1 Retailing Strategy Retail Market Strategy Financial Strategy Site LocationCustomer Relationship Management “customer-centric retailing”Retail LocationsOrganizational Structure and HR ManagementInformation Systems
2 Customer Relationship Management A business philosophy and set of strategies, programs, and systems that focus on identifying and building loyalty with a retailer’s most valuable customers.What is loyalty?Liking a retailer?Frequently shopping a retailer?
3 A Loyal Customer . . .Is committed to purchasing merchandise and services from a retailerResists efforts of competitors to attract the loyal customerHas an emotional attachment to retailerPersonal attentionMemorable positive experiencesBrand building communications programs
4 CRM Process Learning Action Collect Customer Data Analyze Customer Data & Identify Target CustomersLearningDevelop CRM ProgramsImplement CRM ProgramsAction
5 What Customer Data to Collect? Data Mining – technique used to identify patterns in dataMarket Basket AnalysisIdentifying Market SegmentsIdentifying Best Customers
6 Collecting Customer Data Types of Information in the Customer DatabaseApproaches for Collecting InformationPrivacy Concerns
7 Information About Each Customer in the Database History of purchasesPurchase date, price paid, SKUs bought, whether or not the purchase was stimulated by a promotionCustomer contacts by retailer (touch points)Visits to web site, inquires to call center, direct mail sent to customerCustomer preferencesDescriptive information about customerCustomer’s responses to promotions
8 Approaches for Collecting Customer Information Need to have information connected with a specific customer identifierAsk for identifying informationTelephone numberName and addressUse frequent shopper cardsLink checking account number and/or third party credit cards to customer
9 The Customer Purchase Cycle How the customer relates to the retailer:Uncover a need/ problemDiscover where problem can be solvedVisit storesPurchase product/ servicesConsume product/ servicesCustomer“Lock-in”The Key:Consistent execution of your “promise” Builds trust.Customer trust that your store will always deliver Loyalty.BUT, your store’s “promise” is only as strong as your weakest link.So CRM software should help you – as a retailer – to manage the major elements of the customer life cycle. And that’s what we do.We make marketing, selling and customer service software to address each of these stages. And even though we have these broken down into major categories, it’s important to realize that marketing – for example – is a process that never really ends. Retailers always want to be ready to sell a customer products or services at any point along the life cycle.To be profitable, a retail must always be selling – and that’s what our software helps a retailer to do.
10 What is a customer centric relationship? Customer ContactRelationshipRight PersonRight MessageRight MediaRight TimeLifetime of ValueMy ProductsMy BehaviorMy NeedsMy Permissionspecific to me,ever-changingunderstood and rewardedconsulted butpre-emptedrespected and developedA relationship is more than good customer service. Though that is vital…Efficient, simple, 360°, constant, unobtrusive, consistent with store “promise”It is more than intelligent one-off interactions. Though these are valuable…Every time you interact with a customer a loyalty contact is being madeRelationships are longer term and broad-based. They create loyal advocates…You design, configure and promote products specifically for meYou understand my past behavior - and you reward me for itYou consult me on my needs - but you also pre-empt and surprise meYou respect my permission - and you develop it, given my preferences
11 CRM problems in retailing How the customer relates to the retailer:Uncover a need/ problemDiscover where problem can be solvedVisit storesPurchase product/ servicesConsume product/ servicesCustomerHow retailers try to match the customer’s purchase cycle:RetailerCustomer & Business AnalysisMarketing Programs/ Campaigns/ OffersStore Operations/ ExecutionSelling ProcessDelivery, Setup, Installation SchedulingCustomer Service ProcessBut here are the problems:So CRM software should help you – as a retailer – to manage the major elements of the customer life cycle. And that’s what we do.We make marketing, selling and customer service software to address each of these stages. And even though we have these broken down into major categories, it’s important to realize that marketing – for example – is a process that never really ends. Retailers always want to be ready to sell a customer products or services at any point along the life cycle.To be profitable, a retail must always be selling – and that’s what our software helps a retailer to do.Difficult to manage customer dataTime consuming, non-targeted campaignsInconsistent Execution at StoresDisjointed or “single visit” selling processInconsistent field service processCost-center mentality
12 Successful Customer Centric Strategies: 4 Key Elements CRM Strategy ComponentsConsistency Across FunctionsExecutionPerformance MonitoringEffective SegmentationCustomer ExperienceBusiness ProcessesRight Skill Sets & MindsetsRight TechnologyMarketingSalesServiceVendors, etc.Implementation PlanningSetting GoalsAgents of Change in ManagementMeasuring ProgressRewarding Results
13 Customer Segmentation CRM Strategy ComponentsEnables an organization to understand:Which customers / segments are most profitableHow to most effectively market to, sell to, and provide service to these customersWith this knowledge, a company can determine which segments will drive the greatest returnsSegmentation begins with the development of the customer profile:DemographicsPurchasing historyCustomer Life Cycle informationKey Questions:Who do we want to target, and why?What’s the value of “owning” this segment?What data do we have? Quality? Expenses & benefits to improve?Effective SegmentationCustomer ExperienceBusiness ProcessesRight Skill Sets & MindsetsRight Technology
14 “Maximizing the Customer Experience” It is the total of the interactions a customer has with a company’s productsIt starts the moment a customer thinks of your productIt does not end until the customer is completely satisfied with itSource: “The Customer Experience,”Net Company, Fall 1999.
