| Customer
Relationship Management are you doing
it right? |
 |
 Is
CRM a strategic weapon your retailer
wields? Praphul Misra muses aloud.
Perhaps if there is a vertical that
has a natural fit with the concept of
customer relationship management (CRM),
it is the service-led, transaction-driven
nature of the retail industry.
Delivering value in this industry goes
beyond the usual Value=Quality/Price
equation. In the mid-1990s, while conducting
several focus groups and quantitative
market research studies for JCPenney
across the US, I found consumers trying
hard to articulate a 'feature' of their
stores and catalogues. We borrowed from
scientific equations to rewrite JCPenney's
value equation to be Value=Quality/Price
+ ?, where ? stood for the unknown factor
or something that explains an error
in a seemingly straightforward equation.
This was labelled Atmospherix by the
market research department. |
| In our quest for seeking
the right intervention for generating
a desired outcome (satisfaction) at
each 'touch-point', we found a common
denominator relationship. The more it
knew about the brand JCPenney and what
to expect at each stage of its decision-making
process, the more likely it was to come
away satisfied. On the brand side, the
more the company knew of what the consumer
was expecting at each stage of its decision-making
process, the more relevant 'overtures'
it could make to facilitate the process. |
|
| For example, at the
time of sale announcements through insertions
in newspapers, consumers were seeking
enough product information to not only
help them comparison-shop at home but
also provide them with visual ideas
on fashion and trends. These inserts
helped consumers "window-shop"
at home. JCPenney, by allowing them
to do so at regular intervals during
the year, was developing a relationship
with its consumers. |
|
| The retail industry
has four key elements to make it a strong
candidate for CRM at the strategic enterprise
level: |
|
| 1. The most interesting
thing about service or its experience
is that it is intangible, something
that cannot be measured. Therefore,
it is difficult to judge the quality
of the service, especially when benchmarks
are changing all the time. |
|
| 2. In addition to its
dependence on service, retail has repetitive
transactions which force marketers to
look at a customer's lifetime value. |
|
| 3. With the ability
to track customer purchases over a period
of time, it is possible to classify
them using parameters beyond just value
of goods purchased. |
|
| 4. With the ability
to segment customers on various parameters,
it is now possible to offer differentiated
service to differentiated segments |
|
| As more and more brands
are being launched or introduced in
India's retail sector, their primary
focus is to define their positioning
more sharply. Their primary focus is
to acquire customers. |
|
| Historically, brands
have spent less on their current consumers
than on prospective consumers. However,
some brands have made CRM a strategic
weapon – Planet M Stores, Shoppers'
Stop and Wills Lifestyle are some that
come to mind. |
|
| According to Jochen
Sengpiehl of BBDO Consulting, companies
can integrate one or more of the six
strategic elements or 'modules' as part
of their CRM strategy: |
|
1. Relationship Marketing
2. Customer Relationship Centre
3. Dealer [Channel] Integration
4. Database Management
5. eCRM
As we approach the midpoint of this
decade, I can't help but notice a few
specific trends in the horizon: |
|
| Convergence:
CRM is no more the exclusive terrain
of software or technology majors. Companies
have realised that merely installing
state-of-the-art CRM softwares does
not guarantee a successful CRM programme.
I personally know of a chain of stores
with not more than five outlets which
invested several lakhs in a CRM software
that has been lying idle for want of
a business strategy and right talent
to drive the programme. |
|
| Much akin to the story
of the elephant and the blind men, we
are realising that CRM is really a convergence
of customer databases, loyalty programmes,
employee training, direct marketing,
technology, and a customer-centric business
strategy. |
| |
| Loyalty programmes: |
|
| The typical points and
rewards programmes are passé.
There is a 'fatigue factor' in the customer
that brands are coming to realise. However,
there are more avatars of loyalty programmes
that some of us may not have known –
rebate programme, appreciation programme,
partnership programme, affinity programme.
Spice them up with the right promotions,
communications and enabling technology,
and we have a recipe for a truly unique
value proposition. |
| |
| Profits in patterns: |
|
| In their haste to realise
positive ROI from these programmes,
companies tend to undercapitalise them
– they are doomed from the start.
Unless customers perceive a true recurring
value proposition in this 'overture',
they will not 'connect' with the programme
beyond the few initial months. True
value is realised when companies are
able to marry the customer profile data
with their transaction data to identify
meaningful patterns. These patterns
then form the core engine for strategic
activities like product/service enhancement,
communication, and much more. |
| |
| Coalition programme: |
|
| When times are tough,
it is important to stretch the marketing
rupee. More so, when a certain category
does not lend itself to a frequency
marketing model, it is but prudent to
join hands with like-minded brands that
are targeting a similar customer profile.
Malls are a prime beneficiary of such
a CRM model and the existing programme
at Ansal Plaza, New Delhi (Ansal Plaze
Privileges Program) is an example of
such a coalition. Credit cards and airlines
like Amex-Indian Airlines, Stanchart-Sahara
tie-ups are forebearers of such coalition
programmes. Some multi-product brands
could also explore the idea of a coalition
programme. In the UK, the Nectar programmes
have brought together majors in petroleum,
telecom, banking, and grocery to form
a powerful coalition. |
| |
| Technology aha! |
|
| With the advent of smart
cards, Radio Frequency Identification
or RFID, biometrics and such technologies,
brand custodians are discovering a wide
array of toys that could be leveraged
as enablers and value differentiators
for their CRM efforts. My ABN Amro credit
card not only uses a smart chip on the
card to enable me carry my loyalty points
but the bank uses SMS very successfully
for reminders and high-value charge
alerts. Companies that master the art
and science of consumer behaviour will
be better positioned to exploit the
changes that are sweeping the competitive
landscape in our country. |
|
KSA Technopak
