Retailers Get Their CRM Report Card
Perhaps even more significant, the same NRF study shows that the Internet was used in some fashion in 27 percent of all U.S. retail transactions in 2003.
Mastering the multichannel marketing component of CRM is, however, not just about which channel makes the most sense, which channel has the lowest transaction cost or which channel is growing the fastest. Success in multichannel marketing begins with understanding that customers want to use channels together in combinations that support very specific decision-making and buying activities.
If your channels cannot treat customers consistently with price points, messages and offers that make sense, they will be driven away unhappy and confused - hardly a CRM goal.
Customers also want to use whatever channels are most convenient and effective for them at a specific point in time. Online shoppers want to buy online and pick up at a nearby store. Forrester Research points out that 11 percent of shoppers did just that in 2003, though most retailers don't offer this service.
Web shoppers also would prefer to return merchandise to a local store. Likewise, store shoppers would like to be able to place an order in-store for items or sizes that are out of stock and have them shipped to their home. If a merchant doesn't provide these channel capabilities, Web savvy customers can quickly find other merchants that do.
Multichannel customers are absolutely the wrong audience to disappoint. For most retailers, multichannel buyers are going to be your best customers. DoubleClick's Annual Holiday Shopper Study has consistently shown that triple multichannel buyers (store, catalog and Internet) spend more than $1,000 each holiday season and are 60 percent more valuable than single channel buyers.
Multichannel buyers also tend to be younger and more technology savvy. They know other options are available and are quick to look elsewhere if their multichannel experience isn't satisfactory.
Complete customer data integration is the first step in aligning marketing communications and channels with customer shopping preferences. Nearly every aspect of CRM depends on capturing, cleansing, consolidating and organizing all customer data from store systems, customer service, toll-free number order management, Web site and marketing contact history files. Integrated data is the fuel that provides the customer insight needed to drive better, more intelligent and more appropriate customer communications.
So how are retailers faring in their CRM quest?
The NRF's annual CRM Retail Study has become the retail industry's report card for measuring how retailers view, plan and work to enhance relationships with their customers. In 2004, over 100 retailers participated in this survey that is conducted by Ogden Associates on behalf of the NRF. For 2004, the study reached the following overall summary:
· Though steadfast in their enthusiasm for CRM as a business strategy, only 30 percent of retailers say their CRM initiatives are fully meeting or exceeding their expectations. However, more than 80 percent are maintaining or increasing their future CRM budgets in spite of the challenges.
· Fifty percent say they have tackled the data integration issue. Twenty-seven percent report that they know their customers in-depth. Ten percent think they have adequate metrics. And 10 percent are getting data delivered to where it's needed.
· Retailers cited obstacles that are preventing them from realizing their CRM and multichannel marketing expectations, as outlined in the chart below.
What strategies can a struggling multichannel retailer pursue to overcome these obstacles and catch up to, or surpass, the growing expectations of customers?
A Forrester Research report, 2004 Database Marketing Outsourcing Outlook, released on Sept. 28 indicated that many companies are looking for more help from the outside. Of the 49 marketers surveyed, 50 percent or more reported using some outside support in each of 13 separate service categories.
Respondents also reported a willingness to expand these relationships with the emphasis on getting more help in strategic service categories such as customer segmentation, advanced analytics and CRM strategy. Forrester attributes these changes directly to "the challenges of integrating marketing efforts across new media, multiple channels and multiple lines of business."
In times of dramatic change, marketers should be seeking strategic guidance from their suppliers, not just tactical programs and operational assistance.