Customer relationship management should focus on putting existing customers at the heart of your business, finds Sara McCorquodale at a Retail Week roundtable debate with top retailers.
Finding out what customers want is an area retailers will always be striving to perfect. At a roundtable hosted by Retail Week in association with BT last week, the conundrum of how to know the consumer well enough to inspire loyalty and improve profitability was the hot topic for every retailer present.
Attended by eight senior retail executives and three BT experts in the field, the breakfast event focusing on customer relationship management (CRM) was a lively debate and exchange of ideas.
Prominent challenges across the board included gauging how much the customer wants a “relationship” with a retailer, and identifying who the customer is across a multichannel business.
Developing a strategy that suits customer needs and is brand-appropriate was also a topic of discussion.
“What does the customer want?” said Jigsaw ecommerce director Neil Borer. “I just feel so many businesses over the past five years have looked at CRM as some kind of call to action – ‘Buy seven of these and get 24 free’.”
He added: “We’ve done a fantastic job of teaching customers to expect something like this from retailers. But what about the brand being inspirational? That is important too.”
Sainsbury’s director of customer insight Andrew Mann highlighted that a CRM strategy should concentrate on providing what existing customers desire, rather than running around trying to acquire new ones.
“It’s about farming rather than hunting – listening to customers and giving them what they want,” he said. This can mean getting your ranges and promotions right, rather than constantly sending marketing emails to try to develop relationships with consumers who have shown no loyalty to your brand.
Mann added: “You are only as good as yesterday’s sales. The challenge is always, how do you get people to come back and spend more?”
BT Expedite CRM consultant Tanya Bowen sees the logic in this. Working with many retailers on how to get the most out of their CRM systems over the years she has found that recency – when they last shopped with a retailer and what they bought – is a more valuable indicator of their future shopping habits than the amount they spend or qualitative research into what customers think they might buy in
The issue of getting the budget to implement a CRM strategy, and the staff to ensure it has continued momentum, was recognised by all as a concern. Board members want proof that CRM spend leads to increased sales before they make it a financial priority.
Graham Green, an independent consultant advising Ann Summers on ecommerce, believes the very name of CRM has negative connotations. “I would change the name from CRM, I wouldn’t call it that. It has been on every boardroom table for the past 10 years,” he said.
One answer is to start with small changes that can make a relatively big impression.
Debenhams customer strategy and development director Harriet Williams thinks going to executives with evidence of the benefits of pre-implemented small changes is effective.
“When you get into a boardroom set-up you need to take little things that have added a lot of value to the customer and do this piece meal,” she said. “That way you can show the difference these little things make and build on it.”
Williams told the assembled retailers about the strategies she has implemented at Debenhams to ensure it is stocking ranges and products to suit its customers. “We have an online panel of 12,000 Debenhams customers that we speak to every week,” she explained. “Anything we’re thinking about we can test on them and get a reaction.”
She added: “And at the bottom of every receipt it says: ‘Tell us how we do today and go to Debenhams.com.’ This has been a fantastic way to get feedback. We launched it three months ago and have got a really good response rate – about 3%.”
This has had a knock-on effect for the retailer in terms of staff performance and motivation.
“If someone has been particularly positive we tell the store managers and they can use this to motivate their team,” said Williams. “It’s closing the loop on customer service. Before the launch, store managers thought that we were just going to get loads of complaints. But we’ve had more positives than negatives.”
Good CRM, highlighted Bowen, should benefit the customer, retailer and employee. She added that this was the general feedback from her clients who had worked on improving this area of their business.
Bowen said that every £1 spent on CRM should deliver between £3 to £5 in payback, and if the investment is made in increments then the bigger projects, such as creating a single view of a customer, should become possible in time.
At the crux of the discussion was the question of how a retailer can build a relationship with its customer.
BT futurologist Dr Nicola Millard believes retailers’ approach to communicating with the consumer has to change if they want to see improvement. “Largely it’s you, not the customer, who wants this relationship,” she said. “There needs to be a change of thinking. Should it be the customer who is managing this relationship and not the retailer?”
Several retailers volunteered the strategies and incentives they have implemented to create a personal relationship with their customer.
Borer said: “I try to be as innovative as possible. For example, we sent out six really beautiful Christmas cards to customers [for them to send to friends] and saw a 30% uplift in sales. It’s a more interesting way of dealing with it.”
Zoe Pearson, marketing manager of maternitywear brand Isabella Oliver, said the company tries to connect with its customers and gain information about their lives. However, she admitted the life-changing experience these consumers are going through means they may not wish to provide the details the company would find most useful and this can be detrimental to the business.
“Pregnancy is the unknown and the customer tends to buy from us in the early stages of her pregnancy, which is a turbulent time,” she said. “We ask for pregnancy dates online but it is not a requirement.
“You stay clear of it if people don’t want to share that kind of information, but this means we are building relationships on assumptions.”
Sainsbury’s is also trying to cater directly to a niche with its Little Ones Club, developed for families with children. The retailer looks at how lives change when babies are born to construct its offers and promotions.
“Having children changes your life and it’s really important for us to meet families’ needs in a way that is relevant,” said Mann. “When someone has a baby their shopping habits change. They’re buying nappies, beers and DVDs because they’re not going down the pub anymore. Financially, having children can be quite hard on someone too so we try to put on lots of offers
Dr Millard highlighted that there is an element of permission that has to be respected when it comes to CRM.
All the retailers at the table were in agreement that the ideal is to give consumers more power to direct the kind of relationship they want to have, and ultimately this will drive loyalty to the brand. This means making use of the data and insight that customers give you, when they are happy to give it.
Concluding, Dr Millard encouraged continued dedication to CRM if retailers want to improve their business: “I’ve worked in CRM for 19 years. It’s not the box over there, it’s a strategy. Unless you want to change the way that you do business then don’t bother.”