Posts Tagged CRM
Apple has become one of the world leading brands and one of most profitable in the world. So profitable in fact, that people started to write about how its cash holdings of $76 billion made them richer than the United States government.
Apple’s passion for design and ergonomics is obvious for all to see. Using an iPad or an iPhone is a genuinely enjoyable experience, which in itself develops a strong brand identify and customer loyalty.
However, Apple has also build up its reputation as one of the best retailers in the business. An extensive report by The Wall Street Journal taps into confidential training manuals, a recording of an internal store meeting, and more than 12 interviews with current and former employees to reveal the nuts and bolts of Apple’s retail secrets.
What this treasure trove of information revealed, is a retail philosophy which goes to great lengths to ensure listening to customers comes first and sales are much more of an afterthought. This reflects the quality and faith Apple has in their products. Essentially the iPad and iPhone will sell themselves.
The training manuals and employee interviews conducted by the Wall Street Journal reveal a policy of problem solving, rather than simply selling. The confidential training manual reads: “Listen and limit your responses to simple reassurances that you are doing so. ’Uh-huh,’ ‘I understand,’ etc.” One employee recalls being told that he should never correct a customer’s mispronunciation of a product, for fear of patronising them. The Geniuses working the Genius Bar are taught to say “as it turns out”, instead of the more gloomy “unfortunately” when delivering bad news.
Apple has carefully developed its sales force and chain of iconic Apple Stores around the world as part of a strategy to attract huge volumes of foot traffic. To understand their success a little better the Wall Street Journal offered this stark comparison – More people now visit Apple’s 326 stores in a single quarter than the 60 million who visited Walt Disney Co.’s four biggest theme parks last year.
There is much which can be taken from the Apple model and used as a platform for UK and other international retailers. In a difficult retail market, where spending for pleasure has been to a large extent replaced by spending purely as necessity, the retailers who offer the best service will win out. John Lewis is a great example in the UK. Known for quality product and service, the customer will make them the first point of call. Deborah Stone of The Stone Consultancy, a leading retail consultancy, says: ‘Once you are top of mind, you are already half way to creating customer spend, but it is the quality of service which will clinch the sale.’
Many were hoping that 2011 would be the year of global economic recovery. Sadly as the year comes to an end, it is quite clear that in 2011 the international financial picture failed to improve and as we head into 2012, there is significant uncertainty in financial markets and economies.
Looking back on the year and specifically on how retail businesses have improved their customer relationship management, we can see how business as we know it is changing. With the cost of living going up all the time, consumers are changing their spending habits and are becoming very savvy shoppers.
As a result, those retail businesses that are able to differentiate themselves through their service, or quality of customer experience are the more likely to succeed. For some organisations, this has led to dramatic changes to the way it interacts with its customers.
Those retail businesses who have invested in an effective CRM programme will lead the way. They know their customers, can communicate with them in a targeted, segmented way, which improves return on investment and allows them to maximise the customer experience. Customer interaction, both in and out of the store, becomes far more effective and profitable. Look at John Lewis, who have just bucked the trend and turned in successful growth figures for 2012. How do they do it? By offering first class service through their staff training and their marketing campaigns at all levels.
In 2011, businesses have not only seen customer spend drop, but also seen customer expectations grow. Customers are aware that businesses are fighting tooth and nail for their time and custom, which puts the customer in quite a powerful position. For businesses, this means offering something more than just a good deal to the customer. It means offering a great customer experience.
One such way which businesses have been able to nurture a better customer experience is to embrace social media. What was once perhaps viewed with mixed feelings now has much more widespread support due to the success many businesses have had using social media.
It is important to note that social media is constantly evolving and in such a dynamic environment making predications is a challenge. Utilising Facebook, Twitter and the like is crucial. The market in social media is crowded and retail businesses need to stand out.
So, what does 2012 have in store? The Institute of Customer Service has talked about 2012 being a ‘war for customers’ due to the intense competition in a difficult trading environment. With this in mind, the businesses which really understand their customers, can innovate and offer the right service both on and offline will be best placed in 2012. If you do not have an effective CRM programme in place, now is the time to consider it. Over time, retailers will reap the rewards.
Deborah Stone at The Stone Consultancy, a leading retail consultancy agency in CRM, comments: ‘Retailers are often deterred by the initial investment a CRM campaign requires, but it is false economy. They are essential to customer retention and increased spend over time and this will only become more important as we head into 2012.’
Traditional customer loyalty programmes are based on rewarding customer behaviour in order to build up a relationship between the retailer and the customer. However, the established method of collecting points to earn prizes does have a shelf life. As a result, retailers and brands are looking to gamification and how it can be integrated into CRM systems and marketing programmes.
