Filing Information

August 2002
IDC #27713R
Volume: 1
Tab: Vendors

eCommerce Applications

Bulletin

RightNow Technologies: Fine Tuning

Customer Support

Analyst: Scott Tiazkun

IDC Opinion
What are application vendors doing to help end-users increase
customer satisfaction? Are there steps that vendors can take to help
application’s clients wrest greater value from their applications
investment?
Having installed ecustomer support applications on the Web, many
businesses are content to call it a day and let the applications do the
work. For clients of customer services applications vendor,
RightNow Technologies, this is only the first step in a continuous
process that ensures client companies are maximizing the potential
of eservice. RightNow has developed a rigorous best practices cycle
for its applications customers that delivers quicker response times
and greater self-help for end users and bottom-line savings for the
applications users in the form of fewer calls and fewer emails.
 This, of course, is exactly the type of approach that is needed to help
drive the ecustomer support applications market. When software is
shown to have a strong economic impact on a business, it is no
longer difficult to free dollars for an applications purchase that
positively demonstrates a strong ROI. A vendor like RightNow helps
remove skepticism from an IT beleaguered world. The company not
only takes proactive steps in self-service applications deployment, it
also points out better ways of doing business, which leads to greater
customer satisfaction. For many firms, this approach helps put back
some of the shine on applications as a business benefit and not
merely a sunk cost of participating in ecommerce.

Scope
This profile focuses on the ecustomer relationship management
business, specifically customer service and support, and the ongoing
strategy of applications vendor RightNow Technologies. Discussed
and addressed are company background and history, customers,
alliances, acquisitions, product offering, markets, strategic direction
and channel and partnering models. Challenges for both the subject
company and for this applications arena are discussed.
For related IDC research, see the following documents:
• Worldwide eCustomer Service and Worldwide eCommerce
Customer Service and Support Applications Forecast, 2002–
2006: Customer Service Comes into Its Own (IDC #26967, April
2002)
• Worldwide Customer Service and Contact Center Applications
Forecast, 2002–2006 (IDC #26952, April 2002)
• Worldwide eCommerce Applications Market Forecast, 2002–
2006 (IDC #26716, March 2002)
• eGain: Taking the Customer’s Point of View (IDC #25939,
November 2001)
• Customer Support and Call Center Applications: At Industrial
Strength? (IDC #25658, October 2001)

Business Overview
Based in Bozeman, Montana, RightNow Technologies Inc. was
founded in 1995 as a provider of customer service and support
applications for Internet and intranet environments. Currently,
the company has over 200 employees with additional offices

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 located in Dallas, London, and Sydney and an affiliate office in
Tokyo.
The company has more than 1,100 active customers. Of these, 70%
are in a hosted application environment, an increase from
approximately 55% in 2001. With such a large customer roster, it is
hard to claim that the company specializes in any particular vertical.
In fact RightNow is scattered across every industry (telecom, retail,
and consumer packaged goods to name a few) and every size
company. This is reflected by RightNow’s overall steady growth that
insulated the company from the dot-com growth and bust syndrome
that has damaged so many ebusiness applications vendors.
The company showed 86% revenue growth in 2001, has achieved
cash flow positive status and 14 consecutive quarters of revenue
growth. Company founder and current CEO Greg Gianforte —
whose previous venture was the launch and eventual sale of LAN
management utility developer Brightwork Development to McAfee
(now Network Associates) — declined to take the company public in
late 2000 citing an increasingly unattractive IPO market. The
company is active internationally and plans to increase worldwide
sales presence with its software applications that are now offered in
16 languages.

Products
RightNow Technologies offers various products for Internet
customer service. The main product RightNow eService Center is in
version 5.5 with 6.0 expected to ship early in 2003.
• RightNow eService Center. This is the company flagship
application suite which integrates various aspects of support-
related interaction including:
− Self-service via the Web
− Automated email and response management
− Live chat and collaboration
− Satisfaction metrics and reporting tools
RightNow eService Center has a common knowledge base for all
support channels. The self-service aspect is facilitated with
technology that RightNow embeds in the application that
automatically floats the most historically requested information
to the top of the knowledge base. The product also has survey
capabilities to measure customer satisfaction. Canned — or
custom — reports can be created to assemble information,
either in graphical or in tabular form, to monitor service
operation performance.
• RightNow Locator. This application increases the conversion
rate of Web site visitors to bricks-and-mortar customers by
presenting nearest retail location information. Web-site visitors
can choose a retail outlet, distribution facility or other physical
facility based on geographic proximity, hours of operation,

