Chad Ghosn joins the online furniture retailer from Expedia.
Sometimes knowing who the customer is is the biggest CRM challenge. E-mail newsletters and discounts are a good way to start small.
One of the toughest aspects of implementing a customer relationship management program is obtaining the very information that makes CRM work-the customer’s personal information. Many consumers are reluctant to reveal personal data without a good reason and most retailers are cautious about invading a customer’s personal privacy.
But the web has changed that process. Today, retailers are building up impressive customer databases that they then use to pitch personalized products to customers-and they’re doing so by the simple means of soliciting e-mail addresses. Illuminations.com Inc., for instance, has 2 million customers’ e-mail addresses in its database and it communicates with several hundred thousand of them weekly. One of the most effective ways it gathers e-mail addresses is to slip store receipts into a brochure advertising the Candlelight Club. The brochure urges customers to go online and register for the club with their e-mail addresses. “The response rate has been substantially higher than we had hoped, and it’s driving new business,” Clay Lingo, director of direct channel sales and operations, says.
There’s no doubt that CRM continues to be important to retailers. In fact, Jupiter Research Inc. reports that CRM spending by retailers will nearly double from $1.7 billion last year to $3.2 billion in 2006. Retailers struggle with how to populate those CRM databases with usable and current data. The problem: “For the most part, retailers are dealing with anonymous customers in the stores,” says Don C. Peterson, president and CEO of Edina, Minn.-based NetPerceptions Inc., which markets analytics-based CRM software to retailers and others.
A lot of back-end work
Thus the approach that multi-channel retailers like Illuminations takes. Illuminations operates 84 stores and mails several hundred thousand catalogs a year, in addition to operating its web site. Like other direct marketers who sell through catalogs, Illuminations can identify its catalog customers and knows how they shop and what they buy. But that’s not true at the store, where a customer could have bought from the web site already, or from the catalog or store or could be a new customer altogether.
And so Illuminations tries to identify customers, then pitches targeted offers to get them back into the store or to become a multi-channel customer. Customers who sign up for Illuminations’ Candlelight Club receive an e-mail immediately offering a discount good at the web site, on the phone and in the store. “The open rates and the click-through rates are very good,” Lingo says.
Illuminations plans to use the Candlelight Club, which it launched this year, to forge a tighter bond between the customer and Illuminations by sending periodic e-mails with decorating ideas, signing up the customer for the Illuminations catalog, providing advance notice of new items, sales and special events and creating seasonal specials just for Candlelight Club members.
Once the relationship is established, Illuminations tracks what the customer buys and then sends personalized e-mails. “We do a lot of back-end work to look at what customers are buying, then we target them very precisely, even down to what scent they like,” Lingo says.
Illuminations, which employs Yesmail Inc. to manage its e-mail database and mailings and Return Path Inc. to manage e-mail changes of address, does nothing special to encourage store associates to ask for e-mail addresses at the point of sale, Lingo says. Rather, it simply sets the expectation that asking is part of an associate’s job. Corporate managers do, however, encourage division managers in weekly conference calls to get the word to store personnel to gather the addresses and the company publishes a periodic newsletter in which it lists the 10 most and 10 least successful retail stores in getting e-mail addresses.
E-mails are a simple although effective way to create the first steps of a CRM program. “You can start small and pick an application to get started with,” Peterson says. “The simplest tends to be e-mail because it doesn’t involve a lot of integration with the call center and the web site.”
Brylane L.P., which operates nine web sites and catalogs, also is starting its web-based CRM initiative with e-mail. But while Illuminations is undertaking its CRM program from a marketing perspective, Brylane’s is coming from a customer service perspective. “To be successful we need to give the customer the greatest information we can,” says Gary Kazmer, senior vice president of customer relations of Brylane. “Our goal is to cut down the number of non-order phone calls and e-mails coming in.”
Brylane, whose brands include Chadwick’s of Boston, Lerner Catalog, Lane Bryant Catalog, King Size Direct, Brylane Home and Brylane Kitchen, is taking a very deliberate approach to its CRM program. The company set out four months ago to identify a starting point. “We used analytical data to determine exactly what we were going to go after,” Kazmer says. “In a down economy, new customers are hard to come by. We wanted to put something together to reward our best customers and make sure that whatever we did was measurable.”
Brylane has operated a call center-based CRM program from NetPerceptions since the middle of this year. It features a special 800 number for preferred customers and those calls get priority in the calling queue. When they answer the calls, call center reps tell the customers they are preferred customers. Brylane also is testing special offers to preferred customers, such a free shipping, free returns and discounts. The company is still testing offers and methods to determine which work best, Kazmer says. Brylane is independent of the Lane Bryant chain of stores.