“Customer Relationship Management is not a software program but a holistic business philosophy. The aim of CRM is to create added value for both customers and suppliers on the basis of long-term business relationships. The customer relationship is intensified at all process levels and tailored to the customer in order to strengthen customer loyalty and raise relationship exit barriers.” – ThyssenKrupp Steel
While ThyssenKrupp Steel is not a retailer, their perspective on CRM is spot on for retail. Retail CRM has certainly evolved into more of a business philosophy than a software solution. A successful CRM philosophy starts by answering two simple questions about your retail value proposition:
- What is the added value you are creating for your customers?
- What is the added value that your customers create for you?
The answer to these questions helps establish the foundation of a CRM program that supports a mutually beneficial, long-term relationship with customers. Why does this matter?
When a retailer develops customer relationships that are highly engaging and deliver an enhanced customer experience, it strengthens brand loyalty, leading to a larger share of wallet. The goal is to convert most customers into brand loyalists and the best customers into brand evangelists. Even with a CRM philosophy defined and objectives established, there’s lots of work to be done to put an effective CRM program in place.
- Customer Data Management
- Campaign Management
- Loyalty and Rewards
- Reporting and Analytics
Customer Data Management
This is the core, and where CRM begins. Customer data management plays a significant role in CRM, but how it helps the other segments is the really amazing part.
Customer Data Management supports the capture, storage, and cleansing of customer data that is primarily used by the other segments of CRM. Having a robust, real time, 360-degree view of the customer that is accessible to all CRM segments is the foundation of a good retail CRM program.
What does a retailer need to do with the data they collect? Put it into action! Think of campaign management as the prospecting segment, making use of customer data to generate interest and activity. Customers are segmented based on a variety of factors and assigned into groups, each potentially receiving different offers. Communication can be through direct mail, text messages (SMS), email, targeted Internet ads or even social media, depending on each customer’s preferred communication method.
The clienteling segment manages the interactive communication between a retailer and customer, in real-time, during the shopping experience. Clienteling platforms range from mobile devices or tablets in the store, applications that run on the customer’s own device (smartphone) or software integrated into the unified commerce experience. Clienteling encourages personal interactions and relationship building with customers through multiple communication methods. Tailoring the shopping experience based on each customer’s unique profile, Clienteling is the real-time customer facing side of CRM.
Loyalty and Rewards
With the goal of rewarding their best customers, loyalty programs offer a tiered level of incentives for frequent shoppers. By tracking and understanding customer purchasing behavior, loyalty programs issue rewards based on spend amount, specific items purchased and when or where transactions occur. Varying the offers and rewards can impact how the customer interacts with the retailer across shopping channels enhancing the shopping experience. By creatively offering loyalty incentives, retailers can often influence the number of transactions per visit, shopping frequency, average transaction rate and customer retention rates.
Reporting and Analytics
Data gathering is a key component of any CRM program. Components of the program need to be tested, adjusted, retested and refined on a continual basis. Customers respond to offers that are appealing and meet a desire or need. Understanding what offer will appeal to a particular customer or group of customers requires an analytical process. Proactively understanding and responding to how customers react to their experience is an invaluable part of a CRM program.
As illustrated above, CRM is much more than a contact management system for your customer data. We will discuss more details on various CRM topics in future posts coming soon!