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Whitepaper

The Significanceof CRM in Retail Industry

The retail sector has seen unprecedented

growth in the last few years and according to

research firm Lucintel, the global retail market

is forecast to reach an estimated $20,002

billion in 2017 with a CAGR of 3.9% in the

period 2012–2017.

Global izat ion, recessionar y trends in

developed countries, growth of emerging

economies and the rise of online retail have

impacted the retail market dynamics to a great

extent. The increasing adoption of digital,

social, and mobile technologies is changing

the way consumers buy. According to a

research conducted by Deloitte, more than

74% of shoppers conduct online research

before making in-store purchases. While

consumers are reaping the benefits ,

companies are struggling to stay profitable in

this changing landscape.

With a multitude of choices, consumers are

dictating terms today. The online retail

revolution has changed customer preferences

and expectations drastically. Customers can

now make purchases from a variety of sources,

get product reviews and information, compare

Retail Industry overview

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deals and get rewards for loyalty. As the

competition increases and consumers drive

bargaining power, success will come to those

who are able to provide multi channel sales, an

engaging online and in-store customer

experience, competitive pricing and a robust

supply chain.

They will need to break traditional moulds and

focus on innovation when it comes to offering

products and services. Analysts and industry

observers believe that retailers will need to

create new opportunities to acquire new

customers and retain existing customers.

Today retailers have the opportunity to capture

and use to massive amounts of customer data

such as web browsing patterns, social

interactions, supply chain data, customer

service interactions and reviews. To put all this

data in perspective and derive actionable

insights from it, retailers need to look to CRM

technologies and have a sound customer data

strategy in place. Companies will need to train

a significant amount of focus on Innovation,

technology enablement and customer

centricity to stay ahead in this game.

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According to an analysis by Watermark

Consulting, 10-year investment returns from

publicly traded customer experience leaders

(measured by Forrester's Customer Experience

Index) were 43%, while investments from

customer experience laggards generated

negative returns.

This shift towards customer centricity has led

t o a n i n c r e a s e d a d o p t i o n o f C R M

methodologies and technology solutions

among enterprises over the last few years. In a

market where grabbing customer attention is

getting tougher by the day, CRM has helped

retailers understand their customers better

and improve revenues and customer retention.

The early adopters of retail CRM systems

primarily used it for enabling targeted

marketing. With ecommerce, the scope of

CRM has expanded across the customer

lifecycle, right from acquisition to supply chain

and customer service, integrating disparate

customer focused functions like marketing,

sales and customer service.

Significance of CRM in retail

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Retailers are betting on the potential of Big

(customer) data to stay relevant in a market

challenged by economic volatility, savvy

consumers, mobile proliferation and growing

number of channels. According to a research

conducted by Superoffice.com, in 2008 only

12% of businesses used cloud based CRM –

that figure has increased to 87% in 2014. When

it comes to investment in technology, CRM

software leads, with 49% of businesses

planning to increase spending. The chart

below shows how businesses plan their

CRM investment.

A customer-obsessed enterprise focuses its strategy, its energy, and its budget on processes that enhance knowledge of and engagement

with customers and prioritizes these over maintaining traditional competitive barriers. – Forrester Research

Forrester - Age of the Customer

Source: Superoffice.com

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“Get closer than ever to

your customers. So close

that you tell them what

they need well before they

realize it themselves."

- Steve Jobs

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1 Retention

A recent study by Aberdeen Group found that

59 percent of retailers identified a lack of

consumer insights as their top pain point. CRM

provides visibility into customer interactions

across the lifecycle, from marketing customer

service. Retailers can use this data to analyze

customer behavior and preferences and

develop customer retention strategies such as

targeted promotions and offers, product

recommendations and loyalty programs.

Benefits of CRM in Retail

2 Profitability

CRM data can used to derive actionable

insights on how to increase aspects such

order size and revenue per customer. With a

strong data based recommendation engine,

retailers can drive more sales by creating

cross-sell / upsell opportunities.

Attracting new customers is typically 5 to 10

times more expensive compared to

retaining old customers. CRM can help

reduce cost of customer acquisition and

retention by better customer targeting and

offer marketing.

Targeted marketing campaigns deliver

better ROI than traditional marketing

efforts. This helps companies optimize their

marketing spend and get better results.

3 Effectiveness

With CRM systems, companies can leverage

marketing automation capabilities through

seamless integration capabilities. Marketing

automation adds tremendous value to

marketing capabilities. These tools can be

utilized to create targeted segmentation and

personalize the offers and marketing

communication. Campaign management

becomes a lot more effective with easy

scheduling and follow up functionalities. The

reporting and analytics modules help them

track key success metr ics of specific

campaigns, attach revenues to specific

campaigns and measure ROI. This helps

marketing become more revenue oriented and

aligned to the business objectives.

