Retailing Strategy
Retail Market Strategy
Financial Strategy
Site Location
Customer Relationship
Management
“customer-centric retailing”
Retail Locations
Organizational Structure and
HR Management
Information Systems
Relationship Management 10.1
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?
Relationship Management 10.2
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
Relationship Management 10.3
CRM Process
Collect
Customer
Data
Implement
CRM
Programs
Relationship Management 10.4
Learning
Action
Analyze
Customer Data
& Identify
Target Customers
Develop
CRM
Programs
What Customer Data to Collect?
 Data Mining – technique
used to identify patterns in
data
 Market Basket Analysis
 Identifying Market
Segments
 Identifying Best
Customers
Relationship Management 10.5
Collecting Customer Data
 Types of Information in the Customer
Database
 Approaches for Collecting Information
 Privacy Concerns
Relationship Management 10.6
Information About Each
Customer in the Database

History of purchases


Customer contacts by retailer (touch points)




Purchase date, price paid, SKUs bought, whether or not
the purchase was stimulated by a promotion
Visits to web site, inquires to call center, direct mail sent to
customer
Customer preferences
Descriptive information about customer
Customer’s responses to promotions
Relationship Management 10.7
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
Relationship Management 10.8
The Customer Purchase Cycle
How the customer
Customer
Uncover a
need/
problem
Dis
cov
relates
er
whe
re
pro
ble
m
can
be
solv
ed
to the retailer:
Visit
stor
es
Pur
cha
se
pro
duct
/
serv
ices
Con
sum
e
pro
duct
/
serv
ices
“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.
Relationship Management 10.9
What is a customer centric
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
Relationship Management 10.10
Relationship
Customer
Contact
CRM problems in retailing
Dis
cov
How the customer relates
er
whe
re
Uncover a
pro
need/
ble
problem
Customer
m
can
be
How retailers try to match
solv
ed
Retailer
Customer &
Business
Analysis
to the retailer:
Visit
stor
es
Pur
cha
se
pro
duct
/
serv
ices
Con
sum
e
pro
duct
/
serv
ices
the customer’s purchase cycle:
Marketing
Programs/
Campaigns/
Offers
Store
Operations/
Execution
Inconsistent
Execution at
Stores
Selling
Process
Delivery,
Setup,
Installation
Scheduling
Customer
Service
Process
Disjointed or
“single visit”
selling
process
Inconsistent
field service
process
Cost-center
mentality
But here are the problems:
Difficult to
manage
customer
data
Relationship Management 10.11
Time
consuming,
non-targeted
campaigns
Successful Customer Centric
Strategies: 4 Key Elements
CRM Strategy
Components
Consistency
Across Functions
Execution
Performance
Monitoring
Effective
Segmentation
Marketing
Customer
Experience
Setting Goals
Sales
Agents of Change
in Management
Service
Implementation
Planning
Business
Processes
Right Skill Sets &
Mindsets
Rewarding Results
Vendors, etc.
Right Technology
Relationship Management 10.12
Measuring
Progress
Customer Segmentation
CRM Strategy
Components
Effective
Segmentation
Customer
Experience
Business
Processes
 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
Right Skill Sets &
Mindsets
Right Technology
 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?
Relationship Management 10.13
“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.
Relationship Management 10.14
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.
Relationship Management 10.15
Maximizing the Customer
Experience
CRM Strategy
Components
Effective
Segmentation
Customer
Experience
Business
Processes
Right Skill Sets &
Mindsets
Right Technology
Relationship Management 10.16

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?
Well Defined Business Processes
CRM Strategy
Components
Effective
Segmentation
 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:
Customer
Experience
 Marketing Campaign Designs
 Store Layout
Business
Processes
Right Skill Sets &
Mindsets
Right Technology
 Pricing Strategy
 Sales-floor Service Training
 Order Management
 Service Tracking
 Returns Management
• Each of these processes needs to be coordinated with
the other processes
Relationship Management 10.17
Skills & new mindsets
CRM Strategy
Components
Effective
Segmentation
Customer
Experience
Business
Processes
Right Skill Sets &
Mindsets
 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
Right Technology
Relationship Management 10.18
 Reconfigure its compensation schemes
Right Technology
CRM Strategy
Components
Effective
Segmentation
Customer
Experience
 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
Business
Processes
 Company & industry-specific functionality
 Network availability & support
Right Skill Sets &
Mindsets
Right Technology
Relationship Management 10.19
 Scalable
 Support for all devices (networked computers, handhelds,
cash registers)
Metrics linked to rewards can
stimulate change
Area
Old 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
Relationship Management 10.20
New Metric
Retailers’ Use of
Frequent Shopper Programs
Relationship Management 10.21
Elements in Effective
Frequent Shopper Programs
 Tier Based on Customer Value
 Offer Choices of Rewards
 Non-monetary incentives
 Reward all Transactions
 Transparent and Simple
Relationship Management 10.22
Retailer Personalization
Relationship Management 10.23
Converting Good Customers
to Best Customers


Cross-selling
Add-on selling
Relationship Management 10.24
Implementing CRM Programs
 Need systems, databases
+
 Close coordination between departments –
marketing, MIS, store operations, HR
 Shift in orientation
Product Centric
Relationship Management 10.25
Customer Centric