Today, more than ever, technology is changing the way companies do business.  Many companies are using technology to reduce costs and better serve customers. Others are using technologies to reach new markets and customers.

Telephony technologies such as Integrated Voice Response (IVR) help customers serve themselves. One common example is the ability to get flight arrival and departure time from airlines.  Others, such as Computer Telephony Integration (CTI) enable customer service reps to answer the phone with the customer’s complete profile and contact stream popping up on their computer. This information not only helps provide better service, but also shortens the amount of time needed to spend with the customer, reducing costs.  Electronic Customer Relationship Management (ECRM) systems provide an integrated system for conducting and tracking customer contacts and ensuring closed loop customer service.

In many cases, technology can replace mundane tasks previously performed by humans and reduce costs. These types of applications do not necessarily result in workforce reductions. Rather, they can enable companies to use their workers for higher value tasks. For example, as Office Depot transitioned customers from ordering via the phone and fax to ordering online, they were able to reallocate their customer service representatives to higher value tasks. Their representatives began proactively contacting their best customers, resulting in deeper penetration into those accounts and higher retention.  Furthermore, the company estimated that the cost of taking an order via their web site was one-tenth the cost of using a telephone rep.

With Internet sites, small businesses are able to extend their reach beyond the traditional geographic boundaries of a physical location or direct sales representatives. Almost overnight, millions of new entrepreneurs created national and global markets for collectables and other consumer-to-consumer items on sites such as Yahoo! and eBay.  Also, with an Internet site, they can extend their hours of availability.  All of this opportunity doesn’t come without some cost. Companies must be prepared to address the high expectations of Internet customers with respect to rapid response times.  In some cases, companies may need to add customer service representatives in a phone center.  Today, several companies offer outsourcing solutions for customer service.  These companies are great resources for handling all of customer service for some smaller companies and a good source of incremental capacity for some larger firms during peak times.

While technology can certainly reduce costs, streamline mundane tasks, and generate efficiencies, there are some limitations.  First, with a web site, a company’s challenge is to replicate their best sales person.  To do this, they must provide comprehensive information about products and services and effectively “sell” on the site.  Second, they must have humans available to handle questions and problems.  Finally, they should ensure that they either have the right resources or partner to ensure good planning and implementation of technology.