CRM in Retailing - Indian Perspective

- By Mujib-ur Rahman * Page - 1 With the passage of time, the characteristics and the number of activities in retailing as well as approaches to manage customer relationship in retail sector have changed across the globe, including India. CRM has emerged as the latest buzzword in retailing,

especially in organized retail sector, and an important tool to enhance retailer performance. But, before understanding CRM in this sector, one must know the dynamic retailing scenario in India. Retailing in India The retailing industry has been present in our country through history and is considered as one of the largest sectors in the Indian economy, contributing to around 14% to the GDP, and employing around 7% of the total population.. For decades, retailing in India has been highly fragmented, i.e., unorganized, due to the presence of huge number of small mom-n-pop stores. As per Images F&R Research 'India Retail Report 2007', organized retailing in India accounts for 4.6% (Rs. 55,000 Crores or $ 12.4 Billion) of Rs. 120,000 Crores or $ 270 Billion retail market with an expected 40% plus annual growth rate, and is expected to grow to Rs. 2,00,000 Crores, i.e., $ 45 Billion by 2010. During the period 2005- 2006, the leading retailers' sales growth was 50-100%. While retailing industry is present for centuries, it is only in the recent times that it has witnessed so much dynamism and corporate attention. It is the latest bandwagon that has witnessed hordes of big players like TATA, Birla, Reliance, Pantaloon Group, etc., leaping into it. The entry of big players in retailing has caused a major revolution in its marketing strategies and innovations. Now retail sector, being considered as the most dynamic and attractive sector in India, is going through a transition phase. For a long time, the corner grocery store was the only choice available to the consumer. This is slowly giving way to international formats of retailing. The traditional food and grocery segment has seen the emergence of hypermarkets / supermarkets / grocery chains (FoodWorld, Subhiksha, Apna Bazaar, Big Bazaar, etc.) and fast food chains (McDonalds, Dominos, etc.). However, it is in the non-food segment that the foray has been made into a variety of new areas. These include Lifesyle / Fashion segments (Westside, Shoppers' Stop, Lifestyle, Koutons, etc.), Books / Music / Gifts (Archies', Music World, etc.), Appliance & Consumer Durables (Vivek's, Vasant & Co., etc), Drugs & Pharmacy (Health & Glow, Apollo, etc.).

What is CRM? For a long time, marketers implemented their 4Ps strategy to attract and satisfy their target customers. But post-liberalization, the highly competitive and dynamic business

environment has forced the businesses to think not only to attract but also to retain their customers, especially profitable ones. This approach of businesses to build, and maintain one-to-one life-long relationship with their large number of customers has led to the emergence of a new term CRM, which stands for Customer Relationship Management. This change in perspective is also supported by research findings that it costs up to 6-8 times more to attract a new customer than to retain an existing

customer (Gruen, 1997). Moreover, studies have shown that a small proportion of the customer base (20% or less) accounts for more than 70-80% of firm's revenues and profits. CRM, as concept, according to Scoot Fletcher, started gaining prominence in early 1997, and emerged as a management buzz and a topic of interest among business firms, media, software vendors, management gurus and academic institutions. In words of Parvatiyar and Seth (2001), "CRM is a comprehensive strategy and process of acquiring, retaining, and partnering with selective customers to create superior value for the company and the customer." It is a process or methodology used to learn more about customers' needs and behaviors in order to develop stronger relationships with them. Greenleaf and Winer (2002) have explained CRM as, "Customer Relationship Management is a business strategy to select and manage customers to optimize long-term value." CRM is a business approach that integrates people, processes, and technology to maximize the relations of an organization with all types of customers. CRM in Retailing Levy and Weitz, authors of "Retailing Management", define CRM as, "A business philosophy and set of strategies, programs, and systems that focuses on identifying and building loyalty with a retailer's profitable customers." It is based on the business philosophy that all customers are not profitable in the same way and retailers' can increase their profitability by building relationships with their better customers. The goal is to develop a base of loyal customers who patronize the retailer frequently.

CRM in Retailing - Indian Perspective

- By Mujib-ur Rahman * Previous Page - 3 CRM is an iterative process that turns customer data into customer loyalty through four sequential activities shown in the CRM Model (Exhibit 1).

Exhibit 1: CRM Model CRM is quite a new phenomenon in retailing industry. It is only big retailers who have installed CRM systems to identify and track customer purchases and take appropriate management decisions, especially on managing customer relationships. Now, organized retailers like Big Bazaar, Westside, Shoppers' Stop, etc., have started concentrating on providing more value to their valuable customers using targeted promotions and services to increase their share of wallet, i.e., the percentage of the customers' purchases made from these retailers with these customers. Almost all of them have started Loyalty Programs, i.e., frequent shoppers program in order to reward the existing customers. These programs help the retailers in increasing the number of footfalls as well as enhancing their sales revenues and profits. For example, Shoppers' Stop, one of the leading apparel retailer in India, had net sales of Rs. 1.6 Billion, increasing net profits by 96% with the company's loyalty program, First Citizen Club (a CRM program) accounting for 63% of the sales. (Source: Economic Times, August 12, 2006). Conclusion This is to conclude that the organized retailing in India is progressing towards a tough competitive environment where only those retailers would survive who can understand their customers and develop a strong bond with them by developing and implementing appropriate CRM strategies and programs effectively. In the time to come, CRM is going to be the most dominant marketing tool to enhance the overall retailer performance.

