Wilson Sporting Goods Company, an athletic equipment manufacturer headquartered in Chicago, Illinois, has a large, established customer base. Its marketing executives decided to mine this potential gold mine by sending out 90,000 emails to its golf customers.
Rick Kerpsack, Wilson’s director of interactive marketing understood the problem of undertaking this massive endeavor in house. Wilson had never conducted an email campaign previously. Staff wasn’t available since the “pretty lean organization” had had a head count reduction in IT support. Wilson only had two customer service people to handle consumer inquiries. “Ramping up the IT department and the interactive marketing department would require two paths to get up to speed,” says Kerpsack. This was a course he didn’t want to take.
Instead, he felt outsourcing was the best way to drive his campaign. In November 2000 Kerpsack chose to outsource the email campaign to RightNow Technologies of Bozeman, Montana.
Why Small/Mid-sized Businesses Outsource CRM
Outsourcing customer relationship management (CRM) is becoming the preferred solution for small/mid-sized businesses (SMBs). The process of CRM offers the prospects of increased customer communication and knowledge about those customers. It also magnifies the workload and requires more infrastructure if done internally. Putting more chips on the table in the form of increased staff and hardware is a questionable policy when the value proposition of outsourcing offers the potential rewards with decreased risk. For the SMBs, who have limited resources and expertise in the application of new technological tools, outsourcing CRM can leverage the maximum upside with reduced outlay.
In addition, SMBs face a double-edged inhibitor to deploying CRM: it’s hard to demonstrate the business value to the board, on one hand, and is a taxing operation on the other. Further, the fissures between the Information Services (IS) department and sales/marketing staff create a potential for problems. All too often, they do not understand one another.
“The business acumen is not very high among the SMB IS staffs. The business and sales/marketing staff does not necessarily have an appreciation for what technology does for them. They are often not on the same page,” says Mika Krammer, research director mid-sized business group for Gartner, a business advisory firm headquartered in Stamford, Connecticut. “They just make assumptions, which is a dangerous proposition. In large part it is a lack of communication of expectations and strategy to make things run for the business.”
The figure below from Gartner shows the high degree of dissonance between IS business acumen requirements and IS performance metrics tied to business.
These difficulties can be an Achilles heel that can lead to a failed or impaired CRM deployment, often at the expense of other more critical business needs.
Krammer concludes that, “Targeted email is the first thing to consider outsourcing. It is very rarely a competitive advantage for a company. There are a lot of processes where the internal staff would be better served. That is something that all SMBs should try to consider.”
Foresight Produces Above Par Results
Wilson discovered outsourcing was the best way to proceed. RightNow offers a hosted solution for targeted two-way email. The service provider both sends out the email message and manages the replies. Its software directs replies to preset selections like frequently asked questions (FAQs) based upon content analysis. If the consumer does not discover the information needed, a customer service representative replies. The software captures data on the contact and uses analytics, preferences and segments for reports.
RightNow launched the first Wilson campaign in February 2001, according to Steve Daines, vice president of customer service for RightNow. He says the implementation process is quick because the buyer needs no additional IT staff and doesn’t have to purchase servers or set up infrastructure. “Rather than having our customers devote resources to the hardware/technology side of the implementation equation, they can instead focus on the important “three P’s”: the people, processes and politics.” he says.
Kerpsack is pleased with the outsourcing solution. “We would not be able to handle the influx of emails without RightNow. We would have to hire and train more people. Outsourcing has allowed us to start a dialog with consumers without increasing our service department staff. The quicker ramp up has allowed a faster ROI and hasn’t taxed our human resources,” he reports.
He says when customers register their purchases; the process includes checking whether they wish to receive email announcements from Wilson. Year to date, Wilson has sent out three million emails. “We would run into problems if we had to rely on our internal people. It would just be one more thing that they would have to think about,” says the Wilson executive.
In addition, he says the email recipients are satisfied with their missives. “Satisfaction is not opting out of our newsletter. Our opt-out rate is less than three percent,” he reports.
Saving Dollars and Making Sense
Outsourcing pieces of the CRM process like email makes sense, according to Krammer. “You can try out CRM as modular units to see if it works. If it doesn’t, you can just walk away.”
Outsourcing also mitigates one of CRM’s biggest risks: technology. “It is a lower risk option. You don’t have to invest a whole bunch of money into a solution that’s difficult to get running. And, you can’t just back out once you have invested, because you’ve put so much into it up front in licensing, skills, and hardware,” the Gartner analyst continues.
Lessons from the Outsourcing Journal:
- Outsourcing CRM is a good choice for small/mid-sized businesses because they don’t have the staff expertise or the capital for extensive IT infrastructure.
- Outsourcing mitigates risks because the buyer can outsource pieces of the CRM pie to test the waters.
- Speed to market is possible; Wilson was able to launch a 90,000 email campaign in less than six months. So far, its service provider has sent out over 3 million emails.