Day two started with a power track on Consumer Electronics retailing. The session was chaired by Ajit Joshi of Croma and other members of the discussion were Ravindra Jutshi of Samsung, Nilesh Gupta of Vijay Sales, Srikant Gokhale of X-Cite, Manoj Kumar of E-Zone, Srinivasa of Viveks, Ajay Baijal of Reliance Digital & Sunil Mehta of Next.
The session started with some internal bickering between big guys and small guys with Nilesh complaining about the manufacturers on giving more importance & margins to big brands and so called LFR controversy. The key challenge discussed by everyone was the art of managing inventories and sales cycle of the committed quantities since technology upgrade is very rapid and retailers run a huge risk of landing with unsold inventories of outdated products.
On the other hand I felt that no one is really looking at delivering desired experience to the consumers while making a purchase. Consumer durable is an asset purchase by every consumer and they want to make the best choice and there seems to be very little help available at any of the above retailers to consumers to make an informed choice. In fact sometime small format retailers are more informed in product knowledge and helping the consumers to make the right decision. These retailers need to invest in methodology to keep the product knowledge of their sales staff in line with the market and introduction of new products. Also, manufacturers and retailers need to have better coordination in ensuring that the consumers rushing to a retail store after hearing the manufacturer announcement are not disappointed that store staff has no idea of these new products introduced. If retailers & manufacturers can put this together then this will be biggest value addition to their consumers.
Similarly when I attended the next session of mobile & mobile services retailers chaired by Shankar Subramanian of Nokia all of them were talking of the challenges of retaining people and getting right people in their stores but no one seemed to have the solutions. Mobile category is a fast growing category but retailing has not yet met consumer expectations in all respect. This format is also driven largely by discounts and not experience to their consumers.
Retailers in this category need to realize that if they are able to deliver desired experience to every consumer then they really don’t need to discount their store since the consumer will keep coming back only for the sake of that experience. Once again in this category the technology and commercial offerings are so dynamic that consumer needs a retail partner who can honestly keep offering them right product & plans from time to time. This is the biggest value every consumer is looking for. Most of the times the sales staff in these store is not aware of new products & plans and they are only trying to push their own agenda and this can piss off the consumers more often.
I feel that since mobile is a fun category, young school & collage students are very well aware of technology and trends well in advance and most of them enjoy in this space and mobiles are like toys for them. Mobile retailers shall spot such youngsters to work with them on a part time basis. These kids will not only enjoy doing this work but they will also earn some money from this. They will carry their own motivation to deliver the desired experience to every consumer. It is like in the old days many youngsters used to work in music stores since they enjoyed listening to new music and this was the best for them have fun. Based on this theme retailers can work out a model to rope in such services in their stores very successfully. In fact I have a very clear picture in mind and I will be glad to help on this, if they need help on this.
Friday, September 25, 2009
Thursday, September 24, 2009
INDIA RETAIL FORUM 2009 - 3
Next session of the afternoon was on the role of IT in retail and this was chaired by Arun Gupta of Shopper’s Stop. Members on the panel were David Bray of JDA, Lokvir Kapoor of Pine Labs, Mark Wallace of NCR, Mohit Oberoi of Polaris, Mukesh Mathur of Oracle, Navin Joshua of V-Customer, Raja Ray of Veriphone, Rajiv Prakash of Future Group and Rakhi Nagpal of DVS. All members talked about the importance of solutions framework and the technology used to work in open architecture across various technologies. It was felt that retail solutions shall be able to sit and interface with applications across the domain for flexible growth. Unfortunately most the panel members were trying to sell their own cause and not touching the real issues faced across the industry though industry representatives like Rajiv & Arun were trying to bring the real issues on the table but everyone more in the sales pitch mode.
In my opinion IT is the core backbone of any retail enterprise and it is important that retailers adopt an approach for selling business solutions rather than technology. Today the biggest challenge in retail is the big gap between business team and IT team on understanding of the business needs. One of the key reasons is that IT of retailers is handled by technology guys and not business professionals. If I have my way I would give my IT to be handled by a business person and then identify the solutions needed. Technology is not relevant anymore and it shall not play critical role. This will also enable the retailers to get the best out of the investments made in IT solutions since business users will be able to associate more with it to achieve their business objectives. This will also enhance process discipline as well as efficiency across the business.
