ZIFFPAGE TITLENo Overnight Success Story

By Deborah Gage Print this article Print

FedEx already saves money by steering inquiries to its Web site, so how can it justify spending $326 million a year on call-center reps?

No Overnight Success Story

Since 1971, when FedEx was founded as the Federal Express Corp., the company has been a leader in using technology to streamline the delivery of packages. Steward and her manager, Beverley Hight, both recall how excited customers were in the mid-1980s, when FedEx could prove that packages had been delivered because they were scanned. "With other companies, you had to wait until the next day or a week later," Hight recalls.

By 1999, FedEx found itself in businesses ranging from logistics to regional freight to custom shipping of critical items. Information about customers was scattered in computer systems inherited through 14 years of acquisitions. At the same time, customers who used more than one FedEx business were not treated consistently, as company executives discovered when they pretended to be customers themselves. For instance, says systems VP Scot Struminger, customers claiming damages were filling out 37 fields on a claims form—tracking number, ship date, etc.—even though FedEx already had data for 33 of those fields in its computer systems.

During strategy meetings that year, executives at several levels decided to rebrand the entire company as FedEx. For the information-technology department, this meant that FedEx's subsidiaries could share common functions like package tracking without having their entire computer systems ripped out.

Meanwhile, FedEx's customer service centers were redesigned around a PC-based software desktop. If reps could pull up historical data on customers whenever they called—not just their shipping histories, but their preferences and even images of their paper bills—FedEx could provide better, faster service, both to individual customers and to businesses that sold goods through catalogs.

The customer service makeover started in 2000, when FedEx bought customer relationship management software called Clarify from Nortel. Nortel had acquired Clarify in 1999 for $2.1 billion, but then sold its assets to Amdocs in 2001—a year into FedEx's implementation—for $200 million in cash, an indication of how much the value of the software had plunged under Nortel's ownership.

Even so, the handoff created few problems for FedEx, Struminger says. One reason is that systems and customer service at FedEx are equally responsible for the call centers. As Struminger's team pulls new data into Clarify, new services are added to the call centers. Soon, for example, groups of specialized reps—reachable through FedEx's Integrated Voice Response System—will be resolving customs disputes for customers of both FedEx Express and FedEx Ground.

FedEx claims that its customers are happier now than they were in 2000 or even in 2003—although it refuses to provide data to back up that claim. In a cutthroat industry like package delivery, says Gartner research director Esteban Kolsky, no company will provide such data because customer service is all that distinguishes it from competitors. FedEx also says its call-center reps are happier and that turnover has fallen by about 20%. Steward says she feels better because it's easier to help customers, rather than just "enter into a transaction and hope it all works out."

But even as FedEx steps up its use of technology, its business grows more complicated. Hight and Steward both say their biggest challenge is to keep up with it all—new training, new procedures, new software. On Dec. 13, holiday shipments peaked at over 8 million packages. Every day FedEx moves an average of 5.5 million packages, using over 600 aircraft and 71,000 trucks. Inevitably, deliveries are missed and packages are damaged. And when that happens, FedEx's 4,000 customer service reps are the company's first line of defense.

This article was originally published on 2005-01-13
Senior Writer
Based in Silicon Valley, Debbie was a founding member of Ziff Davis Media's Sm@rt Partner, where she developed investigative projects and wrote a column on start-ups. She has covered the high-tech industry since 1994 and has also worked for Minnesota Public Radio, covering state politics. She has written freelance op-ed pieces on public education for the San Jose Mercury News, and has also won several national awards for her work co-producing a documentary. She has a B.A. from Minnesota State University.

eWeek eWeek

Have the latest technology news and resources emailed to you everyday.