PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
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“CRM is a business strategy, not a technology-that’s been a trap for CRM,” Sarner says. “A lot of companies have picked vendors to implement CRM without getting into why they are doing it in the first place. That can wind up simply automating bad business processes.”
Before defining what they want out of a CRM program, retailers should start by being clear on what CRM is and exactly how it works to deliver bottom-line results. Gartner and others frame it as two connected environments: operational CRM, which covers data collection and other functions at all the consumer touch points including the web, call center and others; and analytic CRM, which is back-end analysis, reporting and direct marketing to support the touch points. Critical data flow between the two environments.
Front to back
CRM works on the operational front end, for example, to collect information that marketers on the back end are interested in capturing-and vice versa. “It works with the analytic back end to push what the marketers have found out to the point of customer contact, such as, for example, the type of banner ads I want to pop up when certain types of people order certain things on a web site,” says Steve Schultz, executive vice president for client solutions at CRM consulting firm Quaero Corp.
Retailers have spent a lot of cash over the last few years for the 360-degree view and channel integration. But many until recently have maintained channels separately, with separate organizations carved out as separate business lines managed by separate managers. “It’s only in the last year it’s started to be integrated,” Pagon says. “They’re now looking at the different channels as different touch points, and they don’t care what touch point you come through, but they want to be able to connect those interactions, leverage and learn from them and ultimately deliver a better customer experience.”
Brulant’s client Sears Optical, for example, a brand operated by Cole National Corp.’s Cole Vision Group, learned about customers’ cross-channel preferences in focus groups. Then it pushed those learnings out to its web site. The goal was to provide better customer service based on feedback from shoppers; the result was an increase of 152% in sales of contact lenses, the only item sold on the site, within a few weeks of making those customer-driven changes.
The focus groups found that a significant number of Sears Optical’s customer audience, women aged 30-45, preferred to re-order prescription contact lenses online rather than going back to a store. “The biggest thing we did was to apply some traditional merchandising principles to the web site,” Pagon says. “We put certain offers in the upper right corner of the page so customers would see them first thing, similar to the way most people turn right on entering a physical store.”
The leverage points
The home page redesign also put some business intelligence behind reprioritizing how it presented features, based on focus group input about what customers would be most interested in seeing when they visited the site. “It was all about how to enhance customer service so as to sell more, so it started with how to use CRM to do that,” Pagon says. “There was a dramatic impact just by vectoring in what the highest points of leverage were and using them.”
For others, the issue is not collecting data but the sheer volume of collected customer data, which challenges marketers to make sense of the data. “In many cases, there is too much information and not enough time spent by people trying to figure out what to do with it,” says Paul Kowal, founder of technology consulting firm Kowal Associates. “I rarely go into a contact center and see a system pop up to the rep something to suggest to a particular customer, or offer the rep something to thank the customer when the customer’s last order was three times the size of their average order,” he says.
Yet another issue in pushing multi-channel CRM data out to the point of sale has to do with Internet connectivity where some 97% of retail sales occur: in stores. Many retailers now employ systems that dial the stores at night to collect batched information. Some systems can bring up information at the point of sale, but it’s generally about transactions, not customers. “If I can have just a few data points, I can do lots of interesting things at the POS, but to do that I need a richer interface, which requires higher bandwidth connectivity to the stores. But these things are big hurdles in an environment where capital is scarce, “ notes Pagon.
Yet, Nordstrom Inc. is reportedly testing a version of that scenario in a tech-supported version of retail CRM called clienteling. “The idea is to use technology to get customer information from all the different channels to be used by the associate at the point of sale to manage the customer relationship better,” Sarner says. Using those data, the associate might be able to check purchase history against ongoing campaigns and make the shopper a promotional offer in the store, for example, or send out an e-mail targeting best customers with a relevant offer.
The power of potentially pulling all this information together so the salesperson can actually sell is a huge opportunity, Sarner says. “This would work in a service oriented or boutique environment like a Nordstrom or a Williams-Sonoma,” he says. “It’s less appropriate for Wal-Mart where self-service and kiosks might be more appropriate. The retailer’s value proposition is going to determine the clienteling strategy.”