Companies don’t decide how customer centric they are, they cannot rate themselves on this. In today’s age of the customer, its your wife or my daughter who decide how customer centric a brand is. And yet when corporate executives talk about CRM, most eyes just glaze over. Mostly this is because most companies treat CRM as yet another media vehicle & do what they have been used to doing in mass media-maximise reach & OTS. Customer Relationship Management(CRM) has been around for the longest time. From just an efficiency improvement tool it has morphed into a Customer experience multiplier, if used correctly! At it’s heart, CRM is a customer information based strategy that can help retailers deeply personalise their offerings & become far more relevant to customers.
The Indian retail sector is projected to double from $600 Billion to $1 Trillion, by 2020. This rapid growth will be determined by factors such as Income Growth, Urbanization, Nuclearization, and Attitudinal Shifts. Modern trade is also expected to grow 3 times, with Rapid Consumer Evolution, and a Positive Regulatory Environment, being the drivers that will help this shift.
And while there is umpteen research that shows that it costs 3 to 5 times more to acquire a new customer, most Retail marketers are still focused far more on acquisition than on retention. Ahead of Diwali, the festive quarter of the year, eCoommerce players were seen spending crores of rupees on marketing. Snapdeal announced that it would spend around Rs 200 crore on marketing and advertising only through the festival season. I wonder how much these companies are spending on their existing customers? And yet despite this media push, the right approach to connect with buyers in a meaningful way and personalize their shopping experience is missing, though critical for retailers to effectively break through the noise and competing forces.
CMOs are definitely thinking more about customer retention than before but acquisition is still top of the mind for most CMO’s. Customer relationship management is getting increased investment, but we are far away from one-to-one communications replacing above-the-line campaigns(and replacement should not be the objective: they have different roles).
Flipkart already has 100 million registered users & does not talk about any kind of Loyalty strategy. While globally for Amazon, Prime , it’s paid membership program has clearly become its secret sauce. Recent research showed that Amazon’s 49 million Prime customers are worth a staggering $143 billion for the company over their lifetime. Prime members get best in class customer service & perks to make them feel special. Prime offers Amazon Video, a collection of movies and original content. Free restaurant delivery is new. There are services like Photos, Pantry and Kindle Lending Library as well. The service has been growing rapidly. In 2014 it added 7 million new members. In 2015 the number of new members grew to 10 million.
Estimates show that new subscribers will grow to 12 million in 2016. Though we do not have any numbers for India & Indian consumers will surely seek a lot more value for paying Rs 499 per year for membership. Imagine Amazon has found a way for it’s best shoppers to pay to join, spend a lot & rarely leave. That has to be a Retail Marketer’s heaven!
And yet I don’t see any efforts from Shoppers Stop or Flipkart to disrupt this strategy & get more focused on their existing customers. Shoppers Stop had a lead with their First Citizen program but they will need to innovate because loyalty as defined by points alone is dead.
The amount of buyer profile data that’s collected these days is enormous, and it is incredible how easy it is to collect. My buying information is no longer just mine. But not once in any festival season have I got any communication that has leveraged this information & then urged me to buy. Most marketing is still “lazy” & disregards the information on me & rather gives me a mass offer. With omnichannel becoming important for retailers, small but significant moves like these can create “emotional memory” with consumers. The borders of the digital and physical world have been blurring for years now. The integration of digital and physical experiences is creating new ways for businesses to interact with customers, by using digital information to personalise services. Offline retailers are well positioned to leverage this but they need to think ahead & allow Marketing to act more for existing customers than ever before by leveraging the information they have about these customers.