Technology Initiatives: Clienteling: Retailers Get Up Close and Personal with Customers

A man searches frantically for a size medium cashmere sweater for his wife's birthday, but can only find extra-smalls. An executive plans to shop online for shoes as soon as she gets home from buying a designer jacket, not realizing the exact pair she needs are footsteps away. A busy mom shopping for back-to-school clothes takes one look at the mile-long line and walks out.

What do all these individuals have in common, besides being frustrated shoppers? They're all potential customers who left a store empty-handed because of a lack of personal attention.

While the scenarios are familiar, they don't have to represent the status quo. New affordable information technology packages are turning missed sales into solid profits for more apparel players. And the solutions aren't just for the big guys. With customer service seen as the only remaining battlefront where independents and specialty stores can compete against the retail giants, these tools may be the smartest weapons smaller apparel retailers can add to their arsenal.

"People used to think it was all about the location, then the assortment," says Monte Zweben, CEO and founder of San Mateo, CA-based Blue Martini Software, which specializes in solutions to boost customer loyalty. "Now they recognize it's all about the customer. If you don't have the volume of the Wal-Marts and the Targets, it's going to be tough to compete on price. And if you have the same designers and merchandise as the guy down the block, what's going to make somebody come into your store?"

Trend is toward targeted contacts
A key goal is to match the right offer with the customer, based on his or her buying history, says Charles Riess, managing director of consulting and information solutions for American Express Tax and Business Services (TBS).

"Sending out a generic sales announcement is very different from telling a customer: 'You were in our store two weeks ago and purchased a Ralph Lauren outfit. Would you like a pair of shoes to go with that? Here's a 10 percent discount,' " says Riess. "That's a whole different type of communication."

The recently introduced SAP Business One -- The American Express Edition for Point of Sale (POS) solution, with a starting price of $22,000, allows merchants to click on a customer's name and generate a list of purchases that person has made of a specific vendor's merchandise.
Microsoft's Retail Management System offers similar capabilities. For instance, as each customer checks out at Phoenix, AZ-based Desert Surf Co., his or her purchases are entered into a database using Microsoft's solution, which is designed for retailers with one to 10 stores. "No one gets out of the store without being captured in our software, if I can help it," says Toby Keller, owner of the three-store chain. "We use their purchase histories to send out postcards to announce new merchandise and sales. It's worked wonderfully, but we don't overuse it -- it's important not to inundate them."

The sales staff at Tina's Closet, a 3,500-square-foot, Lisle, IL-based women's apparel specialty store, uses Microsoft's database to track the buying history and personal measurements for 15,000 customers. Owner Tina Karakourtis says having detailed information at her fingertips enables her to retain even customers who have relocated and cannot physically shop at the store. "They can call me up and say, 'Do you have a record of what I bought last time?' " she says, adding that since she implemented the $3,000 solution, sales have increased by approximately 20 percent.

At Tina's Closet, sales promotions can zero in on specific customer preferences, right down to the exact bra a given customer is likely to buy. "If we're putting Bali bras on sale, we can send postcards to every customer who has ever bought one. We also know what sizes we will need to order, because we know who bought [what sizes] in the past, so we don't have to worry about overstocking for a sale," says Karakourtis. "That is a phenomenal benefit."

Apparel retailers need to move away from generic customer contacts, and instead, switch to a highly personalized approach, says Zweben. "Retailers are overly dependent on mass communications, catalogs, phone calls and spam," he says. "That's the wrong way to interact because it's on the marketing department's schedule, not the consumer's."

Zweben says Blue Martini's clienteling application uses specific customer "events" to trigger contacts. These events can include birthdays, anniversaries and address changes, or an indication that the consumer's spending is declining or increasing, or that he or she is showing different brand and size preferences.

"The technology interacts with the customer or salesperson precisely when it's appropriate," says Zweben. For instance, the system will flag a sales associate to alert a customer if a customer is $100 away from being in the top tier of a loyalty program, or about to lose his or her preferred status.

"This fits in with our strategy of being very in touch with the customer," says Susan Neal, vice president of business development for San Francisco-based children's wear retailer Gymboree, which uses Blue Martini software to capture online purchasing history. "It's important to foster that relationship, and we are looking to technology to help us do that. Our goal is to combine that with in-store purchases, to create one view of the customer."

The retailer is looking to Blue Martini's new applications to personalize e-mail contacts, automate in-store order placement for out-of-stock items and develop closer relationships with its best customers.

