Retailers Still Working on CRM
Retailers ‘get’ the
need for customer relationship management (CRM) but many, if not most, have
not quite gotten the hang of making it work to its fullest potential, according
to a piece on the CRM Buyer website.
Chris Fletcher,
research director at AMR Research, said part of the issue is connected to “what
retailers mean by ‘CRM.’"
“Some use a rewards
or a loyalty program,” Mr. Fletcher
told CRM Buyer. “Others use call centers to help customers solve problems.
But only a few have a fully integrated approach to CRM. Mainly, they put in
a program on an ad hoc basis to address pain points as they emerge.”
Traditional
divisions within retail organizations prevent many from achieving the level
of consumer insights that leads to a competitive advantage, according to Mr.
Fletcher.
“Many retailers,
especially the traditional brick-and-mortar companies, revert to a silo situation.
They may expand to a catalog sales operation or an internet program, but they
set up separate operations for these channels and the channel managers don’t
cooperate,” he told CRM Buyer.
“They duplicate data collection and never fully exploit the CRM capability
of getting a complete customer profile because they don’t integrate the customer
data,” he added.
Sallie Burnett,
president of Customer Insight Group, sees the situation changing as consumers
push for more.
“The online retail channel has changed the customer experience
situation,” she
told CRM Buyer. “With digital marketing, the customer expectation level
is higher. Customers can shop a variety of sources easily. They can get product
reviews and information from web sites and blogs. So, now they expect retailers
to provide this kind of support. The whole engagement environment with the
customer has changed, and the retailers are beginning to react to it.”
Discussion
Questions: What is your assessment of the state of CRM in retail marketing
today? Where do merchants need to be concentrating their efforts? Is there
a concern about unrealistic expectations in terms of the benefits of CRM implementation?
The article is correct. Retailers still do not grasp the importance of CRM, nor do they execute their programs correctly. Look at what Amazon does. They are a perfect example of a customer centric company. The emails that are sent to their consumers are personalized, customized based on the customer’s purchasing history, relevant, and expected. Compare this to the way retailers still market their products. They hold generic store-wide sales for the masses, with the same offer being made to all customers. That is no way to manage relationships.
When Walmart says that they feel eventually they can beat Amazon at online sales, they simply don’t understand the power of understanding the customer, building a relationship on a one-to-one basis, and then executing their strategy, one customer at a time. Traditional retailers have a long way to go before CRM becomes a true driving force for their companies.
Compared to other industries that really “get” CRM (e.g., financial services, telecom, and casinos), the vast majority of retailers are way, way behind. And what makes this really shameful is that the Tesco example has been out there as a shining star for such a long time now. It’s a sad state of affairs for US retailers when it comes to customer centricity and CRM.
I think Sallie got it exactly right. The consumer is dragging retailers, kicking and screaming, to pay attention to her and to upgrade their technology platforms to support her.
It’s hard to get used to the fact that customers have more technology at their fingertips than retailers do…but it’s just true. It’s equally hard to internalize that customer-facing applications don’t have to be perfect…they just have to carry accurate information.
Finally, brick and mortar retailers must find a way to get their store managers back on the selling floor. The manager is the most customer-centric person in the place. Putting him or her in the back room reading printouts or looking at dashboards isn’t a great use of time.
While we have had Frequent Shopper programs for years, few use them for anything more than tier pricing. This I do not consider customer relationship management. Coupling this with the decline in newspaper readership and circulation means it’s time to step up the game.
The starting point is, a customer is a customer. No company should care where or how they purchase as long as they buy. Fact is, consumers will use multiple methods depending on their circumstances at the time of purchase. CRM should be positioned above the delivery approaches. Its role is to identify target consumers and keep them interested and educated.
Retailers need to greatly increase the quality of their CRM efforts. The silos need to come down and consumers’ habits need to be explored across then entire retail environment. A rewards or loyalty program is not enough. That data should be incorporated with website analytics and in-store research to target individual consumers with offers that are relevant, timely and easy to access. This process is not easy but it is needed if retailers want to keep up with their customers and drive sales.
‘CRM’ has become a nearly meaningless term in retailing today. As the article points out, it can mean anything from a loyalty program, to call center systems, to complex points programs, to cross-channel systems integration. So, rather than answer the question “what is the state of CRM?”, I’ll answer a differently-worded question: “how well do retailers understand their shoppers’ behavior on an individual level, and how well do they use that understanding to shape their business?”
My answer: not well at all.
For those retailers who even track their shoppers’ individual buying habits, the sheer volume of data and complexity of tools often leads to an “analysis traffic-jam.” As a result, by and large the data are under-utilized. Highly technical tool-sets require highly-trained experts to use them, and most retailers simply can’t afford to staff a huge customer analytics group.
We are, however, at a turning point. Retailers need to demand technology that turns piles of data into usable information and insights, and that eases the technical burdens on retailer staff. That technology exists: closed-loop shopper-specific marketing (meaning marketing targeted to specific shoppers based on their behavior, then measured to determine the actual impact on individual shoppers’ behavior) is finally achievable in real-time and at low cost. Bricks-and-mortar retailers must demand these same capabilities that the online world has enjoyed for years.
So, although retail CRM isn’t where it should be today, I see momentum building in the right direction. My company is focused on making this transformation a reality.