15 Maximizing the Customer Experience Addresses 3 Questions How smoothly do you solve your customers’ problems?How well do you meet customer needs?How quickly do you anticipate what they’ll want next?Source: “The Customer Experience,”Net Company, Fall 1999.
16 Maximizing the Customer Experience CRM Strategy ComponentsCustomer Experience: Maximize the customer experience during the buying processCapabilities: Use the right capabilities (people, process, and technology) to maximize the use of customer informationUnderstanding Customer Value Segmentation: Give each segment what they wantFinancial Value: Understanding the financial value of executing the strategy successfully. It’s not an expense; it’s an investmentKey Questions:How and where do my key segments interact with my brand?Effectiveness/ efficiency of driving to different channels?Effective SegmentationCustomer ExperienceBusiness ProcessesRight Skill Sets & MindsetsRight Technology
17 Well Defined Business Processes CRM Strategy ComponentsAutomating an ill-defined or inefficient business process will only accelerate the pace at which an organization achieves poor resultsA CRM strategy must focus on designing processes based on customers’ perceptions & needsProcesses can include:Marketing Campaign DesignsStore LayoutPricing StrategySales-floor Service TrainingOrder ManagementService TrackingReturns ManagementEach of these processes needs to be coordinated with the other processesEffective SegmentationCustomer ExperienceBusiness ProcessesRight Skill Sets & MindsetsRight Technology
18 Skills & new mindsetsCRM Strategy ComponentsA customer centric strategy will changes the dynamics of how people interact and how a company makes decisionsManaging this change is critical when implementing a customer centric strategyThe change management required entails the realigning of skill sets and mindsetsExample: Teaching selling skills without changing attitudes will lead to poor prospect-to-buyer conversion rates—& will not maximize the customer experienceTo support the culture change required, many companies have found it necessary to:Realign their reward systemsReconfigure its compensation schemesEffective SegmentationCustomer ExperienceBusiness ProcessesRight Skill Sets & MindsetsRight Technology
19 Right TechnologyCRM Strategy ComponentsThe right technology is the final linchpin in a CRM strategyEnables an organization to track every customer interaction, regardless of where, when, or how the interaction occursThe right technology will satisfy the following criteria:Consolidated customer data sourceCompany & industry-specific functionalityNetwork availability & supportScalableSupport for all devices (networked computers, handhelds, cash registers)Effective SegmentationCustomer ExperienceBusiness ProcessesRight Skill Sets & MindsetsRight Technology
20 Metrics linked to rewards can stimulate change AreaOld MetricNew MetricMarketingResponse RateCost per ResponseLifetime Value by Segment% of Customer Base BuyingProductsGross MarginGM by Customer Segment% of Category Spending / SegmentServicesCost per Service% of Total Spend/ SegmentImpact on RetentionStore SalesSame Store SalesSame Customer SalesReferral Rate / StoreCustomersNoneCustomers in Loyalty ProgramCustomer Retention Rate