By DENISE POWER
NEW YORK — Having endured the ups and downs of being labeled
“hot-hot-hot” followed by the inevitable backlash that accompanies
anything overhyped, CRM has indeed emerged with “new legs.”
A surge in spending and user-driven think tanks devoted to customer
relationship management are certain indicators that retail is getting
serious about this practice.
“CRM is a topic that has been around,” said Daniel Butler, vice
president, retail operations, National Retail Federation, Washington.
“When it first came out, everybody jumped on it. The term got bounced
around and people got tired of it before programs were put in place. Now
people are looking at CRM in a new light.”
Butler is currently surveying the organization’s membership and
expects to decide this month whether the NRF should form its own group
dedicated to CRM. The NRF is also investigating whether another group,
comprised of retailers and spearheaded by Best Buy’s CRM team director,
Tim Anglum, would be interested in merging with a formal NRF group.
The retail group includes executives from several primarily
non-competing chains like Gottschalks, Fresno, Calif.; Kohl’s, Menomonee
Falls, Wis.; Best Buy, Eden Prairie, Minn.; Hudson’s Bay, Toronto; and
Saks, Birmingham, Ala.
“We are trying to get a benchmark of where people are in their
journey and what barriers, struggles they are facing,” said Rob Shields,
vice president of CRM and loyalty, Hudson’s Bay, and a member of the
retail group. “It’s organizational stuff [that has been discussed] such
as ‘How do you deal with people who are naysayers? How do you organize
your team?’”
Best Buy’s Anglum, the group’s organizer, declined to be interviewed
for this story, but industry observers applauded the retail forum he put
together.
“I think it is fabulous and extremely healthy, and I wish more folks
would do that,” said Denis Pombriant, vice president and CRM managing
director, Aberdeen Group, Boston.
“This is a neat example of how fast CRM is moving in retail,” said
Jeff Roster, senior analyst, retail, Gartner Dataquest, Stamford, Conn.
“Typically a vendor or a trade group initiates such efforts, but this is
moving so fast that retailers are not waiting for that.
“If this group can form understandings to pass back into the vendor
community, they might take years off the developmental cycle and cut
down on wasted efforts. That, to me, is the coolest thing,” he added.
Pombriant said just-released CRM spending research further validates
retail’s focus on the area. Aberdeen studied CRM spending across 11
vertical industries in the United States and ranked the retail sector
third in terms of overall spending in 2002.
“I was surprised to see that retail is doing so well in terms of
uptake of CRM technology,” he said. “Retail and distribution had 12.8%
of spending. That might not sound like a lot, but we divided the market
into 11 sectors and the biggest sector was manufacturing, with 22.9%” of
the total $7.39 billion CRM spending estimated for 2002.
“That says CRM is no longer an early-adopter technology,” he
continued. “It’s clear to me CRM has become an essential tool at
businesses recognizing they have to go forward.” The report, “Worldwide
CRM Spending, Forecast and Analysis 2001-2005,” was released by Aberdeen
last month.
Sam Kapreilian, partner, Americas leader, CRM solutions, PwC
Consulting here, also applauded the creation of user-driven forums. He
said he was familiar, but not involved, with that CRM retail group put
together by Best Buy’s Anglum and characterized the effort as a lyceum
concept “which is something I generally advocate.
“The concept of a lyceum originated in the 1800s and was carried over
in America for leading thinkers of the day to share best practices,” he
explained. “It’s generally a good idea, when you can do it in a
nonthreatening fashion,” he said.
“We can learn as much from [other retailers’] failures and their
errors as we can from their successes,” said Dave Poirier, chief
information officer and executive vice president, Hudson’s Bay.
“We are finding that there are two types of organizations that are
engaged in CRM,” he said. “One type is looking for that ‘pink pill’
that’s going to solve everything. It may look like loyalty or campaign
management, something that they use to get better results.”
The other type of company engaged in CRM, Poirier said, is applying
science to change consumer behavior in tangible ways. “If you look at it
from a behavioral standpoint — how do we create value for the customer
in ways that change their behavior,” then better results can be achieved
in terms of both sales lift and in meeting consumer needs. For example,
influencing a shopper to add an extra item to the shopping cart or to
buy a higher-margin private-label product instead of a national brand
yields results that can be measured. And that hard data can be analyzed
and incorporated into programs that deliver such results with
repeatability.
Another organization that’s making headway with gathering CRM best
practices for mutual benefit across various industries is the CRM
Association. Founded two years ago in Atlanta, the group now numbers
nine regional chapters across the country and abroad. Ginger Cooper,
founder and president of CRMA, said the group is diverse and includes
retailers.
CRMA has business users-only special interest groups to explore CRM
issues that are universal across different industry sectors. In July,
one of the groups discussed challenges of user adoption. “That continues
to be a problem — getting people to use the technology,” she said.
“Especially salespeople. There’s not a lot of buy-in, and it takes time
they could use to be selling.”
In addition to Atlanta, other CRMA chapters are located in
Baltimore/Washington, Chicago, Dallas, Philadel-phia, San Diego,
Seattle, the San Francisco Bay Area and Dublin, Ireland.
