The office supplies retailer say it sacrificed some sales to improve online profitability. It also redesigned its business-facing e-commerce site, StaplesAdvantage.com.
Most Top 500 e-retailers keep customer relationship management in-house.
Online jeweler Allurez.com, which launched in 2010, still keeps its customer relationship management in-house, with data often organized via Excel spreadsheets and Google Docs. “We feel that in order to truly and fully serve our customers to the best of our ability that we need our customer relations team in the middle of everything,” says a company official.
A main reason for not hiring an outside firm to manage customer data is that Allurez.com wants to tailor its interactions with customers based on their shopping history and preferences—something better handled in-house, according to the retailer.
That kind of personalization getting more challenging as consumers use more channels to shop, the official says. “We have the typical phone lines, e-mails and live chat of yesteryear, but as our company grows and our presence expands, our customers no longer necessarily go directly to our site, e-mail or phone,” he says. “Instead they can contact us through our various social media platforms like Facebook, Twitter, Instagram and Pinterest. We have full-time reps dealing with our social media platforms, a team on the phones taking and making calls, and an upper management staff that came from a customer relations background so they understand the importance and value that needs to be placed on CRM.”
Allurez.com has 23 employees. The company would not reveal sales figures but says it is on track to increase revenue 50% this year over 2013. A much larger retailer, Gap Inc., No. 19 in the 2014 Internet Retailer Top 500 Guide, provides another example of an e-retailer going it alone on CRM. The chain declines to comment specifically about its system, but in its 2014 investor day presentations to Wall Street analysts in April, the apparel seller shed light on its motivation.
“We are leaders in bridging our physical stores with our innovative digital technology to make our customers’ shopping experience convenient,” Art Peck, the chain’s president of growth, innovation and digital, told analysts. He credits that success in part to Gap generally developing its e-commerce technology in-house. According to data from Top500Guide.com, Gap handles internally such systems as content management, customer relationship management, fulfillment and order management rather than farming them out to vendors. “Our technology is our own and it gives us the speed, scalability and flexibility to design customer experiences across channels,” Peck said.
And Gap and Allurez are hardly outliers.
According to Top500Guide.com, 331 web merchants—66.2%—included in the newly published Internet Retailer 2014 Top 500 Guide report handling CRM on their own. That’s down only slightly from the previous year, when 67.6% of retailers kept customer data management in-house. Moreover, 70% of the Top 100 retailers as ranked by annual web sales in this year’s guide report handling CRM internally. That compares with 2% of the bottom 100, that is, retailers ranked Nos. 401 to 500.
In the 2013 Second 500 Guide, covering the next tier of retailers, 161—32.2%—said they handled customer relationship management in-house. That compares with 28.6% that said the same for the previous year’s edition. (The list of retailers changes with each year’s guide, but the rankings and associated data give an overview of trends for each tier of web merchants.)
So what besides the trust that retailers place in their own abilities drives merchants to keep CRM in-house? Part of it stems from frustration with existing customer data systems on the market, says Loretta Jones, vice president of marketing at CRM services provider Insightly.
(The July issue of Internet Retailer magazine will feature a survey about e-commerce technology trends. Please click to take part in the short survey.)
“A common complaint is that [retailers] are only using 50% of a system,” she says. That suggests that some CRM technology and services are too big or complicated for some retailers’ needs, or that some retailers don’t know what to do with all the data-analysis tools. Another possibility—this one expressed by open-source e-commerce platform provider Spree Commerce CEO Sean Schofield—is that some CRM systems focus more on offline and online sales leads than, say, tracking how online consumers shop and then integrating that data into marketing, merchandising and fulfillment. In short, such systems are not giving e-retailers the mix of tools and services they want.
That might be changing.Earlier this year, for instance, privately held e-commerce technology and services provider SugarCRM Inc. reported its 2013 sales increased 75% over 2012 thanks to customer gains and a rising demand for CRM applications. U.S-based SugarCRM is also riding on a $40 million wave of venture capital it acquired last summer via a funding round led by investment banking firm Goldman Sachs & Co., bringing its total venture capital to more than $116 million.
In November the company launched the latest version of its CRM technology, introducing the “Sugar UX” application interface, which the company says makes it easier to create custom reports for use across smartphones, tablets, laptops and PCs. The new version also is designed to access a wider range of customer data, from purchasing history to activity across social media and data pulled from such external databases as company reports compiled by research firm Dunn & Bradstreet. Pricing for SugarCRM ranges from $35 to $150 per user per month, billed annually, based on the amount of data storage and other features and levels of technical support.
For more information about CRM trends—including the varied definitions that experts attach to “customer relationship management”—check out the new issue of Internet Retailer magazine.