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To keep suppliers, e-marketplaces getting CRM-savvy

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Struggling to get off the ground, or in some cases survive, most e-marketplaces have been more concerned with how to acquire customers than what to do with them once they arrive.

That’s about to change. Customer relationship management, or CRM, is coming to e-marketplaces.

But e-marketplaces using CRM tools have to wrestle with questions that stand-alone enterprises do not: Who owns the customer relationship, including the customer’s transaction data and profile? What data can be shared freely among marketplace members, without raising the ire of competitors or government regulators? How can you enable personalized, outbound marketing campaigns, not just for the marketplace, but also as a service for suppliers who participate on the exchange?

The value of CRM software for making an individual company’s supply chain more efficient has been known for some time. "There’s always excess inventory in every supply chain because suppliers want to make sure they can always deliver on time," said Jeremy Burton, senior VP-product and services marketing, Oracle Corp. "That’s because there’s very little visibility into demand. CRM systems are really closest to the customer, closest to that demand. What they can do is provide a great way to collect information and better tune the supply chain, regulate inventory and drive out costs."

Now, CRM within e-marketplaces is on the rise. Consultant Vernon Keenan forecasts the share of b-to-b marketplaces using CRM solutions to grow from 3% in 1999 to more than 50% in 2004.

Some pioneers are putting marketplace-based CRM to the test:

• U.K. marketplace Medexonline, for example, is using a CRM solution from start-up Ardesic Corp. to help manage an environment where companies can be both buyers and sellers, with transactions featuring complex trading relationships and contractual obligations.

• B-to-b barter marketplace BigVine.com Inc. uses a CRM system from E.piphany Inc. to deliver and analyze its database-marketing programs—such as outbound e-mail and customized newsletters—as a way to keep key members active on its site. Another E.piphany e-marketplace user, Buzzsaw.com Inc., is using the call center functions of its CRM tools to manage interactions with more than 50,000 marketplace participants using just 20 customer service representatives.

• CheMatch.com recently tapped Art Technology Group Inc. to add CRM-style personalization to its e-marketplace. As CheMatch has grown, its customer base has splintered, requiring more personal attention.

For e-marketplaces, coming to terms with how to exploit CRM technologies also means coming to terms with the fact that e-markets—especially in the aftermath of the dot-com crash—are no longer setting the rules.

"One of the mistakes Net market makers made early on in the development of the industry was to claim that Net marketplaces would own the customer," said Stephanie Langenfeld, b-to-b program director for E.piphany. "The problem was they also were trying to get suppliers to join. Net markets were seen as a threat to suppliers and others in the demand chain who thought they’d reduce their margins and cut them out of the supply chain," she said.

That stance has altered in the last couple of months, Langenfeld said. "We’ve seen an awareness that Net markets need to support their suppliers, distributors and value-added resellers," she said. "The marketplace becomes a conduit for customer relationships rather than a different forum for those relationships."

Vendor ATG, which specializes in Web-based personalization, has seen customer ownership issues first-hand in its work with consumer goods e-market Transora. Customers on the Transora site can "punch out" to individual member Web sites such as Procter & Gamble Co. or Johnson & Johnson to complete a transaction. But ATG’s CRM applications keep track of these users even as they traverse off the e-marketplace site. This information is maintained as a rich customer profile back at Transora.

"What happens to that relationship? Who owns it?" Rich Caplow, director-product marketing for ATG said. Clearly the supplier needs to "own" the transaction, but the marketplace doesn’t have to be cut out of the relationship entirely, he said. "Core to personalization is that if a customer punches out, it doesn’t mean you have to drop their identity or profile information. It can all be retained independently," Caplow said.

E-marketplace tools

Vendor E.piphany Inc. tweaked its CRM products to suit the needs of e-marketplace customers in September. The underlying technology is mainly the same, but how e-markets use E.piphany’s call center, campaign management, analytics and other tools can be quite different from how a single enterprise would use the software, E.piphany’s Langenfeld said.

"There’s more of a focus on sharing information with buyers and suppliers," she said. "Many e-markets also let their suppliers gain access to campaign management and real-time personalization to effectively promote themselves within the marketplace."

Indeed, when e-markets get their hands on CRM tools, they often start using them to run their own business. But a number have realized they can also provide hosted CRM services to their buyers and sellers as a value-added service.

Start-up Ardesic may be just a blip in the shadow of CRM giants like Siebel Systems Inc. and Oracle, but it is unique in one way: It may be the only CRM vendor specifically focused on developing applications for e-marketplaces.

That singleness of purpose, said Ardesic CEO Steve Traplin, gives it insight into the "special sauce" that makes CRM work in an e-marketplace environment.

"This is a community versus an enterprise," Traplin said. "That has some profound implications. You have to manage and protect a myriad of one-to-one relationships, yet still take advantage of having this cluster of customers together."

E-markets start tapping CRM tools for all the usual reasons: to organize and manage their users, to increase customer loyalty and satisfaction and to handle outbound marketing campaigns, Traplin said.

"[But] when the marketplace starts to grow, things get more interesting," he said. "Initially they use CRM to build usage and membership. But at the same time, the marketplace operator gets intelligence on usage activity, sales patterns and more. Then they can take that and offer it to [exchange participants], and let suppliers run their own market campaigns and tap into that rich data to plan their own marketing and sales. And all of it passes through this concentrator in the middle, the e-marketplace."

Privacy concerns

With all that rich customer data to be mined, an e-marketplace has to be very vigilant about exactly who gets to see what information.

"That’s the million-dollar question right now," Traplin said. "Companies are worried about the sharing of mission-critical brand information and other things that make them unique."

The Federal Trade Commission is concerned as well. Privacy and information-sharing issues were central to its examination last year of the e-marketplace phenomena. Their conclusion: E-marketplaces and their customers need to be vigilant about how they share and protect data, but in the end, traditional antitrust and business rules apply.

That’s good news for e-markets. But its still means they have to go through the hard work of bringing together their members and forming policies on what data gets shared, and how.

"When Net markets look at sharing data with other members of a marketplace, they’re most often comfortable with sharing an aggregated view of the world," E.piphany’s Langenfeld said. "That protects buyers and sellers from releasing information that could offer insight into a competitor’s business strategy. But every Net market has to set its own rules."

In the end, the information garnered via aggressive CRM strategies could prove to be an e-marketplace’s most valuable asset.

What e-marketplaces have to realize," Oracle’s Burton said, "is that one of their crown jewels is the information they collect about their industry’s supply chains. If they can analyze that and share it back with their customers, it’s a huge win."

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