New solutions give the sales staff a list of customers to contact, targeting them at precisely the right moment. "And it's not just a list, but it tells them exactly what they should say to those people -- that their holds are about to expire, their alterations are ready, or a new line of products is coming in from their favorite designer," says Zweben. "This kind of intimacy takes loyalty to the whole next level. This is proven to drive revenue through repeat visits."

A similarly targeted approach is used for up-selling and cross-selling, such as alerting a sales associate that the man at the register is a big spender in the suits department but has never bought a pair of shoes at the store. "The associate could offer a particular set of shoes at a discount, and offer to walk the customer over to an associate in the shoe department who will have them ready," says Zweben. "If you can get someone to start shopping in another category, it goes right to the bottom line."

Likewise, Internet shoppers can be coaxed into the store to try on an item. While they are shopping online, they see a scheduling window pop up onscreen, prompting them to select a time for a store visit. The system then takes the consumer's input and alerts the sales associate to put the correct size on hold so it's ready the moment the customer walks in the door. "It's a unique service experience. That is what the future is going to bring," says Zweben.

It's no secret that effectively targeting the biggest spenders can have a dramatic increase on profits, adds Zweben. "We know of cases where companies have been able to argue for an investment just by saying, 'We are going to get our top 10 or 20 percent of customers to come back to the store twice more a year for one additional item,' " he says. "They have all been in the hundreds of millions of dollars in incremental revenue."
To be effective, customer relationship management solutions must tell merchants three things: What to sell to someone, what to say and when to contact them, according to Zweben. "The automation takes the grunt work out of it by spoon feeding the small retailer with exactly the precise information they need, either when in front of a customer with a transaction or preparing for an outreach," he adds.

Blue Martini soon will offer a Web-based solution geared to small retailers, or others that cannot afford to implement the full-blown solution. "It's a way for them to get their feet wet using this approach, without buying software or machines," Zweben says. "You spend a month or two connecting the software up to your customer database, and away you go. That is the wave of the future for the midmarket."

Mobile devices keep sales from walking out
New hand-held devices also are helping apparel retailers to provide better customer service. Sales staff armed with new mobile devices can process transactions while customers are waiting in line, keeping sales from walking out the door -- and capturing valuable data on buying patterns to boot.

"If the lines are moving, people will stay and shop in the store," says Frank Riso, director of retail vertical marketing at Holtsville, NY-based Symbol Technologies. "Customer satisfaction goes up significantly, and productivity and sales are increased. That's everything the retailer wants to happen."

When a frustrated customer is about to leave because he or she cannot find a product, Symbol's Merchandise Locator System can enable a salesperson to pinpoint the item's location very quickly without having to leave the customer's side. "The product may be in another store, or maybe it's available on the Web. [The retailer] can order that product right there on the handheld and have it delivered to their home tomorrow at no extra charge," says Riso.

Similarly, shoe salespersons can use wireless devices to instantly check availability of sizes and styles, without leaving customers hanging while they go into the back room. "A number of stores have seen increases in sales of over 15 percent just because they stay with the customer, who ends up buying a pair of shoes," says Riso. "Some customers will not shop anywhere else for shoes except the one retailer with the merchandise locator, because they won't sit there waiting for someone to come back out."

For most shoppers, being told an item is on backorder is a cue to leave the store and look elsewhere. "In the past, the burden was on the customer to follow up, and they might come back into the store just to find the item was sold out again," says Harvey Goss, managing director of American Express TBS. "This puts the responsibility on the store instead."

Now, when an item comes in, systems such as the one offered by American Express enable retailers to contact clients by their preferred method, whether e-mail, regular mail or text message to their cell phone. Alternatively, stock at other locations can be checked at the register, and the item shipped directly to the customer.

At Dani Lingerie, a single-store specialty retailer in Manhasset, NY, Microsoft's solution allows staff to take notes on customer preferences. This information is used to build an informal gift registry, which according to Dani Lingerie, has increased sales. The store also uses the system to check inventory instantly, instead of disappearing into the stock room.

"You can lose sales because they don't want to wait," says co-owner Dani Eckstein, who says the $15,000 initial investment she made in the system has more than paid for itself.

Similarly, if an item at one of Desert Surf's three stores is sold out, Keller can locate it at another store and have it ready for pickup within 24 hours for the customer. And because the POS solution allows transactions to be put on hold, it gives customers the freedom to decide at the last minute that they want to shop a little more -- and salespersons the ability to keep ringing up other customers on that single register while they do. "This eliminates any concerns they might have about holding up others," Keller says. "I never want to discourage someone from making a second or third trip back to the racks to buy more."

STACI KUSTERBECK is a free-lance writer based in Long Island, NY, who frequently covers business topics for trade and consumer magazines.