4 Personalization

According to Harvard Business Review,

personalization can deliver five to eight times

the ROI on marketing investment and boost

sales 10 percent. CRM data can enable

enhancement of consumer experience

thorugh personalization by offer, timing and

channel. Companies like Amazon and Macy's

have mastered the art and science of customer

experience and are paving the way for others

to follow.

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5 Performance

Performance Analysis helps retailers make

crucial business decisions and make the

necessary course corrections when needed.

Customer data analytics also enables

identification of customer behavior and

buying patterns, helping them develop

accurate and timely revenue forecasts. A

robust reporting mechanism can drive visibility

and keep the entire organization aligned to

business objectives.

Customer Focus

6 Service

Customer service is a crucial aspect of

customer retention. With CRM, customer

service teams can keep a close eye on

customer satisfaction metrics and ensure high

standards of customer experience. CRM

systems help close loop the customer

experience process right from acquisition

to service.

CRM puts the spotlight on the

customer rather than the

product . Armed wi th a

combination of CRM, big

data analytics and technology

enablement, retailers are

much better equipped to

handle evolving market and

customer dynamics.

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Paragyte offers the entire gamut of CRM capabilities, be it offshore development, or migration

from a different CRM model, specific to business. With expertise in Microsoft Dynamic CRM and

Salesforce and other leading technologies, Paragyte has helped SMEs and enterprises

implement best-in-class CRM systems.

Business Analysis CRM for a business goes beyond just coding and designing; it involves completely

revolutionizing the way things work and propelling the business towards maximum growth. For

this, it is necessary to understand the business domain. The team at Paragyte gives special

importance to domain knowledge and ensures that the CRM solution adapts to the business

environment.

Change Management A migration from old to new is almost always accompanied with a challenging transition period.

Paragyte's professionals strive to ensure that the change happens as smoothly as possible by

devising solutions for all possible transitional issues.

Mobility Readiness Paragyte has a proven track record in mobility solutions, and it brings this very expertise in its

CRM solutions to provide its clients that cutting edge to their businesses.

Paragyte CRM Capabilities

There is no doubt about CRM's potential to add value in the retail industry. It does however bring

its own share of challenges.

Data SecurityThe recent data breach at Target shows how vulnerable retailers are when it comes to customer

data. The breach had a massive impact on Target's brand reputation and revenues. This is surely

giving sleepless nights to a lot of retail executives. Target has subsequently invested a lot of time,

money and effort in reinforcing its data security systems and processes. The solution lies in being

prepared for the highest threats possible. IT organizations need to ensure that there are systems

and processes in lace to avoid such incidents.

Data driven cultureIn the business environment today, there is no shortage of data. There is rather an overload of

data. Organizations need to adopt and encourage a data driven culture across

the board. This takes guesswork out of the process and brings in better accountability. Such a

culture needs ownership from staffing, HR, Learning & development and quality functions.

Adoption and compliancethe success of CRM depends on availability of good quality of data. That means across the

customer lifecycle, concerned functions need to ensure that relevant customer data is fed in to

the system. Executives need to ensure that the right metrics are being measured and reported on

a regular basis. When it comes to a data driven culture, executives need to lead by example and

the organizations need to encourage and reward positive adoption and compliance behavior.

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Challenges

ConclusionCRM has shown demonstrable business impact in the retail industry and it definitely here to stay.

CRM Technologies will continue to revolutionize online and brick and mortar retail. What it also

certain is that consumers will drive the trends and retailers will need to adapt. Retailers will need

to think beyond merchandising and tactical operations and focus on acquiring and retaining

customers.

The combination of CRM, big data analytics and technology is going to determine the success

and longevity of retail companies. When it comes to CRM adoption, fortune will favor the brave

and those left behind will isk oblivion.

References: Superoffice.com, Lucintel, Deloitte, Forrester, Aberdeen, HBR

About ParagyteParagyte provides innovative solutions in a wide range of technologies and domains, to various

small and large organizations. We strive to provide solutions that increase our clients' efficiency,

reduce costs and maximize their return on investment. With a team of skilled and enthusiastic

technical experts, who are ever-eager to better themselves in the quality of services they provide,

we have turned challenges into opportunities for many of our customers and helped them yield

significant results through their partnership with us.

To know more about Paragyte, visit www.paragyte.com

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