Once IT vendors take this approach it will also make it easy for them to make retailers invest desired amounts in the IT solutions. IT vendors need to be more aligned to the core retail business and all their pre-sales and post sales interactions with retailers shall be with this approach. Ultimately they need to take the responsibility of bridging the gap between business and technology.
In my opinion IT is the core backbone of any retail enterprise and it is important that retailers adopt an approach for selling business solutions rather than technology. Today the biggest challenge in retail is the big gap between business team and IT team on understanding of the business needs. One of the key reasons is that IT of retailers is handled by technology guys and not business professionals. If I have my way I would give my IT to be handled by a business person and then identify the solutions needed. Technology is not relevant anymore and it shall not play critical role. This will also enable the retailers to get the best out of the investments made in IT solutions since business users will be able to associate more with it to achieve their business objectives. This will also enhance process discipline as well as efficiency across the business.
Once IT vendors take this approach it will also make it easy for them to make retailers invest desired amounts in the IT solutions. IT vendors need to be more aligned to the core retail business and all their pre-sales and post sales interactions with retailers shall be with this approach. Ultimately they need to take the responsibility of bridging the gap between business and technology.
Tuesday, September 22, 2009
INDIA RETAIL FORUM 2009 - 2
First day post lunch session was kicked off with a Food & Grocery session chaired by Sadashiv Nayak of Big Bazaar leading the panel of K Radhkrishnan of Reliance, Rajiv Krishnan of Bharati Retail, Ashutosh from Hypercity, Satendra Agarwal from ABRL, BVK Raju of Q Mart and Ambeek from Vishal Retail. To begin with there seems to be some disagreement between all of them on attitude & role of FMCG companies towards modern retailers but Sadashiv handled it very well and ultimately Satendra had to agree that modern retail is the only platform which can give broader exposure to the manufacturers, especially for the new products. It was very clear that modern retailers are not happy with the inflexible attitude of manufacturers since modern retail contributes only 10-15 of their revenue. This is leading to retailers exploring private label on priority and reducing their dependence on FMCG majors as much as possible.
All the members also agreed that the time has come to focus on consumer experience as the key value offering in their stores, especially Rajeev Krishnan was very vocal about it and reiterated his group commitment on this strategy. With multiple retail brands now competing with each other in the neighborhood it can become the key differentiator for the consumers who are looking for experience and real convenience. Raju of Q-Mart claimed that they enjoy patronage of a particular class of consumers and focus on ensuring availability of all consumer needs on the shelves. To counter the problem with FMCG companies Raju claimed that his company largely depends on imported products to offer unique experience and there are cost advantages as well.
All the members also agreed that the time has come to focus on consumer experience as the key value offering in their stores, especially Rajeev Krishnan was very vocal about it and reiterated his group commitment on this strategy. With multiple retail brands now competing with each other in the neighborhood it can become the key differentiator for the consumers who are looking for experience and real convenience. Raju of Q-Mart claimed that they enjoy patronage of a particular class of consumers and focus on ensuring availability of all consumer needs on the shelves. To counter the problem with FMCG companies Raju claimed that his company largely depends on imported products to offer unique experience and there are cost advantages as well.
Monday, September 21, 2009
INDIA RETAIL FORUM 2009 -1
IRF is like an annual pilgrimage for all professionals associated with Indian retail and I must say Images team has been putting in fantastic efforts to ensure that all those who matter are present. Despite of gloomy business environment IRF 2009 was buzzing with action and a sense of new energy was heard in the air.
The event was kicked off by the chairman B S Nagesh along with Vikram Bakshi of McDonalds with a brief perspective of previous IRF events and emphasizing the importance of IRF 2009 since the industry has just recovered from difficult phase.
