1. Retailing Strategy Retail Market Strategy Financial Strategy
Site Location
Customer Relationship Management “customer-centric retailing”
Retail Locations
Organizational Structure and HR Management
Information Systems

2. 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?

3. 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

4. CRM Process Learning Action Collect Customer Data
Analyze Customer Data & Identify Target Customers
Learning
Develop CRM Programs
Implement CRM Programs
Action

5. What Customer Data to Collect?
Data Mining – technique used to identify patterns in data
Market Basket Analysis
Identifying Market Segments
Identifying Best Customers

6. Collecting Customer Data
Types of Information in the Customer Database
Approaches for Collecting Information
Privacy Concerns

7. Information About Each Customer 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

8. 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

9. The Customer Purchase Cycle
How the customer relates to the retailer:
Uncover a need/ problem
Discover where problem can be solved
Visit stores
Purchase product/ services
Consume product/ services
Customer
“Lock-in”
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.
So CRM software should help you – as a retailer – to manage the major elements of the customer life cycle. And that’s what we do.
We make marketing, selling and customer service software to address each of these stages. And even though we have these broken down into major categories, it’s important to realize that marketing – for example – is a process that never really ends. Retailers always want to be ready to sell a customer products or services at any point along the life cycle.
To be profitable, a retail must always be selling – and that’s what our software helps a retailer to do.

10. What is a customer centric relationship?
Customer Contact
Relationship
Right Person
Right Message
Right Media
Right Time
Lifetime of Value
My Products
My Behavior
My Needs
My Permission
specific to me,
ever-changing
understood and rewarded
consulted but
pre-empted
respected and developed
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

11. CRM problems in retailing
How the customer relates to the retailer:
Uncover a need/ problem
Discover where problem can be solved
Visit stores
Purchase product/ services
Consume product/ services
Customer
How retailers try to match the customer’s purchase cycle:
Retailer
Customer & Business Analysis
Marketing Programs/ Campaigns/ Offers
Store Operations/ Execution
Selling Process
Delivery, Setup, Installation Scheduling
Customer Service Process
But here are the problems:
So CRM software should help you – as a retailer – to manage the major elements of the customer life cycle. And that’s what we do.
We make marketing, selling and customer service software to address each of these stages. And even though we have these broken down into major categories, it’s important to realize that marketing – for example – is a process that never really ends. Retailers always want to be ready to sell a customer products or services at any point along the life cycle.
To be profitable, a retail must always be selling – and that’s what our software helps a retailer to do.
Difficult to manage customer data
Time consuming, non-targeted campaigns
Inconsistent Execution at Stores
Disjointed or “single visit” selling process
Inconsistent field service process
Cost-center mentality

12. Successful Customer Centric Strategies: 4 Key Elements
CRM Strategy Components
Consistency Across Functions
Execution
Performance Monitoring
Effective Segmentation
Customer Experience
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

13. Customer Segmentation
CRM Strategy Components
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?
Effective Segmentation
Customer Experience
Business Processes
Right Skill Sets & Mindsets
Right Technology

14. “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.

15. Maximizing the Customer Experience Addresses 3 Questions
How smoothly do you solve your customers’ problems?
How well do you meet customer needs?
How quickly do you anticipate what they’ll want next?
Source: “The Customer Experience,”
Net Company, Fall 1999.

16. Maximizing the Customer Experience
CRM Strategy Components
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?
Effective Segmentation
Customer Experience
Business Processes
Right Skill Sets & Mindsets
Right Technology

17. Well Defined Business Processes
CRM Strategy Components
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
Effective Segmentation
Customer Experience
Business Processes
Right Skill Sets & Mindsets
Right Technology

18. Skills & new mindsets
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
Effective Segmentation
Customer Experience
Business Processes
Right Skill Sets & Mindsets
Right Technology

19. Right Technology
CRM Strategy Components
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)
Effective Segmentation
Customer Experience
Business Processes
Right Skill Sets & Mindsets
Right Technology

20. Metrics linked to rewards can stimulate 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

21. Retailers’ Use of Frequent Shopper Programs

22. Elements in Effective Frequent Shopper Programs
Tier Based on Customer Value
Offer Choices of Rewards
Non-monetary incentives
Reward all Transactions
Transparent and Simple

23. Retailer Personalization

24. Converting Good Customers to Best Customers
Cross-selling
Add-on selling

25. Implementing CRM Programs
Need systems, databases
Close coordination between departments – marketing, MIS, store operations, HR
Shift in orientation +
Product Centric
Customer Centric