04/29/96 NEW TRICKS FOR HELP LINES

NEW TRICKS FOR HELP LINES
Customer-support software is going gangbusters
Two years ago, customer-service hot lines at Yamaha Corp. of America were so congested that an estimated 35% of callers gave up before getting through. The company's biggest customers, such as NBC Inc., had to wait on line with the hoi polloi.
Tired of losing customers, Yamaha increased its phone-support staff and asked a small Emeryville (Calif.) software company called Scopus Technology Inc. to help automate customer service. Today when a call comes in from NBC, Scopus software in Yamaha's computer-telephony system recognizes the incoming call and transfers it promptly to an engineer, along with detailed data on NBC's previous questions and complaints.
That's a big help right there. But the Scopus package also tracks each customer interaction--in the process compiling data that can help spot problems, improve products, or even generate sales leads. ``We know exactly how we're doing,'' says Steven G. Thatcher, general manager for support at Yamaha's Customer Satisfaction Group. ``We can check recurring calls, see how long it takes us to get back to the customer, and track defects down to a single product and single serial number.''
SMART SUPPORT. Across Corporate America, troubleshooters such as Thatcher are discovering the benefits of ``customer-interaction'' software. Whether the business is insurance, long-distance phone service, or selling high-tech gear, companies are finding such software can help turn their customer-service operations into a corporate asset. Already, a half-dozen Silicon Valley startups, in addition to Scopus, are producing customer-interaction software--and helping companies in the service economy reap big rewards.
How? For starters, these programs shrink time spent on 800-service lines because each customer describes a problem only once. More important, with every call, a database of customer queries and complaints is built up, which can yield insights into the business that can lead to improvements. Using a software program from Remedy Corp., a technical support group within Motorola's cellular division realized that it was spending far too much time helping the division's personal-computer users install software programs. Now, more software comes preinstalled on new PCs. ``Remedy helps us operate with half the number of staff you'd expect to see on a network this large and complex,'' says Motorola Senior Director of Information Technology Services Jack Leifel.
Thanks to similar stories at hundreds of companies, customer-interaction software ``has become one of the hottest areas'' for large corporations, says Vinnie Mirchandani, an analyst at Stamford (Conn.)-based Gartner Group Inc. And the explosion of activity on the World Wide Web is speeding adoption of the software by corporations. With the rise of corporate intranets--internal networks based on the Web--virtually every employee with a Web browser and proper authorization has the information to help customers.
That adds up to a big opportunity. The market for customer-interaction software could soar from about $400 million last year to $3 billion by 2000, says Hambrecht & Quist analyst J. Neil Weintraut. The top players in the burgeoning field--Remedy, Vantive, Clarify, and Scopus--have racked up 100% annual sales growth since the early 1990s.
ALL-TIME HIGHS. And they're cashing in on investor enthusiasm: All four companies have gone public since last March, beginning with Remedy, which H&Q helped underwrite. Its shares, initially priced at 23, began trading at 43. Today the stock hovers around 62. Clarify Inc. and Vantive Corp. were quick to follow. Both have doubled in value and are trading near all-time highs.
The Web synergies are particularly appealing to investors and analysts. Most of the customer-interaction software makers have already adapted their products to work with the Web. At Motorola, for example, employees can solve their own systems problems using question-and-answer screens on the company's intranet.
Customer-service software startups will get an even bigger boost as Web-browsing programs gain new powers and companies begin to integrate their telephone and computer systems more tightly. By the end of this year, figures Vantive CEO John R. Luongo, PC owners with a problem will be able to get onto the manufacturer's Web site to make direct inquiries and activate software at the site to scour different databases for a solution. If that does not solve the problem, PC users will be able to click a button on the screen to activate a voice line and speak with a real person. A pop-up screen on that agent's computer will display a complete record of the customer's effort to solve the problem. ``When all the Internet hype finally settles,'' says Luongo, ``customer interaction and services will be the leading applications on the Net.''
So far, companies have been willing to pay top dollar for customer-support software. Remedy, for example, charges upwards of $100,000 for big corporate clients--helping it maintain operating profit margins of 25% and net profit growth of 150%. The $40 million software maker got its start by automating internal help desks. Now, Remedy's software is used by many companies to provide service and support to external customers as well. The Anchorage (Alaska) office of computer consultants CTG Corp., for example, relies on Remedy's AR User software to troubleshoot computer glitches for Alyeska Pipeline Service Co., which manages 800 miles of Alaskan oil pipeline.
Clarify, on the other hand, focused from the beginning on external support. The company has had particular success attracting high-tech giants such as Hewlett-Packard, Cisco Systems, and Microsoft (table). After toying with developing its own customer-service software, Microsoft last year settled on Clarify. A key selling point: its flexibility, says Mark Perry, Microsoft's general manager for corporate and developer support. ``We could integrate it with our existing databases handling contract management, accounting, and quality tracking,'' he explains. The software handles a relatively modest 1,100 calls a day--about 4% of the company's total phone volume. But the results have persuaded Perry to make Clarify a key tool for use by all the company's 3,500 support engineers in North America.
Indeed, Clarify CEO David Stamm figures the boom in home PCs creates a huge demand for his customer-interaction software. Hardware and software companies are selling more stuff at lower prices and to customers who are less sophisticated. ``Providing service becomes a tremendous challenge,'' he says.
BRIGHT FUTURE? Home PC owners, of course, aren't the only consumers who could use coddling. Calling into a help line can be as frustrating for a business user as a consumer. Vantive's customers, for example, range from Japanese electronics powerhouse Canon Inc. to California's largest health-maintenance organization, Kaiser Permanente.
How long can the startups thrive? Analysts and investors are debating that point. One startup, Software Artistry in Indianapolis, is struggling. And software giants such as Germany's SAP are starting to sell similar types of software. Still, Clarify's Stamm figures customer-interaction software makers have a huge head start. And they already have a leg up with the people who count--the customers.
By Neil Gross in New York