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 availability of products or services, etc. Maps and driving
directions can also be provided. Currently this is available for the
United States, Canada, and the United Kingdom only.
• RightNow Metrics. The RightNow Metrics application collects
feedback from customers about knowledge items and/or support
effectiveness (which is useful for improving service processes
and content).
• RightNow Live. This application provides real-time, Web-based
chat and online collaboration between customers and service
reps.
The following features are integrated into the eService application:
• SmartAssistant. The RightNow SmartAssistant automatically
scans the content of sent emails, and directs the customer to
appropriate content on a Web site. This works to eliminate
unnecessary email replies.
• SmartSense. This feature scans and picks out words or
characters in email messages to give special attention to
particularly “aggrieved” customers (that may be using profanity
or exclamation points in their messages) and escalates the
incident to the most appropriate contact. This can prevent the
use of automation from undermining a company’s ability to
respond appropriately to emotional issues.
RightNow’s solutions are available as turnkey, hosted systems or can
be installed in-house. Either option carries the same license fee for a
two-year commitment, starting at $30,000 to well into the six-figure
range. To facilitate use of the hosted apps, RightNow provides a
Hosting Management System (HMS) that lets customers set up
test/pilot servers for their upgrades and then — after a trial period
— schedule an automatic upgrade of their hosted production
servers.

Platform Support
Operating Systems
• Linux-Red Hat 7.0
• Sun Solaris 7/8
• Windows NT 4.0
• Windows 2000

Web Servers
• Apache 1.3.12
• iPlanet 6.0
• Microsoft IIS 4
• Microsoft IIS 5

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 Database
• Oracle 8.1.6/8.1.7
• Microsoft SQL Server 2000
• Microsoft SQL Server 7.0
• MySQL 3.23.37

Product Functionality
RightNow eService Center is a multichannel eservice suite that
provides a wide range of functionality. Key technical capabilities
include the following.

Automated Knowledge Base

Application users build their support knowledge base by
automatically adding items as they are created (typically in the
course of resolving a customer issue). This, in turn, allows items to
become useful to customers and customer service agents as soon as
they are created. As responses are captured and appropriately
categorized, they are made usable across Web self-service,
automated email response, and call center channels.
Specifically, the default workflow configuration has a CSR propose
an incident, followed by the knowledge base editor who refines and
generalizes the CSR proposal, at which point the status is changed
to “live” to make the answer publicly visible in the knowledge base.
However, each company can create their own workflow approval
process, with as many custom statuses as they need. For example, a
proposed incident can be edited by legal, by a manager and by
documentation — whatever a company requires — before becoming
public.

Usage-Based Content Ranking and Searching

Knowledge base items that are most commonly used by customers
to solve problems are tracked and those items are placed at the top
of the knowledge base “heap.” Accordingly, the maximum number of
customers find what they’re looking for in the least number of
clicks. This approach keeps support knowledge bases from going
stale, as customer needs change over time, and also relieves content
administrators from having to constantly tweak their knowledge
bases manually. The applications also provide comprehensive
keyword and natural-language search facilities to pinpoint specific
knowledge items in larger knowledge bases.

Cross-Channel Interaction Threading

Some applications users want to create personalization of customer
service by tracking and recording customer interactions across
multiple channels — including transcripts of online chat
conversations. Threading ensures that customers who use multiple

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 channels during the course of an incident will be serviced
appropriately.

Metrics
RightNow eService Center has applications to capture data that
service managers can use to spot weaknesses in their systems. This
data ranges from measuring the popularity of specific knowledge
base items to email response times to escalation rates for specified
support issues.

RightNow’s Value Proposition

The functionality of RightNow’s applications are focused on
supporting several key value propositions for its customers:
• Deliver accurate information to customers in the shortest
amount of time
• Drive customer interaction away from more expensive channels
toward less expensive ones
• Relieve highly skilled staff from redundant support activities
But the essence of the RightNow value proposition boils down to a
basic question — on average, what does a company spend fielding a
call from a customer versus the cost for Web self-service?
The answer to this, in itself, is compelling. Many of RightNow’s
customers put the cost of personally fielding calls, for their
enterprises, in the $10–20/call range (and even this amount may not
take into account the cost of the call center infrastructure and long
distance fees).
When a customer does find an answer via the Web versus a phone
call, there is a huge savings of approximately 80–90%. When
multiplied by hundred or thousand of incidents ROI is extremely
compelling. RightNow has documented customers that are
delivering automated Web self-service rates of over 86% for
customers. In this scenario, the vast majority of customers do not
have to tax an enterprise with costly phone calls and are receiving
information without the expense of either individually answered
phone calls or individually answered emails.
eCustomer support applications, such as those offered by RightNow
provide a common knowledge base across service and support
channels that drive customers to find answers for themselves on a
Web site (or, alternatively, a CSR uses the knowledge base to
expedite a phone call). This is especially important to companies
struggling to cope with huge backlogs of email generated from their
online operations.
Another value proposition that RightNow employs is the ability to
keep the call center at an even keel, in staffing and therefore cost.
Over-reliance on call centers alone adversely impacts a company’s
ability to respond to changing support incident volumes. If incidents
rise above staffing levels, the result is poor service. If however,

