1. Retail CRM (Consumer Relationship Management)
Retailing
MKTG 3346
Retail CRM (Consumer Relationship Management)
Professor Edward Fox
Cox School of Business/SMU

2. Customer Relationship Management
Recognizes that the customer, rather than individual purchases or contracts, is the source of value to the firm
Focuses on customer acquisition and retention
Highlights repeat purchase and loyalty over time as key goals
Recognizes the importance of customer satisfaction
Requires customer data to forecast their response to potential offerings and manage customers over time

3. Customer Relationship Management
Relating with few customers
Emphasizes sales force
Usually B-to-B
Relating with many customers
Emphasis is on purchase history
Often, though not always B-to-C
With retail consumers (i.e., many customers)…
The retailer must be able to customize the product or price or service offering
The retailer must be able to address consumers individually

4. Customer Relationship Management OBJECTIVES
Create loyal purchase behavior
Customize product and price offerings to target customers
Increase customer lifetime value
Consumer Targeting Continuum
Mass Marketing
Segment Marketing
Niche Marketing
Micro-Marketing

5. Customer Relationship Management ORGANIZATIONAL REQUIREMENTS
Performance measures
Internal incentives
Customer information / data architecture

6. Customer Relationship Management PROGRAMS
Card programs
Discount
Credit
Membership
Specific examples
Catalina coupons catalina marketing
Collaborative filtering (recommenders) amazon.com
Virtual model landsend.com
How can the retailer reward loyalty rather than purchase volume?

7. Customer Relationship Management LOYALTY PROGRAMS
Loyalty programs are set up to reward customers with incentives such as discounts on purchases, free food, gifts, or even cruises or trips in return for their repeated business.
Retailers use them for three reasons:
to retain loyal customers
to increase loyalty of non-loyal customers
to collect information about them and what they buy
Loyal customers are the source of most profits
Less price sensitive
More purchases per customer – higher share-of-requirements

8. Customer Relationship Management RETAIL CUSTOMER DATA
Customer Relationship Management (CRM) is enabled by the gathering and warehousing of consumer data
Retailers gather customer data from:
Frequent shopper or shopper loyalty cards
Store credit cards
Identifiable tender

9. Customer Relationship Management RETAIL CUSTOMER DATA
Retail customer databases are organized collections of data about individual consumers including:
Geographic
Demographic
Behavioral data
Purchase histories
Appended behaviors
Databases may enable retailers to gain a competitive advantage
Adapted from Prentice Hall

10. Customer Relationship Management RETAIL CUSTOMER DATA
Most leading retailers use card programs
89% of retail “leaders” in the practice of CRM use card programs (Progressive Grocer, 2001)
However, retailers are not using the resulting data effectively
“The retailers have collected all of this frequent shopper data, but few, if any, attempts have been made to mine the opportunities that it probably presents.” (Shulman 2003)
Issues
How can retailers better exploit consumer data?
How can it be used for targeted marketing offers?

11. Customer Relationship Management DATA WAREHOUSING
Data warehousing is the coordinated and periodic copying of data from various sources, both inside and outside the enterprise, into an environment ready for analytical and informational processing
Wal-Mart makes good use of its data warehouse. It should. Experts estimate that it is second in size to that of the U.S. government

12. Customer Relationship Management DATA MINING
Data mining is the process by which insights are derived from vast amounts of data, such as that contained in a data warehouse.
Statistical algorithms are applied to customer data to identify merchandise buying patterns and relationships.

13. Customer Relationship Management MARKET BASKET ANALYSIS
A market-basket analysis is uses data mining techniques to determine what predominant categories individual consumers are buying.
Based on these analyses, Wal-Mart has changed the traditional locations of several items:
Since bananas are the most common item in America’s grocery carts, they sell bananas next to corn flakes (to help sell more cereal) as well as in the produce section.
Kleenex tissues are in the paper-goods aisle and also positioned among the cough and cold medicines.
Measuring spoons are in housewares and also hanging next to Crisco shortening.

14. RETAIL CRM ISSUES
How does the retailer respect the shopper’s privacy while gathering information to respond more effectively to that customer?
What does the retail shopper get out of CRM? Why should (s)he give is the retailer information about (her-)himself?
Should the retailer offer different levels of price or service? What is the advantage of uniformly high prices or customer service?
What is the appropriate level of customization? How much does the retailer gain by individual, rather than store-specific offers? At what cost?