For most enterprises 1999 was spent making sure that the new millennium would arrive without a technical hitch. Hilton Hotels Corp. was among those working to ensure its YK2 compliance, but the hoteling giant also took the arrival of 2000 as an opportunity to replace its legacy mainframe reservations system, as well as to implement a customer relationship management solution. Two years on, the famous hotel chain is glad it started the process when it did, because now it plans to deploy the system throughout its DoubleTree and Embassy Suites properties.

"In hindsight it was a huge undertaking," says Joanie Flynn, vice president of leisure marketing for Hilton, headquartered in Beverly Hills, Calif. But one that has paid off for the hospitality chain, which develops, owns, manages, or franchises more than 1,800 hotels, resorts, and vacation properties.

"Hotel are a complex business," Flynn says. "We have small hotels, large hotels, and resorts. There are enhanced seasonal needs and some commonality across our business, but each type of hotel has special needs to be addressed."

Hilton spent start of the new millennium preparing to implement E.piphany Inc.'s E.5 suite of CRM reporting and analysis applications by replacing its mainframe reservations system. The hotel chain was finally able to deploy the E.5 suite in June 2001.

Using the CRM solution Hilton is now able to analyze occupancy, booking patterns, and customer information. The software also allows all of Hilton's properties to gather and analyze guest information to help managers provide better service to their guests, administer corporate loyalty programs, and guide marketing campaigns for their respective hotels. As a result Hilton can manage its business more cost-effectively, and properly deploy its marketing resources.

Such analysis, which takes place using a Web-based interface, can happen in minutes. Using Hilton's intranet, hotel general managers, sales representatives, staff coordinators, and analysts can query Hilton's CRM system, which is tied to its new client/server reservations systems. This enables Hilton's users to generate specific reports immediately that show rate plans, numbers of people per reservation, the source of the reservations, and guest information. Data from the reports can be exported to Excel or PowerPoint, and system users can manipulate the graphs.

Users also can drill down for specific data. Managers can track national sales account production, for example, and sales representatives can find out who the top meeting planners are. Hilton can also determine if guests are traveling for business or leisure. "Before the new system we could never get down to the finer aspects," Flynn says. "Now we can get market segments, the actual books, and forecast advance booking patterns."

For travelers, that translates to an extra measure of service. Hotels are able differentiate their service based on customer information. This means that a traveler enrolled in Hilton's frequent traveler program who, for example, has stayed with Hilton 100 times is likely to get an upgrade or additional services, while a traveler with just one stay is likely to get additional information and help about the hotel's services, Flynn says.

A View of a Room
Prior to implementing E.5, gathering customer data was a laborious process. It often took anywhere from two to four weeks to generate static reports, and required the assistance of Hilton's IT department to create SQL queries. Because of those hurdles, only about 150 people a year throughout the Hilton Hotel family were accessing the old system, whereas over the past nine months more than 400 Hilton workers have had access to the Hilton CRM system.

Consequently it was vital that Hilton workers who would be using the system--from such departments as reservations, marketing, and sales--were given the necessary training to get them well-versed on the new system. "We were not only teaching our employees to use a new technology, but teaching them a new way of thinking about their business," Flynn says. "We needed to teach them how to associate the data together and make correct implementation decisions based on that data."

To accomplish that Hilton began offering a variety of training ranging from one hour, over-the-phone training to one-day, face-to-face, hands-on instruction.

Hilton also sends out a monthly newsletter dedicated to updates, best practices, training information, and new report templates associated with its CRM solution. The company has set up HilSmart, a telephone support hotline based in Dallas, dedicated to answering questions about the CRM system.

Flynn says Hilton did not see training as a separate corporate expense, but rather viewed that cost as another part of rolling out and maintaining the new application.

Hilton would not give a specific dollar amount associated with purchase, implementation, maintenance of, and training associated with the CRM products. However, a basic solution from E.piphany starts at $250,000 and can go as high as $500,000.

Hilton did note that it was an early customer of E.piphany and took an ownership stake in the then-fledgling vendor. And although Hilton would not disclose the specific amount of its investment in E.piphany, Flynn says that Hilton made "a ton of money" when it sold its ownership in the firm.

Flynn also noted that at the time Hilton took an equity position in E.piphany, the two companies had also discussed a potential joint venture in which E.piphany would develop and sell a special CRM application targeted at the hospitality industry based on expertise gathered from its deal with Hilton.

For its part, Flynn says, Hilton has already received a return on its CRM investment. "The system costs less to maintain than our old mainframe system--we've saved on personnel and dramatically increased our productivity," she says.

But whether the ROI has translated into more business has yet to be seen, according to Flynn, who notes that the events of September 11 have hit the hospitality industry hard, making it difficult to determine a pattern.

But national events and a travel slow-down were not the only hurdles facing Hilton. Flynn says that deploying its CRM solution has its bumps--mostly due to the huge amount of historical data the company wanted to bring over from the old system, along with a transition that moved the companies IT department from its Beverly Hills headquarters to Memphis.

"Data validation took inordinately long," Flynn says. "If I were doing it again, I would not worry about the old data and just start fresh. I would also have waited until all the linkage issues with our other systems were worked out."

