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06/07/2017

CRM: From Transactional Technology to Innovation Enabler

Not so long ago, going shopping was a leisure activity, often undertaken without a specific goal in mind. Today, shopping is more work than play. In fact, 40 percent call it a chore and 32 percent of respondents in a Capgemini global survey said they would prefer to stay home and wash dishes.

Consumers are still going to stores because they believe that stores have a role in their lives — be it touching, tasting or toting something home. Despite the rise of e-commerce sales, and with web-based product research at an all-time high, customers who walk into stores are clearly seeking something above and beyond what they can experience online — or even what they are currently experiencing in the store. Yes, consumers are growing increasingly frustrated with the in-store experience.

Brick-and-mortar retailers must do a better job of utilizing their customer data to create more personalized, localized and contextually relevant in-store experiences. Most retailers have some form of customer relationship management (CRM) software. The question is, how best to put it to use?

CRM at the center of customer-centricity
Transitioning from a Rolodex to having a client's details, buying history as well as social likes/dislikes, interests on Pinterest, etc. in a database that's accessible to the marketing department should be a game changer for retailers. By leveraging marketing, sales and big data capabilities, companies can now develop highly personalized client relationships — increasing customer loyalty, retention and, ultimately, the store's bottom line.

In our customer-centric view, retailers need to look closely at their capabilities in three areas:
  • Personalized digital wallets and automated promotions. The number of solutions that might be brought together to personalize in-store experiences is a challenge for many retailers. For example, promotions management and promotional execution systems must be integrated so that the promos sent to the POS system are also being shared with online channels. These will need to integrate with the CRM system where in-store Wi-Fi enables associates to access mobile POS and customer profiles on their tablets (see "How to Build Loyalty via Personalization Not Points" for more information on this topic).
  • Marketing automation. In its simplest form, marketing automation is a straightforward way to send emails. When combined with the structured data resident in your CRM system, and unstructured data, it's a powerful tool that enables hyper-personalization. You can begin to curate your customers' social media information and go beyond simply customizing by recipient's name by sharing specific products, product images and discount levels, and offering unique incentives based on what the retailer anticipates will match the look that their clients are after.

    The right analytics and insights capabilities — both in terms of people and technology — will help retailers create campaigns that are less about discounts and more about building a kind of human loyalty based on what's relevant to the individual's tastes and aspirations. 
  • Experience management. The digital and physical worlds are colliding as retailers experiment with technologies such as digital signage or beacons. The challenge is to approach these projects as integrated efforts to drive new and measurable business value, as opposed to one-off point solutions. A cloud platform approach combined with CRM systems can help ensure these technologies are nimble enough to keep up with the marketer's creativity.
CRM platforms bring all these capabilities together by enabling you to automate the incentives you offer based on where they are, what they've purchased, etc. In the example above, adding a curbside pickup option, or sommelier-matched wines and pints of gourmet ice cream based on previous buying history will increase the average per-ticket value. These incentives can be timed and automated in the marketing tool, and new transaction options added, to create more personalized, localized and meaningfully relevant experiences to delight customers.

New ways brick-and-mortar retailers are engaging customers
Brick-and-mortar retailers of all types are creating more branded and holistic approaches to engaging shoppers. You can cast a rod at Bass Pro Shops, climb a rock wall at Dick's Sporting Goods, or take a yoga class at lululemon. At Nordstrom-owned Trunk Club and many small or luxury boutiques in cities everywhere, stylist appointments are made and the wine flows freely all day. Whether you want to sharpen your knife skills, learn to cook or how to caulk, Sur Le Table, William-Sonoma and Home Depot host classes on a regular basis.

These one-to-one, human interactions at the store level matter more than ever before. In our survey, 57 percent of consumers want retailers to offer more than simply products for sale, and for them to provide social spaces, learning experiences and inspiration. Emphasizing great (and personalized) service is the winning combination for some retailers, and Amazon is pushing the boundaries in this area.

With the pilot of Amazon Go, Amazon is testing frictionless commerce. As customers enter the store, they open the store's mobile app while sensors, video cameras and artificial intelligence are deployed to track and record shoppers' movements, interests and eventual selections. Shoppers then simply walk out of the store with their selections, and a charge is made to their linked payment method. As Amazon is increasingly a more formidable competitor for all retail formats, retailers must determine how they will leverage their physical advantages to fight back.

CRM's role in maximizing innovation spend
Nucleus Research has concluded that, on average, investment returns for CRM systems range from $5.60 to $8.71 for every dollar spent. However, if companies fail to properly educate employees on how to use the CRM, then the entire tool becomes little more than an expensive filing system.

Where once the CRM was focused on the data inside the company, today's CRMs need to incorporate data, both structured and unstructured, from outside the organization. Customers might create “unboxing" videos about your products or use your brand as a hashtag to show off their new purchases on Instagram. Without the right solution, this valuable data can go unseen and unused.

The modernization and evolution of CRMs allows companies to see and act at the intersection of the data and experience, applying the context of customer engagement to create delightful in-store experiences. A modern CRM is an essential element in having the ability to test and iterate programs to achieve customer delight.

Unfortunately, many retailers are tied to legacy point of sale (POS) systems that are expensive to maintain and not easy to replace. POS is one of a handful of systems that substantially hampers customers in the store and creates poor customer experiences. Yet it is this rich POS data that, when connected to a CRM, gives retailers more context about their customers.

Moving to a CRM in the cloud opens up a new world of possibilities. The cloud offers greater efficiency with data storage and access, plus the effectiveness to be able to experiment. With a cloud-based system, it is significantly easier to identify interconnecting components, and then just as easy to innovate on top of them. Updates no longer are an event. They are intuitive and just happen.

Deploying in the cloud makes it possible to quickly try and test different things, such as facial recognition technology, a chatbot, or beacon-based offers. You deploy them quickly, see what customers are responding to, then adjust. You find the services that help you connect with your customers, and you commercialize those throughout your business. In short, you are flexible and frugal, and you get results.

The time to try
Innovation is less about the ROI of an individual transaction and more about acquiring new customers with a high lifetime value. That fits, because most CRMs are also heavily used for customer retention, not just for transactional acquisitions. Thinking of CRM as a single technology is shortchanging your business. CRM is a capability that should be developed and enhanced.

We often see some of today's more innovative companies working with a mash-up of apps and systems that seem to have grown haphazardly. But these are no glimpses into chaos. On the contrary, it is this ability to pivot, to think in new ways and to place multiple, small bets on new ways of delighting the customer that makes these companies leaders. They bring shoppers back to their stores and bring changes to the industry. And that's certainly more satisfying work than washing dishes.


Lynn Lang is consumer products, retail and distribution leader for Canada at Capgemini, a global provider of consulting, technology and outsourcing services.