Sony: Is Talk Cheap? Not as Cheap as E-Mail
At Gartner Inc.'s Customer Relationship Management (CRM) conference in September, Maureen Read came away shaking her head from a session on serving customers over the Internet. "There were people there talking about spending $11 on an e-mail response," says a disbelieving Read, the vice president in charge of Sony's Customer Information Services Center in Fort Myers, Fla. "And this was with tools."
She went through her own e-mail management crisis about three years ago, when her staff fell behind in answering the flood of e-mail. Because customers were using more digital Sony products that plugged into their PCs, they were more likely to shoot off an e-mail, rather than pick up the phone, when they had a question or complaint.
Since implementing Kana Communications' e-mail management systemKana Responsein August 1999, the service center has gone from being overwhelmed by a peak volume of 1,000 e-mails a day to comfortably handling about 4,000 per day. And that's with only a few more people, with an e-mail service staff of 20 today, up from 17 about three years ago. By comparison, phone service volume peaks at more than 16,000 calls per day.
Handling e-mail efficiently is one of the things major companies have to learn to do right, given the continuing migration of customer inquiries from phone to e-mail. Gartner analyst Esteban Kolsky tells his clients to expect to receive 35% to 40% of customer inquiries by e-mail by 2005. For a large company like Sony, shaving a few dollars off the per- e-mail cost can be worth millions of dollars per year.
A Gartner report published in May says most users of e-mail management systems report a cost of $5, slightly less than the $5.50-per-call average for live phone service. But Gartner also found companies that were spending as much as $40 per e-mail "and thinking that was normal," says Kolsky.
The broad range of costs suggests that how the technology is managed makes a huge difference. And too many users of e-mail management systems start with the assumption that they will save money, but don't invest the necessary effort to realize any savings, Kolsky says.
The lowest reported cost in Gartner's survey was $2.50 per e-mail, and Sony seems to be in that ballpark. Read declined to provide an average but said her cost ranges from $1.50 to $4 per e-mail, depending on the level of automation her staff is able to apply. Phone service typically costs at least $4 or $5 per call, and double that for the more complicated inquiries.
These days, Kana and every other CRM vendor would like to sell Sony a CRM suite that handles not only e-mail but also Web self-service and text chat, as well as phone service, both manned and automated. Kolsky recommends buying a comprehensive suite, but implementing the software one component at a time to avoid getting bogged down in overambitious projects.
Read remains skeptical of CRM suitesmost of which, on closer inspection, turn out to be incompletely integrated bundles of products from multiple sources, she says. Indeed, today's Kana Communications is the product of a merger with analytics specialist Broadbase, and both companies had acquired several other firms in pursuit of software for call center automation, marketing automation and other functions.
Kana director of product marketing, Brett Ehrlich, says many customers are approaching CRM a step at a time, rather than buying the full suite. But he adds that Sony would probably benefit from moving to Kana Response IQ, which aims to offer e-mail management and self-service Web functionality in a coordinated way, so that e-mail responses can be used to steer customers to the appropriate section of a Web knowledge base.
But so far, Sony has also resisted upgrading from Kana Response 5 to the more recent versions 6 and 7. It runs the e-mail management system on a single Windows NT server, an HP NetServer LH3r with 1 GB of RAM and 56 GB of disk space. A preconfigured SQL Server database was included as part of the application and runs on the same machine. This implementation has served Sony wellexcept for a period earlier this year when it abruptly stopped working.
Even then, Sony couldn't grouse too much because it had pushed far beyond the limits spelled out in the system documentation. Kana had only tested the Response 5 system to support 5,000 categories of answers and says few customers have approached that level. But Sony was supporting such a wide variety of products and trying to produce reports for so many operating divisions that by January 2001 it had cruised past the 17,000 mark. As it started to push 18,000, the system choked. Rebooting the server would solve the problem for a few hours, but then it would die again.
Fortunately, Kana technical support was able to pin down the problem within a day.