The conventional method of rewarding customers with points does work and has proved to be highly effective for some retailers. However this traditional method does have its limitations, in that it has become commonplace amongst big retailers and therefore, no longer offers a point of differentiation. The competitive advantage of having a standard points loyalty scheme has waned and such systems do not always provide the retailer the kind of in-depth understanding they require to maximise the effectiveness of segmentation and therefore, sales.
Gamification can be defined as the use of game design techniques and mechanics to help engage with audiences. One of the most popular forms of gamification currentlyis FourSquare, which has over ten million users. Users can claim ‘Mayorships’, unlock’ badges’, and on a more standard level, receive special offers and rewards such as discounts to specific retailers, while also tracking against friends via a leader board. All of this makes gamification as a mechanic for a CRM programme much more engaging and appealing to certain users.
It could be argued that not everyone has access to the internet or Smartphone’s and gamification will only appeal to particular age groups and therefore is possibly limited in its effectiveness. However, if you consider how rapidly Smartphone usage is growing and that access to the internet is more widespread than ever, it is impossible to ignore this as a new possible CRM platform.
The biggest challenge faced by retailer with established CRM programmes is how to integrate gamification into existing programmes and to decide whether or not they feel it is appropriate for their target audience and product mix. There is little doubt, however, that retailers who are able to embrace a more interactive CRM mechanic will engage their customers more readily than with the tired points schemes of old. Deborah Stone, Managing Director of The Stone Consultancy comments: ‘Smart technology is changing how people deal with the world across all elements, not just online. Gamification is an exciting development for retailers to consider when moving their strategy forward.’
For well over a decade, customer relationship marketing and their umbrella loyalty programmes have been a cornerstone of successful marketing and retail strategies for many of the UK’s biggest brands. Companies such as Tesco and Boots were amongst the first to establish customer loyalty programmes with sophisticated data analysis, which have grown to become hugely significant elements of their business, maximising sales and profits.
The growth of customer loyalty programs has been matched by the growing expectations of customers for marketing messages to be relevant and targeted. The digital age in which we now live means that businesses really need to understand their customers to a level that facilitates relevant and targeted marketing material to the right individuals. Get this right and not only will brand loyalty increase, but sales will be less volatile during periods of economic downturn, such as the ones we are experiencing currently.
Marketing and retail
The UK has seen customer loyalty schemes change dramatically. At first, it was largely a case of collecting points in return for money off vouchers and other rewards at individual companies. Over time, some companies joined umbrella schemes, which offer customers even more value for their loyalty by sharing set up and marketing costs, as seen with the Nectar card. So have customer loyalty schemes reached their limit?
The answer is certainly not. In fact, customer loyalty and brand loyalty schemes are really only now coming into their own thanks to technological advances, which impact on our daily lives. Of course, the one piece of technology which has revolutionised how we all do business and how we run our daily lives is the smart phone. Indispensible to almost all individuals from the moment they wake until the moment they go to sleep, smart phones, i pads and other similar technology also offer marketers and in particular, retail marketers, the chance to reach their audiences accurately and with immediacy.
To be slightly more specific, it is the location-based software available on a smart phone that will be of interest to customer loyalty scheme providers. The more targeted your marketing messages are, the better your response will be. Customer location becomes a highly valuable piece of information, which enables you to get your message across not only to the right person, but also to speak to them in the right place at the right time, i.e. near to where they can buy from you, the retailer.
Deborah Stone at The Stone Consultancy one of the UK’s leading retail marketing consultancies, believes that companies who embrace new smart technology and more importantly, use it with the right analytics, will be the real winners in the battle to retain customer loyalty and sales. ‘The first stage of customer loyalty schemes was reward – spend your money at our store, get points, get a discount. The second stage was about multi-brand reward schemes – get points, get a choice of rewards. The third stage is all about immediacy– ‘check in’ to my brand now and get your reward now. Instant gratification for an instant sale.’
At this stage, it is reasonable to say that no major retailer has cracked combining geo-location with customer loyalty reward schemes. And it must also be pointed out that it has its sceptics, who rightly point out shortcomings, such as lack of smart phone ownership and concerns over user behaviour.
However, it cannot be denied that the number of smart phone users will only grow and that judging by the success of existing customer loyalty reward schemes, it will continue to grow and shape the relationship between an individual and a brand or business. A decade ago, people queried whether or not investing in huge CRM programmes could ever affect the bottom line. We have seen the phenomenal results from those retailers who embraced the concepts and used them intelligently. So it will be with smart technologies. The retailers who think smart will reap the rewards.