Customer relationship management (CRM)

Customer relationship management (CRM)

CRM is a strategic approach that is concerned with creating improved shareholder value through the development of appropriate relationships with key customers and customer segments CRM unites the potential of relationship marketing strategies and IT to create profitable long term relationships with customers and other key stakeholders.

Thus, CRM is a process of collecting information about the customers and aligning and remodeling the organization’s strategy to meet the customer’s demand. The focus of CRM is on people rather than on products and services. Business and processes are built with the customers in mind and the emphasis is on what can be done to make people want to do business with you – over and over again?

Relationship marketing is defined as the ongoing process of engaging in co-operative and collaborative activities and program with immediate and end user customer, to create or enhance mutual economic value at a reduced cost.

CRM in Retail

The concept of CRM has special relevance in retail. If used effectively it can add value to the offering made by the retailer. Many a times it is believed that CRM is one to one marketing. However this perception is incorrect, as by effective use of CRM, a retailer can create products and services to suit the needs of the customers as illustrated below:

How CRM benefits the retailer

Customers’ needs

Product choice >>> range selection >>> Tailored range

Access >>> Channel choice >>> Consistent experience

Support >>> Information >>> Enhanced service

Individual treatment >>> Customer service >>> 1:1 relationship

Value >>> Scale efficiencies >> Customer defined value

The starting point in creating an effective program is to classify the customer segments into:

1) Lower value segments
2) Growable Segments, and
3) Most valuable Segments

Once these segments of customers are identified, different marketing and communication platforms are needed for each segment.

The role of personal selling

Creating an environment or an organization which is focused on the consumer requires that the face of the organization to most of the customers – the salesperson – is a satisfied and happy employee. A survey conducted by Gallup fond that most of the time companies lose customers due tot the attitude of rude and indifferent employees. This was not a small number but a whopping 68%. That is the impact that a sales person can have on the customer. He is in fact, most of the time the customer’s only contact with retail organization.

Most of the time, we tend to classify all the persons doing the role of sales at a retail store as salespersons; however that may not be completely accurate. The role of the salesperson changes with the type of retail organization and the products to be sold.

Merchandise sold at retail stores may be broadly classified as: convenience goods, shopping goods and specialty goods. In case of convenience goods such as food, grocery drugs and impulse items which are purchased as frequent intervals the salesperson plays a limited role.

In case of shopping goods, where consumers usually shop around before buying, salespersons need to have a good background of merchandise information because many customers’ will be relying on them for assistance and advice. For specialty goods, selling is the most difficult, because it usually involves the purchase of merchandise that is higher priced and more expensive than other merchandise. Needless to say, customers for specialty goods must frequent exert considerable shopping effort and give serious consideration before they buy such goods many of which could be once in a lifetime items. Customers expect the salespersons will have a fair amount of information but the merchandise and will be able to advise correctly.

Interestingly while nationally banded merchandise plays an important role in the specialty goods field, the customer’s confidence in the retailer frequently plays an equally important part. In retail, a salesperson represents the business to the customer I the following ways:

1) As a source of information i.e. being knowledgeable about the store’s merchandise and policies.
2) As a fashion and value counselor, who assists the customer with value comparisons with items in the store or possibly competing brands.
3) As a public relations representative the salesperson represents the business to the public or to customers.
4) As a mover of stock who assists in turning over or selling the inventory which is the primary objective of the business.
5) As a seller who assists the customer in making a decision to purchase the store’s merchandise.

It is because of the various role performed by the salesperson that he is often termed as a boundary spanner – he represents the store to the consumers and communicates customer feedback to the management.