Relationship Management 10.1 Information Systems Retailing Strategy Retail Market Strategy Financial...

Relationship Management 10.1

Information Systems

Retailing Strategy

Retail Market Strategy

Financial Strategy Site Location

Retail Locations Organizational Structure and HR Management

Customer RelationshipManagement

“customer-centric retailing”


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?


A Loyal Customer . . .

Is committed to purchasing merchandise and services from a retailer

Resists efforts of competitors to attract the loyal customer

Has an emotional attachment to retailer Personal attention Memorable positive experiences Brand building communications programs


CRM Process

CollectCustomer

Data

DevelopCRM

Programs

AnalyzeCustomer Data

& IdentifyTarget Customers

Learning

ImplementCRM

ProgramsAction


What Customer Data to Collect?

Data Mining – technique used to identify patterns in data

Market Basket Analysis

Identifying Market Segments

Identifying Best Customers


Collecting Customer Data

Types of Information in the Customer

Database

Approaches for Collecting Information

Privacy Concerns


Information About EachCustomer in the Database

History of purchases

Purchase date, price paid, SKUs bought, whether or not

the purchase was stimulated by a promotion

Customer contacts by retailer (touch points)

Visits to web site, inquires to call center, direct mail sent to

customer

Customer preferences

Descriptive information about customer

Customer’s responses to promotions


Approaches for Collecting Customer Information

Need to have information connected with a specific customer identifier

Ask for identifying information Telephone number Name and address

Use frequent shopper cards Link checking account number and/or third party

credit cards to customer


The Customer Purchase Cycle

CustomerCustomer

How the customer relates to the retailer:

Uncover a need/

problem

Discover where

problem can be solved

Visit storesPurchase product/ services

Consume product/ services

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.

“Lock-in”


What is a customer centric relationship?

A 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 made

Relationships are longer term and broad-based. They create loyal advocates… You design, configure and promote products specifically for me You understand my past behavior - and you reward me for it You consult me on my needs - but you also pre-empt and surprise me You respect my permission - and you develop it, given my preferences

Rel

atio

nsh

ip

RightPerson

CustomerContact

RightMessage

RightMedia

RightTime

respected anddeveloped

consulted butpre-empted

understoodand rewarded

specific to me,ever-changing

Lifetime of Value

MyProducts

MyBehavior

MyNeeds

MyPermission


CRM problems in retailing

CustomerCustomer

How the customer relates to the retailer:

RetailerRetailer

How retailers try to match the customer’s purchase cycle:

But here are the problems:

Difficult to manage customer

data

Customer & Business Analysis

Time consuming, non-targeted campaigns

Inconsistent Execution at

Stores

Disjointed or “single visit”

selling process

Inconsistent field service

process

Cost-center mentality

Marketing Programs/

Campaigns/ Offers

Store Operations/ Execution

Selling Process

Delivery, Setup,

Installation Scheduling

Customer Service Process

Uncover a need/

problem

Discover where

problem can be solved

Visit storesPurchase product/ services

Consume product/ services


Successful Customer Centric Strategies: 4 Key Elements

CRM Strategy Components

Consistency Across Functions Execution Performance

Monitoring

Effective Segmentation

CustomerExperience

Business Processes

Right Skill Sets & Mindsets

Right Technology

Marketing

Sales

Service

Vendors, etc.

Implementation Planning

Setting Goals

Agents of Change in Management

Measuring Progress

Rewarding Results


Customer Segmentation


CustomerExperience

Business Processes


Right Technology


Enables an organization to understand:

Which customers / segments are most profitable

How to most effectively market to, sell to, and provide service to these customers

With this knowledge, a company can determine which segments will drive the greatest returns

Segmentation begins with the development of the customer profile:

Demographics

Purchasing history

Customer Life Cycle information

Key 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?


“Maximizing the Customer Experience”

It is the total of the interactions a customer has with a company’s products

It starts the moment a customer thinks of your product

It does not end until the customer is completely satisfied with it

Source: “The Customer Experience,” Net Company, Fall 1999.


Maximizing the Customer ExperienceAddresses 3 Questions

How well do you meet customer needs?

How smoothly do

you solve your

customers’ problems?

How quickly do you

anticipate what they’ll want next?

Source: “The Customer Experience,” Net Company, Fall 1999.


Maximizing the Customer Experience


CustomerExperience

Business Processes


Right Technology


Customer Experience: Maximize the customer experience during the buying process

Capabilities: Use the right capabilities (people, process, and technology) to maximize the use of customer information

Understanding Customer Value Segmentation: Give each segment what they want

Financial Value: Understanding the financial value of executing the strategy successfully. It’s not an expense; it’s an investment

Key Questions:

How and where do my key segments interact with my brand?

Effectiveness/ efficiency of driving to different channels?


Well Defined Business Processes


CustomerExperience

Business Processes


Right Technology


Automating an ill-defined or inefficient business process will only accelerate the pace at which an organization achieves poor results

A CRM strategy must focus on designing processes based on customers’ perceptions & needs

Processes can include:

Marketing Campaign Designs

Store Layout

Pricing Strategy

Sales-floor Service Training

Order Management

Service Tracking

Returns Management

• Each of these processes needs to be coordinated with the other processes


Skills & new mindsets


CustomerExperience

Business Processes


Right Technology

CRM Strategy Components A customer centric strategy will changes the dynamics of

how people interact and how a company makes decisions

Managing this change is critical when implementing a customer centric strategy

The change management required entails the realigning of skill sets and mindsets

Example: Teaching selling skills without changing attitudes will lead to poor prospect-to-buyer conversion rates—& will not maximize the customer experience

To support the culture change required, many companies have found it necessary to:

Realign their reward systems

Reconfigure its compensation schemes


Right Technology


CustomerExperience

Business Processes


Right Technology


The right technology is the final linchpin in a CRM strategy

Enables an organization to track every customer interaction, regardless of where, when, or how the interaction occurs

The right technology will satisfy the following criteria:

Consolidated customer data source

Company & industry-specific functionality

Network availability & support

Scalable

Support for all devices (networked computers, handhelds, cash registers)


Metrics linked to rewards canstimulate change

Area Old Metric New Metric

Marketing Response Rate

Cost per Response

Lifetime Value by Segment

% of Customer Base Buying

Products Gross Margin GM by Customer Segment

% of Category Spending / Segment

Services Cost per Service % of Total Spend/ Segment

Impact on Retention

Store Sales Same Store Sales Same Customer Sales

Referral Rate / Store

Customers None Customers in Loyalty Program

Customer Retention Rate


Retailers’ Use of Frequent Shopper Programs


Elements in EffectiveFrequent Shopper Programs

Tier Based on Customer ValueOffer Choices of Rewards

Non-monetary incentives

Reward all TransactionsTransparent and Simple


Retailer Personalization


Cross-selling Add-on selling

Converting Good Customersto Best Customers


Implementing CRM Programs

Need systems, databases

Close coordination between departments – marketing, MIS, store operations, HR

Shift in orientation

Product Centric

Customer Centric

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Relationship Management 10.1 Information Systems Retailing Strategy Retail Market Strategy Financial...

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