Retail and CRM prove Good Partners for Success!!!!

A look at most industries will show that each of them in turn are doing their own little bit towards understanding the importance of customer focus. What is the retail industry doing on its part? What efforts are they making to interact with their customers? Several retailers have endeavored to add that extra personal touch and several more have not. The need for focusing a whole lot more on the customer has been acutely felt by them and they have tried to accommodate it. The past few years has witnessed a strong upsurge in the number of retailers looking for a lifetime strategy that will cater to their customer requirements. What have they come up with? Most of them have seen that the need of the moment is a customer strategy that caters to lifetime responsibilities. As a result they have turned to a customer strategy - CRM retail software to fulfill those needs. Let's take a look at some of the ways in which retailers have sought to hang onto their most valuable customers prior to employing CRM:

Offering workshops and classes wherein the customer can have a hands on learning

experience Offering repeated demonstrations Mailbox offerings catered to suit the individual customer Offering the chance to try before you buy Maintaining the line of communication with the customer Encouraging customer feedback and making sure that it is paid attention to Providing customers with a chance to share their experiences with other customers Treating their customers as friends not as mere customers Little unique gifts and customized mailbox offers ensures that their best customers keep coming back.

All this is magnificent, but the added edge is what is needed. It is the extra touch that has proved so necessary and that serves as the edge over the competitor. Why should retailers opt for CRM? What does it offer the retail industry? Probably the most important advantage CRM has over all other customer strategies is its lifetime approach. CRM is not for a mere single transaction. The benefits of CRM technology extend over a lifetime and deal with the customer relationship for that entire period. Retailers experience a vast difference when they treat their customers as a partner. This serves to basically improve the entire supply chain. The wholesaler as well benefits when the retail industry maintains and sustains a good relationship with the customer. Another factor that contributed to CRM success in the retail industry is the failure of enterprise resource (ERP) systems in lending the competitive edge that is needed. CRM retail software encourages good marketing which includes the usage of CRM software as a means of collecting and managing customer information, using that information to segment your market and basically endeavoring to do so, on the basis of this collated information. It means using a CRM product to collect and manage customer intelligence to segment your database by common interests, purchasing history, demographics and other relevant customer information. CRM enables retailers to address the right information to the most appropriate customer segment. It helps the retail industry to send personalized messages to each customer with information catered to his likes. CRM helps retailers take their customers successfully through the sales and marketing process. Why opt for CRM? Market analysts dispute the correct figure but all are of the opinion that companies will pour billions of dollars into the CRM industry. This is because of its ability to maneuver customer relationships in the direction of profitability. The philosophy behind adopting retail CRM - the way the retail industry treats its customers influences future profitability. Net result? Companies are making bigger investments in CRM solutions. Retail CRM serves to support marketing, sales, and service processes involved in the business. CRM causes changes in the organization and the business work processes. CRM helps achieve a way of managing customer relationships in a better manner. Partner Relationship Management is yet another

offshoot of CRM projects. It serves to support channel partners and all other channels as well between an enterprise and its end customers. What's new in the retail industry? eCRM that basically serves to allow organizations to interact with their customers via the corporate Websites CRM Retail Software Benefits:

targeting prospects acquiring new customers campaign management lead distribution long-term relationship value effective selling processes forecasting transactions done at the lowest cost better service and handling post-sales service support issues with call center

Useful Tips for the Retail Industry employing CRM :

don't back off at the first problem defined the project plan involve the right people choose appropriate technology train new employees maintain system support give them an easy way to get answers

The Bottom Line? Retailers need CRM!!! There is no disputing the fact that this is one strategy the retail industry cannot afford to gloss over. The rewards are huge and need to be availed of if one wants to succeed in a competitive business world.

CASE STUDY:http://loyaltysquare.com/shoppers_stop.php http://www.computerworld.in/articles/shopp ers-stop-earns-customer-loyalty-projectdrishti#

http://books.google.co.in/books?id=vI7RRngD aZcC&pg=PA173&lpg=PA173&dq=crm+case+st udy+of+shoppers+stop&source=bl&ots=X0Z_ mnF_Rs&sig=kmr85rE27dWj3z850NqtNrmsZQ&hl=en&ei=1_VpTvy5O4TMrQeRzM m2BQ&sa=X&oi=book_result&ct=result&resn um=2&ved=0CCkQ6AEwAQ#v=onepage&q&f= false http://www.slideshare.net/argali/whitepaper -crm-in-retail-retail-management-solutions

http://www.slideshare.net/leoting/crm-bestpractices-for-luxury-retail-v10-final http://www.slideshare.net/amit1nayak/CRMin-Retail-Industry http://www.slideshare.net/sandy.0485/crmin-retail