The plenary session was on learning from retail business in India. The session was chaired by Raghu Pillai of Reliance with the leaders like Vineet Kapila of Spencer’s, Paul Martin of Planet Retail, Sada Shiv of Big Bazaar, Hemant Bakshi of HUL and V Ramachandran of LG India. All of them agreed on the need of collaboration at different levels to share the knowledge, consumption data and need to focus on consumers. Private label is also seems to be becoming a critical factor in the profitability of various food categories since MRP factor doesn’t allow much flexibility to the retailers in meeting consumer expectations.
This was followed by a rendezvous with Kishore Ji. I feel Kishore Ji enjoys being interviewed by B S Nagesh on such platforms. Kishore Ji once again emphasizing on the importance of increasing consumption for the growth of the industry. He strongly feels that Indians are saving 40% of their income which is too high and if only they save 10% less than the retail industry will get a tremendous boost. As per his estimates Indian retail is growing by at least US$30 billion every year and if all of it can be acquired by organized retail that it will give desired boost to the organized retail. Kishore Ji also suggested that industry needs to look at innovative solutions to enhance the consumption such as declare a day when every consumer shall wear new cloths and this itself can give a huge boost to fashion & apparel sale. As a part of Future Group strategy to get into consumption space he also indicated their entry into selling telecom airtime as well as travel business.
The event was kicked off by the chairman B S Nagesh along with Vikram Bakshi of McDonalds with a brief perspective of previous IRF events and emphasizing the importance of IRF 2009 since the industry has just recovered from difficult phase.
The plenary session was on learning from retail business in India. The session was chaired by Raghu Pillai of Reliance with the leaders like Vineet Kapila of Spencer’s, Paul Martin of Planet Retail, Sada Shiv of Big Bazaar, Hemant Bakshi of HUL and V Ramachandran of LG India. All of them agreed on the need of collaboration at different levels to share the knowledge, consumption data and need to focus on consumers. Private label is also seems to be becoming a critical factor in the profitability of various food categories since MRP factor doesn’t allow much flexibility to the retailers in meeting consumer expectations.
This was followed by a rendezvous with Kishore Ji. I feel Kishore Ji enjoys being interviewed by B S Nagesh on such platforms. Kishore Ji once again emphasizing on the importance of increasing consumption for the growth of the industry. He strongly feels that Indians are saving 40% of their income which is too high and if only they save 10% less than the retail industry will get a tremendous boost. As per his estimates Indian retail is growing by at least US$30 billion every year and if all of it can be acquired by organized retail that it will give desired boost to the organized retail. Kishore Ji also suggested that industry needs to look at innovative solutions to enhance the consumption such as declare a day when every consumer shall wear new cloths and this itself can give a huge boost to fashion & apparel sale. As a part of Future Group strategy to get into consumption space he also indicated their entry into selling telecom airtime as well as travel business.
Thursday, July 30, 2009
5 C for your customers!
Sometime ago I had the opportunity to attend a day-long knowledge session conducted by Dr. Steven Covey on “How to Overcome Challenges in Today’s Times” and I would like to share what I learnt there, connecting it to a short story set in a retail environment, with which some of you may be familiar.
A man used to sell hot dogs by the roadside in the city of New York and he was illiterate, so he never read newspapers. He was hard of hearing, so he never listened to the radio and his eyes were weak, so he never watched television, but enthusiastically, he sold lots of hot dogs. He was smart enough to offer some attractive schemes to increase his sales. His sales and profit went up. He ordered more and more raw material and buns and his sale kept increasing. He recruited a few more supporting staff to serve more customers. He started offering home deliveries. Eventually he got himself a bigger and better stove.
As his business grew, his son, who had recently graduated from college, joined his father.
Then something strange happened. The son asked, "Dad, aren't you aware of the great recession that is coming our way?" The father replied, "No, but tell me about it." The son said, "The international situation is terrible. The domestic situation is even worse. We should be prepared for the coming bad times."
The man thought that since his son had been to college, read the papers, listened to the radio and watched TV, he ought to know and his advice should not be taken lightly. So the next day onwards, the father cut down his order for raw material and buns, took down the colorful signboard, removed all the special schemes he was offering to the customers and was no longer as enthusiastic. He reduced his staff strength by giving layoffs.
