Is CRM a panacea?

CRM is often seen as a panacea for slow sales - especially in difficult economic times.  However, the experience shows that CRM only works for some retail formulas and does little for the others.

 

Let's assume for a moment that CRM would work well in your business; the key question immediately arises: how to do it right?

 

There are vendors on the market who will gladly sell you a CRM system.  What they are not telling you is that - in order to work - such a system must exchange a massive volume of data with your transactional system.  Customer information is of practically no value unless it is fully cross-referenced with sale transactions.  Each sale made to a specific customer must be linked to the customer's record in the CRM database.  So if you put in place a separate customer database, you will either need to regularly export gigabytes of sale transactions to your CRM database, or you will need to import customer information to your main transactional system -  otherwise, analysis of the sales baskets will not be possible.  Add to this the cost of the separate CRM system, and you end up with a real lemon.

 

Recognising the inadequacy of such fragmented solutions, Retail Directions decided to incorporate customer and loyalty functionality into our main stream retail management system.  Today, customers such as The Body Shop and GNC use our loyalty system with excellent results and at minimal cost.  By a simple scan of a customer's card at any time during a sale transaction, the system links the sale with the customer, applies any promotional deals that are valid for the customer and manages loyalty entitlements.  The data is immediately available for analysis and various promotional offers can be constructed.

 

For example, a customer who regularly buys shampoos but who has never bought conditioner may be mailed an offer: present this letter within the next 30 days, buy a conditioner and get 20% discount.  The retailer can then set up a promotion that is activated by scanning a bar code on the letter.  All automatic, without any staff training, data file transfers or cumbersome manual procedures.

 

Whilst not every retailer uses the Retail Directions system, the principle remains the same: if you are looking for a CRM solution, make sure it is an integral part of your mainstream system.

© Retail Directions 2009

 

- RD Consulting Team (19 May 2009)