CRM in Retail/E-Commerce: Vertical Markets Spotlight
Today’s consumers are up against an inflationary environment that is impacting their spending, according to Medallia’s Sense360 report, which showed that consumers are buying fewer products, but for those companies from which they do make purchases, they’re willing to spend more.
“For those who aren’t choosing to make a purchase altogether, retailers are at a unique inflection point to pivot strategies and focus on getting to the bottom of nonbuyer issues through technology,” says Michael Debnar, Medallia’s retail solution principal. “In doing so, retailers have a better opportunity to understand what’s driving changes and ideate on steps that can be taken to enhance the likelihood that customers will complete a transaction, whether it’s online or in a physical retail store.”
CRM and other technologies are helping retailers determine which consumers have a propensity to purchase and in which format they might do so, according to Medallia.
Total Retail’s 2022 Retail Technology Report notes that 43 percent of retailers use CRM platforms. In the report’s conclusion, Total Retail calls CRM a must-have technology for retailers.
Act!’s 2022 “The Role of CRM in Today’s Small and Medium-Sized Businesses” study found that SMBs using CRM and marketing automation technology saw improvements across the board, including with marketing reach, customer satisfaction, and customer retention as well as revenue growth.
“CRM systems for e-commerce retailers can provide a slew of customer data, such as purchasing patterns, demographics, and preferred contact channels, all in one single platform,” adds Cory Cummings, cofounder and CEO of Pack Digital, a commerce platform provider. “Retail marketers can use these insights to enhance the personalized shopping experience for their customers, essentially allowing the CRM to decipher what the customer values most during the purchasing journey, such as what products they are likely to buy or their preferred shopping channels.”
In addition to CRM and location data, retailers are tapping into artificial intelligence to analyze customer feedback circulating on social media channels, including potential brand mentions or comments and ratings on review sites, Debnar says.
CRM PUTS CUSTOMERS IN FOCUS
“Retailers understand that consumers now expect personalized shopping experiences, from product discovery through to post-purchase support,” Total Retail says in its report. “Data segmented down to the individual customer is what enables those types of personalized experiences.”
CRM systems can help retailers focus on customers rather than on tasks, according to executives at Backcountry, the parent company of four business units that specialize in gear for wilderness adventures and outdoor sports.
Like many companies, Backcountry staff logged and carried out rote tasks. They sold items, set up sales calls, responded to customer inquiries, and provided customer service. But these tasks lacked goals, context, and customer insight.
The company’s results were lagging, says Peter Tew, senior product manager. “We’ve turned that around, and in SugarCRM, we have a customer-centric view of our jobs instead of a task-oriented view. Backcountry sells differently today because the progressive profiling logged in SugarCRM gives the sales team more insight into customers and more sales opportunities.”
The company integrated a widget in SugarCRM called “Outdoor Passions” that lists each customer’s hobbies, sports preferences, clothing, shoe sizes, and last adventures. Sales reps don’t have to open a different database to get the consumer information; it displays within SugarCRM when sales calls up a customer profile.
CRM also serves as a loyalty engine for retailers, with Customer Communications Group even calling it “the most efficient path to fostering customer loyalty.”
Such programs are becoming increasingly important in the grocery industry, one of the segments hardest hit by inflation, as consumers look for ways to stretch their dollars for food and other items typically purchased at supermarkets, general retailers like Walmart and Target, and smaller grocers.
“The current economic climate has sparked a surge in loyalty program growth and participation,” Eagle Eye says in its latest global loyalty survey report. “This is when retailers should invest in their programs’ capabilities and explore new and better ways to engage with their customers. They need scalable loyalty solutions that support advanced personalization initiatives and gamified features that include high levels of shopper interaction.”
According to the report, more than half of grocery customers actively seek items for which promotions or special offers are available. Many of these are loyalty promotions, with 57 percent of consumers using loyalty points to save money.
This is a growing phenomenon in the grocery industry, with more than three-quarters (76 percent) of consumers joining loyalty programs or using their existing loyalty memberships more frequently in the past year, according to the report.