Very soon, fewer and fewer people bothered to stop at his hotdog stand. And his sales started coming down rapidly. The same happened to his profit. The father said to his son, "Son, you were right”. “We are in the middle of a recession and crisis. I am glad you warned me ahead of time."
Moral of The Story: We fuel this recession by our own actions and attitude!
I can relate this story very clearly with the current scenario in many of the modern retail brands where shelves are empty, there is less staff on the floor and no new range of merchandise has been introduced for a long time. Regular shoppers are repulsed by this careless, unfriendly environment. Already made wary by media horror stories, these negative signals scare them right away.
The story clearly suggests that you must not confuse intelligence with good judgment. You must choose your advisors carefully; and you must learn to trust your own judgment.
Dr. Covey proposes that a person or an organization will survive forever, if they have the 5 Cs:
• Character
• Commitment
• Conviction
• Courtesy
• Courage
I strongly believe that this is the time when retail brands will work internally to reunite as organizations, and motivate their people, their biggest assets. This is the time retailers will discover the value they offer to their consumers and communicate it to their consumers by re-aligning their business processes and service standards through a rejuvenated team serving the consumers in the stores.
Retailers must make sincere efforts to show higher levels of commitment towards their consumers.
A man used to sell hot dogs by the roadside in the city of New York and he was illiterate, so he never read newspapers. He was hard of hearing, so he never listened to the radio and his eyes were weak, so he never watched television, but enthusiastically, he sold lots of hot dogs. He was smart enough to offer some attractive schemes to increase his sales. His sales and profit went up. He ordered more and more raw material and buns and his sale kept increasing. He recruited a few more supporting staff to serve more customers. He started offering home deliveries. Eventually he got himself a bigger and better stove.
As his business grew, his son, who had recently graduated from college, joined his father.
Then something strange happened. The son asked, "Dad, aren't you aware of the great recession that is coming our way?" The father replied, "No, but tell me about it." The son said, "The international situation is terrible. The domestic situation is even worse. We should be prepared for the coming bad times."
The man thought that since his son had been to college, read the papers, listened to the radio and watched TV, he ought to know and his advice should not be taken lightly. So the next day onwards, the father cut down his order for raw material and buns, took down the colorful signboard, removed all the special schemes he was offering to the customers and was no longer as enthusiastic. He reduced his staff strength by giving layoffs.
Very soon, fewer and fewer people bothered to stop at his hotdog stand. And his sales started coming down rapidly. The same happened to his profit. The father said to his son, "Son, you were right”. “We are in the middle of a recession and crisis. I am glad you warned me ahead of time."
Moral of The Story: We fuel this recession by our own actions and attitude!
I can relate this story very clearly with the current scenario in many of the modern retail brands where shelves are empty, there is less staff on the floor and no new range of merchandise has been introduced for a long time. Regular shoppers are repulsed by this careless, unfriendly environment. Already made wary by media horror stories, these negative signals scare them right away.
The story clearly suggests that you must not confuse intelligence with good judgment. You must choose your advisors carefully; and you must learn to trust your own judgment.
Dr. Covey proposes that a person or an organization will survive forever, if they have the 5 Cs:
• Character
• Commitment
• Conviction
• Courtesy
• Courage
I strongly believe that this is the time when retail brands will work internally to reunite as organizations, and motivate their people, their biggest assets. This is the time retailers will discover the value they offer to their consumers and communicate it to their consumers by re-aligning their business processes and service standards through a rejuvenated team serving the consumers in the stores.
Retailers must make sincere efforts to show higher levels of commitment towards their consumers.
Wednesday, July 22, 2009
Focus On Customer At this Difficult Time
The current economic slow down seems to be building panic across businesses, and no less in retail. Like all other sectors retailers also seem to be looking at controlling operational costs as the top priority. Recruitments are frozen; organizational structure and business strategy is being reviewed and viability of low-performing stores is being scrutinized very closely. In fact many chains have already announced that they will be closing some of their stores. It is the retailers’ fear of drastic reduction in sales numbers that is leading to this panic. However, I am not sure whether the September, October and November sales figures are at all indicating a slow down and whether the cash registers have been affected – yet.
