NOTE:  Raymark is now part of the Mi9 Retail team. Read the press release here

SPEAK Magazine Spring 2011

Written by Jasmine Yalds with commentary by Marc Chriqui, President, Raymark

In our rapidly changing, digitally-connected world, customers display a new in-control attitude. They’re less loyal, more self-reliant and more resourceful when it comes to finding the best all-round value. With this in mind, retailers must also change in order to succeed. Jasmine Yalds finds out how…

Today’s consumers have changed. They use mobile devices, Web connectivity, and abundant information to learn, shop and communicate in new ways. The recent recession has taught them new budget discipline and, in our rapidly changing, digitally connected world, they sense that long-term brand loyalty might no longer guarantee the best all-around alue or the most satisfying shopping experience. For retailers this presents a strategic call to action: be more customer centric.

But becoming a customer-centric business means far more than simply reacting to consumer trends. Retailers need to understand the underlying changes, and then build on them. They need to learn more about their customers, deliver the experiences that today’s smart shoppers demand, and participate in the new forms of communication that consumers favour.”Retailers need to tailor their business to deliver service based on each customer’s profile,”says Klavs Skovgaard Lund, product manager at To-Increase. “This is known as dynamic adaptability. Providing the customer with timely, precise advice and service helps them to feel special, regardless of the product they’re buying. It’s important to position the store and products in a way that matches the customer perception of the whole buying experience.”

To do this retailers unquestionably need an effective customer relationship management (CRM) solution. “CRM is bringing back the personal touch to a customer’s retail experience,” says Ross Daniel, K3’s CRM strategy and business development manager. “The days of family-run retail outlets, with customers building personal relationships with retailers, are gone in mainstream retail. This is largely due to the complex nature of multi-channel retail and the consumer’s desire for choice, not only of the products they’re buying but the channel they purchase them through. CRM is providing a modern day, technical equivalent of this for consumers. It helps provide that personal touch by using information about a customer and their purchasing habits, creating a retail experience that feels personal.” “In an increasingly dynamic retail market, maintaining and building strong relationships with your customers is critical to business success,” adds Lund. “Not only this, but CRM is the premier factor between winning or losing a sale. More and more, CRM is evolving into a facilitator that both maintains and sustains customer relationships.”

However implementing a CRM solution isn’t without its challenges, as Marc Chriqui, president at Raymark, explains: “Although 86 per cent of retailers believe that building deeper relationships with customers is key to their success, 46 per cent cite their company’s efforts towards customer centricity as basic,” he says. “This means that, despite recognising the importance of having a strong customer focus, retailers are often uncertain how to implement and proceed with an effective CRM strategy.”

Commonly many retailers are held back because they are using siloed information from a number of different systems. “Retailers must continue to focus their attention on harmonising information across separate sales channels,” explains James Gurney, director of retail solutions at Ideaca Knowledge Services. “A recent Aberdeen survey of 100 retailers indicates that 74 per cent of multi-channel retail operations are characterised by separate and siloed channels. There is a strong business case for change as the majority of top performers who saw their basket size grow over 22 per cent, compared to an 8 per cent industry average, have attained some sort of cross-channel integration. “From a customer perspective, retail channels simply represent different service points in their shopping process with an expectation that they be met with a seamless experience,” Gurney continues. “Traditional CRM solutions geared towards business-to-business client interactions will not deliver such a seamless experience or solution to convert transactional data into actionable intelligence.” Javed Sikander, Microsoft’s solution architect for the retail industry, agrees with Gurney. “Retailers need to deliver personalized experiences to their customers across multiple channels, and they need to understand and connect the customer interactions across all touch points,” he says.

Henrik Salicath, corporate senior VP of sales at Columbus IT, also agrees: “From the first time a customer contacts you, a relationship is born,” he says. “Every time anyone in your organization speaks with that customer, regardless of the channel, they should know the entire background of that relationship. This can only be achieved with an integrated CRM system.”

The pictures and the insights gained from an integrated, customer-centric solution become the foundation for all of a retailer’s efforts to enhance customer centricity across the organisation and deliver the end-to-end, connected experiences that resonate with today’s shoppers. For example, with an end-to-end solution providing the backbone for an effective loyalty programme, retailers can provide a really differentiated experience that captures the attention of even the most frugal shoppers. “One of the essential concepts of customer centricity is to identify your best customers and provide them with opportunities to earn special benefits,” says Sikander. “For retailers, loyalty programmes play an important role in attracting new customers, retaining existing customers and supporting customers after they purchase products.”