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 incidents fall below staffing levels, then expenses are higher than
necessary. Automated response capabilities that RightNow
applications provide allows users to handle peaks or valleys in
demand without adversely affecting either costs or service levels.
Also, by relieving operators from having to deal with high volumes
of redundant support incidents, CSRs can focus on special situations
where their skills are most needed. This allows them to deliver more
value-per-hour to their company. (As a side benefit, it also might
increase CSR job satisfaction, which is important considering the
high turnover rates in the customer service field.)

Target Market and Current Customers

RightNow has developed a presence in Europe and Asia via its own
sales efforts and partnerships. But RightNow is still largely focused
on the North American market.
RightNow has penetrated a wide range of vertical markets. Notable
customers in these markets include:
• Financial services: BankDirect, Deutsche Bank, First North
American National Bank, Visa
• Telecom: Alltel, British Telecom, Motorola, Qwest, Quip, Sprint,
VoiceStream
• Discrete manufacturing (including hi-tech): Cisco, DataCore,
Maxtor, Ricoh, Skechers, Thule, Schwinn, Bissell, Hasbro
• Process manufacturing: Ben & Jerry’s, Proctor & Gamble,
Remington
• Interactive entertainment/gaming: Activision, Electronic Arts,
Sony
• Government: NY Division of Motor Vehicles, Social Security
Administration, U.S. Postal Service
• Education: Digital Learning Interactive, University of South
Florida, University of Washington
The company has been particularly successful in niche-specific
verticals like the above-mentioned gaming industry as well as
racking up successes in the airline industry with Air Canada, British
Airways, and Lufthansa.

Business Strategy
Services Are Key
A major part of RightNow’s strategy for retaining customers revolves
around its unique “tune-up” program that shows customers how to
implement best practices (such as site navigation, feature
implementation, and content enhancement) on their site to
maximize business benefit for applications users.

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 Today, this process is usually implemented 30 days after an
implementation and is designed to help customers maximize
RightNow applications effectiveness (see Figure 1).

Figure 1
Customer Tune-Up: Adjusting Business Practices to Maximize RightNow Applications Investment

Source: RightNow Technologies, 2002

The best practices triangle is a process designed to optimize

applications user’s Web sites. This results in getting customers away
from using email and getting them to search for answers by category
or keyword. In RightNow’s universe, this is moving a Web site from a
“C” level to an “A”. Specific steps include more savvy positioning of a
customers 800-number, having information available to Web-site
visitors in a searchable FAQ form, marketing the release of the
applications to external and internal customers and having self-help
rules following a strict escalation path. All of this is part of the effort
to stop questions before they are asked (but still get the right
information into the hands of customers). This will increase
customer satisfaction and increase return on investment of the
actual application.
RightNow is revisiting all its customers to implement tune-up
procedures and has completed tune-ups in 42% of its customer base,
aiming for 125 tune-ups a quarter.
Additionally, RightNow is introducing a professional services
platform, ProServicesTM, that enable customers to adopt and
implement future best practices strategies to drive greater business
value from their applications investment. This platform includes the
following:

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 • RightStartTM, a combined telephone and on-site engagement
designed to accelerate effective RightNow eService Center
deployments and ensure initial implementation of best practices
• RightPracticesTM, a three-day on-site engagement to evaluate an
existing implementation and enhance both its effectiveness and
alignment with a company’s specific business requirements
• RightFitTM, a set of technical services for companies seeking to
either integrate RightNow’s eService software with other
enterprise applications (such as CRM, help desk, call center
management) or to customize the user interface to better match
their business processes and the way customers interact on their
Web site.