The industry target of achieving over US$ 50 billion revenue from modern retail by 2011 still seems to be realistic which means modern retail is here to grow. However, I definitely expect a change in consumer buying behavior to emerge very soon, and every consumer will be much smarter with their wallet and look for higher value for money spent. In my view, consumer traffic in modern retail is irreversible and consumers will continue to explore destinations to extract the best value for their shopping spend.
Large players which have invested in their core infrastructure including supply chain network will be looking at revised growth strategies. I see this as a phase in which some exciting opportunities have emerged for retailers. Since the panic has been triggered by an anticipated drop in consumer spend, this can be a great opportunity to take another look at the business strategy with the consumer firmly at the centre this time.
Retailers must now begin to start giving importance to in-store service as the first step in this direction. If retailers are able to develop a clear visibility of what exactly consumers expect from their brand, it will help them to design and implement effective customer-service programs for the store staff. They will also be able to put in place an effective system to deliver consistent and measurable service.
Consumers are likely to choose shopping destinations with pleasant memories and avoid those where they have had not very good experiences. The financial effect of a poor consumer experience can be very damaging even though it may not be visible in a short span of time. Consumers are typically likely to visit a department store only once in 3 or 4 months and it would take a few months before the bad experiences are reflected in lagging sales. By then it would most likely be irreversible, and would certainly require a great deal of effort and expense to address.
To prevent such consumer erosion, retailers must put a complaint management system in place. This would provide a listening post for issues at the store, city and regional levels. To be truly effective, such a system must promptly route complaints to the appropriate business role and ensure timely response and management accountability.
The next step retailers must take is more critical. They must set up a sensitive measurement system which is alert to unwritten complaints that occur when the promise of a great shopping experience is not met. While a complaint management system picks up only routine failures (such as non-availability, staff service etc.) failures in providing excellent service during each and every consumer transaction creates silent complaints. As these complaints accumulate they can become potentially very damaging for the business.
Having covered in-store service aspects and related practices, retailers will need to now focus on making efforts towards consumer-oriented merchandise-planning, merchandise allocation and pricing and promotions practices.
During this time when every consumer is actually counting the basket value while shopping, we expect that consumers would not indulge much in impulse buying, and most of the money they spend in a store will be as per their planned shopping lists. This in my opinion can be a great opportunity to enhance basket value by delivering a great consumer shopping experience. Using historic shopping data of different consumer groups and profiles, retailers can drive accurate merchandise planning and allocation models to ensure that merchandise available in the store will lead to a near match of the planned shopping list each consumer carries. This will not only enhance the consumer shopping experience but also help to make inventory and supply-chain cycles more efficient.
This deeper insight into consumer needs will also help retailers design targeted pricing and promotions for each group and profile of consumers. Today consumers are used to shopping as per general pricing, or on promotions intended for all consumers visiting the store. Many of these promotions are not popular since they meet consumer expectations or align with the shopping list. Once the promotions are designed based on consumer needs they will not just be more effective but also enhance trust between the consumer and the retailer.
Finally, this deeper understanding of consumer buying habits will also build sufficient knowledge at the retailer end to develop a consumer-specific private label for each category, and this can help retailers to broaden their private-label portfolio. This will not only lead to meeting consumer demands competitively but also create new opportunities for increased profitability.
-----------------------------------------------------------------
Published in Image Retail December 2008 issue
The industry target of achieving over US$ 50 billion revenue from modern retail by 2011 still seems to be realistic which means modern retail is here to grow. However, I definitely expect a change in consumer buying behavior to emerge very soon, and every consumer will be much smarter with their wallet and look for higher value for money spent. In my view, consumer traffic in modern retail is irreversible and consumers will continue to explore destinations to extract the best value for their shopping spend.