Dagnabbit, (you would have scratched anything stronger) all the CRM examples are me-toos and should be selectively used. WHAT THE RETAILERS ARE MISSING IS THEY OWN THE SHOPPER RELATIONSHIP AND WHEN THEY STRONGLY PROMOTE WITH REASONS TO BUY, THEIR SALES GO UP.
Their store can be their #1 Direct Selling Media.
For brick and mortar retailers, CRM is still a huge and for the most part, untapped opportunity. Understanding each shopper (through loyalty data) is only part of the formula. Doing something with that data is the next and most important step. Joel is correct; we have a lot to learn from Amazon. How do we truly customize the shopping experience at retail? There are at least a dozen companies working to provide solutions to retailers and help them to get the most from their data. I would encourage retailers to explore all options and find the one that works best for their company environment and their shoppers. Kroger uses dunnhumby and it appears to be working very well for them. That does not mean it will work well for all retailers across the board.
There’s Cash in Connecting…customer-centric connecting with ever-demanding wants and personal expectations in the marketplace. Where do you start? With an interested top dude. He/she can set a new pace in retailing if they intermingle and sincerely involve themselves–and then their team–in seeking the necessary parallels with customer mindsets.
I agree that this is still in the embryonic stage and can be developed to expand customer loyalty, commitment, and bottom-line sales. Amazon started customer relationship management with “you bought this and these items may be of interest”….but even this could be expanded to generate new sales and to build a profile. Where the feeling of the consumer is “they know exactly what I like.”
A retail store that does a good job of this is Chico’s with their in-store experience. When a customer finds a blouse they like, the salesperson’s responsibility is to outfit the customer with a wardrobe based on that like. Many have gone in for one item and come out with a bag full of purchases. This is an example of doing a good job in store…marketing could pick up on this and create a campaign to build loyalty.
This is a vast generalisation. We have been working with retailers around the world for over 15 years and the ones we work with get it, like Tesco, Kroger, Casino, etc.
The problem with CRM is that customers don’t want relationships. The banks and others have reduced CRM to self service to drive down costs and certainly CRM software companies don’t get it either.
The R in CRM should stand for Relevance and so its not about 1:1 communications but the right products, the right prices and the right promotions as much as it is about 1:1 Amazon style customisation of web sites.
Let’s face it, if you buy your grandma a gardening book on Amazon you become targeted as gardening for life, even if you live in an apartment!
The truth is, being a great retailer means you need to know your customers…but CRM is not the answer.
I’ve found that CRM programs can be a lot like home gyms. If you’re an unhealthy person and have no real desire to get healthy, putting a treadmill in your basement won’t help you.
The real issue here is not that companies don’t “get” CRM as a concept. It’s that some companies simply don’t have very good relationships with customers to begin with–or care to, for that matter.
In Amazon’s case, it’s not their understanding of CRM that makes them great. It’s that customer service is an ingrained corporate value that is simply being enabled by CRM technology. If they used quill pens and carrier pigeons they’d probably still wow their customers.
Wow. Look at the number of comments here that indicate that retailers just don’t get it.
The real game-changer is social media, because it fosters a sense of community among people who might not see one another that often. Unless retailers learn how to foster that kind of intimacy with customers, they’ll be in danger of losing market share to competitors who can.
Retailers and the pitiful state/practice of CRM are the elephant in the room. While the reference to Tesco and dunnhumby’s work is apropos, it’s surprising to hear Mr. Humby’s comments that customers don’t want a relationship with retailers. Maybe that’s the case with Kroger and Home Depot (though I seriously doubt that) but that is not the case from our experience. Quite the contrary, in fact though clearly some retailers and categories (just like customers) are more compelling in terms of a relationship than others.
Customers are quite willing to opt-in and have a relationship with retailers, just like other brands, but only when there is a mutually beneficent value proposition. Customers expect something out of the relationships–and not just discounts (which may be why Kroger customers don’t consider their “relationship” with the grocer as anything more than transactional)–though the discount mentality is absolutely part of the explanation as to why CRM in retail is so far behind.
There are numerous examples, not the least of which includes department stores like Nordstrom and Neiman Marcus but also grocers like Ukrops. The key to customer relationships for retailers, like any other relationship, is meaning (relevance) and value.
CRM is not dead despite all you naysayers to the contrary. CRM, when applied properly, is still a powerful tool in the retailer’s arsenal to drive repeat frequency and market basket share.
Granted, they also need to have the right merchandise, price points, locations, advertising, marketing, promotional strategies and so on. How is this accomplished?
We are finally seeing a technology out there that allows for all this data (POS, back office, marketing DBs,merchandising, promotions, etc…) to be integrated in near real time, so that retailers can adapt to changing consumer behavior. We are not talking about legacy Teradata, Neteeza, SAP, Oracle, etc, data warehouses but real analytic, transparent databases running in the cloud.
This technology has been concentrated on Wall Street for the last 10 years because they “feel the need for speed,” and now is making it into the retail channels. The issue I see hampering retail is one of risk taking. Too many in the IT or exec management ranks will not take on much risk if any, for fear of job loss.
When retailers adopt proven hyper speed technologies, CRM becomes a positive reality.