"They got us the right guy on the phone," says Phil Cohen, the service center's IT and telecommunications manager. It turned out the system was taking so long to sort through all the categories that a database connection timed out. The short-term fix was to prune the number of categories and stop creating new ones. Ultimately, Sony implemented an additional component, Kana Forms, that made it possible to simplify the application by having customers use a Web form to categorize their own inquiries, rather than relying on the system to parse unstructured e-mail.
Ease of use is a key selling point for Sony products, and it's important for its service center to preserve that image by promptly addressing any difficulties customers may experience. But before Sony implemented e-mail management, the rising volume of Internet queries had created a backlog, with e-mail going unanswered for 20 days or more. "Sometimes, it was almost a month, and that's just totally unacceptable," says Ira Josowitz, manager of the center's knowledge-base group.
At the time, a lot of companies found that e-mail presented an unexpected challenge. Although the Internet provided an inexpensive communication channel compared with the phone, the labor involved in preparing written responses often outweighed that advantage. Sony had a knowledge base full of answers to common questions, but content created for internal use had to be rewritten before it could be e-mailed out.
To get organized, the team dedicated to handling e-mail created a series of Word documents in folders on a file server. At that point, Sony was seeing costs of about $7 per e-mail. Moving to a system specifically designed for e-mail management greatly improved productivity. Kana Response parses the content of each message and tries to match it with an approved response.
The capital investment was modestabout $100,000 for the initial license, plus some subsequent consulting and upgrade feesbut Read suspects her team's investment in planning for, managing and refining the system made the difference between her experience and the unhappy stories she heard at the Gartner event. Her staff created lists of questions for Kana representatives and already had a library of prepared responses, which gave them a head start before the implementation began. She is following a similar course with plans to implement voice recognition as a way to allow callers to cut through levels of phone-tree choices. Staffers have already been assigned to think through usage scenarios, even though no vendor has yet been selected.
Read's conclusion: Software alone can't solve all your problems: "If you're going to invest in a package, you have to be willing to invest in the manpower" to get the most out of it, she says.
Today, about 30% of Sony's e-mail is handled in "autoresponse" mode, according to Jerry Farnstrom, supervisor for the e-mail service group. For example, if the system spots the phrase "lost my manual," it automatically responds with directions on how to order a new one from the parts department.
Another 30% of messages can be handled with "autosuggest" answers that are sent out after a quick check by a customer service representative. About 40% are still handled manually, meaning that the software is unable to recognize a previously identified question and propose a response. In that case, a representative searches through an electronic library of approved responses and either finds one that is appropriate or flags this as a new question for which an answer must be prepared.
Autoresponse works best when the e-mail contains a single question for which there is one clearly defined answer. One of the first autoresponse messages concerned questions about Y2K compliancea question for which Sony had created a legally defined response that couldn't be changed.
In other cases, it works better to have a representative personalize the response. Also, if the e-mail includes multiple questions, the best the system can do is display a list of possible answers and rely on the representative to combine them into a coherent response.
Gartner's Kolsky suggests that the goal should be to approach an 80% to 90% autoresponse rate to truly obtain savings from e-mail management. However, Read prefers to keep the agents in the loop most of the time and believes the Sony system is already very cost-effective. She says she is more concerned with meeting customer expectations.
In a review of newsgroup postings that mentioned Sony's e-mail customer service, Baseline found several complaints from people who didn't like the answers they had gotten from the company.
However, one customer (who also preferred to communicate with Baseline by e-mail) says Sony's "prompt and courteous" service contrasted sharply with his experience with another consumer electronics manufacturer that ignored repeated messages. "I don't believe I have ever received a response from them the same day. But they have always responded, and usually within two to three days," he writes.Case">
Sony Customer Information Base Case
Headquarters: 12451 Gateway Blvd., Fort Myers, Fla.
Phone: (941) 561-7669
Business: Supports Sony Electronics customers throughout the United States, Canada and parts of Latin America.
IT and Telecommunications Manager: Phil Cohen
Financials in 2000: Sony Electronics contributed about $9.6 billion to the Japanese company's $58.5 billion in worldwide revenue
Challenge: Using automated e-mail to reduce contact-center costs and enhance customer satisfaction