Local company turning customer relationship management into a profit-maker
Monday, December 15, 2003
Local company turning customer relationship management into a profit-maker
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In the late 1990s, customer relationship management, or CRM, was
portrayed as the promised land. Consultants told CEOs they could transform
customer call centers that were "costing" them money into revenue centers that
were ringing up sales.
Companies threw tens of billions of dollars into
CRM, for instance, trying to convert a call center that simply handled billing
into a complex organization that also handled sales and contract issues with
customers. But Paul Stockford, chief analyst with Saddletree Research
Inc. in Scottsdale, Ariz., said CRM largely flopped because companies had no
way to determine what changes to make to increase productivity and savings.
"You can't manage what you can't measure." he said.
For these
reasons, Mutual of Omaha, the Nebraska-based insurance company, three years ago
cautiously began trying to find ways to increase productivity in its call
centers and other operations.
John Wells, senior vice president of
service on individual policies, who was responsible for call centers, said,
"Technology is not the cure for everything. You can spend as much as you wish
[on CRM], but you need milestones along the way because CRM can be a big black
hole."
While studying his options, Wells got an offer he couldn't refuse
from Chicago-based Opus Group Consulting, a consultancy specializing in contact
centers.
Michael Callaghan, chief executive of Opus, guaranteed that if
Opus were allowed to study Mutual of Omaha's contact centers and set up a
program with its Opus Suite software, the insurer would receive a return on its
investment of at least three dollars for every dollar spent.
SWells said
he checked out Opus and signed on.
"Opus was effective. They achieved
the results. It was a win-win," he said. He said there were "substantial"
savings -- he wouldn't say exactly how much -- as the company used Opus'
software and techniques, such as implementing better scheduling of agents during
busy times, to boost productivity in call centers and in its billing department.
Wells said Mutual of Omaha boosted agent productivity to more than 85
percent, noting that productivity is only 60 percent on average in all
industries.
Callaghan, 35, launched Opus three years ago, and said that
today his firm has worked on about a dozen projects at Mutual of Omaha alone.
Other clients include T-Mobile, IBM, Computer Sciences Corp., Discover, SBC,
Blue Cross Blue Shield of Michigan, Farmers Insurance Group and Liberty Mutual
Insurance.
The Opus Suite software allows top managers to see what
impact the changes are having overall as well as enabling individual employees
-- and their supervisors -- to check on productivity, such as the number of
calls they handled and the average length of those calls, Callaghan said.
Opus typically charges $500,000 to put its software to work in call
centers with 200 to 300 agents, he said. He guarantees savings of three to five
dollars for every dollar spent on a project.
The Opus Suite can be used
with any database a company has, include billing, contracts, payroll and
scheduling. The system has an interface that enables agents to help customers
with their issues as well as to sell them other products.
Saddletree's Stockford said Opus is one of a dozen companies in
the emerging "performance optimization" field that is aimed at helping companies
extract benefits from CRM and other systems already in place.
He said
performance optimization "cannot be ignored or dismissed as another industry
fad." because, unlike faddish CRM, it is linked with measurable return on
investment. He said this new PO market "represents the first industry segment
growth opportunity of the 21st century following the failure of the dot-com
industry and the implosion of the worldwide telecommunications industry."
Opus has steered clear of VCs and has been self-funded. It has doubled
revenue each year, Callaghan said. He estimates $10 million in revenue this year
and $20 million in 2004. But he said Opus has developed a relationship with
Arbor Financial, a Chicago VC, by consulting with some of Arbor's portfolio
companies.
Opus, which has 40 employees, including 16 here, plans in the
next few weeks to move downtown from Lincoln Park.