Indeed customer loyalty is a key success factor in today’s retail business. “Loyal customers abide by theretailer’s organisation, will recommend it to friends and family, and are open to cross-selling and up-selling opportunities,” says Andreas Gerlach, senior developer at Wincor Nixdorf. “To recapture lost customers, on the other hand, is extremely expensive.”

In fact, Salicath says that it costs a retailer seven times as much to acquire a new customer as it does to keep an existing one. “With this in mind it makes sense to do everything you can to keep your customers, keep them happy, and keep them buying from you,” he says.

But what makes an effective loyalty solution? Sikander says that retailers need a loyalty solution that provides membership management, prepayment management and a membership portal with easy enrollment via different channels. “The portal must also allow easy integration with existing systems,” he explains. “The loyalty solution must provide multiple membership tiers and membership with card and cardless support. In addition, the solution needs to support configurable business rules for earning loyalty points, balance points, as well as recognising expiry dates of promotions and providing support for different redemption methods, including regular purchases, gift cards, and so on, from various channels. Furthermore, the solution must provide technology to collect customer information and break it down to meaningful analytics. This allows sales and marketing teams to better understand the customer and find ways to increase their patronage.”

Gurney says that leading retailers are extending loyalty programmes to add relevance to the customer experience by continually combining and segmenting customer groups, identifying the most profitable groups as well as those that can be shifted into higher profitability categories. “Consider Amazon or Zappos,” he says. “Using a tremendous amount of customer data based on past purchases and real-time product queries, both are able to deliver realtime, cross-selling opportunities, increasing wallet share.”

Clearly, achieving and maintaining a high level of customer loyalty pays. And, by adding clienteling into the mix, retailers can implement effective in-store and online strategies that can lead to unprecedented satisfaction for the customer and increased profitability for the retailer. “Clienteling is all about strengthening relationships with clients in specific ways that generate more frequent purchases,” Chriqui explains. “By tracking customers’ purchase history, retailers can be proactive in the way they serve them. Instead of waiting for customers to come to them, they can offer suggestions based on concrete facts about their preferences.”

Bryan Amaral, CEO at Retaligent, agrees, adding that when 80 per cent of a retailer’s business originates from the top 20 to 30 per cent of its customers, technologies that support improved communication, targeted selling and customised value propositions are integral to success. “Empowering the individual associate with mobile and POS-based clienteling solutions offers a proven way to increase productivity, achieve competitive differentiation and grow lifetime value with their best customers,” he explains. “Unlike most loyalty initiatives, clienteling promotes an ongoing learning relationship between customer and retailer that, over time, improves the shopping experience by using knowledge gained from each successive touch with the customer. As the relationship grows, that retailer is uniquely qualified to please the customer, further maximising their profits.”

Sikander also acknowledges the value of clienteling. “A clienteling solution enables the retailer to provide targeted customer information to the sales associate on the shop floor or online,” he explains. “The sales associate can then use this data to better connect with customers and enhance their overall shopping experience. By providing customer-centric data, clienteling helps the sales associate strengthen his or her relationships with customers by personalising the shopping experience and providing relevant product recommendations before, during and after the sale.”

Better marketing can also be achieved with an integrated CRM solution. Instead of using a generic marketing strategy, retailers must be able to create customer-focused campaigns based on customer segmentation and buying behaviour, and then deliver campaigns by using the customer’s preferred method of communication. “Customers today do not buy individual products,” Sikander argues. “Instead, they buy complete solutions and experiences. From a marketing perspective it is critical that retailers provide their customers with a view of the complete solution, related products, well designed assortments and promotions based on the combined purchase.” “An intelligent CRM solution incorporates the ‘who’, ‘what’, ‘where’, ‘when’ and ‘why’ of customer behaviour and converts this information into suggestive marketing,” adds Chriqui. “Once the rules are established and plugged into the solution, data is inputted into the CRM and the solution cross-references it, producing substantiated suggestions on target markets, cross-selling, up-selling, promotional campaigns and appropriate channels for reaching customers, even automating these suggestions if the retailer so desires.”

Gerlach concurs: “The key to success in the future is the ability to move away from mass marketing toward consistent customer orientation by obeying individual customer needs and requirements. This strategic realignment must be easy to manage however and fast to implement. Thereby it is vital to use different channels and methods, to combine them and provide consistent and stringent programs that offer unique customer-specific advantages.”

