CRM for Retail is Different
CRM software for retailers is different when compared to other industries. It is not about account, contact and opportunity management. It's about retail imperatives such as the customer experience; retail essentials such as omnichannel engagement and loyalty programs; retail processes such as price management, discounting and promotion; and technology requirements such as integration with online commerce, point of sale (POS), supply chain management (SCM) and enterprise resource planning (ERP) systems.
The best retail CRM systems recognize that the sales process isn't about a considered purchase, it's about satisfying a moment of truth in the consumer journey. Marketing isn't about nurture campaigns supporting long sales cycles, it's about precision campaigns based on highly specific consumer audiences and delivered in social, mobile and consumer preferred channels. Be clear, CRM for retail is different.
When searching for the best retail CRM software many novices focus on software. That's a mistake as CRM features and functions may or may not deliver business results. A smarter approach is to lead with prioritized company objectives and then identify the CRM software capabilities that accelerate those goals.
The 4 most strategic retail CRM objectives are to acquire more customers, grow customer share, increase customer retention and lower marketing, sales and customer services costs.
CRM to Increase Customer Acquisitions
The best CRM software for retailers supports this business objective with several important capabilities.
- Consumer Insights. To achieve effective marketing, sales and customer service, retailers must really know their customers and what they want. Inaccurate assumptions, incomplete data or not really knowing what customers want will degrade your marketing and sales performance and set back business results by quarters or years. Customers are not homogenous so they must be identified by persona and segment. Retail CRM software capabilities to support this requirement include a 360 degree customer view, Voice of the Customer (VoC), crowdsourcing, tracking of digital footprints and insights dashboards.
- A 360-degree customer view. Every CRM publisher claims to deliver a 360 degree customer view. But most don't when it comes to the retail consumer. What most deliver instead is a consumer view with demographics and purchase history. That's a start, but consumers are far better defined by their behaviors than their demographics. Demographic data is explicit data while behaviors are implicit data. Explicit data such as age and income only indicate how interested the retailer is in the customer. Implicit data such as digital footprints, online behaviors, customer sentiment and a social profile show how interested the customer is in the retailer. To achieve a 360-degree customer view in the retail industry you need five types of customer data - demographic, transactional, behavioral, environmental and social.
- Customer segmentation. Retailers need to target offers and promotions based on customer audiences, preferences and conversion history. The best retail CRM software generates dynamic segments based on explicit and implicit traits. Explicit data such as demographics is a start, but implicit data such as real-time digital and behavioral data dramatically improve segmentation with attributes that more accurately predict intent and demand. The bottom line is that the more precise the segment, the higher the conversion.
- Retail marketing. Marketing performance is driven by combining precise customer profiles and segments with relevant and personalized offers delivered on the right channel at the right time. The best retail CRM systems use personas and consumer journey mapping to orchestrate these variables.
Retail marketing apps support flexible, non-linear journeys and measure each moment of truth or milestone in the customer journey to assess its effectiveness in getting the customer to the next step, and to a purchase. It should identify bottlenecks, loopholes and fall-off points and compare different responses to identify the optimal journey map.
Other retail marketing capabilities include list management, multi-channel campaign execution, conversion rate optimization and marketing resource management. The best retail CRM systems will go further with functionality to support social, mobile, proximity and SoLoMo campaigns.
- Retail Sales. Retail sales are delivered through e-commerce, POS and Clienteling. CRM for retail supports these methods with relevant promotions, Next Best Offer recommendations, guided selling automation and intelligent up-sell, cross-sell and bundles.
The most advanced retail CRM apps also include price optimization, discount policies and capture management – all delivered over multiple devices and channels.
As an example, fewer than 1 in 10 retailers leverage CRM clienteling tools, which results in a lost opportunity for creating relationships between consumers and associates. In fact, research consistently shows that personal attention reduces showrooming and makes the difference between browsing and buying.
Clienteling delivers personalized service using mobile devices such as tablets or portable POS terminals. This type of engagement empowers sales associates to deliver deeper product content, real-time promotions, inventory availability, cross-sell and up-sell recommendations and other product suggestions based on consumer attributes and prior purchases. It further aids purchases with mobile check-out, portable payment processing, shipping information and a 360-degree view of the customer relationship that includes style and brand preferences, prior purchases, active warranties, loyalty program information, key dates such as anniversaries and birthdays, and more. Most importantly, it aids the delivery of an exceptional in-store customer experience.
