immediately by transportation optimization, whereby the company determines the best way to move the order to the customer. Whether or not that step is classified as CRM, it's a critical part of the supply chain from an order fulfillment and customer-service standpoint, according to Lessmoellmann. "There has to be an integrated process and functionality," he says.
The carrier, meanwhile, must execute planning and scheduling based on available orders, maximizing its use of assets while meeting customer requirements. Ideally, all information about loading, pickup and arrival times will be available to sales representatives in the event a shipper inquires about the status of its freight. Once again, the CRM functionality becomes hard to separate from the execution piece.
One user of SAP's CRM and transportation suites is Deicmar, a logistics service provider based in Brazil. It conveys data on shipments, cost, routing and contract details to shippers via the internet, Lessmoellmann says. The information is used both at the execution level and for long-term service and asset planning.
The Analytics Play
SAS Institute Inc., based in Cary, N.C., is a CRM vendor with a focus on customer analytics. That's one of the areas in which transportation companies have shown the least interest. Nelle Schantz, program director of CRM, says most have started with systems on the operational side, such as order fulfillment and shipment tracking.
Still, she says, analytical CRM can be of great value to transportation companies. It can aid in demand forecasting and identify changes in customer needs. It can also help providers to customize their offerings, much as a manufacturer like Dell Computer assembles the components of a computer to create a tailored product.
SAS's CRM suite combines historical data with predictive modeling and data mining to identify buying trends. Users can determine when customers should be contacted and when they're likely to buy. They can also track customer behavior on the provider's web site with regard to check cashing and credit card payments. In the process, they can identify actions that fall outside the norm for any given customer.
While most of SAS's customers are consumer-direct companies in financial services, telecommunications and retail, the vendor does have a number of transportation providers using its analytics tool. They include Vitran, Progress Rail Services, MTR Corp., Air France, Jet Services and LOT Polish Airlines.
In the transportation industry, it's the largest providers who are most likely to acquire a CRM package, says Ben Balbale, regional vice president of sales for San Mateo, Calif.-based E.piphany. Smaller, more regionally based companies may not be able to justify the cost and effort.
Still, Balbale says, "transportation is as ripe for a CRM solution as any other [industry] with limited inventory." It's especially valuable for companies struggling to improve their margins. The real reason why transportation companies have balked at buying CRM may be cultural, he says.
DHL uses a customer-service application to manage its shipment inquiry process, Balbale says. The agent who takes a customer call can refer immediately to the vendor's electronic tracking system to locate a package anywhere in the world. That individual will also have a detailed history of the package's progress through the DHL network. Such information is conveyed to the appropriate individuals within the company, who can tackle the highest-priority issues. The system has reduced DHL's time to case resolution by more than 25 percent, Balbale claims.
E.piphany software also supports a multi-channel contact center, where agents handle customer inquiries via the web, phone, fax or e-mail. By consolidating all contacts at a single location, the carrier can once again deal with the most critical problems first.
Balbale says it could take 12 to 24 months before transportation companies come around to the value of CRM. Others say it's a lack of tailored software that limits the industry's interest, creating a classic chicken-and-egg dilemma between supply and demand. As Gartner's Goodwin puts it: "CRM vendors go where the money is."
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