relationship management 10.1 information systems retailing strategy retail market strategy financial...
TRANSCRIPT
Relationship Management 10.1
Information Systems
Retailing Strategy
Retail Market Strategy
Financial Strategy Site Location
Retail Locations Organizational Structure and HR Management
Customer RelationshipManagement
“customer-centric retailing”
Relationship Management 10.2
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?
Relationship Management 10.3
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
Relationship Management 10.4
CRM Process
CollectCustomer
Data
DevelopCRM
Programs
AnalyzeCustomer Data
& IdentifyTarget Customers
Learning
ImplementCRM
ProgramsAction
Relationship Management 10.5
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 10.6
Collecting Customer Data
Types of Information in the Customer
Database
Approaches for Collecting Information
Privacy Concerns
Relationship Management 10.7
Information About EachCustomer 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
Relationship Management 10.8
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
Relationship Management 10.9
The Customer Purchase Cycle
CustomerCustomer
How the customer relates to the retailer:
Uncover a need/
problem
Discover where
problem can be solved
Visit storesPurchase product/ services
Consume product/ services
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.
“Lock-in”
Relationship Management 10.10
What is a customer centric relationship?
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
Rel
atio
nsh
ip
RightPerson
CustomerContact
RightMessage
RightMedia
RightTime
respected anddeveloped
consulted butpre-empted
understoodand rewarded
specific to me,ever-changing
Lifetime of Value
MyProducts
MyBehavior
MyNeeds
MyPermission
Relationship Management 10.11
CRM problems in retailing
CustomerCustomer
How the customer relates to the retailer:
RetailerRetailer
How retailers try to match the customer’s purchase cycle:
But here are the problems:
Difficult to manage customer
data
Customer & Business Analysis
Time consuming, non-targeted campaigns
Inconsistent Execution at
Stores
Disjointed or “single visit”
selling process
Inconsistent field service
process
Cost-center mentality
Marketing Programs/
Campaigns/ Offers
Store Operations/ Execution
Selling Process
Delivery, Setup,
Installation Scheduling
Customer Service Process
Uncover a need/
problem
Discover where
problem can be solved
Visit storesPurchase product/ services
Consume product/ services
Relationship Management 10.12
Successful Customer Centric Strategies: 4 Key Elements
CRM Strategy Components
Consistency Across Functions Execution Performance
Monitoring
Effective Segmentation
CustomerExperience
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
Relationship Management 10.13
Customer Segmentation
Effective Segmentation
CustomerExperience
Business Processes
Right Skill Sets & Mindsets
Right Technology
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?
Relationship Management 10.14
“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.
Relationship Management 10.15
Maximizing the Customer ExperienceAddresses 3 Questions
How well do you meet customer needs?
How smoothly do
you solve your
customers’ problems?
How quickly do you
anticipate what they’ll want next?
Source: “The Customer Experience,” Net Company, Fall 1999.
Relationship Management 10.16
Maximizing the Customer Experience
Effective Segmentation
CustomerExperience
Business Processes
Right Skill Sets & Mindsets
Right Technology
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?
Relationship Management 10.17
Well Defined Business Processes
Effective Segmentation
CustomerExperience
Business Processes
Right Skill Sets & Mindsets
Right Technology
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
Relationship Management 10.18
Skills & new mindsets
Effective Segmentation
CustomerExperience
Business Processes
Right Skill Sets & Mindsets
Right Technology
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
Relationship Management 10.19
Right Technology
Effective Segmentation
CustomerExperience
Business Processes
Right Skill Sets & Mindsets
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)
Relationship Management 10.20
Metrics linked to rewards canstimulate 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
Relationship Management 10.22
Elements in EffectiveFrequent Shopper Programs
Tier Based on Customer ValueOffer Choices of Rewards
Non-monetary incentives
Reward all TransactionsTransparent and Simple
Relationship Management 10.24
Cross-selling Add-on selling
Converting Good Customersto Best Customers