eService for B2B

RightNow’s future business strategy revolves around the notion that
customer service will become as important for B2B eservice as it is
for B2C.
Effective eservice may be as critical in this area considering several
factors:
• Per-customer revenue is much higher in B2B relationships
• B2B products are more complex than consumer products
• B2B customers have a greater need for timely service
(particularly as it might impact overall production)
• The ability to support global markets is a more common
strategic objective for B2B practitioners
This last point is critical to companies trying to support global
marketing, as a key strategic business imperative. Companies that
cannot effectively support overseas customers miss out on major
growth opportunities and can even lose domestic business from
their multinational accounts.
To avoid this scenario, eservice will be extremely useful for
supporting overseas clients since good eservice applications provide
round the clock coverage and eliminate the need for support
operators to communicate in real time (or with non-native English
speakers). Overall, eservice can become a primary differentiator in
the B2B market space, perhaps as important as price or product
availability. RightNow will position its applications to be part of this
market opportunity.
To do this effectively, RightNow will need to expand on its
applications offering in multichannel eservice to become a full-
function customer service applications vendor. The company will
expand existing workflow/escalation and incident tracking functions
to provide more robust call center capabilities to create an end-to-
end customer service applications suite. This vision will start to be
realized when RightNow releases eService Center v6.0 in 2003.

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 On a simpler functional level, RightNow plans to increase product
reporting capability. Currently, RightNow applications collect much
useful data, but users need better packaging and presentation of the
data in a way that is useful for administrators. RightNow will also be
addressing this in v6.0 of RightNow eService Center.

Industry Alliances
RightNow Technologies has international distribution agreements
with:
• Mitsui, a Japanese trading firm
• SNT Connect Services, a subsidiary of SNT N.V., a Dutch call
center services provider
These agreements allow RightNow to extend into diverse vertical
markets in Western Europe and Asia, including manufacturing,
transportation, and energy. Other partnerships will occur as market
conditions dictate.

SWOT Analysis
Strengths
• RightNow has a large customer base, spread in many industries,
and the dot-com bust has not injured the company the way it
has many other eCRM vendors.
• Company has a highly motivated, skilled, and focused
management, sales, and development team.
• eCRM customer support is a high-profile area that creates a
relatively easy sell in the applications arena.
• Strong service and follow-up procedures wins and keeps
customers highly engaged with RightNow.
• Tune-up procedures maximize value of applications and keeps
ROI firmly insight on users horizon.
• Product was engineered in-house with no acquisitions and
related integration problems.
• As a hi-tech company that is isolated from major hi-tech centers,
RightNow serves as a magnet for talent that seeks a rural and
unusual environment.

Weaknesses
• Better reporting capabilities and related business analytics
associated with more in-depth reports have to be added to the
coming version of the software in order to allow expansion into
the traditional call center arena.
• There is a high level of competition in this space that burdens
companies such as RightNow with having to constantly prove
themselves “better” than CRM giant Siebel Systems.

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 • Generic perception problems associated with best-of-breed
solutions versus integrated software suites.
• While CRM remains high on the enterprise must have list, the
weakened economy still negatively impacts growth rates in this
eCRM niche as well as CRM overall.

Opportunities
• As customer support costs grow, the marriage of applications
plus strong services follow-up, which RightNow provides, should
be highlighted as a market differentiator.
• In a down economy, customer-facing company initiatives
become a top priority for many companies; this frees up money
for this type of applications investment.
• The hosted applications model, which RightNow offers, works
well for companies with limited resources.
• RightNow can capitalize on disenchantment with “first-wave”
CRM implementations by demonstrating and verifying actual
customer results and practical ROI, such as fewer support calls
and emails due to its customer support applications.

Threats
• RightNow needs to show potential customers that its
applications will integrate and contribute to achieve overall
business objectives.
• In a stable economy, applications for sales and marketing are
normally considered more important for the company bottom
line. RightNow must work to overcome the stepchild mentality
for many potential customers who might have to make choices
of sales applications versus customer service.
• RightNow remains a private company that may limit its
presence, mindshare and eventual growth.
• The company’s origins in Web-based self-service may cause it to
be perceived as merely a “FAQ” engine, even though the
company has evolved well beyond that.

Conclusion
Customers, and their concerns, remain paramount in the minds of
companies, perhaps even more so in economic troughs. (Because in
bad economic times, companies can ill afford to lose customers.)
Therefore the market for ecustomer support applications should ride
out the weak economy if not triumphantly, at least with a
respectable showing.
RightNow has the dual challenge to keep growing and integrate with
other vendors’ applications as customers needs dictates.

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 But as of today, RightNow has proven itself a desirable commodity in
the eCRM market. Its applications do exactly what they are billed to
do and this has generated a rapidly growing customer base. Unhappy
customers do not create a portfolio of nearly 1,200 implementations.
Rarely does a company of RightNow’s size, revenue wise, accrue
such a large roster of clients. This broad base of customers, which
should also tantalize RightNow with resale possibilities, bodes well
not only for the company’s potential growth, but also for its
continued presence in the eCRM customer support applications
market.

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