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Nov 16, 2017 @ 01:11 by Annika Sieveneck

Customer Relationship Management (CRM) is essential for the future of retailers

In times where retailers struggle to differentiate and competition is fierce, a smart customer relationship management might be the key to success.

Retailers must find new ways to differentiate from competitors

Most retailers of today are completely exchangeable from a customers’ point of view. Products and prices are the same and thus no means for differentiation any more. To survive, retailers must continuously deliver a value beyond their core offerings.

We advise retailers to focus on CRM to master that challenge, where we understand CRM as a holistic approach that puts customers at the heart of business. The fundament of that approach is to build and foster long-term relationship with key customers and customer segments. Within this approach, we see technology as a facilitator, but do not equate the term CRM with a technical solution.

How do companies build that trustful, long-term relationship with customers? The first thing is to get to know your customers and gain a deep understanding of their needs. Thanks to technology, the 360-degree-view of your customer is the new normal. While companies have been collecting demographical- and transactional data for ages, today’s CRM possibilities go far beyond.

While behavioural data provides insights about channel- and application usage, on-site engagement, number of website visits, category- as well as brand views and much more, we can learn from social media data what our customers are interested in, with whom they have relationships with and what kind of content they like. Furthermore, companies can improve CRM activities by learning about environmental aspects of their customers like education and profession, personal- and household income, economic affluence and retail purchases with competition.

Another critical success factor for CRM is a smart omnichannel management. Retailers must clearly define the strategic role for each channel. Which channel is leading the direction? Taking current market developments into account, it will be definitely advantageous to mirror the increasing dominance of digital in the overall omnichannel strategy. Next, integration of the various channels should be seamless. Customers should have one experience with the brand – not multiple ones. This means content, messages and service levels should be the same, no matter whether the customer gets in touch online, in-store, on a mobile device or by a private meeting with a sales person.

At dgroup, we work with customer journeys and persona to organize and deepen insights we gained from customer- and channel analyses. These methods lead to an in-depth understanding of the different customer segments and their specific needs during the various buying stages, which is the prerequisite for a successful CRM.

Customer Journeys help to gain a deep understanding of customers’ needs

Retailers have to anticipate customers’ needs before they even arise

Typically, customers are very likely to inform themselves before making a buying decision. To anticipate their individual needs, consider not only the most typical questions they have about your products, but also the situation they are in. Customers’ needs might be interrelated with the device used, as well as day, time and location. For example, a customer who checks a retailer’s brand close to a store on his smartphone might be satisfied with information about opening hours and a navigation to the store.

During the buying phase, your customers are likely to need advice and options to compare products, some will also look for inspiration. Providing the needed information and facilitating the checkout- and payment process will definitely improve your customers’ satisfaction.

During the usage phase of your products, your customers might be engaged by how-to-tutorials, care instructions, or other information related to whatever one can do with your products.

A retailer that is ahead of competition in the field of CRM is Sephora. The beauty retailer who is positioned in the prestige market, is part of LVMH Moët Hennessy Louis Vuitton, the world's leading luxury goods group and operates 2.300 stores in 33 countries worldwide, most of them in the U.S. and Canada.

Sephora offers a great customer experience by providing very strong, customer engaging content, great in-store experiences and a customer loyalty programme that brings great benefits to their customers. For example, they run the app ‘Sephora Virtual Artist’ which allows a customer to virtually try on lipstick, eyeshadows and other beauty products. The app links to product detail pages and thus allows for sharing and commerce. (

Further, they operate a Chabot on the messaging app KiK which has one of the highest engagement rates there. But the beauty retailer has also integrated digital and social elements in their store concepts. The so called ‘Beauty Hub’, including features like a virtual catalogue, the virtual artist, which can be run not only on iPads but also on connected mirrors, and the colour profile application that helps to choose the right foundation shade, is at the heart of the concept.

Moreover, Sephora features a Digital Makeover Guide, which records the customer’s specific service received and provides customized product- and application tips which can be forwarded to the customer by E-Mail.

Artificial Intelligence is shaping the future of CRM

What are current trends to watch in the field of CRM?

As one can conclude from the Sephora case, Artificial Intelligence (AI) is definitely the most important influence factor that is shaping the future of CRM from a technological point of view.

Above all, AI will be increasingly used in Chatbots, which will perform simple and repetitive customer service requests. But AI will also facilitate the sales and marketing processes. Smart CRM systems are already able to prioritize leads with respect to opportunity value. Digital assistants help sales agents to schedule their days and provide real-time information with respect to clients’ behaviour and industry updates. But marketing becomes also smarter with AI. CRM systems with AI enabled marketing functionalities can predict a customer’s likelihood to convert and where customer segments were based on historical data in the past, it is now possible to segment customers based on likely future actions. AI brings personalization of marketing messages to a new level and in the end, the customer journey can be slightly adapted for each individual.

In addition, AI will be used in a CRM context to analyse customer dialogues. By applying voice analytics, it is possible to estimate customers’ satisfaction, willingness to buy and uncover intentions. Insights can be gained and applied real-time which allows sales agents to identify cross- and up-selling opportunities and provide customers with information that is relevant for them. By providing these insights, voice analytics has the potential to substitute customer surveys to some degree.

Further trends in CRM include the rising number of simplified CRM systems, respectively lightweight vertical CRM solutions to serve the increasing demand from smaller businesses and start-ups that cannot afford an investment in the more expensive enterprise solutions from market leaders, a new focus on third party data and emphasis on social channels. We will discuss these trends in one of our next articles. If you want to learn more about this topic, please do get in touch.

Annika Sieveneck is  Management Consultant Delivery Specialist at dgroup, realizing e-commerce projects in the retail industry and focusing on Customer Relationship Management and Category Management.

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