Associated Wholesale Grocers, the Kansas City-based food distribution chain with more than 1,100 member companies in more than 3,400 locations, uses Givex’s CRM technology to help drive its loyalty, digital coupon, and data marketing initiatives across much of its network. These include points and fuel programs, matching vendor offers, and digital coupons from authorized partners. The CRM solution integrates with the point-of-sale technology (also from Givex) as well as the Givex proprietary Enterprise Coupon Portal.
But grocers aren’t the only ones seeing increased loyalty activity. Retailers of luxury goods, specialty merchandise, and other products are also finding their CRM programs and related technology to be essential drivers of discount and loyalty programs. Others have gotten even more out of their systems.
SOME RETAILERS NEED MORE
However, not all CRM systems provide the level of insight that some retailers seek, says Brian Hawkins, affiliate marketing manager at Ghost Bed, a Boston-based retailer of mattresses, pillows, bedding, and related products.
“One of the challenges with CRM is attribution and tracking offline to online sales,” Hawkins explains. New technology is helping it realize nine times the return on ad spend for retail stores to use credit-card-linked cash-back offers, but the challenge is not having the CRM and point-of-sales systems working together.
“It’s a big challenge to train retail sales staff, and in some cases, smaller chains have an advantage until these systems can sync up and give a better ROI and lead sales funnel system,” Hawkins says.
“E-commerce retailers should be wary about the shortcomings of CRM systems when integrating customer data,” Cummings adds. “As AI buzzwords continue to dominate the retail space, retailers should be aware that human beings still need to be treated as such [instead of as] statistical data. Behaviors change and cannot always be accounted for in a single CRM system; this is why retailers should review the customer data regularly to ensure algorithms are accounting for what the AI cannot collect—human emotion and lifestyle changes.”
GOING BEYOND TRADITIONAL CRM
Challenges such as those outlined by Hawkins and Cummings have some retailers looking for more comprehensive customer detail than they can receive from CRM systems alone.
“The retail industry has undergone significant transformation following the pandemic and ongoing economic challenges,” says Ritu Bhargava, president and chief product officer for industries and CX/CRM at SAP. “On top of shipping delays, inflation, and high delivery costs, retailers are also tasked with adapting to consumers’ rapidly changing expectations, which have never been higher.”
Therefore, it is crucial for retailers to connect their front-office data with the back office to have a true 360-degree view of customers to help them better understand their behavior and engage with them in more personalized ways, Bhargava says.
To achieve such a view, some retailers have moved beyond traditional CRMs to more intelligent CX technology solutions that maximize the potential of customer data, according to Bhargava. It is also crucial for vendors to take an industry-first approach to accelerate value to customers by enabling end-to-end, integrated business processes.
“Today, 80 percent of industry solutions are ecosystem-led,” Bhargava says. “With this approach, customers will get solutions that natively connect the cloud ERP to the last mile of a customer’s experiences spanning e-commerce, sales, service, and marketing, all with the industry-specific best practices they rely on from a vendor, such as SAP, and their ecosystem.”
Carhartt, the global apparel company, transformed its entire back office to better respond to the needs of digitally native consumers, according to Bhargava. Behind the scenes, the technological transformation became crucial for Carhartt to keep up with fast-paced growth.
At the heart of Carhartt’s strategy was its investment in digital technologies that deeply connect data from across the enterprise to fuel highly personalized omnichannel engagement and ensure the entire value chain—from the e-commerce site to the manufacturing floor—is optimized to deliver what customers want, when and how they want it, Bhargava adds.
Nonetheless, even though many retailers are augmenting their technology with additional solutions, CRM is still the primary engine driving their sales and revenue success.
Just ask executives at global athletic wear manufacturer and retailer Puma. When its CRM strategy was in its infancy, it was faced with the complexity of serving customers in multiple segments across numerous countries and in various languages. A lack of marketing automation, personalization, or a customer life cycle strategy didn’t help.
Then the retailer turned to Emarsys’s customer engagement platform to identify and target high-value customers and grow its CRM database and added analytics from SAP to drive personalized targeting. With these technologies, the retailer saw a fivefold increase in revenue and grew its customer database by 50 percent within six months. And those results are not uncommon.
Phillip Britt is a freelance writer based in the Chicago area. He can be reached at email@example.com.