Large players which have invested in their core infrastructure including supply chain network will be looking at revised growth strategies. I see this as a phase in which some exciting opportunities have emerged for retailers. Since the panic has been triggered by an anticipated drop in consumer spend, this can be a great opportunity to take another look at the business strategy with the consumer firmly at the centre this time.
Retailers must now begin to start giving importance to in-store service as the first step in this direction. If retailers are able to develop a clear visibility of what exactly consumers expect from their brand, it will help them to design and implement effective customer-service programs for the store staff. They will also be able to put in place an effective system to deliver consistent and measurable service.
Consumers are likely to choose shopping destinations with pleasant memories and avoid those where they have had not very good experiences. The financial effect of a poor consumer experience can be very damaging even though it may not be visible in a short span of time. Consumers are typically likely to visit a department store only once in 3 or 4 months and it would take a few months before the bad experiences are reflected in lagging sales. By then it would most likely be irreversible, and would certainly require a great deal of effort and expense to address.
To prevent such consumer erosion, retailers must put a complaint management system in place. This would provide a listening post for issues at the store, city and regional levels. To be truly effective, such a system must promptly route complaints to the appropriate business role and ensure timely response and management accountability.
The next step retailers must take is more critical. They must set up a sensitive measurement system which is alert to unwritten complaints that occur when the promise of a great shopping experience is not met. While a complaint management system picks up only routine failures (such as non-availability, staff service etc.) failures in providing excellent service during each and every consumer transaction creates silent complaints. As these complaints accumulate they can become potentially very damaging for the business.
Having covered in-store service aspects and related practices, retailers will need to now focus on making efforts towards consumer-oriented merchandise-planning, merchandise allocation and pricing and promotions practices.
During this time when every consumer is actually counting the basket value while shopping, we expect that consumers would not indulge much in impulse buying, and most of the money they spend in a store will be as per their planned shopping lists. This in my opinion can be a great opportunity to enhance basket value by delivering a great consumer shopping experience. Using historic shopping data of different consumer groups and profiles, retailers can drive accurate merchandise planning and allocation models to ensure that merchandise available in the store will lead to a near match of the planned shopping list each consumer carries. This will not only enhance the consumer shopping experience but also help to make inventory and supply-chain cycles more efficient.
This deeper insight into consumer needs will also help retailers design targeted pricing and promotions for each group and profile of consumers. Today consumers are used to shopping as per general pricing, or on promotions intended for all consumers visiting the store. Many of these promotions are not popular since they meet consumer expectations or align with the shopping list. Once the promotions are designed based on consumer needs they will not just be more effective but also enhance trust between the consumer and the retailer.
Finally, this deeper understanding of consumer buying habits will also build sufficient knowledge at the retailer end to develop a consumer-specific private label for each category, and this can help retailers to broaden their private-label portfolio. This will not only lead to meeting consumer demands competitively but also create new opportunities for increased profitability.
-----------------------------------------------------------------
Published in Image Retail December 2008 issue
CRM Is More Than technology: Its An Emotional bond
Retailers understand in theory that Customer Relationship Management (CRM) is the foundation of profitable retailing. Key aspects of this are customer value, customer care, and customer retention. Most modern retailers have formally adopted loyalty schemes, and consumers are likely to have a collection of loyalty cards in their wallets.
However, loyalty is an emotional bond, and retailers have realized to their dismay that sophisticated technology and a piece of plastic alone are not sufficient to inspire it. During this slow-down phase every retailer is seeking ways to hold on to customers by invoking loyalty through various methods.
More than using cards and technology, retailers must establish the link between consumer experiences and repeat purchasing. By demonstrating that the quality of a customer relationship has an impact on Recency, Frequency and Value (RFV) factor, retailers can justify investments into actions that will deepen those relationships. They must identify which actions have the strongest effects to engender that all-important loyalty, and make strategic investments in technology.
But technology, no matter how sophisticated, cannot deliver loyalty on its own.
As an analogy, consider the computer software package Microsoft Word. When we write and make a typo or break a rule of grammar, we are alerted by the red and green lines that appear and enable us to make necessary corrections. But this does not make us all skillful writers. The ability to select words, construct sentences and express thoughts is something Bill Gates did not develop in us. All Gates did was to provide tools to make those jobs a little easier.
