Retail Customer Relationship Management (CRM) Software

The Customer Relationship Management in retail (CRM) market as a whole is very complex, and the retail CRM market certainly is as well. Systems come in all flavors, with options designed specifically for various retail stores, sizes of companies, and marketing channels. We have written this buyer’s guide to help retailers get an understanding of their options. 

Here’s what we’ll cover:

What is Retail CRM Software?
Deployment Strategies
The Retail CRM Vendor Landscape

Market Trends You Should Understand
Benefits & Potential Issues

What is Retail CRM Software?

“The customer is king” is a fact that can be learned very quickly when doing more business with existing customers. Savvy retailers have found that selling to existing clients is far more profitable than spending to market to new potential customers. CRM in retail enables retailers to do just that. Programs help businesses track customer contact information, past purchases, items of future interest, key dates such as birthdays and anniversaries, and more. Putting this information to use empowers retailers to grow profits by doing more business with one of their biggest assets, their customer bases. 

Deployment Strategies

Best-of-breed CRM systems such as Microsoft Dynamics CRM, Sage ACT!, and Salesforce.com can be implemented as standalone systems to track customer information. However, many retailers will choose to implement CRM programs as part of an integrated suite of modules for point of sale (POS) and inventory control. The decision as to how to implement software will be based on the size of the company and the extensiveness of the buyer’s needs. 

What Type of Buyer Are You?

We have found that over 90% of buyers fall into one of the following categories:

• Small buyers. Small retailers with fewer than five locations will find that their needs are often met sufficiently by POS software that include modules for customer information tracking. These POS systems integrate sales, inventory, and customer data into one system, making it easy for small businesses to market to a smaller user base. 
• Best-of-breed buyers. These buyers typically work for larger retail businesses. They have much larger customer bases than small businesses and have a lot more to gain. Their marketing needs are typically more robust due to promotions, new product offerings, and the size of their customer databases. 
• Multi-channel retailers. These buyers work for organizations that do extensive sales across numerous channels including websites, brick and mortar locations, and special events. They are collecting customer information from a wide variety of sources, collecting analytics in retail, and marketing to customers via email, phone, and print campaigns. 

The Vendor Landscape

The market becomes much less cluttered when buyers approach it with their respective category in mind.

Market Trends You Should Understand

The primary trends impacting retail CRM purchases include the following:

• Social media. This is perhaps the biggest trend impacting how retailers and consumers interact. Many CRM providers are beginning to offer integration with Facebook and Twitter, enabling retailers to reach prospects and build brand awareness. Group buying sites such as Groupon provide an additional channel to reach new buyers and market accordingly. Retailers should consider their vendor’s strategy and offering when it comes to embracing social media. 
• POS and ERP vendors as CRM vendors. Best-of-breed vendors such as Salesforce.com are finding the market increasingly crowded by POS and ERP vendors offering competitive systems. Due to the complementary nature of POS for small businesses and ERP for larger businesses, many retailers are turning to them for CRM for retail solutions. 
• Lead nurturing & scoring. As buyers conduct more and more research via the web, they become empowered in the buying process. They want contact on their own terms and at their own pace. Therefore, these vendors have developed marketing automation tools to enable vendors to nurture these prospects and score them based on demographics, buying intent, decision-making timeframe, past purchases, and more criteria. Automated email, mail, print, and phone campaigns can be conducted based on lead scores, enabling retailers to deliver the right message to prospects at the right time. 

Benefits & Costs

A strong CRM system should benefit organizations in various ways. Most retailers should expect to note the following benefits when properly using a system.

• Efficiency. Good programs will help retailers automate the cumbersome tasks of assembling prospect lists, sending bulk physical mail or email campaigns, and tracking campaign performance. Systems can also provide automated reminders for key dates such as birthdays, anniversaries, and holidays.  
• Customer retention. Keeping in regular contact with customers enables retailers to build relationships with customers and keep their repeat business. Systems can also prompt retailers to contact customers at regular intervals after sales are complete. 
• Increased margins. By using systems effectively, retailers should be attuned to customers’ preferences and be able to offer more of what they want, leading to increased sales and fewer purchases of unsold items. 

Retailers should find that implementing a CRM system is fairly low-risk. Best-of-breed systems are typically priced monthly, so buyers can cancel if they are not getting a return on their investment (ROI). POS applications that include CRM in the suite typically offer inventory control and sales management functionality that retailers will require anyways. The costs of executing marketing campaigns (postage and mail supplies, bulk email software, and employee time) can be hidden costs that need to be factored in when considering the total cost of a retail CRM system.

Vendors in the News

Microsoft announced in June 2012 that it’s agreed to pay $1.2 billion dollars for the start-up Yammer, with the intention of the investment leading to a needed boost in “social media expertise.” Though Yammer will continue to exist as a standalone entity, reporting to the current Yammer CEO, David Sacks, the long-term integration for Microsoft-Yammer will begin with Microsoft Dynamics CRM. Microsoft Dynamics CRM has an Activity Feed allowing users to update statuses and “like” posts; however, the company wishes to boost its usability to that of Salesforce.com’s Chatter.

Fifth Sun Apparel also announced in June 2012 its selection of Microsoft Dynamics AX for its private design and distribution company for major retailers like Target, Wal-Mart, Hot Topic, and Forever 21. Fifth Sun referred to their selection of the Microsoft solution as a “natural fit with the apparel industry” with robust functionality including finance management, supply chain planning, and distribution.

Another company recently announced the implementation of Microsoft Dynamics CRM--Saia, Inc., being one of the first less-than-truckload (LTL) companies to invest in the product. Saia’s sales reps and account executives access the solution via mobile devices, hoping to manage customer relationships more efficiently.

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