CRM Software to Increase Consumer Share
Returning consumers spend, on average, 67% more than first-time consumers (source: Bain and company) and in many retail sectors up to 15% of a brands most loyal customers account for 55-70% of the company's total revenues (source: The Center for Retail Management at Northwestern University).
CRM for the retail industry offers capabilities to increase return visits, repeat purchases, customer lifetime value (CLV) and customer share.
Accelerated product commoditization coupled with more informed and empowered consumers requires retailers to step up their game. Customer Experience (CX) has become the go-to customer strategy to achieve what may be the most strategic and sustainable competitive differentiation. Retail CRM software aids this strategy by applying data to deliver personalized and differentiated customer experiences.
CRM apps facilitate end-to-end consumer engagement journeys over physical and digital channels by applying consumer personas, preferences and purchase histories in a way that delivers relevant, personalized and contextual consumer experiences.
The apps can also measure each consumers customer experience using RFM analysis or methods such as NPS (Net Promote Score) or CSAT (Customer Satisfaction) scores.
- Consumer loyalty. Loyalty systems provide the technology to help advance consumers from browsers to buyers to repeat customers to advocates.
Retail CRM systems support the most strategic goals of using loyalty programs to grow consumer intelligence, increase lifetime value, increase margins with the most profitable customers and shift consumer loyalty from products to the brand.
The best CRM apps for retailers support loyalty or rewards programs that include progressive loyalty tiers, point management, flexible rule modeling, benefits handling, voucher handling, performance metrics (e.g., reward rates and break rates), and direct integration with POS and online commerce platforms. They also integrate with retail marketing applications to deliver personal and relevant promotions that are likely to convert.
- Omni-channel engagement. In an IDC Retail Insights research report titled, Satisfying the Omni-channel Consumers Whenever and Wherever They Shop, the analyst firm reported that while multi-channel shoppers spend, on average, 15% to 30% more with a retailer than consumers who use only one channel, omni-channel shoppers spend 15% to 30% more than multi-channel consumers and show stronger brand loyalty, often swaying others to patronize the brand.
That is why meeting customers on the channels they search, communicate, evaluate and buy, and accommodating their communication and purchase preferences is an undeniable mandate for retailers. And a mandate enabled with retail CRM software.
Customers expect that a conversation begun on one channel can be continued on another, with all communication and context preserved across channels. That is why the best retail CRM systems maintain communication fidelity as conversations traverse multiple channels. They also use social listening tools to identify consumer conversations about the brand or its products, and social engagement tools to communicate on social networks.
- Customer Relationship Management. All merchandise becomes commoditized over time thereby making product-centric retailers vulnerable. Fortunately, customer relationships do not deteriorate over time giving customer-centric retailers a more sustainable competitive advantage.
The "R" in CRM is where the most strategic opportunity occurs, or fails to occur.
Customers want to engage with their preferred brands pursuant to their terms and using their personal technologies. Retailers that apply CRM strategies and supporting technologies to engage consumers and nurture relationships can find that these relationships trump every other competitive differentiation factor for certain classes of consumers, such as loyalty members, repeat customers and high value customers.
CRM Software to Increase Consumer Retention
Consumer churn is like a disease. Left unattended it only gets worse.
Fortunately, the best CRM for retailers provides tools to decrease churn. These tools include customer self-service (such as portals, knowledgebases, social service, bots, virtual agents, communities) and business intelligence (BI) that quickly detects where the retailer has a problem.
Some retail CRM systems calculate consumer health scores and use predictive analytics to detect consumers at risk of churn. They also use predictive analytics to forecast buying patterns, offer responses, sales conversions and up-sell lift.
It's the BI that can account for halo effects, seasonal trends, cross category relationships and figure out how to get the right product at the right price on the right channel and the right time.
Peter Drucker may have said it best when he advised that "Knowledge has become the key economic resource and the dominant–and perhaps even the only–source of competitive advantage."
One More Thing
I’m frequently asked what are best CRM systems for retailers? The short answer, based on market share, market growth and my experience in implementing CRM systems at retailers for more than three decades, is Salesforce, Oracle, Microsoft Dynamics 365 and SAP CRM. The longer answer and a deeper analysis is available at the top retail CRM systems.
If you are evaluating CRM software, consider our CRM selection framework to identify the best CRM software.