But Hilton is still hot on CRM and working to deploy other modules. The company plans to add E.piphany's Campaign Management and Real-Time. Campaign Management is used for planning, executing, and analyzing multichannel campaigns across all customer touch points. Real-Time provides a real-time marketing engine to give a single view of the customer and to personalize each interaction by building a profile for each visitor or customer with information drawn from multiple sources including customer databases, transaction systems, third-party data, and other sources. The system then selects the best offer for a particular person using up-to-the-second information.

Two years ago Hilton acquired Doubletree and Embassy Suites, growing its company from 250 to nearly 2,000 properties. Hilton plans to role out all of its CRM applications to all of its properties over the next year.

"This is going to allow us to have a customer-centric view across all our brands," Flynn says. "That is very powerful and should translate to a huge return on investment."

In the future customers using Hilton's Web site who respond to "Where do you want to go next?" will receive well-timed offers for relevant itineraries. Hilton will eventually leverage E.piphany's ability to download customer profiles from third-party sources. When first-time users log onto Hilton's Web site, they will begin to see custom options and information derived from their third-party profiles. By correlating such e-commerce information with data gathered from hotels, phone reservations, and other sources, Hilton representatives could optimize both rates and occupancy. Eventually, Hilton is looking to have customer-specific information available to key service personnel throughout the system--from Hilton's reservations operators to desk clerks.

"This has transformed our staff's expectations and now they are thinking of new ways to help their business and offer better customer service," Flynn says.

A couple of times per quarter CRM vendor E.piphany holds formal roundtables that bring together three to four of its key customers to discuss the specifics of their CRM implementations, including the benefits they have reaped, the hurdles they faced, and everything in between.

"People who license our applications tend to be visionary about CRM in their organizations," says Mike Trigg, vice president of product management for E.piphany. "They are eager to talk about the problems they are facing and maybe find other users who can tell them how to solve the problems."

Joanie Flynn, vice president of leisure marketing for Hilton Hotels, which was an early adopter of E.piphany's E.5 CRM suite of products, says that she enjoys sharing the CRM expertise her company has gained with other companies.

"I've become evangelical about CRM and its benefits," says Flynn, who also noted that E.piphany recently introduced her to executives from another of its customer--starbucks--who were facing some implementation problems. Flynn says she was eager to share information with the Seattle-based coffee giant and to help the company solve some challenges that Hilton had already overcome."We were very sympathetic to their problems and it was great to be able to lend our expertise to help them," Flynn says.

Roger Siboni, CEO of E.piphany, says that delivering a CRM solution is not just about delivering good technology but about the process as well, and that letting customers share the good, the bad, and the ugly is a necessary part of the process.

"Sharing best practices between customers is good business for us and for them," Siboni says. "If I jumped up and down and talked about how efficient and effect our solution is, it would just fall on deaf ears. But letting existing and prospective customers share their experiences speaks volumes. These people have a big investment in a technology product and they want to learn as much as they can."--L.P.

Siboni recently spoke about the challenges and opportunities of CRM with business journalist Lisa Picarille for CRM magazine.

CRM: What is the single biggest problem facing enterprises implementing a CRM solution?
Roger Siboni: The challenges that organizations face is that CRM has historically been all about driving a process that makes people and technology interface with customers more efficiently. CRM is in the process of and needs to evolve to be more customer-centric and customer specific. Instead of evaluating CRM by how fast you can take calls and get people off the phone, you have to think what customer is on the phone and what kind of interchange are you having with that customer. It's about driving CRM from process-centric to customer-centric.

CRM: What is the one piece of key advice that you would give managers implementing or upgrading CRM solutions?
Siboni: start with the customer, not the channel. The salesperson wants to do CRM. The marketing people want to do it. But it's not about the channel. It's about developing a holistic view of the customer and then driving a consistent view of that customer from all touch points with a company.

CRM: What is the biggest CRM development you see coming over the next year?
Siboni: There will be more and more activity centered around sharing knowledge about customers and offering a consistent and coherent customer experience between all touch points--the call center, the Web site, the sales department, etc.

CRM: What about over the next five years?
Siboni: As organizations become more automated there will be more pervasive and more and different ways to interact with customers 24/7. Organizations will be networked across different platforms--PDAs, ATMs, kiosks--and wherever and whenever the customer chooses to interface with the company, the company will be able to carry on a consistent conversation. This means that interactions with customers will move from being specific transactions to continuous conversations that are carried out across multiple media. And organizations will be in a position so that they know where they left the dialog with the customer. That interaction will be triggered by the customer and not the enterprise.

CRM: Why does the CRM sector seem to be thriving when deployment or implementation of some other enterprisewide applications have leveled off or even slowed down?
Siboni: We've moved from an era where it's all about cool technology to an era where it's all about the customer. Every organization is seeking how to get, keep, and grow customers--and CRM technologies really drive that part of the equation. During the 1980s and the 1990s, product quality and efficient manufacturing ruled. The best companies were defined by which made the highest quality product. Now, the leading companies are defined by how they interact with their customers.