As we have seen, most of the CRM solutions in the market today have failed to deliver. Let’s examine the reasons why, and explore some solutions.
CRM is based on three core elements: People, Processes and Technology. IT vendors and consultants have ensured that technology has received the most investment and attention.
However, the best in the business have been quick to realize that you cannot install a system and expect it to deliver the desired results unless it also addresses the people and process issues. Until the gap between genuine CRM understanding and the technology to facilitate it is closed, all CRM projects – including up-and-running retailer loyalty schemes – are at risk.
In Retail CRM, technology should primarily work to enable the following steps:
- To establish who your loyal customers are, their satisfaction levels and what exactly it is that keeps them coming back;
- To identify the customers who do not come back, and why.
Based on what you learn, you can then set yourself clear objectives on the percentage of customers you want to retain per annum, the number of customers you want to acquire, and your marketing budgets to attract and retain those customers.
Loyalty doesn’t have to be about “prizes”. Once you have determined what motivates your loyal customers to stay, you should create the right mix of bonds to further improve their retention and increase their spending.
It is essential that the basic rules of customer service in your business should be in place before you go out in the market looking for a technological tool to implement those rules. The technology you select should be easy to adapt to your set rules and goals, and, most of all, easy to use by your business managers.
In my opinion, profitable customer service is another term for organized retailing, and finding the right mix is likely to lead to a very high chance of successful CRM in your retail business.
---------------------------------------------------------
Published in DNA Money Dated 22nd January 2009
However, loyalty is an emotional bond, and retailers have realized to their dismay that sophisticated technology and a piece of plastic alone are not sufficient to inspire it. During this slow-down phase every retailer is seeking ways to hold on to customers by invoking loyalty through various methods.
More than using cards and technology, retailers must establish the link between consumer experiences and repeat purchasing. By demonstrating that the quality of a customer relationship has an impact on Recency, Frequency and Value (RFV) factor, retailers can justify investments into actions that will deepen those relationships. They must identify which actions have the strongest effects to engender that all-important loyalty, and make strategic investments in technology.
But technology, no matter how sophisticated, cannot deliver loyalty on its own.
As an analogy, consider the computer software package Microsoft Word. When we write and make a typo or break a rule of grammar, we are alerted by the red and green lines that appear and enable us to make necessary corrections. But this does not make us all skillful writers. The ability to select words, construct sentences and express thoughts is something Bill Gates did not develop in us. All Gates did was to provide tools to make those jobs a little easier.
As we have seen, most of the CRM solutions in the market today have failed to deliver. Let’s examine the reasons why, and explore some solutions.
CRM is based on three core elements: People, Processes and Technology. IT vendors and consultants have ensured that technology has received the most investment and attention.
However, the best in the business have been quick to realize that you cannot install a system and expect it to deliver the desired results unless it also addresses the people and process issues. Until the gap between genuine CRM understanding and the technology to facilitate it is closed, all CRM projects – including up-and-running retailer loyalty schemes – are at risk.
In Retail CRM, technology should primarily work to enable the following steps:
- To establish who your loyal customers are, their satisfaction levels and what exactly it is that keeps them coming back;
- To identify the customers who do not come back, and why.
Based on what you learn, you can then set yourself clear objectives on the percentage of customers you want to retain per annum, the number of customers you want to acquire, and your marketing budgets to attract and retain those customers.
Loyalty doesn’t have to be about “prizes”. Once you have determined what motivates your loyal customers to stay, you should create the right mix of bonds to further improve their retention and increase their spending.
It is essential that the basic rules of customer service in your business should be in place before you go out in the market looking for a technological tool to implement those rules. The technology you select should be easy to adapt to your set rules and goals, and, most of all, easy to use by your business managers.
In my opinion, profitable customer service is another term for organized retailing, and finding the right mix is likely to lead to a very high chance of successful CRM in your retail business.
---------------------------------------------------------
Published in DNA Money Dated 22nd January 2009
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