It certainly seems that marketing is moving from its classic one-way push model to a two-way interactive customer conversation. With the new and emerging digital channels, marketers have a wide array of opportunities and tools to engage customers in a relevant and valuable way. Retailers can also use social media to listen to customers so that they can better understand, analyse and respond to their needs. “Social networks represent a new channel for interacting with shoppers,” Sikander says. “By staying aware of conversations about their own brand as well as their competitors, retailers have the opportunity to engage with individuals to resolve complaints and perhaps convert dissatisfied shoppers into new customers. Beyond this, social media can be used to actively involve consumers in product design or finetuning future marketing campaigns. For these and other reasons, it makes sense for retailers to include social media in their marketing plans.”

Positive and encouraging feedback on social media outlets is much more beneficial and effective than traditional advertising. Retailers are using social media to listen to their customers, foster new ideas, and validate new product or service concepts. Effective social media tools are allowing these retailers to understand the needs of their customers across blogs, Facebook pages, Twitter posts and so on. By combining traditional CRM capabilities with social media tools, they can listen to, participate in and analyse the conversations of their customers.

All of the aforementioned elements of an effective CRM solution may sound like a huge amount for retailers to get their heads around, but in fact these capabilities can be acquired from solutions built on Microsoft Dynamics CRM. “With ‘Connected Customer Centricity’ solutions, Microsoft and its partners provide retail-specific capabilities that enable retailers to develop long-term loyalty, differentiate their brands and exploit the technology innovations,” explains Sikander. “Dynamics CRM provides the platform for retailers to manage their customer relationships and get a 360-degree view of their customers. Solutions for loyalty, clienteling and marketing built on Dynamics CRM offer powerful, flexible, end-to-end capabilities for retailers who are striving to make their businesses more customer centric.

Forrester research has praised Microsoft Dynamics CRM in a recent report, giving it high marks for ease of use and fast deployment times. “Although many CRM technology projects were deferred or cancelled in 2009, our latest research spotlights that organisations of all sizes are now investing again to improve the customer management capabilities they’ve neglected during the past 18 months. If you are a business process leader in a large organisation, you’re challenged to pick the best CRM solution to enable your company to capitalise on the upturn,” says William Band, vice president and principal analyst, Forrester Research, in the report. “Microsoft Dynamics CRM shines by offering flexibility for large and mid-sized organisations. As a result, Microsoft is pursuing its strategy for penetrating the CRM market through offering buyers the ‘Power of Choice’ so that companies may choose how to deploy, how to pay and how to use the application.”

With solutions like this in place, retailers undoubtedly have an advantage. “Those with CRM solutions are able to provide a personal service across all channels, and ultimately know, engage with and serve customers better,” says Martin Chitty, director at Charteris. “Not only this, but CRM provides the ability to increase traffic by bringing more customers into the store, increasing conversion by getting customers to feature Customer centricity buy today, and increasing transaction size by getting customers to buy more.”

Russell Dorset, sales and marketing director at Maginus, agrees: “CRM allows every retailer to move away from treating all customers exactly the same, to treating each customer as being unique. With CRM, retailers can identify how best to communicate with customers. For example, a customer in their early twenties would probably prefer to receive communications by e-mail or text, while a customer in their seventies might prefer communication by post. It also gives retailers the opportunity to promote different products and offer special offers to their best customers where appropriate. Ultimately, CRM helps retailers to improve customer service, lower the costs of marketing and increase conversion rates.”

Truly understanding their customers and how to reach them is what will separate successful retailers from those who neglect to invest in fostering relationships. Those who view CRM as a ‘nice to have’ will suffer as their messages get lost among those that are truly reaching a captive audience. “Those who get it right are identifying their customers, identifying their needs and expectations, and acting on them,” says Daniel. “Many of these retailers have a fundamental customer-centric strategy and have changed their business processes to meet the ever-changing needs of the consumer that drives the bottom line, ultimately making them more successful than their competitors. The large supermarkets haven’t got to where they are today by selling the highest quality goods but by convincing their customers to return time after time with quality service and offers that are relevant to them.”

Sikander concludes that as time goes on the need for customer centricity will only increase. “While the focus on customers has been the key ingredient of a successful retail strategy for years, it’s only now we see the technology innovations that provide a platform to truly benefit from it,” he says. “The future of retail is dependent on how customer centric they become.”
View the article as a PDF as it appears on page 37 of the Spring Edition of SPEAK Magazine