From the Top
- Executive to Executive -

In this interview, the President and co-founder of Merced Systems, Mark Selcow, shares his candid thoughts on the current landscape in the CRM industry and indicates some of the driving issues. Mark explains how and why companies in today's market landscape are addressing today's issues in smaller, bite size ways.

Mark Selcow,
President and co-founder of Merced Systems


 
RealMarket: You talk with CEOs from leading companies.  What do you see as the number one issue or opportunity facing CRM today?
 
Selcow: My area of focus is the call center, and what I hear most often from senior executives who focus on call centers and back office operations is the question “how can I more productively serve the customer.  How can I deliver a really high quality customer experience in a way that doesn’t break the bank for my company?” They are looking for a combination of management improvements via small steps and phase changing insights to improve how they work.

I also have met with top executives who have just come back from a retreat where they focused on a management methodology like Six Sigma.  More often than not, the executive will go straight to the operations guys with this methodology and tell them to create change.   They’ll say “I need a list of ten key insights from our data and then I want you to begin the process of transformation.”

 
"People are risk adjusting their project and I think that is really sensible."

 
 
RealMarket: How are companies addressing this issue?
 
Selcow: There is always opportunity for insight and improvement, but companies are now pursuing change in smaller, bit-size ways.  This seems pretty consistent with what your publication, RealMarket Today, shows. In contrast with the past, companies now tackle change one insight at a time and one project at a time.  They now define technology initiatives as achievable projects with clear deliverables that can be done in a short period of time using a small team.  In essence, people are risk adjusting their project and I think that is really sensible. That is where Performance Management and Merced Systems come in.  We help our customers solve core data problems in their operations that allow them to transform how people work.

Based on our past customer successes, we can show what an achievable performance management project is and how long it will take. We can show the results you are likely going to see creating a low-risk, high-return implementation.  You can be assured that you are going to see results, and we know it is going to be one of several things that you are doing that year, not a single, massive initiative.

 
"The second biggest competitor is existing business intelligence tools, which are very powerful, everyone has them, and is the biggest part of the market."

 
 
RealMarket: Who are your biggest competitors?
 
Selcow: The main competitor to our Performance Management software is customers building it themselves.  We play in the world of data integration, data management, reporting, analytics, scorecards, and workflow. For the most part, organizations have been developing and deploying their own internal metrics and scorecards. Quite frankly, many people do have the skills to achieve success with individual elements of a dashboard project. But if the goal is meaningful employee behavior change, not simple reporting, we’ve found that homemade projects can fall short. Our challenge at Merced is to convince the customer that the data management and time based complexity around the data is hard to scale with an internally developed system. And, internal applications can often strain under frequent management and data source changes. In contrast, we’ve made a substantial investment in data management and administrative tools.

The second biggest competitor is existing business intelligence tools. Everyone has them, and they represent the biggest part of the reporting and analysis market.  In the contact center , however, we felt there was room for a product that embedded domain-specific functionality such as experience with common data sources like phone switches, workforce management, CRM, HR and mainframe systems.


 
RealMarket: What are your thoughts on the consolidation in the CRM industry and how do you see it affecting Merced Systems?
 
Selcow: Consolidation is undeniably happening and will continue, but it isn’t as pronounced in the markets we live in like contact center performance  and data management. So we believe that gives us an opportunity to continue to focus on this very narrow and distinct problem.  Whether or not contact center performance management becomes a more central part of CRM, or remains an operational issue, is still unclear to us.  Either way, it is a real problem and companies are putting money into solving the problem. For example, one of our largest customers was able to reduce handle time by twenty seconds and increase coaching time by 50% in the first 6 months after deployment. Another one of our customers solved a hiring problem and was able to get more people successfully on the floor lowering hiring and training costs. And yet another customer increased transactions per hour by over 5%. While the contact center performance management market isn’t a huge market today, it is a sharp point of pain.


 
RealMarket: What is the average size implementation? 
 
Selcow: An average size implementation from Merced Systems is between 1,000 and 2,000 users and involves integrating 8 to 12 data sources.  Our biggest customer currently has 13,000 users on Merced daily and over 20 data sources.
 
"A major trend we see is the implementation of a management methodology like Six Sigma or COPC…there is a list of them."

 
 
RealMarket: You see quite a few contact centers implementations.  What best practices can you share that would help other contact centers achieve higher levels of ROI?
 
Selcow: A major trend we see is the implementation of management methodologies like Six Sigma or COPC…although there are a lot of others.  There are elements of these methodologies which can be applied towards a core objective that most of our customers have - culture change. More specifically, our customers want more accountability and fact-based, data driven, decision-making throughout the organization. This makes sense because it is just good management.  One can only beat the drum so loudly on “better management, better management” before they need to be systematic about it. 

That’s where our software comes in.  We organize and improve visibility into the data and distribute it throughout the organization in a way that everyone can make better decisions. So the impact is pretty substantial.  For example, some of our customers now track variability metrics instead of averages. By reducing variability, one of our customers reduced average handle time by 16%, allowing them to staff fewer people on any given shift.  This was a pretty meaningful insight and saved them a lot of money.

The second major trend we see is the focus on supervisors.  You will hear a lot about the agent being the key to productivity improvement. What we’ve seen and firmly believe is that the supervisor has been overlooked.  For many supervisors, it is their first job in management and we think one of the most important levers to increasing front-line agent productivity. Unfortunately, supervisors are not necessarily the most data driven people.  Yet the company needs the front-line supervisors to be able to coach and develop and do so with the content and with the right members of their team.  Performance management helps here. It helps develop a class of manager who can understand and use data, and that can have a huge impact on how your customers get served by reps.

 
"You can notice the increase but it’s not like the markets are 10 times stronger than a year ago, maybe twice as strong as a year ago."

 
 
RealMarket: What is your view on today’s overall economic climate as compared to a year ago?
 
Selcow: I would say the climate is distinctly improved.  You can feel it.  There are more projects and there is more demand for what we do. But I wouldn’t call it massive.  You can notice the increase but it’s not like the markets are 10 times stronger than a year ago, maybe twice as strong as a year ago. What we see is that companies that we have been talking to for some time are committing to implement a performance management or data management programs inside their contact center. Where a year ago we were spending a lot of time building the business case, they are now getting the budget to at least implement phase one of the project.  Once phase one has been implemented, we are optimistic that we will receive a good amount of ongoing business with companies moving towards phase two. 
 
"There will be more and more pressure for culture change."

 
 
RealMarket: Looking into the crystal ball – can you make a prediction on what changes will occur in the next year and how you see them effecting Merced Systems?
 
Selcow: There will be a continuation of the current major trends.  There will continue to be complexity because of the increasing demand of consumers and of the Marketers who want to win and keep their business. This drives operational complexity. There will be more demand on the contact center, on the skills of workers and on the resourcefulness of the operations team. People who have principally been hired to provide service will now have to sell because the insight of the operation is that “hey we have someone on the phone, let’s solve their problem and then sell them something new.” This is very logical from a marketing perspective but has very profound operational implications because you may or may not have hired or trained your people for that specific job.

There will be more and more pressure for culture change. There will continue to be an ongoing demand for data management solutions.  Based on these conclusions, it is no surprise to us that more and more people are getting into this market.

Consolidation will continue as well.  We feel that we are the best at what we do, we continue to focus on the operational data problem and we believe we will have a good niche to play in for some time.


 
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